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10th District rules former Salon Lofts attorney cannot break covenant, open competing business
JESSICA SHAMBAUGH
Special to the Legal News
Published: July 31, 2012
A Franklin County appellate court recently held that preliminary injunction was appropriate to prevent the former general counsel and vice president of investor relations for Salon Lofts from creating competing business.
The 10th District Court of Appeals panel ruled that Sean Stoner had in-depth knowledge of Salon Lofts’ business model and posed a threat to the company with his plan to open a competing salon in an area where he knew Salon Lofts planned to market.
“Moreover, Stoner, as general counsel for Salon Lofts, was privy to all the confidences and secrets of the business and of Salon Lofts Franchising established while he served in that role. Barring Stoner from revealing those confidences and secrets was certainly a reasonable precaution for the trial court to take,” 10th District Judge Gary Tyack wrote for the court.
Case summary states that Stoner is an attorney in Columbus who served as general counsel and vice president of investor relations for Salon Lofts from 2007 to 2010.
During his time with Salon Lofts, Stoner played a large role in creating Salon Lofts Franchising and the documents the company used to sign franchisees. He also became its first franchisee, according to case summary.
Stoner was terminated in August 2010 and he filed suit against his former employer. Salon Lofts filed a counter claim alleging Stoner violated a covenant stating he would not compete and that he was using trade secrets acquired at Salon Lofts.
After an evidentiary hearing, a Franklin County Court of Common Pleas judge granted Salon Lofts’ motion for preliminary injunction and Stoner appealed to the 10th District.
On review, the three-judge appellate panel found that Stoner signed a confidentiality and non-competition agreement when he became a franchisee that stated he could not create a competing business within 20 miles of a Salon Lofts property for two years following his departure. It also rejected Stoner’s claim that the covenant could not be enforced because it was too broad after it found it specifically included a limited time frame, adequate consideration, and related to property and employment.
“Here, the trial court did nothing but enforce the terms of the agreement signed by Stoner to block Stoner from opening competing businesses in nine counties in North Carolina and two counties in South Carolina,” Tyack stated.
“The terms are not overly broad.”
The judges held that Salon Lofts had clearly established franchising efforts in the areas of North Carolina and South Carolina in which Stoner attempted to open salons. They also maintained that Stoner had been a part of making those plans prior to his leaving and that his business moves after his termination caused a threat to Salon Lofts’ business.
“If Stoner opened Salon Lofts-type businesses and cornered the market before Salon Lofts and/or Salon Lofts Franchising could find a substitute for Stoner in developing the area, the Salon Lofts entities would be permanently damaged,” Tyack continued.
“On review, none of the issues submitted on Stoner’s behalf for barring a preliminary injunction demonstrated that the trial court erred.”
Fellow 10th District judges Peggy Bryant and William Klatt joined Tyack to form the majority.
The case is cited Stoner v. Salon Lofts, LLC, case No. 2012-Ohio-3269.
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