Charlene Hassler v. Circle C Resources

IN THE SUPREME COURT, STATE OF WYOMING

2022 WY 28

OCTOBER TERM, A.D. 2021

February 25, 2022

CHARLENE HASSLER,

Appellant

(Defendant),

v. S-21-0132

CIRCLE C RESOURCES,

Appellee

(Plaintiff).

Appeal from the District Court of Natrona County

The Honorable Kerri M. Johnson, Judge

Representing Appellant:

Jeremy J. Hugus, Platte River Injury Law, Casper, Wyoming.

Representing Appellee:

Timothy M. Stubson and Holly Tysse, Crowley Fleck PLLP, Casper, Wyoming.

Argument by Ms. Tysse.

Before FOX, C.J., and DAVIS*, KAUTZ, BOOMGAARDEN, and GRAY, JJ.

*Justice Davis retired from judicial office effective January 16, 2022, and, pursuant to Article 5, § 5 of

the Wyoming Constitution and Wyo. Stat. Ann. § 5-1-106(f) (LexisNexis 2021), he was reassigned to act

on this matter on January 18, 2022.

NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.

Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne,

Wyoming 82002, of typographical or other formal errors so correction may be made before final

publication in the permanent volume.

KAUTZ, Justice.

[¶1] Circle C Resources sued its former employee, Charlene Hassler, for breach of a

noncompete agreement. Ms. Hassler claimed the agreement was unenforceable and void

as against public policy. The district court used the blue pencil rule to modify some of the

restrictions in the noncompete agreement to make them reasonable (in the district court’s

opinion), ruled Ms. Hassler had breached the court-modified agreement, and granted

summary judgment to Circle C. We conclude it is no longer tenable for courts to use the

blue pencil rule to modify unreasonable noncompete agreements. Because Circle C’s

noncompete agreement with Ms. Hassler is unreasonable on its face, it is void in violation

of public policy. We reverse and remand to the district court for entry of summary

judgment in favor of Ms. Hassler.

ISSUE

[¶2] Ms. Hassler’s initial arguments on appeal were primarily that Circle C did not prove

her breach of the noncompete agreement was the proximate cause of its damages and the

terms of the noncompete agreement were unreasonable, making it void in violation of

public policy. We requested supplemental briefing from the parties on the appropriateness

of using the blue pencil rule to revise noncompete agreements. In light of the arguments

raised in that briefing, we conclude the dispositive issue in this case is whether the district

court erred by using the blue pencil rule to modify the unreasonable terms in Circle C’s

noncompete agreement with Ms. Hassler.

FACTS

[¶3] Circle C provides day and residential habilitation services to disabled clients in

Natrona and Converse counties. It is also authorized by the Wyoming Department of

Health to provide services in Fremont, Weston, Laramie, Johnson, and Campbell counties.

Circle C has a day habilitation facility in Casper where clients interact with each other and

participate in activities. Circle C also engages employees to provide residential habilitation

services to clients in the employees’ homes.

[¶4] Circle C hired Ms. Hassler, a CNA, on March 17, 2015, to provide residential

habilitation care in her home in Converse County for one of its long-term adult clients

(hereinafter referred to as Client). At the time of her hire, Ms. Hassler signed Circle C’s

“Confidentiality and Noncompetition Agreement.” The noncompete aspect of the

agreement was set out in Section 2. Paragraph A of that section stated:

A. Employee Conduct with Respect to Competitors.

During the term of employee’s employment by employer and

for 24 months after the end of such employment, employee

agrees that employee will not, without the prior written consent

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of employer, directly or indirectly, whether as an employee,

officer, director, independent contractor or service provider,

consultant, stockholder, partner, or otherwise, engage in or

assist others to engage in or have any interest in any business

which competes with employer, or provide services themselves

similar to the services provided by employer, or provide such

services to any of employer’s clients or customers (served by

employer at any time during employee’s term of employment

with employer), in any geographic area in which employer

markets or has marketed its services during the year preceding

separation from employment. Such geographic area shall

include, but not be limited to, the counties of Natrona,

Converse, Fremont, Weston, Laramie, Johnson and Campbell

in Wyoming, which employer and employee agree is the

geographic area that employer presently services. Employee

agrees that 24 months is a reasonable term for this agreement

given the unique character of employer’s business.

Paragraph B prohibited Ms. Hassler from soliciting Circle C’s clients for 24 months

after their employment relationship ended. Paragraph C stated:

C. Maximum Restrictions of Time, Scope, and Geographic

Area Intended. The parties agree and acknowledge that the

time, scope and geographic area and other provisions of this

agreement have been specifically negotiated by the parties, and

employee specifically agrees that such time, scope, and

geographic areas, and other provisions are reasonable under

these circumstances. Employee further agrees that if, despite

the express agreement of the parties to this agreement, a court

should hold any portion of this agreement unenforceable for

any reason, the maximum restrictions of time, scope, and

geographic area reasonable under the circumstances, as

determined by the court, will be substituted for the restrictions

held unenforceable.

The noncompete agreement also listed remedies available to Circle C for an employee’s

breach of the agreement.

[¶5] Circle C trained Ms. Hassler for approximately one month before Client moved into

her home. Client was nonverbal and required full-time habilitation care. Ms. Hassler’s

duties included waking, feeding, toileting, bathing, and dressing Client in the morning,

transporting Client to and from Circle C’s day habilitation facility in Casper, feeding Client

dinner, engaging in activities with Client in the evening, and putting her to bed. Circle C

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was paid $121,142.10 per year through Medicaid waiver programs for Client’s residential

habilitation services. Circle C, in turn, paid Ms. Hassler approximately $26,400 per year,

resulting in an annual net profit to Circle C of $94,742.10.

[¶6] Client’s mother, who was also her legal guardian, became dissatisfied with Circle

C’s day habilitation services and decided to find another provider. On January 7, 2017,

Client’s case manager1 notified Circle C that Client was changing providers and Ms.

Hassler was leaving its employ. Client remained in Ms. Hassler’s home for residential

habilitation services and transferred to another provider for day rehabilitation. While Ms.

Hassler, with assistance from the case manager, worked to obtain her own Medicaid

number so she could be a provider, Client’s residential habilitation care was billed under

another Medicaid provider. Ms. Hassler was paid significantly more by the new provider

than she was by Circle C.

[¶7] On May 31, 2017, Circle C’s attorney sent a letter to Ms. Hassler informing her that

she was violating the noncompete agreement by soliciting and providing services to Client.

Circle C demanded Ms. Hassler “cease and desist” her activities “for at least 12 consecutive

months” or it would file suit to enjoin her from violating the agreement and to recover its

damages. Although Ms. Hassler received her Medicaid number in July 2017, she

responded to Circle C’s demand letter by stating she would not “do paid service[]s starting

8-7-17” until the matter was resolved. Ms. Hassler stopped providing paid services to

Client until August 2018, but Client continued to live in her home and she occasionally

helped with Client’s care. Ms. Hassler’s husband and daughter cared for Client most of

the time and were paid, through Medicaid, for their services.

[¶8] Circle C filed a complaint against Ms. Hassler in July 2019, seeking damages for

breach of the noncompete agreement. Ms. Hassler answered the complaint asserting,

among other things, the noncompete agreement was unenforceable and void as against

public policy. Both parties moved for summary judgment, and the district court ruled in

favor of Circle C. It decided the noncompete agreement was reasonable and enforceable

if the geographical area subject to restriction was narrowed to include only Natrona and

Converse counties and the duration of the restriction was changed from 24 to 12 months.

Applying the blue pencil rule, the district court narrowed the restrictions accordingly. The

district court concluded Circle C was damaged in the amount of its projected profit for the

modified 12-month term of the agreement and granted judgment in its favor for $94,742.10.

Ms. Hassler appealed.

DISCUSSION

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Although it is not entirely clear from the record, it appears the case manager worked with the Medicaid

program.

3

[¶9] Ms. Hassler challenges the district court’s summary judgment ruling that her

noncompete agreement with Circle C, with modifications to its duration and geographical

scope, was consistent with public policy and enforceable. She claims the district court

should have granted judgment in her favor because, as a matter of law, the terms of the

noncompete agreement were unreasonable, making it void as against public policy, and it

was improper for the district court to revise the agreement to make it reasonable. Although

Ms. Hassler moved for summary judgment in her favor, she did not originally assert

unreasonableness of the noncompete agreement’s duration and geographical restrictions as

a basis for her motion. She did raise those claims in support of summary judgment in her

response to our request for supplemental briefing about the blue pencil rule.

[¶10] We review a district court’s summary judgment order de novo. Gowdy v. Cook,

2020 WY 3, ¶ 21, 455 P.3d 1201, 1206-07 (Wyo. 2020) (citing Bear Peak Res., LLC v.

Peak Powder River Res., LLC, 2017 WY 124, ¶ 10, 403 P.3d 1033, 1040 (Wyo. 2017), and

Int’l Assoc. of Fire Fighters, Local Union No. 5058 v. Gillette/Wright/Campbell Cnty. Fire

Protection Jt. Powers Bd., 2018 WY 75, ¶ 19, 421 P.3d 1059, 1064 (Wyo. 2018)).

Interpretation of an unambiguous contract is a question of law subject to de novo review.

Miller v. Life Care Ctrs. of Am., Inc., 2020 WY 155, ¶ 18, 478 P.3d 164, 170 (Wyo. 2020)

(citing Kindred Healthcare Operating, Inc. v. Boyd, 2017 WY 122, ¶¶ 12-13, 403 P.3d

1014, 1019 (Wyo. 2017)). Additionally, “[t]he reasonableness, in a given fact situation, of

the limitations placed on a former employee by a covenant not to compete are

determinations made by the court as a matter of law.” Hopper v. All Pet Animal Clinic,

Inc., 861 P.2d 531, 542-43 (Wyo. 1993).

[¶ 11] Summary judgment is generally appropriate when “‘the movant shows that there is

no genuine dispute as to any material fact and the movant is entitled to judgment as a matter

of law.’” Gowdy, ¶ 21, 455 P.3d at 1206 (quoting Wyoming Rule of Civil Procedure

(W.R.C.P.) 56(a)). “‘In most appeals from summary judgment, we either affirm the district

court or reverse and remand for further proceedings. There are cases, however, in which

we reverse and remand with instructions to the district court to enter summary judgment,

or partial summary judgment, in favor of the unsuccessful party.’” Questar Expl. & Prod.

Co. v. Rocky Mountain Res., Inc., 2017 WY 10, ¶ 28, 388 P.3d 523, 530 (Wyo. 2017)

(quoting Leithead v. Am. Colloid Co., 721 P.2d 1059, 1063-64 (Wyo. 1986)). Given our

review of a summary judgment is de novo, W.R.C.P. 56(f)(1)-(2) allows us to grant

summary judgment to the nonmovant and “on grounds not raised by the parties” after

giving them “notice and a reasonable time to respond.” We gave the parties such notice

when we requested supplemental briefing on the issue of whether Wyoming courts should

continue to apply the blue pencil rule to cure unreasonable terms in noncompete

agreements.

[¶12] To determine the validity of the noncompete agreement between Circle C and Ms.

Hassler, we start with a general discussion of contract law and noncompete agreements.

Competent parties have the right to freely contract. Nuhome Invs., LLC v. Weller, 2003

4

WY 171, ¶ 8, 81 P.3d 940, 944 (Wyo. 2003). See also, Roussalis v. Wyo. Med. Ctr., Inc., 4

P.3d 209, 245 (Wyo. 2000) (recognizing the right of persons to freely enter into contracts).

The role of the courts is to interpret contracts consistent with the parties’ intent at the time

of execution. P&N Invs., LLC v. Frontier Mall Assocs., LP, 2017 WY 62, ¶ 10, 395 P.3d

1101, 1104 (Wyo. 2017) (The court’s “‘ultimate goal when interpreting a contract is to

discern the intention of the parties to the document.’” (quoting Comet Energy Servs., LLC

v. Powder River Oil & Gas Ventures, LLC, 2008 WY 69, ¶ 6, 185 P.3d 1259, 1261 (Wyo.

2008) (other citation and some quotation marks omitted)). Courts generally enforce

contracts as written, James v. Taco John’s Int’l, Inc., 2018 WY 96, ¶ 12, 425 P.3d 572,

577-78 (Wyo. 2018), and “‘are not at liberty to rescue parties from the consequences of a

poorly made bargain or a poorly drafted agreement by rewriting a contract under the guise

of construing it.’” Four B Props., LLC v. Nature Conservancy, 2020 WY 24, ¶ 56, 458

P.3d 832, 846 (Wyo. 2020) (quoting In re CDR, 2015 WY 79, ¶ 30, 351 P.3d 264, 270-71

(Wyo. 2015)).

[¶13] However, contracts contrary to public policy are not “‘recognized by the court, and

the parties to the contract are left as the court finds them.’” Retz v. Siebrandt, 2008 WY

44, ¶ 16, 181 P.3d 84, 90 (Wyo. 2008) (quoting Tate v. Mountain States Tel. & Tel. Co.,

647 P.2d 58, 61 (Wyo. 1982)). Instead of revising an agreement to make it consistent with

public policy, we typically declare it void. See, e.g., Century Surety Co. v. Jim Hipner,

LLC, 2016 WY 81, ¶ 20, 377 P.3d 784, 792 (Wyo. 2016) (insurance contract against public

policy was “illegal and void” (citation omitted)); Combs v. Sherry-Combs, 865 P.2d 50, 54

(Wyo. 1993) (postnuptial agreement providing for a divorce by termination of contract was

void as against public policy); Hede v. Gilstrap, 2005 WY 24, ¶ 24, 107 P.3d 158, 168

(Wyo. 2005) (agreement giving a biological grandparent visitation rights after the child

was adopted violated public policy and was void (citing Matter of Adoption of RDS, 787

P.2d 968, 970-71 (Wyo. 1990)).

[¶14] When considering the enforceability of agreements not to compete, the court must

balance competing principles – the public’s interest in free competition and trade, the

parties’ freedom to contract, and the employee’s freedom to work. See Hopper, 861 P.2d

at 539. “[S]ound public policy encourages employees to seek better jobs from other

employers or to go into business for themselves.” Ridley v. Krout, 63 Wyo. 252, 180 P.2d

124, 127 (1947) (citations and quotation marks omitted). Contracts which hinder them

from doing so are “‘strictly construed and rigidly scanned and are declared void unless

necessary for the reasonable protection of the employer.’” Malave v. W. Wyo. Beverages,

Inc., 2022 WY 14, ¶ 9, ___ P.3d ____ (Wyo. 2022) (quoting Brown v. Best Home Health

& Hospice, LLC, 2021 WY 83, ¶ 10, 491 P.3d 1021, 1027 (Wyo. 2021)) (other citation

omitted). See also, Hopper, 861 P.2d at 539 (the common law policy against contracts that

restrain trade is firmly established (citing Restatement (Second) of Contracts §§ 185-188

(1981) (Introductory Note at 35) and Dutch Maid Bakeries v. Schleicher, 58 Wyo. 374, 131

P.2d 630, 634 (1942))). Although an employer may use a noncompete agreement to protect

itself from improper and unfair competition by a former employee, it “‘is not entitled to

5

protection from ordinary competition.’” Brown, ¶ 26, 491 P.3d at 1031 (quoting Hopper,

861 P.2d at 539).

[¶15] To be enforceable, a noncompete agreement must be (1) in writing; (2) part of a

contract of employment; (3) based on reasonable consideration; (4) reasonable in duration

and geographical limitations; and (5) not against public policy. Hopper, 861 P.2d at 540.

Because a noncompete agreement is a restraint on trade it “‘is prima facie invalid,’” as a

violation of public policy. Brown, ¶ 10, 491 P.3d at 1027 (quoting Ridley, 180 P.2d at

128). See also, DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 681 (Tex. 1990) (“An

agreement not to compete is in restraint of trade and . . . unenforceable on grounds of public

policy unless it is reasonable.”). To overcome the presumption, “‘it is incumbent on the

[employer] to prove that there existed some special circumstances which rendered [the

restraint on trade] reasonably necessary for the protection of the [employer’s] business.’”

Brown, ¶ 10, 491 P.3d at 1027 (quoting Ridley, 180 P.2d at 129). See also, Malave, ¶ 9,

___ P.3d at ____ (the employer has the burden of overcoming the presumption its

noncompete agreement is invalid). In other words, the employer must show the restraint

on the employee’s employment options is necessary to protect the employer’s legitimate

business interests. Brown, ¶ 26, 491 P.3d at 1030-31 (citing Hopper, 861 P.2d at 539, and

Tench v. Weaver, 374 P.2d 27, 29 (Wyo. 1962)).

[¶16] When courts encounter unenforceable restrictions on trade, they have taken three

approaches:

(1) the “all or nothing” approach, which would void the

restrictive covenant entirely if any part is unenforceable, (2)

the “blue pencil” approach, which enables the court to enforce

the reasonable terms provided the covenant remains

grammatically coherent once its unreasonable provisions are

excised, and (3) the “partial enforcement” [or liberal blue

pencil] approach, which reforms and enforces the restrictive

covenant to the extent it is reasonable, unless the

“circumstances indicate bad faith or deliberate overreaching”

on the part of the employer.

Skaf, ¶ 44, 495 P.3d at 902 (quoting Ferrofluidics Corp. v. Advanced Vacuum Components,

Inc., 968 F.2d 1463, 1469 (1st Cir. 1992), and Durapin, Inc. v. Am. Prods., Inc., 559 A.2d

1051, 1058 (R.I. 1989)) (emphasis omitted).

[¶17] Prior to Hopper, noncompete agreements with unreasonable terms were

unenforceable in Wyoming. Hopper, 861 P.2d at 545 (citing Restatement of Contracts

(First) § 518 (1932); Tench, 374 P.2d at 29; Ridley, 180 P.2d. at 133; and Dutch Maid

Bakeries, 131 P.2d at 636). In Hopper, we adopted the third approach to unreasonable

noncompete agreements. Hopper, 861 P.2d at 545-46. Known as the partial enforcement

6

approach or the liberal blue pencil rule, courts may narrow the terms of noncompete

agreements to make them reasonable. Skaf, ¶ 44, 495 P.3d at 902 (Wyoming has adopted

the partial enforcement approach to allow modification of unreasonable restrictions (citing

Reddy v. Cmty. Health Found. of Man, 171 W.Va. 368, 298 S.E.2d 906, 915 (1982));

Griffin Toronjo Pivateau, Putting the Blue Pencil Down: An Argument for Specificity in

Noncompete Agreements, 86 Neb.L.Rev. 672, 682 (2008) [hereinafter Pivateau] (the liberal

form of the blue pencil rule permits “a court to rewrite an overbroad non-competition

agreement to reasonably limit the restrictions found in the agreement”).

[¶18] Although the liberal blue pencil rule departs from black letter law which prohibits

courts from enforcing contracts in violation of public policy or reforming parties’ poorly

drafted contracts,

[w]e believe[d] the ability to narrow the term of a covenant not

to compete and enforce a reasonable restraint permit[ed] public

policy to be served in the most effective manner. Businesses

function through the efforts of dedicated employees who

provide the services and build the products desired by

customers. Both the employer and the employee invest in

success by expressing a commitment to one another in the form

of a reasonable covenant not to compete. For the employer, this

commitment may mean providing the employee with access to

trade secrets, customer contacts or special training. These

assets of the business are entitled to protection. For the

employee, who covenants as part of a bargained for exchange,

the covenant provides notice of the limits both parties have

accepted in their relationship. The employee benefits during

his tenure with the employer by his or her greater importance

to the organization as a result of the exposure to the trade

secrets, customer contacts or special training. When the

employer-employee relationship terminates, a reasonable

covenant not to compete then avoids unfair competition by the

employee against the former employer and the specter, which

no court would enforce, of specific performance of the

employment agreement. When the parties agree to terms of a

covenant, one of which is too broad, the court is permitted to

enforce a narrower term which effectuates these public policy

goals without arbitrarily invalidating the entire agreement

between the parties and creating an uncertain business

environment. In those instances where a truly unreasonable

covenant operates as a restraint of trade, it will not be enforced.

Hopper, 861 P.2d at 546-47.

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[¶19] The jurisprudential doctrine of stare decisis generally bids us to follow our

precedent.

We consider the doctrine of stare decisis to be an

important principle which furthers the “evenhanded,

predictable, and consistent development of legal principles,

fosters reliance on judicial decisions, and contributes to the

actual and perceived integrity of the judicial process.”

Nevertheless, we should be willing to depart from

precedent when it is necessary “to vindicate plain, obvious

principles of law and remedy continued injustice.” When

precedential decisions are no longer workable, or are poorly

reasoned, we should not feel compelled to follow precedent.

Stare decisis is a policy doctrine and should not require

automatic conformance to past decisions.

McCallister v. State ex rel. Dept. of Workforce Servs., 2019 WY 47, ¶ 21, 440 P.3d 1078,

1084 (Wyo. 2019) (quoting State ex rel. Wyo. Workers’ Comp. Div. v. Barker, 978 P.2d

1156, 1161 (Wyo. 1999), and Goodrich v. Stobbe, 908 P.2d 416, 420 (Wyo. 1995)).

[¶20] In light of the doctrine of stare decisis, the district court logically followed Hopper

and reformed the duration and geographical terms of Circle C’s noncompete agreement

with Ms. Hassler to make the agreement reasonable. However, we now question whether

the legal and policy principles cited in Hopper as justification for the liberal blue pencil

rule hold true. Since Hopper, we have not used, or affirmed a district court’s use of, the

liberal blue pencil rule. In fact, Skaf is the only other case where we have discussed the

rule in any depth. There, we reversed the district court’s confirmation of an arbitration

decision that significantly revised a noncompete agreement between Dr. Skaf and his

former medical practice. Skaf, ¶¶ 43, 50, 495 P.3d at 901, 903. Using the liberal blue

pencil rule, the arbitration panel changed two aspects of the scope of Dr. Skaf’s medical

practice prohibited by the noncompete agreement and the geographical restriction of the

agreement. Id., ¶ 43, 495 P.3d at 901. We said the liberal blue pencil rule did not “allow

the court or arbitrator to rewrite a contract to create a new agreement for the parties in order

to uphold a non-compete covenant.” Id., ¶ 44, 495 P.3d at 902. See also, Reddy, 298

S.E.2d at 915 (“No court should trouble itself to rewrite an inherently unreasonable

covenant to bring the covenant within the rule of reason.”). Thus, the arbitration panel’s

decision, which rewrote “three of four restrictions in the covenant resulting in wholesale

contract revision,” was erroneous. Id., ¶ 47, 495 P.3d at 903.

[¶21] Because the arbitration panel’s actions in Skaf were outside its authority under the

liberal blue pencil rule adopted by Hopper, we did not need to examine the continued

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validity of the rule. However, Justice Davis’s special concurrence addressed the wisdom

of continuing to allow courts (or other decision makers) to rewrite noncompete agreements

to make them reasonable and, thus, enforceable. Skaf, ¶¶ 51-58, 495 P.3d at 903-05 (Davis,

J., specially concurring). The concurring opinion agreed with the resolution of Skaf in light

of the narrow standard of review for arbitration awards, but stated that, in an appropriate

case, the blue pencil rule should be eliminated. Skaf, ¶ 51, 495 P.3d at 903. This is an

appropriate case.

[¶22] By allowing a court to reform an agreement that otherwise would be void as a

violation of public policy, the liberal blue pencil rule strays from the rational and well

established black letter rules of contract interpretation and enforcement discussed above.

The blue pencil rule was intended to be a tool to prevent former employees from unfairly

competing with employers who had provided them valuable information and training and

to promote certainty in the business environment. Hopper, 861 P.2d at 546-47. However,

in practice, the rule places an unfair burden on employees and creates uncertainty in

business relationships.

[¶23] At the time of hire and execution of a noncompete agreement, the scales generally

weigh in favor of the employer who holds a superior bargaining position and is the drafter

of the noncompete agreement. Golden Rd. Motor Inn, Inc. v. Islam, 132 Nev. 476, 376

P.3d 151, 157-58 (2016), superseded by statute as stated in Paws Up Ranch, LLC v. Martin,

463 F.Supp.3d 1160, 1164-65 (D. Nev. 2020). See also, Hopper, 861 P.2d at 540

(referencing the inequality of bargaining power in employment agreements); Star Direct,

Inc. v. Dal Pra, 319 Wis.2d 274, 767 N.W.2d 898, 924 (2009) (recognizing employees

generally hold a weaker position in the employment bargaining process). The liberal blue

pencil rule further tips the scales toward employers by encouraging them to draft

noncompete agreements with overly broad and unreasonable trade restraints. Streiff v. Am.

Family Mut. Ins. Co., 118 Wis.2d 602, 348 N.W.2d 505, 509 (1984) (the liberal blue pencil

rule “tends to encourage employers possessing bargaining power superior to that of the

employees to insist upon unreasonable and excessive restrictions, secure in the knowledge

that the promise will be upheld in part, if not in full”).

[¶24] When challenged, the employer gets the benefit of the court redrafting the

agreement to make it reasonable. Golden Rd. Motor Inn, 376 P.3d at 158; Pivateau, 86

Neb.L.Rev. at 689-90. The employer receives what “amounts to a free ride on a contractual

provision that the employer is . . . aware would never be enforced.” Pivateau, 86

Neb.L.Rev. at 689-90. “‘[T]his smacks of having one’s employee’s cake[] and eating it

too.’” Richard P. Rita Pers. Servs. Int’l, Inc. v. Kot, 229 Ga. 314, 191 S.E.2d 79, 81 (Ga.

1972) (quoting Harlan M. Blake, Employee Agreements Not to Compete, 73 Harv. L. Rev.

625, 683 (1960) [hereinafter referred to as Blake]). See also, Reddy, 298 S.E.2d at 914-15

(in rejecting the liberal blue pencil rule, the West Virginia Supreme Court reasoned it “will

necessarily encourage employers to draft overly broad agreements in the belief that . . . if

they [are challenged], the terms will simply be judicially narrowed”).

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[¶25] In this case, Circle C included Paragraph C in the noncompete agreement which

specifically contemplated court intervention to redraft the agreement if its terms

overstepped the bounds of reasonable trade restrictions. That is not a proper use of judicial

resources or a proper role for judges. As the Colorado court of appeals stated, “[i]t is not

the function of a court to write or rewrite contracts for parties to enable enforcement of a

contract that, as written, violates the public policy of the state.” 23 LTD v. Herman, 457

P.3d 754, 759 (Colo. Ct. App. 2019) (citing Bayly, Martin & Fay, Inc. v. Pickard, 780 P.2d

1168, 1175 (Okla. 1989)).

[T]he court is not a party to the agreement, and the parties have

no power or authority to enlist the court as their agent. Thus,

parties to an employment or noncompete agreement cannot

contractually obligate a court to blue pencil noncompete

provisions that it determines are unreasonable.

Id. See also, Rector-Phillips-Morse, Inc. v. Vroman, 253 Ark. 750, 489 S.W.2d 1, 4 (1973)

(“We are firmly convinced that parties are not entitled to make an agreement, as these

litigants have tried to do, that they will be bound by whatever contract the courts may make

for them at some time in the future.”). But see, Duong v. Fieldsen Hanson Isaacs Miyada

Robison Yeh, Ltd., 478 P.3d 380, 381 (Nev. 2020) (courts are permitted to “blue pencil” an

unreasonable noncompetition agreement if the agreement specifically allows it).

[¶26] The tendency of employers to draft overly broad covenants “exercise[s] an in

terrorem effect on employees who respect their contractual obligations and on competitors

who fear legal complications if they employ a covenantor,” thereby interfering with “the

mobility of untold numbers of employees.” Blake, 73 Harv. L. Rev. at 682-83. See also,

Reddy, 298 S.E.2d at 914 (employers draft overly broad noncompete “agreements in the

belief that most employees will not challenge” them). An overly broad noncompete

agreement dissuades employees from leaving a job for a better opportunity. Del. Elevator,

Inc. v. Williams, 2011 WL 1005181, *10 (Ch. Ct. Del. 2011). See also, Valley Med.

Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277, 1286 (Ariz. 1999) (en banc) (“For

every agreement that makes its way to court, many more do not. Thus, the words of the

covenant have an in terrorem effect on departing employees.”). An employee subject to a

noncompete agreement “may pass up a competing job offer (or the rival employer might

not make the offer in the first place) if the existence of the [agreement] suggests that there

is risk of a lawsuit.” Del. Elevator, 2011 WL 1005181, *10 (citation omitted). This result

is directly contrary to the public policy espoused in our precedent which “‘encourages

employees to seek better jobs from other employers or to go into business for themselves.’”

Brown, ¶ 10, 491 P.3d at 1027 (quoting Ridley, 180 P.2d at 127).

[¶27] Furthermore, the liberal blue pencil rule, with its specter of eventual court

intervention, means neither employers nor employees can rely, with any assurance, on the

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specific terms of the agreements they execute. See Golden Rd. Motor Inn, 376 P.3d at 157

(courts’ refusal to use the blue pencil to make unreasonable noncompete agreements

enforceable “avoids the possibility of trampling the parties’ contractual intent”). See also,

Unlimited Opportunity, Inc. v. Waadah, 290 Neb. 629, 861 N.W.2d 437, 441 (2015)

(allowing revision of contracts through the blue pencil rule “creates uncertainty in

[employment contracts,] increases the potential for confusion by parties to a contract, and

encourages litigation of noncompete clauses in contracts”); Pivateau, 86 Neb.L.Rev. at 691

(“The blue pencil doctrine creates confusion for employees, employers, and the court

system. The problem arises out of the fact that it is impossible to predict the construction

of a noncompete agreement accurately.”). Future litigation may well result in enforcement

of a noncompete agreement with terms different from those agreed to by the parties. See

Prod. Action Int’l, Inc. v. Mero, 277 F.Supp.2d 919, 923-24 (S.D. Ind. 2003) (“‘[T]he court

may not create a reasonable restriction under the guise of interpretation [of a noncompete

agreement], since this would subject the parties to an agreement they had not made.’”

(quoting Young v. Van Zandt, 449 N.E.2d 300, 304 (Ind. App. 1983)). See also, Pivateau,

86 Neb.L.Rev. at 674 (“the blue pencil doctrine . . . creates an agreement that the parties

did not actually agree to”). The liberal blue pencil rule, therefore, creates uncertainty in

the business environment, undermining the very policy the rule was intended to serve.

[¶28] The doctrine of stare decisis does not obligate us to follow precedent that is unjust,

clearly contrary to plain and obvious principles of law, or has proven unworkable.

McCallister, ¶ 21, 440 P.3d at 1084. The liberal blue pencil rule adopted in Hopper is

contrary to traditional contract law, has worked an injustice on employees, and has

contributed to uncertainty in business relationships by encouraging employers to draft

overly broad, unreasonable restraints on trade. The law’s general distaste for agreements

in restraint of trade and assignment to the employer of the duty to show any restraint is

reasonable should extend to all terms of the agreement. By rejecting the liberal blue pencil

rule, we encourage employers to incorporate only reasonable trade restraints into their

employment contracts and to assure such restraints are reasonably tied to legitimate

interests requiring protection. Kenneth R. Swift, Void Agreements, Knocked-Out Terms,

and Blue Pencils: Judicial and Legislative Handling of Unreasonable Terms in

Noncompete Agreements, 24 Hofstra Lab. & Emp. L.J. 223, 246 (2007) (rejection of the

blue pencil rule encourages careful drafting of restraints to avoid the possibility the entire

noncompete agreement will be declared void).

[¶29] We, therefore, overrule Hopper’s adoption of the liberal blue pencil rule. Returning

to our roots, a noncompete agreement which includes unreasonable restrictions on trade

violates public policy and is invalid. Brown, ¶ 10, 491 P.3d at 1027. The employer has

the duty of proving all the terms of the noncompete agreement are reasonable and,

therefore, enforceable. Wyoming courts will no longer exceed the scope of their traditional

authority in contract interpretation by redrafting noncompete agreements to bring them

within the bounds of reason.

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[¶30] Under our de novo standard of review, we are permitted to grant summary judgment

to the previously unsuccessful party on grounds they did not raise in support of summary

judgment after giving the parties proper notice and the opportunity to respond, which we

did by requesting supplemental briefing on the continued vitality of the blue pencil rule.

Questar Expl., ¶ 28, 388 P.3d at 530; W.R.C.P. 56(f)(1)-(2). There is no dispute that the

original terms of the noncompete agreement between Ms. Hassler and Circle C were

unreasonable.2 Circle C did not attempt to justify the geographical restriction which

covered many counties outside the area where it actively engaged in its trade. It sought

enforcement of the agreement only in Natrona and Converse counties. The district court

ruled Circle C had not met its burden of showing the 24-month term of the agreement was

reasonable and narrowed it to 12 months. Circle C does not challenge that ruling on appeal.

Because there is no dispute that the duration and geographical terms of the noncompete

agreement are unreasonable and we no longer permit use of the blue pencil rule to make

noncompete agreements reasonable, we conclude the entire agreement is void in violation

of public policy. Ms. Hassler is entitled to judgment in her favor.

CONCLUSION

[¶31] Circle C’s noncompete agreement with Ms. Hassler is unreasonable on its face and,

therefore, void in violation of public policy. It is untenable to continue to place courts in

the position of using the blue pencil rule to draft reasonable terms for the parties.

Consequently, it is appropriate to overrule Hopper’s adoption of the rule.

[¶32] Reversed and remanded for proceedings consistent with this opinion.

2

Given our ruling on the unreasonableness of the duration and geographical terms of the noncompete

agreement, we need not determine whether Circle C proved it had a legitimate business interest to protect

with the agreement.

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