Communication Technical Sys. v. Densmore – Case Brief Summary (South Dakota)

In Communication Technical Sys. v. Densmore (1998) 1998 SD 87 583 N.W.2d 125, Densmore was employed by plaintiff CTS, which entered into a contract with Gateway to provide computer programming services. (Densmore, supra, 583 N.W.2d at p. 126.)

CTS and Gateway later entered into an agreement under which Gateway agreed that during the time CTS was performing services and for one year thereafter, Gateway would not "hire, solicit or recruit any CTS employee ... ." (Ibid.)

Densmore became dissatisfied with CTS and inquired about employment with Gateway, but was told that due to the agreement, Gateway could not even discuss employment with him. Densmore left CTS and began his own consulting business, which Gateway then contracted after terminating CTS. (Ibid.)

CTS then sued Gateway for breach of contract and Densmore for business torts. (Id. at pp. 126-127.)

The trial court granted summary judgment to defendants. (Densmore, supra, 583 N.W.2d at p. 127.) The court concluded that under South Dakota's statute prohibiting the restraint of trade (which is very similar to section 16600), the provision was invalid. "CTS improperly seeks the best of both worlds. Reserving its rights under the 'at will' employment doctrine, it wants to be able to fire Densmore for any reason, arbitrary or otherwise, or for no reason at all. However, should Densmore seek employment or a consulting contract with a former customer, CTS wants that to be forbidden fruit even though Densmore never agreed to any such limitation." (583 N.W.2d at p. 129.)