## Facts

- Thomas Runfola operated a court-reporting business as a sole proprietorship beginning in 1971; it incorporated in 1977, with assets and contract rights assigned to the corporation.
- Barbara Rogers worked for the business beginning in 1972 and signed a written employment contract on June 1, 1975.
- Nicholas Marrone began working for the business in 1977 at age 19 and signed a similar employment contract; he testified Runfola said he would not be held to the contract if he became unhappy.
- The contracts were one-year terms with automatic renewal and contained nearly identical covenants not to compete.
- The covenants prohibited the employees from engaging in court reporting or public stenography in Franklin County for two years after termination.
- The covenants also barred the employees from ever diverting or soliciting the employer’s clients and from ever using the employer’s client lists or related materials.
- In April 1988, Rogers and Marrone resigned and opened a competing court-reporting firm in Franklin County.
- The employees sought a declaration that the restrictive covenants were invalid or unenforceable; the employer sought enforcement and asserted damages difficult to quantify.

## Issues

1. Whether an employee’s post-hire covenant not to compete was supported by sufficient consideration when the employee had previously been employed at will.
2. Whether the covenants not to compete remained enforceable after the employer incorporated and assigned contract rights to the corporation.
3. Whether the covenants’ geographic, temporal, and substantive restraints were reasonable, and if overbroad, whether a court could modify and enforce them.

## Decision

- The Supreme Court of Ohio affirmed in part and reversed in part.
- The court held that Rogers’s covenant not to compete was supported by sufficient consideration.
- The court held the employment contracts and restrictive covenants were assignable to, and enforceable by, the successor corporation.
- The court found the covenants overbroad as written, particularly the perpetual (“ever”) restrictions, but held they should be modified rather than voided.
- The court enforced the covenants as modified, limiting enforcement to a one-year period with narrowed restrictions.

## Legal Principles

- Courts generally do not evaluate the adequacy of consideration once consideration exists; mutually binding promises can supply consideration for a covenant not to compete signed after employment begins.
- A covenant not to compete is not invalidated solely because an employer changes business form; the covenant may be assigned to a successor entity when contract rights are transferred.
- Under Ohio law governing restrictive employment covenants, an unreasonable covenant may be judicially modified to render it reasonable and then enforced as modified, considering duration, geographic scope, the employer’s protectable interests, hardship to the employee, and public effects.

## Conclusion

Ohio’s high court upheld the validity and assignability of employee noncompete agreements but treated sweeping, perpetual restraints as overbroad, ordering enforcement only after judicial modification that narrowed the restrictions and limited the restraint to one year.


Rogers v. Runfola & Assocs., Inc., 57 Ohio St. 3d 5, 565 N.E.2d 540 (Ohio 1991)