Blue Penciling of Non-Competes in Virginia?

Non-competition agreements, AKA non-competes, are enforceable in Virginia provided that they are drafted in terms that are reasonable with regard to duration, geography and scope.  When a non-compete is facially unreasonable because it is vague or overbroad with regard to one of those components, Virginia Courts will refuse to enforce the entire restrictive covenant.

Enter the concept of “Blue Penciling …  Blue Penciling is a practice where a Court can in effect redraft or “limit” unreasonable terms of an agreement in a manner that would make the agreement otherwise acceptable and enforceable.  Virginia Courts have never endorsed this practice, though it is permitted in other states.  As a result, Virginia employers typically do not get a second chance to reform an unreasonable agreement.

Enter the concept of “Choice of Law” …  Virginia law does permit contracting parties to elect or choose the law of the State that applies to their contract, provided that it does not offend Virginia public policy.   In the case of Edwards Moving and Rigging, Inc. v. W.O. Grubb Steel Erection, Inc., the Richmond U.S. District Court was presented with a non-competition agreement that stipulated to the application of Kentucky law – a State that does permit Blue Penciling.   While the Court was not asked to reform the agreement in the context of a 12(B)(6) Motion to Dismiss, it did hold that Kentucky’s Blue Penciling policies were not repugnant to the public policies of Virginia, thereby opening the possibility that a Virginia Court could consider Blue Penciling at a later stage in application of Kentucky law.