Matthew McGovern was a former executive and minority owner of a closely-held automotive dealership group called Prime Motor Group. McGovern was terminated from his position and signed an agreement to sell his minority stake in Prime that included an “anti-raiding” restrictive covenant. The covenant prohibited McGovern from soliciting or hiring Prime’s employees for a defined period of time. In spite of this provision, McGovern hired multiple Prime employees. Prime filed suit against McGovern.
After a bench trial, the trial court found that McGovern had breached the anti-raiding provision. Rather than attempting to restore the employees’ relationships with Prime, or compel McGovern to terminate the employees, the trial court extended the length of the restrictive covenant by one year. McGovern appealed the trial court’s ruling, arguing that (1) the anti-raiding provision was invalid because it did not protect a legitimate business interest; and (2) the trial court had abused its authority by extending the duration of the anti-raiding period. The SJC transferred the appeal to itself from the Appeals Court.
SJC Validates the Anti-Raiding ProvisionGenerally, restrictive covenants are only enforceable if: (1) necessary to protect a legitimate business interest; (2) reasonably limited in time and geography; and (3) consistent with the public...
