Last month, in Assurance Data, Inc. v. Malyevac, (Va. Sept. 12, 2013), the Supreme Court of Virginia published an opinion holding that a trial court cannot decide on demurrer whether restrictive covenants in employment agreements are overbroad and thus unenforceable if an employer argues in opposition to the demurrer that it intends to produce factual evidence to demonstrate reasonableness.

In the case, Assurance Data, Inc. (“ADI”), a computer products and services company, sued its ex-salesman John Malyevac (“Malyevac”) to enforce the non-compete, non-solicit, NDA, and return of confidential information provisions in his employment agreement with ADI.  Malyevac filed a demurrer asserting that the non-compete and non-solicitation provisions were facially overbroad, therefore unenforceable, and thus subject to dismissal at the demurrer stage.  The Trial Court agreed sustaining Malyevac’s demurrer and dismissing the non-solicit and non-compete claims against him with prejudice on facial overbreadth/invalidity grounds.  The Virginia Supreme Court reversed the Trial Court, and in doing so held that an employer seeking restrictive covenant enforcement is entitled to present evidence as to reasonableness notwithstanding the ostensible overbreadth of such covenants.  Accordingly, a departing employee may no longer demur to such cause of action on the grounds that the restrictive covenants sued upon are facially overbroad.   

This opinion represents a significant shift from previous Virginia Supreme Court precedent standing for the proposition that trial courts may sustain demurrers to claims for breaches of restrictive employment covenants without allowing the Plaintiff the opportunity to introduce additional evidence.  See Modern Environments, Inc. v. Stinnet, 263 Va. 491, 561 S.E.2d 694 (2002); Home Paramount Pest Control Cos. V. Shaffer, 282 VA. 412 (2011).

The opinion also represents a significant victory for employers as regardless of the facial scope of their restrictive covenants departing employees are now faced with the prospect of prolonged, expensive litigation and discovery should their ex-employer sue.  Moreover, employers no longer face the risk of a trial court determining at the demurrer stage that their template restrictive covenants, also in place with respect to current employees/nonparties, are facially unenforceable as a matter of law across the board.