## Facts

- Product Action International, Inc. (PAI), an Indiana company, provided automotive quality-control and inspection services.
- Carl Mero, a Michigan resident, worked for PAI as a salesman and signed a noncompetition agreement as a condition of employment.
- The covenant barred Mero for 24 months after termination from engaging “in any way” with a “competitive business.”
- “Competitive business” was defined broadly to include any business that (1) did business or sought to do business with a PAI customer, (2) did business or sought to do business within a 100-mile radius of any PAI facility, or (3) did business in the preceding 12 months in any state or country in which PAI did business or planned to do business.
- The agreement included a savings clause stating that any overbroad restriction would be enforced “to the maximum extent permitted by law.”
- After leaving PAI, Mero became a salesman for Quality Industrial Services (QIS), a similar business located about 20 miles from his former PAI office.
- While at QIS, Mero contacted some businesses that did business with PAI and obtained business from customers he had served at PAI.
- PAI sued in federal court under diversity jurisdiction, sought to enforce the covenant, and requested a preliminary injunction.
- The parties asked the court to decide enforceability first; they filed cross-motions for partial summary judgment on enforceability under Indiana law.

## Issues

1. Whether the noncompetition covenant, as drafted, was enforceable under Indiana law given its breadth as to customers and geographic scope.
2. Whether Indiana’s blue-pencil doctrine permitted the court to enforce the covenant “to the maximum extent permitted by law” by supplying reasonable customer or geographic limitations not stated in the agreement.

## Decision

- The court granted Mero’s motion for partial summary judgment and denied PAI’s motion.
- The court held the covenant was an unreasonable restraint of trade because it lacked reasonable limits on geography and customers.
- The court held Indiana’s blue-pencil doctrine does not allow courts to add terms or rewrite a covenant to make it reasonable.
- The savings clause could not authorize judicial modification beyond what Indiana law permits.
- Because the covenant could not be narrowed by mere deletion to yield a reasonable restriction, it was unenforceable and could not support injunctive relief.

## Legal Principles

- Under Indiana law, employee noncompetition agreements are strictly construed in favor of the employee and are enforceable only if reasonable in scope, duration, and geographic reach and tied to a legitimate protectable employer interest.
- A covenant that effectively restrains competition across an excessively broad set of customers or territory is facially unreasonable and unenforceable.
- Indiana’s blue-pencil doctrine is limited: a court may strike divisible, unreasonable provisions but may not add missing limitations or otherwise rewrite the agreement.
- A contractual clause directing enforcement “to the maximum extent permitted by law” cannot expand judicial authority to reform an otherwise overbroad noncompete.

## Conclusion

The court held PAI’s noncompetition covenant unenforceable because its customer and geographic restrictions were facially overbroad, and Indiana law did not permit the court to salvage the covenant by rewriting it under a savings clause; only deletion of divisible language is allowed, and that remedy could not produce a reasonable restraint here.


Product Action Int’l, Inc. v. Mero, 277 F. Supp. 2d 919 (S.D. Ind. 2003)