Noncompete Struck Down by Indiana Court of Appeals

Earlier this spring, the Indiana Court of Appeals struck down and refused to enforce certain provisions in a restrictive covenant (i.e., a noncompete) contained in an employment agreement between a central Indiana employer and a former employee. The Court determined that the scope of activity restrictions and geographic limitations in the noncompete were overly broad and unreasonable. Notably, the Court declined to apply the “blue pencil” doctrine to the restrictive covenants. (Stated differently, the Court was unwilling to delete only those portions of the noncompete that the Court found to be overly broad and unenforceable.) While Indiana courts have historically applied the blue pencil doctrine to restrictive covenants by enforcing reasonable noncompete agreements and striking only unreasonable restrictions, here the Court refused to do so because the language in the noncompete was neither divisible nor clearly separated into parts or severable terms.