In a rare move, the Ohio Supreme Court granted a motion for reconsideration and issued an opinion on October 11, 2012, that "clarified" a decision that it had reached in May of this year. The case involved the question of whether non-compete agreements which failed to include specific language that the agreements extended to successors and assigns could be enforced by a company that acquired the entity that originally entered into non-compete agreements with its employees. Entitled Acordia of Ohio, LLC v Fishel, the original cause of action arose when former employees of Acordia used prior contacts at that company to lure customers to their new employer. Acordia had entered into non-compete agreements with those employees, but after Acordia went through a series of mergers, the employees went to a competitor. Acordia attempted to enforce the non-compete agreements against its former employees, but the Supreme Court held that since the agreements did not include language that they extended to other employers -- specifically the company's successors or assigns -- then they could not be enforced.
Acordia asked the Court to reconsider that ruling, and in its most recent decision, Justice Judith Ann Lanzinger, writing for a 6-1 majority, said that the Court "determined that portions of the lead opinion in Acordia I should be clarified. We reassert that in accordance with RC 1701.82(A)(3), all assets and property, including employment contracts and agreements...transfer through operation of law to the resulting company postmerger. We clarify the lead opinion by noting that certain language was, upon further consideration, erroneous." The Court remanded the case to the trial court to determine if, in fact, the non-compete agreements would be considered reasonable so that they could be enforced against the former Acordia employees. The trial court will apply Ohio's longstanding test for non-compete agreements, and determine if the non-compete language is no greater than necessary to protect an employer, does not impose an undue hardship on the employee and is not injurious to the public.
While assignability clauses are still recommended in non-compete and other agreements that employers have their employees sign, this decision will allow employers who purchased the assets of companies that did not have agreements with such clauses to breathe easier.