## Facts

- Syncom Industries, Inc. provided cleaning and maintenance services to movie theaters.
- Eldon Wood (vice president of sales) and William Hogan (area manager, later regional manager) signed three-year employment contracts containing restrictive covenants and confidentiality provisions.
- The covenants barred, for three years after termination, solicitation of “any of the Company’s customers” in territories serviced during employment and barred association with entities that may solicit such customers.
- The contracts included an attorneys’ fees clause for successful enforcement actions by Syncom.
- While still employed or shortly after leaving, Wood and Hogan planned and formed a competing business and obtained business from certain theater clients associated with Syncom.
- Syncom alleged Wood and Hogan diverted business using customer relationships developed through their employment and breached contractual duties and fiduciary/loyalty obligations.
- A separate dispute arose over Wood’s claimed commission arrangement; essential terms regarding commission credit when multiple employees participated in a sale were not agreed upon.

## Issues

1. Whether the post-employment restrictive covenants were reasonable and enforceable under New Hampshire law.
2. Whether covenants restricting solicitation of an employer’s entire customer base were broader than necessary to protect the employer’s legitimate interest in customer goodwill.
3. Whether Syncom’s threat to suspend Wood for one week without pay constituted a material anticipatory breach excusing Wood’s performance.
4. Whether Wood had an enforceable commission agreement despite lack of agreement on an essential term.
5. Whether the trial court’s injunctive relief, damages (including enhanced damages), and attorneys’ fees award could stand given any required narrowing of the covenants.

## Decision

- The Supreme Court affirmed in part, reversed in part, vacated in part, and remanded.
- It held the restrictive covenants were overbroad to the extent they restricted solicitation of customers with whom the employees had no direct contact or special knowledge obtained through employment.
- It ruled the covenants could be enforced only to a narrowed scope consistent with protecting Syncom’s customer goodwill and remanded for trial-court reformation and related reconsideration.
- It held Wood had no enforceable commission agreement because the parties did not agree on an essential term regarding commission allocation in shared sales.
- It held Syncom’s threatened one-week unpaid suspension was not a material anticipatory breach of the three-year employment contract.
- It vacated the attorneys’ fee award and required reconsideration of injunctive relief and damages in light of the narrowed enforceable covenants.

## Legal Principles

- Restrictive covenants in employment contracts are disfavored, narrowly construed, and enforceable only if reasonable as a matter of law.
- Reasonableness is assessed at the time of contracting under a three-part test: (1) no greater than necessary to protect legitimate employer interests, (2) no undue hardship on the employee, and (3) no injury to the public; an affirmative answer to any renders the restraint unreasonable.
- Protectable legitimate interests include trade secrets, confidential business information, customer influence and contacts obtained during employment, and employer goodwill.
- When the interest asserted is customer goodwill, a restriction barring solicitation of the employer’s entire customer base generally sweeps too broadly; enforceability is limited to customers tied to the employee’s employment-derived relationships or information.
- An anticipatory breach requires a material repudiation; a threatened short unpaid suspension did not constitute a material anticipatory breach of a multi-year employment contract.
- Contract enforceability requires agreement on essential terms; absent such agreement, a claimed commission arrangement is unenforceable.
- Where remedies and fee awards rest on an overbroad covenant, injunctive relief, damages, and attorneys’ fees may require vacatur and remand for recalculation after narrowing the covenant.

## Conclusion

The court limited enforcement of Syncom’s restrictive covenants to a narrower set of customers connected to the employees’ employment-derived relationships or information, rejected Wood’s anticipatory breach and commission claims, and remanded for reformation of the covenants and reconsideration of injunction, damages, and attorneys’ fees.


Syncom Indus., Inc. v. Wood, 155 N.H. 73, 920 A.2d 1178 (N.H. 2007)