Missouri Courts Continue to Require Employee Consent to Assign Non-Compete to a New Employer
On March 16, 2015, the United States District Court for the Western District of Missouri granted Defendants Greenbaum and Tabanag’s Motions for Summary Judgment as to Plaintiff’s causes of action for breach of contract. Defendants entered into Covenants Not to Compete (“Non-Competes”) as conditions of their employment with Ozark Mobile Imaging, LLC (“Ozark”), in 2007 and 2010 respectively, and Plaintiff purchased Ozark in an Asset Purchase Agreement in December 2012. However, neither Defendant provided Plaintiff with consent to the assignment of their Non-Competes from Ozark to Plaintiff and, instead of continuing employment with Plaintiff after the purchase, they accepted positions with a competitor. In granting the Motions for Summary Judgment, the Court found Missouri law, relating to the assignability of employment contracts and non-competes, continues to be as previously held by the Missouri Court of Appeals in Roeder v. Ferrell-Duncan Clinic, Inc., 155 S.W.3d 76 (Mo. App. 2004): “’contemporaneous consent’ from the employee [is] necessary in order to assign the employment contract to the subsequent employer.” Based upon the Court’s holding, a subsequent employer includes a party who purchases some or all of a business.
This holding does not have an effect on agreements that include a sufficient assignability provision. The Court discussed the holding of the Missouri Court of Appeals in Orthotic & Prosthetic Lab, Inc. v. Pott, 851 S.W.2d 311 (Mo. App. 1986) where an assignability provision within the non-compete agreement was found sufficient to make the agreement assignable without consent – however, as the Non-Competes did not include assignability language it did not apply to save Plaintiff’s claims from dismissal. The discussion appears to support that despite Missouri’s position on requiring “contemporaneous consent” for assignment of contracts to subsequent purchasers, parties can agree to assignment language within the agreement at the onset to avoid the need for consent from employee in the event of any assignment. Inclusion of the phrase “this Agreement shall be binding on and inure to the benefit of the parties and their respective heirs, successors, assigns and legal representatives” is likely sufficient to make an agreement assignable without requiring an employee’s consent.
MobileExUSA v. Greenbaum and Tabanag, Case No. 13-4196-CV-C-FJG (W.D. Mo. 2015). A link to this case can be found here.