N.D. Cent. Code § 9-08-06

Section 9-08-06 generally makes contracts restraining someone from exercising a lawful profession, trade, or business void to that extent, subject to specified exceptions.

Jacam Chemical Company 2013, LLC v. Shepard · filed 2020-04-13

N.D. Cent. Code § 9-08-06 provides, “A contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void, except: 1. A person that sells the goodwill of a business . . . 2. Partners, members, or shareholders, upon or in anticipation of a dissolution of a partnership, limited liability company, or corporation . . . .” ... Because numbered paragraph 4 of the stipulation prevents Shepard from working for Geo, it is in direct conflict with North Dakota law. Accordingly, numbered paragraph 4 must be voided.

Section 9-08-06 makes employee noncompete covenants that restrain lawful work void.

Jacam Chemical Company 2013, LLC v. Shepard · filed 2023-01-03

The Court concludes the employee agreements signed by Kainz, Rebel, and McWhorter are void as against North Dakota public policy because they contain covenants not to compete which clearly violate N.D.C.C. § 9-08-06.

Section 9-08-06 prohibits restraints on the exercise of a lawful profession, trade, or business by employers as well as employees.

Spectrum Emergency Care, Inc. v. St. Joseph's Hospital & Health Center · filed 1992-01-14

Thus, we conclude that section 9-08-06, N.D.C.C., contemplates prohibiting restraints on a person’s exercise of a lawful profession, trade, or business as an employer as well as an employee.

Section 9-08-06 voids a contract term that makes an insurance agent forfeit termination compensation for competing with a former insurer.

Werlinger v. Mutual Service Casualty Insurance Co. · filed 1993-02-23

In light of the common-law history of noncompetition clauses in restraint of trade, Section 9-08-06, N.D.C.C., Olson v. Swendiman, supra; Spectrum Emergency Care, Inc. v. St. Joseph’s Hospital & Health Center, supra; and California decisions, such as Buskuhl v. Family Life Ins. Co., supra, construing the same Field Code provision as § 9-08-06, N.D.C.C., we conclude that Paragraph 12(D) of the parties’ contract constitutes an unlawful restraint of trade and is void under § 9-08-06, N.D.C.C. The contract restrains Werlinger from competing with MSI by requiring that he “purchase the freedom” (Olson v. Swendiman, supra, 244 N.W. at 870) to compete with MSI by forfeiting money that MSI would otherwise pay to him.

Section 9-08-06 voids a non-compete clause to the extent it restrains a person from exercising a lawful profession, trade, or business in North Dakota.

Osborne v. Brown & Saenger, Inc. · filed 2017-12-07

The non-compete clause is unenforceable under N.D.C.C. § 9-08-06 to the extent it limits Osborne from exercising a lawful profession, trade, or business in North Dakota.

Section 9-08-06 generally prohibits contractual restrictions on an employee’s ability to practice a profession, trade, or business.

CDI Energy Services, Inc. v. West River Pumps, Inc. · filed 2009-05-29

North Dakota generally prohibits contractual restrictions on an employee’s ability to practice his “profession, trade, or business.” N.D. Cent.Code § 9-08-06; see also Warner and Co. v. Solberg, 634 N.W.2d 65, 70 (N.D.2001).

Section 9-08-06 permits an overbroad noncompetition agreement tied to a business sale to be enforced in the county where the purchased business was located and conducted.

Hawkins Chemical, Inc. v. McNea · filed 1982-07-09(1)

Because the property and business purchased from Saunders and McNea were located and conducted in Ward County, we hold the non-competition agreement to be enforceable in that county.

Section 9-08-06(1) limits a covenant tied to the sale of goodwill to one county; competition occurs where the work is physically performed, not merely where bids are submitted.

Earthworks, Inc. v. Sehn · filed 1996-09-03(1)

If we were to construe the covenant as restricting competition through the bidding process alone and regardless of where the physical work was to be done, the covenant would accomplish what NDCC 9-08-06 prohibits— noncompetition covenants applicable to more than one county. We conclude that the trial court correctly ruled, as a matter of law, that no competition would occur under the terms of the covenant unless Landstar was awarded a contract “for any work on the Federal Aid Highway System” to be physically performed in Burleigh County.

The sale-of-goodwill exception permits a noncompete within one specified county, city, or part of either; a covenant covering more than one county may be enforced within the permitted area.

Herman v. Newman Signs, Inc. · filed 1987-12-29(1)

Section 9-08-06 permits such agreements within “a specified county.” Construing Section 9-08-06, N.D.C.C., using the plural, i.e., “specified counties,” nullifies the intent of Section 9-08-06, N.D. C.C., to confine covenants not to compete to a limited area.

When a business is sold, § 9-08-06(1) permits a noncompetition agreement to be enforced within the city where the business was located, even if the agreement states a broader geographic limit.

Lire, Inc. v. Bob's Pizza Inn Restaurants, Inc. · filed 1995-12-27(1)

Under the rationale of those cases, the geographic limitation in this non-competition agreement is valid for Rugby.

A divorce court restraining a spouse to protect an awarded business’s goodwill must apply § 9-08-06(1)’s geographic limits.

Kelly v. Kelly · filed 2011-08-22(1)

Although the provisions for contractual restraints on a business in N.D.C.C. § 9-08-06(1) are not directly applicable to property distributions in a divorce decree, we conclude public policy and legal consistency warrant the district court exercising its authority to distribute marital property in conformity with limitations imposed on contracting parties in N.D.C.C. § 9-08-06. ... The court’s order, however, does not include the geographic limitations of N.D.C.C. § 9-08-06(1), and we remand for application of the limitations of that statute to the restraining order.

Section 9-08-06(1)'s geographic limits apply to a divorce decree's restraint protecting the goodwill of a business awarded to one spouse.

Carlson v. Carlson · filed 2011-08-22(1)

The court’s order, however, does not include the geographic limitations of N.D.C.C. § 9-08-06(1), and we remand for application of the limitations of that statute to the restraining order.

Section 9-08-06 does not invalidate a narrowly tailored one-year nonsolicitation clause that bars a former insurance agent from soliciting only the former employer's policyholders credited to the agent's account.

Kovarik v. American Family Insurance Group · filed 1997-03-19

For the reasons discussed above, we believe that the North Dakota Supreme Court would uphold the nonsolicitation clause contained in Kovarik’s American Family Agent Agreement. This clause does not prohibit Kovarik from accepting employment as an insurance agent with another insurance company in direct competition with American Family. Nor does the clause broadly prevent Kovarik from soliciting American Family policyholders for his new company. The clause merely obligates Kovarik to refrain for one year from soliciting those current American Family policyholders who are credited to his account at the time he leaves American Family. We thus conclude that under North Dakota law the nonsolicitation clause is not unenforceable as a restraint of trade. Finally, for the reasons given earlier in this opinion, this clause and the forfeiture clause in combination are not invalid on restraint-of-trade grounds.

Section 9-08-06 voids postemployment restrictions on soliciting an insurance agency’s customers and writing replacement policies, but permits a narrow restriction on soliciting former coworkers.

Warner Co. v. Solberg · filed 2001-09-05

Section 9-08-06, N.D.C.C., prohibits a contract by which anyone is restrained from exercising a lawful profession, trade or business with certain specific exceptions we discuss later in this opinion. ... The statute contains no exception for the contractual provisions in § 6(a) and (b) of the contract. ... This prohibition is narrowly drawn to penalize only Solberg’s actions of soliciting or influencing an employee to leave Warner and come to work for Vaaler and is not void as a restraint of trade.

No-solicitation and confidentiality agreements do not appear on their face to violate § 9-08-06’s restriction on contracts in restraint of trade.

Schlumberger Technology Corp. v. Coil Tubing Solutions, LLC · filed 2015-04-16

They address Beesley’s no-solicitation agreement and the employees’ confidentiality agreement. Such agreements do not appear on their face to conflict with that statute and CTS has not provided any authority that they violate that or any other North Dakota statute.

Section 9-08-06 does not void a narrow agreement that penalizes a seller for soliciting the buyer’s employees without restricting where those employees may work.

FA ND Chev, LLC v. Kupper · filed 2024-08-05

Like the prohibition in Warner, Section 2(b)(iii) is narrow and only penalizes Kupper for his attempts to solicit FA Plaintiffs’ employees. It does not prohibit any of FA Plaintiffs employees from working for Kupper. Rather, it only indicates Kupper will be in breach of contract if he induces or solicits FA Plaintiffs’ employees to work for him. This is essentially the same agreement in Warner. Accordingly, Section 2(b)(iii) of the Agreement is not void as a restraint of trade.