NOTICE: This opinion is subject to modification resulting from motions for reconsideration under Supreme Court Rule 27, the Court’s reconsideration, and editorial revisions by the Reporter of Decisions. The version of the opinion published in the Advance Sheets for the Georgia Reports, designated as the “Final Copy,” will replace any prior version on the Court’s website and docket. A bound volume of the Georgia Reports will contain the final and official text of the opinion.
In the Supreme Court of Georgia
Decided: September 6, 2023
S22G0854. MOTORSPORTS OF CONYERS, LLC et al. v.
BURBACH.
PINSON, Justice.
When contracting parties choose the law of a jurisdiction other
than Georgia to govern their contractual relations, Georgia courts
generally honor that choice unless applying the foreign law would
violate the public policy of our State. See OCGA § 1-3-9. Under this
public-policy exception, our courts have for many years declined to
apply foreign law to determine whether to enforce restrictive
covenants—in particular, agreements not to engage in the same type
of business in the same market for a period of time, usually
connected with the sale of a business or employment contracts. The
petitioners here—two motorcycle dealerships who seek to enforce
restrictive covenants against a former employee under Florida law—
ask us to reconsider this application of the public-policy exception,
citing recent changes in Georgia law that require a more flexible and
permissive approach to enforcing restrictive covenants.
Having taken a fresh look, we conclude that Georgia law
remains the touchstone for determining whether a given restrictive
covenant is enforceable in our courts, even where the contract says
another state’s law applies. Our decisional law has long
distinguished between restrictive covenants that are reasonable (in
scope, duration, and geographic reach) and those that are
unreasonable. The former are enforceable, while the latter have
been classified as contracts “in general restraint of trade.” For just
as long, contracts in general restraint of trade have been “deemed
contrary to public policy” in our State. OCGA § 13-8-2 (a) (2). As we
explain below, a careful review of our decisional law and statutory
history in this space shows that our legislature has codified this
view, including with the recent enactment of the Georgia Restrictive
Covenants Act. OCGA § 13-8-50 et seq. Although the GRCA and a
corresponding constitutional amendment set up a much more
2
permissive and flexible approach to enforcing restrictive covenants,
these changes did not disturb the well-settled understanding that
restrictive covenants that are unreasonable under Georgia law are
not just illegal, but against our public policy. This means that to
determine whether applying foreign law to a restrictive covenant
would violate Georgia’s public policy—i.e., whether the public-policy
exception to honoring a choice-of-law clause applies—a Georgia
court must first determine whether the restrictive covenant
complies with the GRCA. If the restrictive covenant as written is
reasonable under the GRCA, the court can honor the choice-of-law
provision and apply the foreign law to determine whether to enforce
it. If the restrictive covenant is unreasonable under the GRCA, a
Georgia court may not apply foreign law to enforce it. In that case,
Georgia law would govern the contract, and so the court would apply
our law, including the GRCA’s blue-penciling provision, which could
allow the restrictive covenant to be enforced in part.
In this case, the trial court accepted the parties’ choice of
Florida law to govern the employment contracts at issue without
3
first determining whether the restrictive covenants in the contracts
complied with the GRCA. The Court of Appeals reversed, and in
doing so, correctly identified application of the GRCA as the first
step in the analysis of whether the public-policy exception overrides
the parties’ choice of foreign law. But because we have now set out
a clear framework for that analysis in this opinion, we leave it for
the trial court to apply that framework in the first instance. We
therefore vacate the decision below and remand with direction to
vacate the trial court’s decision and remand for further proceedings
consistent with this opinion.
1. (a) In 2016, Edmund Burbach was hired to work for a group
of six Harley-Davidson dealerships under common ownership,
including Motorsports of Conyers, LLC d/b/a Falcons Fury HarleyDavidson, and Motorsports of Durham, LLC d/b/a Raging Bull
Harley-Davidson (collectively as to all six, “the dealerships”). Later
that year, he was promoted to Chief Operating Officer, and he
executed two employment agreements, one with Falcons Fury and
one with Raging Bull. These agreements included identical
4
restrictive covenants. Among other things, those covenants
prohibited Burbach, during his employment and for three years
after, from accepting employment from any competitor within a 120-mile radius of any of the six dealerships. Both agreements also
included a choice-of-law provision stating that the agreements were
to be governed by Florida law.
Burbach’s employment with the dealerships ended in
December 2019. He then began working for Preston Cycles West,
LLC d/b/a Thunder Tower West Harley-Davidson, a competitor of
the dealerships located less than 20 miles from Falcons Fury.
Falcons Fury and Raging Bull (together, “Motorsports”) asked him
to stop that work, which they claimed violated the restrictive
covenants in his employment agreements. He persisted, so they sued
him in the Superior Court of Henry County to enforce the restrictive
covenants. Motorsports then moved for an interlocutory injunction.
(b) After a hearing, the trial court issued an interlocutory
injunction. Relevant here, the court applied Florida law to
determine whether the restrictive covenants were enforceable. In
5
doing so, the court rejected Burbach’s argument that,
notwithstanding the agreements’ choice-of-law provisions, Georgia
law should apply because Florida law governing restrictive
covenants violates Georgia public policy. In support, the court relied
on Auld v. Forbes, 309 Ga. 893 (848 SE2d 876) (2020). In that
wrongful-death case, this Court examined the “public policy
exception” to the doctrine of lex loci delicti—which requires courts
to apply the law of the jurisdiction where the tort was committed—
and held that a court may decline to apply another state’s law “only
if the out-of-state law is so ‘radically dissimilar to anything existing
in our own system of jurisprudence’ that it would ‘seriously
contravene’ the policy embodied in Georgia law.” 309 Ga. at 896 (2)
(b) (citation omitted). Applying Auld, the trial court compared
Florida’s restrictive-covenants statute with the Georgia Restrictive
Covenants Act and determined that Florida’s law was not “so
radically dissimilar to” Georgia’s that public policy required it to
apply Georgia law instead. Id. at 898 (2) (b). So the court applied
Florida law, and it determined that the restrictive covenants were
6
enforceable because they were “reasonable and necessary to protect
[Appellants’] legitimate business interests.” The court held further
that Motorsports had met their burden to justify interlocutory
injunctive relief. The court therefore granted an interlocutory
injunction that barred Burbach from working in any capacity for any
competitor located within 120 miles of either Falcons Fury or Raging
Bull.
(c) The Court of Appeals reversed. Burbach v. Motorsports of
Conyers, LLC, 363 Ga. App. 188 (871 SE2d 63) (2022). The court
reasoned that it would “apply Georgia law to determine the
enforceability of the forum-selection clause here” because “forum
selection clauses involve procedural and not substantive rights.” Id.
at 190 (1) (citation and punctuation omitted).1 And under Georgia
1 Throughout its opinion, the Court of Appeals used the terms “forumselection clause” and “choice-of-law clause” interchangeably, but these are
different kinds of contract provisions. Forum-selection clauses operate to give
“advance consent to personal jurisdiction” in a particular forum. JOHN K.
LARKINS, GA. CONTRACTS: LAW AND LITIGATION, § 1:10 (2d ed. Sept. 2022).
Choice-of-law clauses identify the substantive law that the parties have chosen
to govern the contract. Id. at § 1:9. No one disputes that the contractual
provisions at issue here, which say that the agreements are “governed by, and
construed in accordance with, the laws of the State of Florida applicable to
7
law, the court explained, a showing that “a restrictive covenant
violates Georgia public policy and that a court in the selected forum
likely would find the restrictive covenant enforceable” is a
“compelling reason” to “avoid the contractual forum selection
clause.” Id. at 190-191 (1) (punctuation omitted). The court then
cited the GRCA’s directive that “a court shall not enforce a
restrictive covenant unless it is in compliance with [the Act],” under
which restrictive covenants must be “reasonable in time, geographic
area, and scope of prohibited activities.” Id. at 191 (1) (quoting
OCGA §§ 13-8-53 (a), 13-8-54 (b)). In a footnote, the court
distinguished Auld because that case involved “a tort that occurred
in another country,” while this case was about a “contractual dispute
[involving] a mutually negotiated, forum-selection clause.” Id. at 191
(1) n.5.
The Court of Appeals then turned to the restrictive covenants
here and concluded they would be “unreasonable” under Georgia law
contracts executed in and to be performed in that State,” are choice-of-law
clauses.
8
because they were too broad in their duration, scope of activity, and
geographic reach. Burbach, 363 Ga. App. at 191-192 (1). On the
other hand, the court believed the covenants would be enforceable
under Florida law, see id. at 192-193 (1). Based on that review, the
court concluded that “the trial court erred in upholding the [choiceof-law] clauses in Burbach’s restrictive covenants.” Id. at 193 (1).
We granted review to clarify the framework for deciding
whether to apply contracting parties’ choice of foreign law to govern
the enforceability of a restrictive covenant in an employment
contract.
2. (a) As a general rule, when parties agree to have foreign law
govern their contractual relations, Georgia courts must honor that
choice and apply the foreign law as a matter of comity. See OCGA §
1-3-9; CS-Lakeview at Gwinnett, Inc. v. Simon Prop. Grp., Inc., 283
Ga. 426, 428 (659 SE2d 359) (2008); Carr v. Kupfer, 250 Ga. 106, 107
(1) (296 SE2d 560) (1982). But the statute that provides this general
rule also sets out exceptions to it: notwithstanding any agreement
of the contracting parties, courts may not apply foreign law to
9
interpret or enforce a contract if that course is “restrained by the
General Assembly” or “contrary to the policy or prejudicial to the
interests of this state.” OCGA § 1-3-9. 2 In other words, contractual
choice-of-law provisions “will be enforced unless application of the
chosen law would be contrary to the public policy or prejudicial to
the interests of this state.” CS-Lakeview, 283 Ga. at 428. See also
Convergys Corp. v. Keener, 276 Ga. 808, 809 (582 SE2d 84) (2003)
(declining invitation to “enforce contractual rights which contravene
the policy of Georgia”); Nasco, Inc. v. Gimbert, 239 Ga. 675, 676 (2)
(238 SE2d 368) (1977) (“The law of the jurisdiction chosen by parties
to a contract to govern their contractual rights will not be applied by
Georgia courts where application of the chosen law would
contravene the policy of, or would be prejudicial to the interests of,
2 In full, OCGA § 1-3-9 provides
The laws of other states and foreign nations shall have no force
and effect of themselves within this state further than is provided
by the Constitution of the United States and is recognized by the
comity of states. The courts shall enforce this comity, unless
restrained by the General Assembly, so long as its enforcement is
not contrary to the policy or prejudicial to the interests of this
state.
10
this state.”); Carr, 250 Ga. at 107 (1) (choice-of-law clauses will
ordinarily be enforced “[a]bsent a contrary public policy”); Ulman,
Magill & Jordan Woolen Co. v. Magill 155 Ga. 555, 557 (117 SE 657)
(1923) (“Comity of the States . . . will be enforced, unless restrained
by the General Assembly, so long as its enforcement is not contrary
to the policy or prejudicial to the interests of this state.” (cleaned
up)).
Litigants may try to show that applying foreign law would be
contrary to Georgia’s public policy—and that a court should
therefore disregard a contractual choice-of-law clause—by showing
that the foreign law governing the issue is significantly different
from any corresponding Georgia law. In such cases, we have
explained that “mere dissimilarit[ies]” between the foreign law and
ours are not enough to disregard the parties’ choice of law, because
differences alone “do[ ] not mean that the foreign state’s law
necessarily is against the public policy of the forum state.” CSLakeview, 283 Ga. at 428 (citations and punctuation omitted).
Instead, as we clarified in Auld, if a party seeks to disregard the
11
choice of foreign law based on its dissimilarities to our own, it must
show that the foreign law is “so ‘radically dissimilar to anything
existing in our own system of jurisprudence’ that it would ‘seriously
contravene’ the policy embodied in Georgia law.” 309 Ga. at 896 (2)
(b) (quoting Southern R. Co. v. Decker, 5 Ga. App. 21, 25 (1), 29 (2)
(62 SE 678) (1908)).
(b) But no such comparison-based inquiry is necessary in the
context of restrictive covenants. In this context, Georgia public
policy is instead set by statute. OCGA § 13-8-2 (a) expressly deems
certain kinds of contracts “contrary to public policy” and declares
that such contracts “cannot be enforced.” Among the contracts
deemed contrary to public policy are “[c]ontracts in general restraint
of trade, as distinguished from contracts which restrict certain
competitive activities, as provided in Article 4 of this chapter.” Id. at
(a) (2). And “Article 4 of this chapter” is the GRCA, which sets out a
comprehensive scheme that governs whether restrictive covenants
in certain kinds of contracts are enforceable. See generally OCGA §
12
13-8-50 et seq.3 So, by statute, “contracts in general restraint of
trade” are against public policy and unenforceable, while “contracts
which restrict certain competitive activities, as provided in [the
GRCA],” are not. OCGA § 13-8-2 (a) (2).
This category of contracts “in general restraint of trade”
includes unreasonable restrictive covenants. The principle that
“contracts in general restraint of trade” are contrary to public policy
has its roots in English common law, see Holmes v. Martin, 10 Ga.
503, 505 (1) (1851), and it has been a part of our Code, in materially
the same form, since at least 1868. See OCGA § 13-8-2 (a) (2)
(prohibiting “contracts in general restraint of trade”); Code Ann.
1933, § 20-504 (same); Code Ann. 1910, § 4253 (prohibiting
“contracts in general in restraint of trade”); Code Ann. 1895, § 3668
(same); Code Ann. 1882, § 2750 (same); Irvin’s Code 2d. ed. 1873, §
3 In particular, see OCGA §§ 13-8-52 (a) (listing specific types of
contracts, including employment contracts, to which GRCA applies); 13-8-53
(a) (providing that restrictions that are “reasonable in time, geographic area,
and scope of prohibited activities” “shall be permitted”); and 13-8-53 (c), 13-8-56, and 13-8-57 (establishing parameters for “reasonableness” of restrictive
covenants).
13
2750 (same); Irvin’s Rev. Code 1868, § 2708 (same).4 Over that span,
decisions applying this principle to restrictive covenants have
consistently explained that if such covenants are unreasonable—in
scope, duration, or geographic reach—they are “void” or
“unenforceable” contracts “in general restraint of trade.” See, e.g.,
Moore v. Dwoskin, Inc., 226 Ga. 835, 836-837 (1) (177 SE2d 708)
(1970) (restrictive covenant prohibiting employee from engaging in
employer’s business in “the primary business areas of 31 states” for
two years following employment was “unreasonable . . . and opposed
to the interests of the public,” and thus void); Aladdin, Inc. v.
Krasnoff, 214 Ga. 519, 520 (2) (105 SE2d 730) (1958) (restrictive
4 This principle is part of our State Constitution as well. Article III,
Section VI, Paragraph V (c) (1) of the Georgia Constitution of 1983 prohibits
the General Assembly from “authoriz[ing] any contract or agreement which
may have the effect of or which is intended to have the effect of defeating or
lessening competition.” In construing the materially similar predecessors of
this provision in earlier constitutions, we have held that it “mean[s] precisely
the same thing which the Code section [prohibiting contracts in general
restraint of trade] has been construed to mean.” Griffin v. Vandegriff, 205 Ga.
288, 293 (1) (53 SE2d 345) (1949) (construing Article IV, Section IV, Paragraph
I of the Georgia Constitution of 1945). Accord Howard Schultz & Assocs. v.
Broniec, 239 Ga. 181, 183 (1) (236 SE2d 265) (1977) (“By both constitutional
and legislative provision, Georgia prohibits contracts or agreements in general
restraint of trade.”).
14
covenant that prohibited disclosure of “all of the employer’s past,
present, and potential customers,” which was “unlimited as to either
time or territory,” was “an attempt at general restraint of trade” and
thus “unenforceable”); Orkin Exterminating Co. of South Ga. v.
Dewberry, 204 Ga. 794, 802, 807 (1) (51 SE2d 669) (1949) (“A
contract in restraint of trade is thus total and general, when by it a
party binds himself not to carry on his trade or business at all.”
(citation and punctuation omitted)), overruled in part on other
grounds by Barry v. Stanco Commc’ns Prods., Inc., 243 Ga. 68, 71
(3) (252 SE2d 491) (1979); Bonner v. Bailey, 152 Ga. 629, 632 (110
SE 875) (1922) (in assessing whether to enforce a restrictive
covenant, explaining that “it is settled in this state that a contract
in general restraint of trade without territorial limitation is contrary
to public policy and unenforceable”).
On the other hand, restrictive covenants that are “reasonably
limited” in scope, duration, and geographic reach—also referred to
as contracts in “partial restraint of trade”—have consistently been
held to be enforceable. As we explained more than 170 years ago,
15
the distinction was early taken, and is established by an
unbroken current of authority, English and American,
between [restrictive covenants] as are in general restraint
of trade, and such as are in restraint of it only as to
particular places and persons, or for a limited time. The
latter, if founded upon a good and valuable consideration,
are valid, while the former are universally prohibited.
Holmes, 10 Ga. at 505 (1). See also Griffin v. Vandegriff, 205 Ga.
288, 294 (1) (53 SE2d 345) (1949) (“Numerous decisions of this court,
applying the [predecessor to OCGA § 13-8-2 (a) (2)] have held that
such contracts when reasonable as to time and area of restrictions
are not void under that section.”). The takeaway is that in Georgia,
the line between unreasonable restrictive covenants and reasonable
ones has long been drawn by public policy: unreasonable restrictive
covenants are contracts in general restraint of trade that are against
public policy, while reasonable restrictive covenants are valid and
enforceable. See W.R. Grace & Co. v. Mouyal, 262 Ga. 464, 465 (1)
(422 SE2d 529) (1992); Moore, 226 Ga. at 836-837 (1); Aladdin, 214
Ga. at 520 (1); Orkin, 204 Ga. at 802 (1); Black v. Horowitz, 203 Ga.
294, 294 (1) (46 SE2d 346) (1948). See also Hood v. Legg, 160 Ga.
620, 627-628 (128 SE 891) (1925) (explaining that in assessing
16
whether restrictive covenants are reasonable and thus enforceable,
“what is meant by the word ‘reasonable’” is “whether the contract
unduly burdens the public interest,” and so “public policy is the
test”); Rakestraw v. Lanier, 104 Ga. 188, 197 (30 SE 735) (1898) (in
considering reasonableness of restrictive covenant, noting that
“[w]hile public policy forbids any agreement which unreasonably
restrains a person from exercising his trade or business, it is equally
true that public policy also requires that the freedom of persons to
enter into contracts shall not be lightly interfered with”); Holmes, 10
Ga. at 505 (2) (“The reason assigned for this difference is, that all
general restraints tend to promote monopolies and to discourage
industry and enterprise and just competition; whereas the same
reason does not apply to special restraints. On the contrary, it may
even be beneficial to the public, that a particular place should not be
overstocked with persons engaged in the same business.”).
(c) This settled understanding that unreasonable restrictive
covenants are contracts in general restraint of trade—and thus
against public policy—has been confirmed by recent legislation in
17
the restrictive-covenant space.
(i) For a long time, the standards governing the validity of
restrictive covenants developed through the decisional law
discussed above, which had for years grappled with how to
distinguish reasonable restrictive covenants from unenforceable
contracts in general restraint of trade. See W.R. Grace & Co., 262
Ga. at 465 (1) (noting the “three-element test” that courts had
developed “as a ‘helpful tool’ in examining the reasonableness” of
restrictive covenants (citation omitted)). In 1990, the General
Assembly for the first time codified standards for assessing whether
restrictive covenants are reasonable and thus enforceable. In that
Code section, the legislature approved the enforcement of “contracts
in partial restraint of trade”—defined as “[c]ontracts that restrain
in a reasonable manner any party thereto from exercising any trade,
business, or employment.” Former OCGA § 13-8-2.1 (a), enacted at
Ga. L. 1990, pp. 1676-1677, § 2. In the same legislation, OCGA § 13-8-2 (a) (2) was amended to distinguish such “contracts in partial
restraint of trade” from those in general restraint of trade, which
18
remained “contrary to public policy.” See former OCGA § 13-8-2 (a)
(2), as amended by Ga. L. 1990, p. 1676, § 1. In doing so, the General
Assembly adopted the longstanding public-policy-based distinction
in our decisional law between unenforceable contracts in general
restraint of trade and reasonable restrictive covenants. See
Peachtree-Cain Co. v. McBee, 254 Ga. 91, 93 (1) (327 SE2d 188)
(1985) (noting that “when a statute is codified from . . . decision[s] of
this court, unless the language of the [statute] imperatively requires
a different construction, it will be presumed that the General
Assembly in adopting it intended merely to adopt the principle of
law announced in the decision[s] from which it is taken” (citation
and punctuation omitted)). See also Crum v. Jackson Natl. Life Ins.
Co., 315 Ga. 67, 77 (2) (c) (ii) (880 SE2d 205) (2022) (“we presume
that the legislature enacted the new statute ‘with full knowledge of’
the extant body of decisional law”).
Soon after its enactment, OCGA § 13-8-2.1 was declared
unconstitutional because its provision allowing for the “partial
enforcement” of unreasonable restrictive covenants (i.e., blue
19
penciling) would have “breathe[d] life into” contracts that “[had] the
effect of defeating or lessening competition,” in violation of Article
III, Sec. VI, Par. V (c) of the 1983 Georgia Constitution. See Jackson
& Coker, Inc. v. Hart, 261 Ga. 371, 372 (1) (405 SE2d 253) (1991).
But nothing in Jackson disturbed the conceptual distinction
between general and partial restraints of trade (i.e., reasonable
restrictive covenants) or the understanding that unreasonable
restrictive covenants were contracts in general restraint of trade.
(ii) When the General Assembly enacted the GRCA some 20
years later—after the ratification of a constitutional amendment to
address the issue identified in Jackson5—it carried forward the
settled understanding that unreasonable restrictive covenants are
general restraints of trade that contravene public policy. Ga. L.
2011, p. 399, 400, § 2 (repealing prior OCGA § 13-8-2 (a) (2) and
reenacting it in its current form). Through the GRCA, the General
5 See Ga. L. 2011, p. 399, 399-400, § 1 (detailing legislative history of
GRCA, including constitutional amendment); Ga. Const. of 1983, Art. III, Sec.
VI, Par. V (c) (as amended Nov. 2, 2010) (authorizing “judicial enforcement” of
certain “contracts or agreements restricting or regulating competitive
activities” and expressly allowing blue-penciling).
20
Assembly set up a comprehensive scheme for determining whether
restrictive covenants are reasonable and thus enforceable. See
OCGA §§ 13-8-53 (a), (c), 13-8-56, 13-8-57 (together, providing that
reasonable restrictive covenants are enforceable and establishing
standards for determining whether a given covenant is reasonable);
13-8-55 (setting pleading and burden of proof requirements). In
several ways, that scheme reflects a more permissive and flexible
approach to restrictive covenants compared to what had developed
through our decisional law. See Burson v. Milton Hall Surgical
Assocs., LLC, 343 Ga. App. 159, 161 (806 SE2d 239) (2017) (noting
that prior to the enactment of the GRCA, “‘Georgia law disfavored
restrictive covenants’” (citation omitted)). For example, the GRCA
tells courts to construe restrictive covenants “in favor of providing
reasonable protection to all legitimate business interests
established by the person seeking enforcement.” OCGA § 13-8-54 (a).
And, as now authorized by the 2010 constitutional amendment, it
expressly allows blue-penciling: if a court concludes that a
restrictive covenant violates the GRCA as written, the court “may
21
modify the restraint provision and grant only the relief reasonably
necessary” to protect the proponent’s legitimate business interests
and to “achieve the original intent of the contracting parties.” OCGA
§ 13-8-54 (b). See also OCGA § 13-8-53 (d). Compare Coleman v.
Retina Consultants, P.C., 286 Ga. 317, 320 (1) (687 SE2d 457) (2009)
(before GRCA, noting that Georgia courts generally did not bluepencil overly broad restrictive covenants). This more permissive
approach is grounded in the General Assembly’s express finding
that “reasonable restrictive covenants . . . serve the legitimate
purpose of protecting legitimate business interests and creating an
environment that is favorable to attracting commercial enterprises
to Georgia and keeping existing businesses within the state.” OCGA
§ 13-8-50.
But the GRCA’s more permissive scheme for construing and
enforcing restrictive covenants still preserved the settled
understanding that restrictive covenants that are unreasonable—
i.e., those which do not comply with the GRCA—are against public
policy. Under the GRCA, such restrictive covenants are not only
22
“unlawful” but “void and unenforceable.” OCGA § 13-8-53 (d). See
also OCGA § 13-8-54 (b) (“In any action concerning enforcement of a
restrictive covenant, a court shall not enforce a restrictive covenant
unless it is in compliance with the provisions of Code Section 13-8-53.”). That language is the same kind of language used in our
decisional law to describe the effect of concluding that a restrictive
covenant was against public policy. See, e.g., W.R. Grace, 262 Ga. at
465 (1) (unreasonable restrictive covenants are “void”); Moore, 226
Ga. at 836-837 (1) (same); Aladdin, 214 Ga. at 520 (2) (unreasonable
restrictive covenant was “unenforceable”). And more important, the
GRCA maintained the public-policy-based line our decisional law
has drawn between contracts in general restraint of trade and
reasonable restrictive covenants: revised OCGA § 13-8-2 (a) (2)
distinguishes between “[c]ontracts in general restraint of trade,”
which remain “contrary to public policy,” and “contracts which
restrict certain competitive activities, as provided in [the GRCA].”
This latter language swaps out the “partial restraint of trade” label
our decisional law (and the short-lived OCGA § 13-8-2.1) gave to
23
reasonable restrictive covenants in favor of the GRCA and its
standards for determining whether a given restrictive covenant is
reasonable. And the juxtaposition of that language against the
“general restraint of trade” language—which our decisional law has
long used interchangeably with unreasonable restrictive
covenants—is hard to understand as anything other than readoption of the settled understanding that unreasonable restrictive
covenants are against public policy.
(e) What does this mean for the choice-of-law question before
us? Put simply, it means that the inquiry must start with Georgia
law. As discussed above, under OCGA § 1-3-9, Georgia courts may
not enforce foreign law if it would contravene our public policy. And
as we have just explained, restrictive covenants that do not comply
with the GRCA are contrary to public policy. So a Georgia court that
is asked to apply foreign law to determine whether to enforce a
restrictive covenant must first apply the GRCA to determine
whether the restrictive covenant complies with it. This includes an
analysis of whether the restrictions at issue are “reasonable in time,
24
geographic area, and scope.” OCGA § 13-8-53 (a). If the court applies
the GRCA and concludes that the restrictive covenant is reasonable,
the court can honor the choice-of-law provision and apply the foreign
law to determine the enforceability of the restrictive covenant. If, on
the other hand, applying the GRCA shows that the restrictive
covenant is unreasonable, the restrictive covenant is against public
policy, see OCGA § 13-8-2 (a) (2), and the court may not apply foreign
law to enforce it, see OCGA § 1-3-9. Instead, the court must apply
Georgia law, which would not allow for the enforcement of the
unreasonable restrictive covenant as written. That said, the court
would have the power under Georgia law to partially enforce the
covenant through blue-penciling—“modify[ing]” the covenant and
“grant[ing] only the relief reasonably necessary” to protect
legitimate business interests and achieve the parties’ intent “to the
extent possible.” OCGA § 13-8-54 (b); see also OCGA § 13-8-53 (d).6
6 The Court of Appeals’ opinion can be read to suggest that Georgia
courts may simply decline to blue-pencil an unreasonable restrictive covenant
without reason. See Burbach, 363 Ga. App. at 192 (1) n.8 (“Although Georgia
courts may apply the ‘“blue pencil’” doctrine and modify unreasonable
25
Our conclusion that Georgia courts may not apply foreign law
to enforce a restrictive covenant that would be deemed unreasonable
under Georgia law largely tracks our courts’ approach before the
GRCA and the corresponding constitutional amendment were in
force. See Convergys Corp., 276 Ga. at 808-809 (declaring, in regard
to certified question on whether Ohio law should govern the
noncompetition agreement at issue, that “we continue to refuse to
enforce contractual rights which contravene the policy of Georgia”);
Nasco, Inc., 239 Ga. at 676-677 (2) (noting that “[c]ovenants against
disclosure, like covenants against competition, affect the interests of
restrictive covenants, Georgia courts are not required to do so.”) (citing OCGA
§ 13-8-54 (b) (“[T]he court may modify the restraint provision.” (emphasis
added by the Court of Appeals)))). To be sure, this provision’s use of the word
“may” indicates that the court may exercise discretion to determine whether
or not to blue-pencil an agreement. See Belt Power, LLC v. Reed, 354 Ga. App.
289, 294-295 (2) (b) (840 SE2d 765) (2020). That said, the same statute that
empowers a court to blue-pencil a restrictive covenant also requires a court to
construe restrictive covenants “to comport with the reasonable intent and
expectations of the parties” and “in favor of providing reasonable protection to
all legitimate business interests established by the person seeking
enforcement.” OCGA § 13-8-54 (a). And the blue-penciling provision empowers
a court to modify a restrictive covenant for precisely those purposes. See OCGA
§ 13-8-54 (b). Given this language, it is not obvious to us that a trial court’s
discretion to blue-pencil or not is wholly unbounded. That said, we leave for
another day any questions about the breadth of a trial court’s discretion to
decide whether to blue-pencil a restrictive covenant under this provision.
26
this state, . . . and hence their validity is determined by the public
policy of this state,” and thus applying Georgia law rather than that
of selected state to conclude that restrictive covenants were invalid);
Hostetler v. Answerthink, Inc., 267 Ga. App. 325, 328 (b) (599 SE2d
271) (2004) (“A choice of law provision set forth in an agreement
containing a restrictive covenant will not allow the parties to choose
a jurisdiction that will uphold what is against Georgia public policy;
Georgia courts will decide the validity of such restrictive covenant
in partial restraint of trade under Georgia law.”). Motorsports
suggests that those decisions were grounded in a pre-GRCA
“hostility” to restrictive covenants and thus were effectively
abrogated when the GRCA was enacted. It is not clear to us that
they are right on that point, but even assuming they are, it is of no
moment: as we have explained, our conclusion here is grounded in
statutes currently in force, including OCGA § 13-8-2 and the GRCA.
The enactment of the GRCA and its enabling constitutional
amendment may have liberalized our State’s general approach to
restrictive covenants, but as we have shown above, the legislature
27
retained the consistent and longstanding view that unreasonable
restrictive covenants are against public policy and may not be
enforced by Georgia courts. See OCGA §§ 13-8-53 (a), (d); id. § 13-8-54 (b). And the GRCA certainly did not change our State’s
longstanding and codified policy of declining to apply foreign law to
enforce contracts against the public policy of our State. See OCGA §
1-3-9; Convergys Corp., 276 Ga. at 809; Ulman, Magill & Jordan
Woolen Co., 155 Ga. at 557-558. In other words, although the GRCA
implemented an approach to restrictive covenants that is more
flexible in some ways, that new flexibility still does not include
allowing Georgia courts to enforce restrictive covenants that are
deemed unreasonable under Georgia law.
3. Having now clarified the standard for determining whether
to apply contracting parties’ choice of foreign law to govern the
enforceability of a restrictive covenant in an employment contract,
we vacate the judgment below and remand this case to the Court of
Appeals. On remand, the Court of Appeals is directed to vacate the
judgment of the trial court and remand the case to that court, so that
28
it may in the first instance apply the framework set out above. To do
that, the trial court must first apply the GRCA to determine whether
the restrictive covenants in Burbach’s employment agreements
comply with it. If the covenants are reasonable under Georgia law,
see OCGA § 13-8-53, the court must then apply the parties’ chosen
law—Florida law—to determine their ultimate enforceability. 7 If the
covenants as written do not comply with the GRCA, then enforcing
them would violate Georgia public policy, and so the court may not
apply foreign law to enforce them. Instead, Georgia law would
govern the covenants, and so the trial court would apply our law,
including the GRCA’s blue-penciling provision, to determine
whether the restrictive covenants may be enforced in part.
Judgment vacated and case remanded with direction. All the
Justices concur.
7We do not decide here whether, and under what circumstances, a
Georgia court could decline to apply the parties’ choice of foreign law if that
law would invalidate a restrictive covenant that would be enforceable under
Georgia law.
29