In
Golden Road Motor Inn, Inc. v. Islam, 132 Nev. 476, 488, 376 P.3d 151, 159 (2016), the Nevada Supreme Court held that district courts cannot, on their own, blue-pencil a noncompetition agreement to remove unreasonably restrictive, and thus unenforceable, aspects.
SeeNevada Supreme Court Refuses To Blue Pencil Unreasonable Non-Compete The Nevada legislature was not in accord and the following year enacted NRS 613.195, which requires district courts to blue-pencil unreasonable noncompetition agreements and enforce the revised agreement. 2017 Nev. Stat., ch. 324, § 1, at 1861. That would seem to be the end of the story, but it wasn t. Left unanswered was the effect of NRS 613.195 on agreements entered into before the statute was enacted.
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Many practitioners in Nevada had been operating under the assumption that the Nevada Supreme Court’s 2016 opinion in
Golden Road Motor Inn, Inc. v. Islam, 132 Nev. 476, 376 P.3d 151 (2016) automatically rendered void and unsalvageable any non-competition agreement entered into prior to the enactment of NRS 613.195(5)[1] in June 2017 that contained a single unreasonable geographic or temporal restriction.. On December 31, 2020, however, the Nevada Supreme Court remedied this misconception by clarifying that parties may contractually consent to blue-penciling[2] of unreasonable or unenforceable non-competition clauses.
Background
Fielden Hanson Isaacs Miyada Robison Yeh, Ltd. (the “Employer”) is a provider of anesthesia and pain management services in Nevada who entered into employment agreements with two anesthesiologists (the “Employees”) in November 2016. The employment agreements contained non-competition
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On December 31, 2020, the Nevada Supreme Court issued an opinion addressing and clarifying several issues relating to the power of the court to reform or modify an unreasonable noncompetition agreement often referred to as blue penciling.
In
Duong v. Fielden Hanson Isaacs Miyada Robison Yeh, Ltd., 136 Nev. Adv. Op. 87 (2020), the employer sought to enjoin two anesthesiologists from breaching noncompetition agreements. After the employer merged with another company in 2016, the anesthesiologists entered into employment contracts that contained a noncompetition provision restricting the anesthesiologists from working at several facilities. The agreement also contained language requesting that, if any provision of the agreement is found unreasonable by a court, “any such provision shall nevertheless be enforceable to the extent such court shall deem reasonable, and, in such event, it is the parties’ intention . . .
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On December 31, 2020, the Nevada Supreme Court issued an opinion
addressing and clarifying several issues relating to the power of
the court to reform or modify an unreasonable noncompetition
agreement often referred to as blue penciling.
In
Duong v. Fielden Hanson Isaacs Miyada Robison Yeh,
Ltd., 136 Nev. Adv. Op. 87 (2020), the employer sought to
enjoin two anesthesiologists from breaching noncompetition
agreements. After the employer merged with another company in
2016, the anesthesiologists entered into employment contracts that
contained a noncompetition provision restricting the
anesthesiologists from working at several facilities. The