Alex's Wine And Spirits Company Case Study

Discussion Joanne Haley would be able to successfully defend a suit filed by Alex’s Wine & Spirits Company because the covenant not to compete is void, due to failing two of the five required elements. Under Wisconsin law, a restrictive covenant requires an employer to demonstrate: (1) they have a protectable interest that justifies restriction on the employee’s activity; (2) a reasonable time limit; (3) a reasonable territorial limit; (4) it is not harsh or oppressive to the employee; and (5) not contrary to public policy. Star Direct Inc. v. Dal Pra, 767 N.W.2d 898, 905 (Wis. 2009). Evidence showing one restraint as unreasonable will make the whole covenant void and unenforceable, since the covenant is viewed in totality of its circumstances

Haley not to compete is necessary for their protection because of her personal relationship with their customers. A restrictive covenant can be seen as being necessary for the protection of the employer when “special facts” fall under the customer contract theory, and the relationship the employee has with the customers could produce competition that is not “of the type that a stranger could give.” Lakeside Oil Co. v. Slutsky, 98 N.W.2d 415, 419 (Wis. 1959). The customer contract theory states that if customers are the most important asset to the business, then protection of these customers is a legitimate interest. In Slutsky, the defendant worked as a salesman in a very competitive gasoline business and served as the main contact with customers. Id. The defendant obtained these customers through his personality and salesmanship, with sales made based on customers’ confidence in him and the customers’ identification of the plaintiff’s business through the defendant Id. The court held that this relationship made him a salesman with authority and standing, and that customers were a genuine interest of the employer that enabled the covenant to be enforceable. Id. Like the situation in Slutsky, Ms. Haley had a personal relationship with customers as the main sales person that could result in stealing customers, due to their association of her with Alex’s Wine & Spirits Co. Her work experience within the company for almost six

Haley is focused on selling wines of higher quality and not selling a different product, Alex’s Wine & Spirits Co. does not has a protectable interest solely because they also sell wine. If there is no product differentiation between what an employer sells and what an employee who has had contact with customers plans to sell, then the customers will continue to purchase from the employee due to prior personal contact and an employer has an interest in protecting its business. Chuck Wagon Catering, Inc. v. Raduege, 277 N.W.2d 787, 793 (Wis. 1979). In Raduege, the defendant serviced a twenty-six-stop lunch route, adding four or five stops, which he had previously serviced as an agent of the plaintiff for two and a half years. Id. at 792. In this role, the defendant made daily contacts with the customers and evidence showed that these customers remained loyal to him after he worked the lunch route on his own, since his products were not unique. Id. The court held that the restrictive covenant was reasonable so that harm would not occur to the plaintiff’s business. Id. at 792-93. Unlike the products in Raduege, Ms. Haley has product differentiation, as she intends to distribute a higher quality product that is not distributed by Alex’s Wine & Spirits Co. While she may sell to some of the same customers, she is focused on attracting different customers that are interested in high-end wines. Consequently, because there is product differentiation, a Wisconsin court would