Failure to Update Non-compete Agreements after Purchase of Company Foils Enforcement

The federal appeals court in Boston has underscored the importance of carefully examining and understanding restrictive covenants, such as non-competes and non-solicitation agreements, that may be acquired in a business purchase. The Court found a one-year non-compete clause in a restrictive covenant agreement expired and unenforceable against former employees when it was sought to be invoked more than one year following the sale of the company that had entered into the agreements with them. OfficeMax, Inc. v. Levesque, 2011 U.S. App. LEXIS 18816 (1st Cir. Sept. 12, 2011). Accordingly, the Court refused to enforce the District Court’s preliminary injunction restricting the former employees from competing with OfficeMax, an office supplies company that bought the assets of Boise Cascade Office Products Corp. (BCOP), another office supply company.