In January 2022, the Wyoming Supreme Court reversed a district court ruling granting a preliminary injunction that enjoined a former employee of Western Wyoming Beverages (“WWB”) from working for a competitor. Malave v. Western Wyo. Bevs., Inc., 2022 WY 14, 503 P.3d 36 (Wyo. 2022). The former employee, Jorge Malave, began working for WWB, a distributor of Pepsi products, in September 2016. At that time, Mr. Malave signed a noncompete agreement, which prohibited him from directly or indirectly working for a competitor of WWB for a period of twelve months from the date of termination. Mr. Malave left WWB in May 2020 and began working for High Country Coca-Cola, a direct competitor of WWB. At the time he left WWB, Mr. Malave was in a sales position, worked with various customers face-to-face, and developed relationships with the customers. WWB filed for a preliminary injunction, enjoining Mr. Malave “from a sales or distribution position of a direct competitor of WWB, that would include Coke.”
In its decision reversing the preliminary injunction, the Court noted that noncompete agreements are not analyzed in the same manner as typical contracts. “Contracts which hinder employees’ freedom to work are strictly construed and rigidly scanned and are declared void unless necessary for the reasonable protection of the employer.” Malave, 2022 WY 14 at ¶ 9, 503 P.3d at 39-40 (internal quotations omitted).
In Wyoming, a noncompete agreement must be in writing, part of a contract of employment, based on reasonable consideration, reasonable in durational and geographical limitations, and not against public policy. The employer bears the burden of establishing that the restraint on trade is reasonable. The reasonableness determination involves assessing whether the employee received trade secrets, confidential information, had special influence over the employer’s customers, or had extensive training from the employer. In cases where noncompete agreements are upheld, the employer often has distinct special business interests. See, e.g., Hopper v. All Pet Animal Clinic, 861 P.2d 531 (Wyo. 1993) (upholding noncompete agreement where veterinarian had no significant professional contact with the community prior to working with the employer and gained access to client files, pricing policies, practice development techniques, and exposure to clients from the employer); CBM Geosolutions v. Gas Sensing Tech. Corp., 2009 WY 113, 215 P.3d 1054 (Wyo. 2009) (upholding noncompete agreement where employer had a special business interest because it trained its employees in innovative technologies required to maintain a competitive edge in the marketplace).
The Court found Mr. Malave did not receive extensive training for the job, his position didn’t give him access to innovative technology, and none of the information he received constituted a trade secret. Though he worked with customers, those customers were easily identifiable and Mr. Malave did not have a special relationship with them. Noting the employer failed to meet its burden of proving reasonableness of the noncompete agreement, the Court stated, “an employer must be prepared to encounter competition even at the hands of a former employee.”
Malave is the third noncompete case the Wyoming Supreme Court has considered in the last year. In the other two noncompete cases in 2021, Brown v. Best Home Health & Hospice, LLC, 2021 WY 83, 491 P.3d 1021 (Wyo. 2021) and Skaf v. Wyo. Cardiopulmonary Servs., P.C., 2021 WY 102, 495 P.3d 887 (Wyo. 2021), the Court also found the noncompete agreements at issue unenforceable.