Nike, Inc. v. Eugene McCarthy

In this case we must determine the validity of a noncompete agreement under Oregon law. Eugene McCarthy left his position as director of sales for Nike’s Brand Jordan division in June 2003 to become vice president of U.S. footwear sales and merchandising at Reebok, one of Nike’s competitors. Nike sought a preliminary injunction to prevent McCarthy from working for Reebok for a year, invoking a noncompete agreement McCarthy had signed in 1997 when Nike had promoted him to his earlier position as a regional footwear sales manager. Under Oregon law, which governs here, a noncompete agreement generally is void and unenforceable unless agreed to “upon” either the employee’s initial employment or — relevant here — the “[subsequent bona fide advancement of the employee with the employer.” Or.Rev.Stat. § 653.295(l)(b) (2004). McCarthy’s promotion to regional footwear sales manager was undisputedly an “advancement”; the critical issues are when the advancement occurred and whether Nike obtained McCarthy’s agreement not to compete “upon ” that advancement. Construing the Oregon statute and reviewing the circumstances surrounding McCarthy’s promotion and the execution of the noncompete…