RATHMANN GROUP V. TANENBAUM 889 F.2d 787 (8th Cir. 1989) CASE BRIEF

RATHMANN GROUP V. TANENBAUM

889 F.2d 787 (8th Cir. 1989)

NATURE OF THE CASE: Rathmann (P) beauty supply distributor sought to enjoin its former employee, Tanenbaum (D), salesman, from violating a covenant not to compete. The District Court entered a temporary restraining order (TRO) and granted P's motion for a preliminary injunction. D appealed from those orders.

FACTS: P operates a beauty and barbershop supply business that was purchased from Fred F. Foster in 1988. D had worked as a sales agent for Foster since 1979. D had signed an agreement stipulating that if his employment with Foster were to terminate for any reason, he would not work as a sales agent for manufacturers of beauty and barbershop supplies in a twelve-state area of the midwest for a period of one year. On the sale to P, D sought to clarify the terms of his employment under the company's new management. They executed a written contract describing D's sales territory and commission arrangement on January 6, 1989. The contract contained no noncompete agreement and made no mention of the agreement D previously had entered into with Foster. P previously had rejected an integration clause proposed by D, which stated that the contract represented the sole and complete agreement between the parties. D submitted his resignation and then organized his own beauty and barbershop supply business and began soliciting trade from customers of P in his former territory. P sought injunctive relief against to enforce the noncompete agreement D had signed with Foster in 1979. The court entered a TRO conditioned on P's posting a $5,000.00 bond, granting the relief P sought for the period from May 24, 1989 to May 30, 1989. An evidentiary hearing was held May 30, 1989 to consider P's motion for a preliminary injunction. The TRO was continued until June 6, 1989, conditioned on P's posting an additional $5,000 bond. The court issued a preliminary injunction which restrained D and his affiliates from competing with P in a twelve-state area of the midwest until May 9, 1990, one year from the date on which P had resigned. The preliminary injunction was not conditioned on the posting of any additional bond by P. D appealed: D claims the district court erred in failing to condition its preliminary injunction on the posting of further security by P. D next contends the injunction is in effect a permanent one because it enforces the agreement. As such, the injunction should not have been ordered without notice to the parties that the court was considering permanent relief.

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LEGAL ANALYSIS:

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