## Facts

- Cook Sign Company (Cook), a North Dakota sign-manufacturing business, purchased the assets of Art-N-Sign, a sign business located in Minnesota.
- During the acquisition, Cook offered employment to Daniel Combs, a long-time Art-N-Sign employee who worked in sales.
- Combs met with Cook’s CEO to discuss employment; Combs was told he would be required to sign a noncompetition agreement as a condition of employment, but the parties did not discuss the noncompete’s specific terms before Combs accepted the job.
- Combs signed an employment offer/contract that referenced a one-year noncompetition agreement but did not include the covenant’s full terms.
- The employment offer tied compensation to the covenant: Cook offered Combs a $2,500 signing bonus and an income guarantee (with an additional payment if his annual income did not exceed a stated amount) in exchange for signing a one-year noncompete.
- The employment contract included a North Dakota choice-of-law provision for disputes.
- About a month later, Combs signed a separate written noncompetition agreement containing a Minnesota choice-of-law provision.
- Several months after starting with Cook, Combs resigned and accepted employment with Indigo SignWorks, another North Dakota sign company.
- Cook sued in Minnesota state court and obtained a temporary restraining order and then a temporary injunction preventing Combs from working for the competitor and otherwise violating the noncompete during the restricted period.
- Combs appealed the temporary injunction; by the time of appeal, the one-year noncompete period had expired.

## Issues

1. Whether the appeal was moot because the one-year noncompete term expired while the appeal was pending, and if so, whether the court should still decide the case.
2. Whether Minnesota law or North Dakota law governed enforceability of the noncompete given conflicting choice-of-law clauses in the employment agreement and the noncompete.
3. Whether the noncompete was supported by adequate consideration under the governing law.
4. Whether the district court abused its discretion by granting a temporary injunction enforcing the noncompete.

## Decision

- The court reached the merits even though the appeal was arguably moot, concluding review was appropriate in the interests of justice.
- The court applied Minnesota law, giving effect to the noncompete agreement’s Minnesota choice-of-law clause.
- The court held the noncompete was supported by consideration, because Cook provided a signing bonus and income guarantee expressly in return for Combs’s agreement to sign the one-year noncompete and the covenant was part of the initial employment arrangement.
- The court held the district court did not abuse its discretion in granting the temporary injunction under Minnesota’s temporary-injunction standards and affirmed the injunction order.

## Legal Principles

- An appellate court may decide an otherwise moot appeal when doing so serves the interests of justice.
- Minnesota courts generally enforce contractual choice-of-law provisions when the chosen state has a substantial relationship to the parties or transaction and applying the chosen law does not contravene a fundamental policy of a state with a materially greater interest.
- Under Minnesota law, a noncompete is enforceable if it is part of the initial employment bargain or supported by independent consideration; a signing bonus and income guarantee expressly exchanged for the covenant can satisfy the consideration requirement.
- A temporary injunction is reviewed for abuse of discretion; Minnesota courts evaluate the request using factors that include the parties’ relationship, relative harms, likelihood of success on the merits, public policy considerations, and administrative burdens (often described as the Dahlberg factors).

## Conclusion

The Minnesota Court of Appeals affirmed a temporary injunction enforcing Combs’s one-year noncompete, holding that the court could decide the appeal despite the covenant’s expiration, Minnesota law governed under the noncompete’s choice-of-law provision, the covenant was supported by consideration through the signing bonus and income guarantee tied to signing, and the district court acted within its discretion in granting injunctive relief.


Cook Sign Company v. Combs, 2008 WL 3898267 (2008)