Non-competition Agreements

Are your covenants not to compete enforceable? Many factors go into whether or not a court will enforce a non-compete agreement. Courts will not only consider, among other things, the scope, territorial limitation, and duration of the agreement, but also whether there was adequate consideration.

Georgia and South Carolina differ as to what constitutes adequate consideration.

For example, if an employer asked an at-will employee to sign an agreement as a condition of his continued employment, the courts in each state differ as to whether this alone constitutes adequate consideration.

Non-competition agreements may also be valuable tools in other situations such as partnerships, franchises, and settlement agreements. However, a non-compete agreement is only a benefit if it is enforceable.

Below I have linked two opinions discussing the issue of adequate consideration, one from the Supreme Court of South Carolina and one from the Supreme Court of Georgia.

Supreme Court of South Carolina

Supreme Court of Georgia

Augusta’s District 7

What in the world is going on with naming a replacement fo District 7′s Commission seat? It has now been over 2 weeks since Donnie Smith, District 7′s Commissioner, resigned from his seat. It only took a week for the Commission to appoint a replacement for Joe Jackson after he abruptly resigned last month. Yesterday the Augusta Chronicle ran an article on the likely replacements: Echols, Frantom, and Harris.

One has to wonder why there is, at least from the outside seems, a lack of urgency to appoint a commissioner for District 7. For those who follow the local government, it is fairly easy to guess as to why there was a rush to appoint the commission rushed to get Hasan aboard yet has no urgency to appoint a District 7 replacement.

As the Donnie Smith fiasco has unfolded, I began to think about the District 7 race between Smith and Echols two years ago. I am sure the majority if not all of Smith’s voters now wish they had voted for Echols. During his campaign, Echols pledged not to vote for any property tax increases.

Smith, on the other hand, recently voted for the tax hike, then retreated after the appararent outcry from District 7 residents. Presumably so Smith could save face with his district, Smith voted “no” in the final vote that increased the tax burden.

The vote on the tax increase ended in a 5-5 tie with the mayor casting the tie-breaking vote in favor of the tax increase. If any one of the 5 “no” voters had abstained, the tax increase would have failed. This tactic has been used repeatedly in the past.

Have any of the 5 “no” votes answered the question on why they didn’t abstain? The voters in those districts need to demand answers because their vote was basically a vote in facor of a tax increase.

Adhesion Contracts

After re-reading my blog post from last Tuesday regarding the terms and conditions we agree to on a daily basis, I thought I should clarify that not ALL adhesion contracts are enforceable.

For example, South Carolina courts view adhesion contracts in vehicle purchase agreements (the agreement the car dealer has you sign) with “considerable skepticism”. As a refresher, adhesion contracts have been defined as standard form, non-negotiable, contracts that are offered on a take-it-orleave-it basis.

Courts will not enforce adhesion contracts if the terms are unconscionable. Certainly, many of these contracts are enforceable but I did not want you to come away with the impression that all of them are enforceable.

Be sure to visit my law office’s website at: www.nehlaw.com

Uber

Over the last few weeks I have had the opportunity to go to Atlanta a couple of times. I met some friends over there and we decided to go out to dinner. How were we going to get there? One of my friends from Atlanta suggested we use Uber. I had read about Uber before but had never used it.

It was a great experience. We ended up being picked up by a late model large SUV. It was very clean and the wait to be picked up was short. The driver was very polite. And most importantly, it was much cheaper than a taxi or driving service. It is simple to use, you just download an app on your phone, request a pick up, and pay through paypal.

I have seen ads that Uber is coming to Augusta. It makes me wonder what kind of response Uber will receive from the local taxi companies, the commission, and the law enforcement. The Oxford, Miss. police department has been ticketing Uber drivers for violating a newly enacted ordinance preventing services such as Uber from operating without paying to be a licensed taxi company. You can read about that here.

Memphis similarly created a similar ordinance that similarly banned Uber if the drivers did not pay the taxi fees. The Memphis newspaper, the Commercial Appeal, came out against Uber stating they believed it was a matter of public safety.

My friend who lives in Memphis, wrote a a letter to the editor refuting this assertion. You can find his letter here (subscription required). Basically, he states that Uber already does a more thorough background check than that required by the city ordinance. Further, because of the GPS technology employed by Uber, it would make it virtually impossible for a driver to commit a crime against a passenger and get away with it.

I am anxious to see how the local authorities handle Uber when it gets to Augusta. I am sure the taxi companies will lobby hard against Uber (as they even opposed a city bus stop near Fort Gordon).

The Richmond County Code appears to be broad enough that an Uber driver would be required to pay the taxi regulatory fee. Ordinance Number 1400, adopted April 16, 2013 defines a taxicab as a vehicle “regularly engaged in the business of caryying passengers for hire….” Uber will likely argue that because the drivers use their personal vehciles and aren’t full-time professional drivers, that the vehicles cannot be considered to be regularly engaged in the business.

Uber is able to offer affordable transportation because, in part, they do not have to pay the costly regulatory fees. It will be interesting to see how Augusta handles Uber when it arrives.

Remember to visit my law firm’s website at www.nehlaw.com.

Terms and Conditions

Today I came across this article revealing that researchers have found it would take 15 work weeks for the average internet user to read all of the privacy policies he or she encounters in a year. That is an amazing figure but not overly surprising considering how many websites the average internet user access or subscribes to in a given year.

For example, I am sure that I agreed to a lengthy privacy policy when I bought this domain and when I downloaded the website’s theme.

The article got me thinking, though, about how long it would take the average internet user to read all of the terms and conditions, not just the privacy policies, of all the websites the user visits in a year.

Has anybody ever read the terms and conditions for a website, program, or application? LinkedIn’s user agreement, for example, is over 7,800 words (the privacy policy is about the same length). The terms and conditions on a website are just the latest versions of adhesion contracts – contracts where the consumer becomes bound by the terms if the consumer accepts the product (a/k/a shrink wrap contracts – the consumer becomes bound by the terms after opening the software package).

What has become known as browse wrap agreements – agreements binding upon the person accessing a website without deliberately consenting to the terms (you don’t have to hit “I AGREE”) – have become the norm. Many of these browse wrap agreements contain exclusive an jurisdiction provision and/or arbitration provisions. These provisions end or limit the judicial relief that would otherwise be available to the internet browser.

Because it is nearly unviversally accepted that these type of contract are enforceable, there are few local reported cases.

One that I found, from 2010 in the U.S. District Court for the Northern District of Georgia enforced the forum selection clause in Facebook’s agreement after a Facebook user brought a suit alleging copyright and patent infringement. The Court declined to address the case on the merits citing the user’s agreement to litigate only in Santa Clara County, California. In other words, the Facebook user couldn’t have his day in court in Georgia.

Given how much we surf the internet, we have likely unknowingly submitted ourselves to a plethora of terms and conditions and our only remedy for any wrong is likely in a far away locale.

The Hiatus is Over

I apologize for not posting during the last few weeks. I have been busy starting my own law firm. My law website can be found at nehlaw.com. When I started this blog I posted a picture of me standing under the Miller Theater marquee – “Coming Soon”. Opening my own firm is what I was referring to. Now that I have done that, I will get back to posting regularly as I continue to get everything set up and running. A lot has happened around Augusta in my absence including the resignation of my commissioner. Hopefully I will have the opportunity this week to post my thoughts on that and some other events that have occurred around Augusta. Thank you!

Richmond County Sheriff’s Office

Today the Sheriff’s Office is hosting a free event at the Augusta Commons and providing all comers with burgers and shakes. I realize that this event isn’t the overly costly, but does it strike anybody as poor timing to have this unnecessary expenditure 2 days after asking the commission for more money?

The Augusta Tax Hike and Your Property Assessment

On July 28th I commented on the millage rate increase passed by the Augusta Commission. After what was apparently a strong showing of displeasure by the taxpayers, the Commission voted no to the tax increase.

What changed? Mary Davis and Donnie Smith, who voted in favor of the increase less than a month ago, did not support the increase yesterday. I have found no public comment regarding the change of heart.

Some people have commented that instead of raising the millage rates to increase tax revenue, the county assessor should reassess and increase the value of properties. Last year when I appealed my tax assessment (successfully) I got a first hand look at how the assessor’s system works.

Pursuant to the relevant statute, the property is supposed to be assessed at its fair market value on January 1. In preparing my appeal, I looked at all the sales in my neighborhood over the last several years and the values at which the houses were assessed.

By looking at the MLS and other online listings and comparing those listings to the property records kept by the assessor’s office it was apparent that the assessor’s office does not have accurate information on MANY houses in the neighborhood. Numerous houses have second levels or other amenities which are unaccounted for by they assessor’s office.

By adding the unaccounted for square footage, the city would stand to gain a significant amount of money without raising the millage rate. This could be effectuated by simply comparing the tax assessor’s records to the for sale listings online.

That brings me to my second point: The assessment for many houses (not the ones with unaccounted for square feet) is already well above the house’s fair market value. Fair market value is defined as “the amount a knowledgeable buyer would pay for the property and a willing seller would accept for the property at an arm’s length, bona fide sale.” O.C.G.A. Section 48-5-2(3).

After studying the sales in the neighborhood and comparing them to the assessed values of the properties, it is apparent that the tax assessor already assesses most properties above their fair market value. To advocate for a blanket increase of assessed values is simply wrong.

In short, the people who believe another way of going about the tax increase would be to increase the assessments of properties have it right with respect to increasing the accuracy of the property records. However, many, if not most, properties are already assessed above their fair market values.

ZILLION + PILLOW = ZILLOW? Really??

Zillow’s opposition to the trademark application for “LOANZILLA” was denied. What I found interesting, however, was not the decision nor the Board’s rationale, but Zillow’s explanation on how it got its name. Is this believable??? To me, hardly:

“The Zillow name evolved from the desire to make zillions of data points for homes accessible to everyone. And, since a home is about more than just data – it is where you lay your head to rest at night, like a pillow – ‘Zillow’ was born.”

What do you think? Is the real meaning of the name? You can find the opinion here.

The O’Bannon Case

I finally got around to reading all of Judge Claudia Wilken’s 99 page verdict in the O’Bannon v. NCAA case. You can entertain yourself with it here.

By now everyone knows that the NCAA lost and that the NCAA will appeal the decision. What this means for the long term structure of the NCAA and Division I universities’ relationships with athletes will likely not be clear for some time. I just wanted to comment on a few of the findings:

The judge found that there was no viable alternative to Division I athletics for the recruits. She diminished the role professional European Leagues have begun to play in competing for basketball players straight out of high school. This trend started with Brandon Jennings and is most recently evidenced by Emmanuel Mudiay’s decision to skip college in favor of playing professional basketball in China. I don’t totally disagree with the Judge’s opinion, particularly with respect to football, but high school basketball players do have the legitimate option to join professional leagues rather than play Division I basketball.

On page 22 of the opinion, the Judge states that after the “recruit’s decision to attend and play for a particular school, the school provides tuition, room and board, fees, and book expenses, often at little or no cost to the school.” Yes, the schools do provide these things for the athletes but they also provide other amenities, academic support, training, equipment, counseling, etc. that simply aren’t available to the general student population. To act as if there is no other benefit for the athletes other than tuition and room and board is naive at best.

Apparently the NCAA did a terrible job presenting their evidence. The Court tore the survey the NCAA conducted, in an effort to show people liked Division I sports because of amateurism, to shreds.

After the plaintiffs satisfied their initial burden, the NCAA had to show, among other things, the regulations placed on universities regarding the benefits they can give athletes have the effect of balancing competition. The Judge did not buy the NCAA’s argument at all: “The only quantitative evidence that the NCAA presented related to competitive balance is a cursory statistical analysis … comparing the levels of competitive balance in [Division I] to the levels in the NFL and NBA….his analysis does not suggest that the NCAA’s challenged rules actually produce the levels of competitive balance he observed.” p. 36. The Judge stated that instead of spending money on the athletes, the colleges spend the money on recruiting budgets, coaching salaries, and facilities. She believes that this “cancels out whatever leveling effect the restrictions placed on student-athlete pay might otherwise have.” I have to strongly disagree with her on this point. While it is not in front of the court, if there were no salary cap, what it is in effect, then the elite of the elite would create even wider gaps between the conference bottom feeders and non-power 5 schools. In my opinion, you would wind up with Alabama, Texas, USC and schools of that ilk being completely dominate. While those schools might have nicer weight rooms and facilities, there is only so much value a recruit can place on that. Instead, if the recruit were offered a 5k dollar stipend to go to Mississippi State and a 50k dollar stipend to go to Alabama, there is little question that the money difference has the ability to change the recruit’s mind more than any difference in facilities. On page 63, the Judge recognizes that without the current restrictions, “schools would compete against one another by offering to pay more for the best recruits’ athletic services….” However, she did not find that such bidding would create unfair competition. I find that conclusion naive as well.

Along the same line, the NCAA’s expert failed to convince the judge that competitive balance even had an effect on the popularity of college sports: “his analysis did not show that consumer demand for [Division I sports] would decrease if [the] teams were less competitively balanced than they currently are.” p. 84. Obviously the NCAA’s expert failed in convincing the judge that a substantial portion of the popularity is due to the parity of the sports. I also find this conclusion unavailing and unrealistic.

Some of the Judge’s highlights and lowlights:

“In short, non-FBS and non-Division I schools do not compete with FBS and Division I schools…on the football field….”p. 53. She obviously missed Georgia Southern’s upset of Florida in November.

On pages 80 and 81, she bashes the NCAA for their inconsistency pointing out that a tennis player may maintain his amateur status even though he accepts up to 10k the year before enrolling. Yet a track and field athlete would forfeit his eligibility by doing the same.

Although the NCAA maintains this rule promotes competitive balance, the Judge notes on page 91, that a more simple way to do this would to be to spread the money between Division I schools equally. Instead, “its current formula primarily rewards the schools that already have the largest athletic budgets. This uneven distribution of revenues runs counter to the association’s stated goal of promoting competitive balance.”

The Judge states that the schools and the NCAA are converting (stealing) athletes’ rights by selling the right to use the athletes’ names, images, and likenesses to television networks: The schools give the networks assurances that they have the legal right to sell the likenesses and “Such assurances might constitute conversion by the schools of the student-athletes’ rights, or otherwise be unlawful….”

The Augusta Commentator