<i>Palmer v. Marsh</i>: New Considerations for Non-Compete Agreements

The recent 11th Circuit ruling in Palmer & Cay, Inc., et. al. v. Marsh & McLennan Companies, Inc., No. 03-16248 (11th Cir. April 1, 2005) means corporate counsel should reconsider their approach to drafting and enforcing non-compete agreements. Reviewing a Georgia trial court's ruling in a declaratory judgment action that a non-compete agreement was unenforceable only in Georgia under Georgia public policy, the 11th Circuit ruled that the unenforceability ruling should be extended to any other lawsuit between the parties in any other state. The ruling means corporate counsel must carefully consider dispute resolution clauses and other aspects of employment agreements to ensure their company is not forced into a situation where a federal court sitting in a state hostile to non-competes issues an adverse decision that is then enforced nationally. In addition, the ruling has the effect of imposing additional due diligence burdens in the context of mergers and acquisitions.