Ohio based Sanitation contractor that sued former employees who opened competing cleaning company for the Dakota City Tyson plant loses summary judgment appeal at the Eighth Circuit Court of Appeals (Riley, Circuit Judge) DCS Sanitation Mgt. v. Eloy Castillo051201P.pdf 01/25/06 District of Nebraska; Judge Smith Camp granted summary judgment in favor of former DCS sanitation company employees who opened up their own company to clean the Dakota City Tyson Foods plant. They were subject to non-compete agreement which purported to prevent their competing with the plaintiff for 1 year after ending employment with the plaintiff, and further that Ohio law would govern the contract. The employees opened up their own company cleaning for Tyson before their one year contract window had expired. The former employer sued in federal court for an injunction. Judge Smith Camp dismissed, granting summary judgment to the defendants, and applied Nebraska law to the non-compete agreement. The Eighth Circuit affirms, finding the district court properly concluded Nebraska law applied because of its greater material interest than Ohio and because Ohio law was contrary to Nebraska's fundamental policy to reject judicial reformation of noncompete agreements. District court also properly concluded the noncompete agreements were overbroad and unenforceable.

Because Nebraska has a greater material interest in the Agreements and application of Ohio law would violate a fundamental policy of Nebraska law, we holdthe district court correctly applied Nebraska law to the question of the validity and enforceability of the noncompete agreements. See First Nat’l Bank v. Daggett, 497 N.W.2d 358, 363 (Neb. 1993) (disregarding choice-of-law provision because the chosen state had no contacts with the transaction and the parties, and application of the chosen state’s law would offend a strong public policy in the forum state

. We conclude the district court properly held the noncompete agreements were overbroad and unenforceable. The district court recognized the noncompete agreements prohibit the former employees from, directly or indirectly, being concerned in any manner with any company in competition with DCS, and from providing contract cleaning services within one hundred miles of any entity or enterprise “having business dealings” with DCS, including attorneys, accountants, delivery services and the like. The breadth of the noncompete agreements effectively put the former employees out of the cleaning business within an extensive region. We hold the district court did not err in concluding Nebraska courts would not enforce such overly broad noncompete agreements. See Rosno, 680 N.W.2d at 186-87 (holding noncompete agreement was overly broad where the agreement prohibited the former employee from soliciting or contacting any of the former employer’s clients and where the former employer could not establish the former employee had done business with or had substantial personal contact with all of the former employer’s clients); Even if the defendants might have been in violation of a reformable noncompete, because Nebraska prohibits reformation of non compete agreements, the Plaintiff's non-compete was completely ineffective