RAIN AND HAIL INSURANCE SERVICE

v. CASPER

902 F2d 699 (8th Cir. 1990)

WOLLMAN, CIRCUIT JUDGE.

Rain and Hail Insurance Service, Inc. (Rain & Hail) appeals the district court's refusal to enforce a contractual non-compete clause against Paul Casper, a former Rain & Hail employee. We affirm.

Casper's employment agreement with Rain & Hail provided:

If you resign your employment with Rain and Hail Insurance Service, Inc. you agree by signing below that you will not, for a period of two years from the date of resignation, engage within your assigned territory in the marketing and servicing of any insurance lines presently represented by Rain and Hail Insurance Service, Inc. for any competitive corporation, company or firm.

Although the parties entered into the agreement in Nebraska, they agreed that the laws of the state of Iowa would apply to the agreement.

Casper resigned from Rain & Hail in November 1988. He began employment with Columbia Mutual Casualty Insurance as manager of the crop insurance division in a geographical area that overlapped the area he had worked in while employed by Rain & Hail. Rain & Hail sought preliminary injunctive relief, claiming that Casper's new employment violated the non compete clause and would cause Rain & Hail irreparable injury.

The district court denied Rain & Hail equitable relief, finding it unlikely that Rain & Hail would succeed on the merits. Although Nebraska law generally allows parties to choose which jurisdiction's law will apply in a contract dispute (here Iowa law), the court nevertheless applied Nebraska law, reasoning that application of Iowa law would be contrary to a fundamental policy of Nebraska. Under Nebraska law, contracts in restraint of trade must be no greater than reasonably necessary to protect the employer in some legitimate interest. The district court found the restrictions of the non-compete clause overbroad because the identity of customers is not a trade secret and Rain & Hail's agreements with the customers are not exclusive. The district court also found the restriction unduly harsh and oppressive to Casper because the agreement was essentially a prerequisite to obtaining the job with Rain & Hail and because Casper had no training in other fields and needed employment.

Judgment affirmed.