MOTORSPORTS OF CONYERS, LLC v. BURBACH

Two Harley-Davidson dealerships in Georgia hired Edmund Burbach as an executive and had him sign agreements barring him from working for a competitor within 120 miles for three years after leaving, with the contracts specifying that Florida law would govern. After Burbach left and took a job at a nearby competing dealership, the dealerships sued in a Henry County superior court to enforce the noncompete under Florida law, and the trial court agreed, granting an injunction. The Court of Appeals of Georgia reversed, saying Georgia law had to be checked first. The Supreme Court of Georgia took up the case to settle how courts should decide whether to apply a contract's chosen foreign law to a noncompete clause. It held that a Georgia court must first apply Georgia's Restrictive Covenants Act to see whether the clause is reasonable in time, geography, and scope. If it is reasonable, the court can apply Florida law as the parties chose; if not, Georgia law controls instead, including the possibility of narrowing the clause rather than throwing it out entirely.

A Georgia court asked to enforce a restrictive covenant under a contract's chosen foreign law must first apply the Georgia Restrictive Covenants Act to determine whether the covenant is reasonable; if it is, the court may apply the foreign law, but if it is unreasonable it violates Georgia public policy and Georgia law, including blue-penciling to narrow the clause, must govern instead.

Georgia employers who put out-of-state choice-of-law clauses into noncompete agreements can no longer skip straight to that other state's law. They and their employees will now see Georgia courts screen every restrictive covenant against Georgia's own reasonableness standards first, affecting how such agreements are drafted and litigated statewide.

Judgment vacated and case remanded with direction

1. Georgia law generally lets contracting parties choose another state's law to govern their agreement, but a Georgia statute (O.C.G.A. § 1-3-9) says courts must not apply foreign law if doing so would violate Georgia's public policy.
2. Separately, Georgia's Code (O.C.G.A. § 13-8-2(a)(2)) has long declared 'contracts in general restraint of trade,' meaning noncompete-type restrictions that are unreasonably broad in time, geography, or scope, to be against public policy and unenforceable, while reasonable restrictions have always been enforceable.
3. The Georgia Restrictive Covenants Act (GRCA), a 2011 law adopted alongside a constitutional amendment, made Georgia's approach to noncompetes more flexible and allows courts to narrow overbroad clauses ('blue-penciling'), but it kept the same basic rule: a restrictive covenant that fails the Act's reasonableness standards is void and against public policy.
4. Combining these two strands, the court reasoned that whether applying foreign law to a noncompete would violate Georgia public policy depends on whether the covenant, as written, would pass muster under the GRCA's reasonableness test.
5. Therefore a Georgia court facing a choice-of-law clause in a noncompete case must first run the GRCA analysis: if the covenant is reasonable, the chosen foreign law can be applied to decide enforcement; if it is unreasonable, foreign law cannot be used, and Georgia law, including the option to narrow the clause, applies instead.
6. Because the trial court had jumped straight to Florida law without first testing the covenant against the GRCA, and the Court of Appeals had not applied this exact framework either, the case needed to go back so the trial court could apply the newly clarified analysis itself.

• noncompete agreement
• choice-of-law clause
• Georgia Restrictive Covenants Act
• Harley-Davidson dealership dispute
• blue-penciling