• December 24, 2008

Bannister v. Bemis Company, Inc., 8th Circuit Court of Appeals (Case No. 08-1634)

Argued before the U.S. Court of Appeals on 11/14/08 on appeal by appellant Bemis on rulings of cross-motions for summary judgment by the District Court (Kyle, J., D. Minn.), Bemis appears to be facing a strong headwind in its attempt to reverse Judge Kyle’s ruling against it. The case involved a non-compete agreement between Bannister and his former employer, Bemis. Their agreement provided a non-compete, enforceable in the discretion of Bemis, which, per the agreement, would have to make payments to Bannister (wage continuation) in order to enforce the agreement. Bemis declined to pay the promised consideration to enforce the non-compete but, nevertheless, told Bannister that he was precluded from working for a competitor, Mondi Packaging USA, due to a wholly separate 10/8/04 Settlement agreement between Bemis and Mondi Packaging USA. The first question from the appellate panel, “Are you saying the non-compete was trumped by the settlement agreement?” Additional questions from the bench expressed strong skepticism that Bemis denied payment of any wage continuation but also affirmatively stated to Bannister that he could not work for Mondi, having left Bemis.

Business implications (with the caveat that the appeal is pending and though Bemis’ prospects look dim, “it’s not over til it’s over”): courts will be reluctant to allow businesses to enter into contracts with employees and then seek to limit the rights given to employees in those agreements claiming authority to do so under wholly separate agreements to which the employees were not a party.

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