## Facts

- Mark Weikel worked for The May Department Stores Company (May) as its chairman.
- Weikel and May entered an employment agreement containing a noncompetition clause that applied for two years after Weikel’s employment ended.
- The agreement defined “competing business” as either: (1) “a retailer of the same type of goods sold by May” with at least $25 million in sales revenue, or (2) “any business in material competition with May.”
- Victoria’s Secret Stores, Inc. (VSS), a nationwide specialty retailer focused on women’s intimate apparel, offered Weikel a job as chief operating officer.
- Weikel asked May to confirm whether taking the VSS job would violate the noncompete; May would not say whether VSS was a “competing business.”
- VSS filed a declaratory judgment action seeking a ruling that employing Weikel would not violate his agreement with May.
- After trial, the circuit court found that VSS and May were not “competing businesses” under the agreement, emphasizing that VSS sold intimate apparel while 97% of May’s sales were in other categories.
- The circuit court also found that information Weikel received at May (such as weekly or monthly sales reports) would not give VSS an unfair advantage, that the companies used different marketing strategies, and that May’s market-share report listing competitors did not identify VSS.
- May appealed the declaratory judgment.

## Issues

1. Under the employment agreement’s definition, was Victoria’s Secret a “competing business” because it sold the same type of goods as May or was in “material competition” with May?
2. If VSS was not a “competing business” under that definition, would Weikel’s acceptance of the COO position violate the noncompetition clause?

## Decision

- The Missouri Court of Appeals affirmed the declaratory judgment.
- The court upheld the trial court’s determination that VSS did not fall within the agreement’s definition of “competing business.”
- The court agreed that, given VSS’s focus on intimate apparel and May’s predominantly non–intimate apparel sales, VSS was not a retailer of the “same type of goods” as May for purposes of the contract.
- The court also agreed that the evidence supported the trial court’s finding that VSS was not in “material competition” with May, including May’s own internal market-share materials that did not list VSS as a competitor and the companies’ different marketing approaches.
- Because VSS was not a “competing business” under either prong of the definition, employing Weikel at VSS would not breach the noncompete.

## Legal Principles

- A noncompetition clause is interpreted according to its written definitions; courts apply the restriction the parties drafted rather than expanding it beyond its terms.
- When a contract defines “competing business” with multiple prongs (same-type-of-goods and material-competition), the employer must show the prospective employer fits at least one prong.
- “Material competition” calls for a substantial competitive relationship, not merely some overlap in product offerings.
- In a court-tried declaratory judgment action, an appellate court defers to supported factual findings about the parties’ businesses and competitive conditions and will not disturb the judgment absent legal error or lack of evidentiary support.

## Conclusion

The Missouri Court of Appeals affirmed a declaratory judgment that Victoria’s Secret was not a “competing business” under May’s employment agreement with its chairman, Mark Weikel, because the businesses were not materially competitive and did not sell the same type of goods in the sense required by the contract; therefore, Weikel could accept Victoria’s Secret’s COO position without violating the two-year noncompete.


Victoria's Secret Stores, Inc. v. May Department Stores Co., 157 S.W.3d 256 (2004)