In this article:

  • Overview
  • Background
  • Key Rulings
  • Implications for Utah Businesses and Employees

Overview

In a recent decision, England Logistics v. Kelle’s Transport Service, the Utah Court of Appeals addressed several important issues related to noncompete agreements and tortious interference claims. This case offers valuable insights for both employers and employees in Utah regarding the enforceability of noncompete agreements and the standards for proving tortious interference.

Background

C.R. England, a large trucking company, sued Kelle’s Transport Service (referred to as “Soar” in the case) and several former employees who had left to work for Soar. C.R. England alleged that the employees had violated their noncompete agreements and that Soar had tortiously interfered with C.R. England’s economic relations.

Key Rulings

1. Enforceability of Noncompete Agreements

The Court of Appeals affirmed the lower court’s ruling that the noncompete agreements were enforceable. The court rejected arguments that:

  • The agreements lacked consideration
  • The agreements were unreasonable in scope
  • The at-will nature of employment invalidated the agreements

Takeaway: Utah courts continue to uphold noncompete agreements when they are reasonably limited in time and geographic scope, even for at-will employees.

2. Tortious Interference Claim

The Court of Appeals reversed the lower court’s decision on the tortious interference claim, finding that C.R. England failed to present sufficient evidence of “improper means.” The court clarified that:

  • Improper means must involve actions that are either contrary to law or that violate an established industry standard
  • C.R. England did not provide evidence of any independently illegal or tortious conduct by Soar
  • Opinions about the legal effect of contracts are generally not a basis for fraudulent misrepresentation claims

Takeaway: Proving tortious interference in Utah requires evidence of truly improper conduct, not just aggressive competition or differing opinions on legal matters.

3. Prevailing Party Determination

Despite the reversal on the tortious interference claim, the Court of Appeals upheld the lower court’s determination that C.R. England was the prevailing party for purposes of awarding costs. The court emphasized:

  • The flexible, case-by-case approach to determining the prevailing party
  • The discretion given to trial courts in making this determination
  • The importance of considering the overall context and goals of the litigation, not just monetary awards

Takeaway: Prevailing party status for costs and fees can depend on more than just monetary awards, especially in complex commercial litigation.

Implications for Utah Businesses and Employees

  1. Noncompete Agreements: These agreements remain enforceable in Utah when properly drafted. Employers should ensure their agreements are reasonably limited in scope and supported by consideration. Employees should carefully review such agreements before signing.
  2. Tortious Interference Claims: The bar for proving these claims is high. Businesses alleging interference must have clear evidence of truly improper conduct, not just aggressive competition.
  3. Litigation Strategy: When pursuing or defending against multiple claims, consider how courts might weigh the relative importance of different outcomes when determining prevailing party status.

At Hepworth Legal, we stay up-to-date on the latest developments in employment and business law to better serve our clients. If you have questions about noncompete agreements, business torts, or other commercial litigation matters, please contact our office to schedule a consultation.