In the Metis case, as to the first factor, the Court found the scope of the non-compete to be too broad and therefore unenforceable because it prevents the contractors from “engaging in any professional services with the United State[s] Army anywhere in the world and for any purpose, whether or not such purposes compete with The Metis Group’s business model.” Additionally, the Court found the non-solicitation of employee provision to be overbroad in that it restricted employees and independent contractors from pursuing opportunities unrelated to Metis’ business needs, and that coupled with the non-compete the contract sought to “hoard the services of the defendants.” In finding the restrictive covenants unenforceable, Metis confirmed that Virginia courts will not rewrite contracts, as there is “no authority for courts to ‘blue pencil or otherwise rewrite the contract’ to eliminate any illegal overbreadth.”
Takeaway 2 – Limiting the Scope of Enforceable Employee Non-Solicitation Provisions
Historically, the focus on whether a non-solicitation of employees provision is enforceable rests on whether the employee has a nexus to or material knowledge of the skills of the employees he or she is prohibited from recruiting. However, in Metis, the Court goes beyond this and focused on whether or not the employee non-solicitation provision was related to Metis’ business needs and limited to those who would be solicited to engage in competing services. Because the provision was not confined to providing competitive services, the Court regarded it as a mechanism to “hoard” the doctors’ services without regard to whether that disruption came from a competitor; and the fact that the disruption did, in fact, come from a competitor does not render the restriction enforceable. This is, arguably, a new limitation in Virginia with respect to non-solicitation of employee provisions.
Takeaway 3 – Expanding the Scope of the Public Policy Factor
Notably, the Court placed great emphasis on the third enforceability factor – public policy – which is often discussed as a secondary consideration if at all and generally limited to balancing the employer’s need to protect their legitimate business interests against the employee’s interest in maintaining a livelihood. In doing so, the Court held that the Metis restrictive covenants violated public policy because “they are designed to perpetuate a monopoly.” Declaring restrictive covenants unenforceable in Virginia on the basis of monopolistic behavior is unprecedented.