## Facts

- Eldredge White worked for Fletcher/Mayo/Associates, Inc. (FMA) beginning in 1973 and became a senior vice president.
- FMA encouraged employee stock ownership; at the time of the merger White owned 7,114 shares (about 4.62%), and many other employees also held shares.
- FMA merged into a Delaware subsidiary formed by Doyle Dane Bernbach International, Inc. (DDB) in March 1982; shareholders who approved received DDB stock in exchange for their FMA shares.
- White did not control the decision to pursue the merger and did not participate in merger negotiations.
- As a condition of the acquisition and continued employment, DDB required employment contracts with restrictive covenants from a small group of key employees, including White.
- The contract included covenants not to compete and not to solicit customers; the trial court found the covenants overbroad.
- White was terminated shortly after the merger and sought a declaration that the covenants were unenforceable.

## Issues

1. Whether restrictive covenants signed by a minority, non-controlling shareholder-employee in connection with a corporate acquisition should be treated as covenants ancillary to the sale of a business or as employment covenants.
2. Whether an overbroad covenant classified as an employment covenant may be judicially modified and enforced in edited form.

## Decision

- The Supreme Court of Georgia reversed the trial court.
- The covenants were classified as ancillary to White’s employment, not to the sale of a business or its goodwill by White.
- Because the trial court found the covenants overbroad and they were employment covenants, they were void and could not be judicially modified or partially enforced.

## Legal Principles

- Georgia courts scrutinize restrictive covenants ancillary to employment more strictly than covenants ancillary to the sale of a business.
- Overbroad employment restrictive covenants are unenforceable as written and may not be judicially rewritten or blue-penciled.
- A minority, non-controlling equity interest and a shareholder vote approving a merger do not, without meaningful control or bargaining over the transaction, convert an employee’s post-transaction restraints into sale-of-business covenants.

## Conclusion

The court held that post-merger restrictive covenants required from a minority shareholder-employee as a condition of continued employment are treated as employment covenants; once found overbroad, they are void in full and cannot be saved through judicial editing.


White v. Fletcher/Mayo/Assocs., Inc., 251 Ga. 203, 303 S.E.2d 746 (Ga. 1983)