J 4 H, L.L.C., Just 4 Him Houma, L.L.C. and Just 4 Him, L.L.C. VS Misty Zeringue Derouen and Making the Kut, L.L.C.
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2010 CA 0319 J4H L JUST 4 HIM HOUMA L AND JUST 4 HIM L C C C VERSUS STY ZERINGUE DEROUEN AND MAKING THE KUT L C q DATE OF JUDGMENT Y SEP 10 2010 ON APPEAL FROM THE SEVENTEENTH JUDICIAL DISTRICT COURT NUMBER 113143 DIVISION B PARISH OF LAFOURCHE STATE OF LOUISIANA HONORABLE JEROME J BARBERA III JUDGE Steven M Miller Counsel for Plaintiffs Appellants Thibodaux Louisiana J 4 H L Just 4 Him Houma C C L and Just 4 Him L C Woody Falgoust Cassie Rodrigue Braud Rachel Bollinger Carothers Counsel for Defendants Appellees Misty Zeringue Derorten and Making the Kut L C Thibodaux Louisiana BEFORE KUHN PETTIGREW AND KLINE JJ Disposition AFFIRMED The Honorable William F Kline Jr is serving pro tempore by special appointment of the Louisiana Supreme Court Kuhn J Plaintiffs J41 L J4H C C L Just 4 Him Just 4 Him Houma L and Just 4 Him C appeal the trial court judgment which denied their motion s for a preliminary injunction to prohibit defendants Misty Zeringue Derouen and Making the Kut L from competing with plaintiffs hair salons in accordance C with the terms of a noncompetition agreement We affirm I PROCEDURAL AND FACTUAL BACKGROUND Tica Sevin formed Just 4 Him L a male themed hair salon in C Lockport Louisiana in December 2005 The salon catered to male clients seeking walkin salon services Due to its success a second salon was opened six months later in Houma Louisiana at 632 Corporate Drive Thereafter J4H was formed to franchise additional Just 4 Him salons Tica and her husband Kevin are owners of J4H which owns the salon located in Houma Ms Derouen graduated from cosmetology school in 2001 She began working for Just 4 Him on March 26 2007 after she and the Sevins reached a verbal agreement regarding the hours she would work and they agreed she would receive 50 percent of the amount charged for the services she performed She did not pay any additional amount to the salon to rent a chair or booth the percentage of her earnings paid to the salon was her rent Just 4 Him provided hair dryers and Paul Mitchell products for her use but she provided her own scissors Just 4 Him andor J4H paid Ms Derouen weekly she kept all of her tips 2 The record establishes that each stylist had a different agreement regarding compensation with some receiving a smaller percentage of the amount of the services rendered 2 and no social security or income taxes were withheld from her pay Ms Derouen primarily cut hair at the Houma salon but she occasionally worked in other Just 4 Him salon locations For at least part of the time that she worked for Just 4 Him she was a manager who trained new stylists and she traveled to new salons as they opened to help with trainings On June 6 2007 Ms Derouen signed an Operating Manual a sixpage document that outlined various operating procedures for Just 4 Him It included provisions addressing vacation time and an end of the year bonus and it contained the following paragraph relevant to plaintiffs request for injunctive relief y B Louisiana law clients are property of Just 4 Him and J4H You may not take any trademark property of Just 4 Him or J4H upon termination of employment Trademark property includes using the name Just 4 Him Just 4 Him Haircut Lounge or Just 4 Him Men s Haircut Lounge Trademark property also refers to any and all concepts regarding the Just 4 Him Haircut Lounge or J4H including but not limiting sic to a sports themed or male themed salon Stylists are entered into a non compete clause with Just 4 Him and or J4H and may not compete with any of the afore named establishments within Lafourche and or Terrebonne Parish for 2 years from date of termination On July 10 2009 the Sevins held a meeting with the Just 4 Him hair stylists Mr Sevin testified that the Just 4 Him salon located at 632 Corporate Drive was about to relocate to Martin Luther King Blvd and he had been hearing complaints from his stylists He called all of the hair stylists together for a meeting wherein he told them that the salon would have extended hours on Saturday and he discussed other business matters pertaining to the relocation Mr 3 Ms Derouen testified she was initially paid in cash and later paid with a Just 4 Him check from the J4H franchise Sevin further testified that he instructed his stylists that if they could comply with his directives they could return the next day and continue working for Just 4 Him He testified that all of the stylists returned the next day except Ms Derouen Just 4 Him moved to its new Martin Luther King Blvd location and on August 17 2009 Ms Derouen opened her own male themed hair salon Making the Kut C L Making the Kut in the same business suite that Just 4 Him salon had s previously occupied at 632 Corporate Drive On October 6 2009 plaintiffs filed a petition seeking injunctive relief and damages wherein plaintiffs alleged that Ms Derouen worked as an independent contractor cutting hair in plaintiffs salons while primarily working out of the salon located at 632 Corporate Drive and was an independent contractor employed by J4H to act as a trainer for that business Plaintiffs further alleged that Making the Kut was directly competing with plaintiffs and using the same business model and training methods used by Just 4 Him Plaintiffs sought damages for losses resulting from defendants competition and injunctive relief to enforce the terms of the noncompetition agreement The trial court issued an order directing defendants to show cause at a November 10 2009 hearing why a preliminary injunction should not issue prohibiting them from competing with plaintiffs and why the terms of the noncompetition agreement should not be enforced On November 30 2009 the trial court signed a judgment denying plaintiffs motion for a preliminary injunction and ordering plaintiffs to bear all costs of the matter In oral reasons for judgment the trial court found in pertinent part as follows Ms Derouen was certainly an independent contractor I don t think there is any doubt about that And as a result of that we re 4 required to look at the statute to see what has to happen for an independent contractor to enforce a noncompetition agreement between the treatment of an employee s There a distinct difference and the treatment of an independent contractor The trial court further concluded that plaintiffs burden of establishing a written contract as required by La R 23 pursuant to which Ms Derouen work S 921C s as an independent contractor was performed was not satisfied by the Just 4 Him operating manual Plaintiffs appealed urging that the trial court incorrectly concluded that 1 Ms Derouen was an independent contractor for purposes of applying La R S 921 23 and 2 Just 4 Him operating manual was not an enforceable contract s II ANALYSIS Historically Louisiana has disfavored noncompetition agreements Swat 24 Shreveport Bossier Inc v Bond 001695 p 4 La 6 808 So 294 01 29 2d 298 Such agreements are deemed to be against public policy except under the limited circumstances delineated by statute LaFourche Speech Language Services Inc v Juckett 94 1809 p 3 La App 1st Cir 3 652 So 679 95 2d 680 writ denied 95 0850 La 5 654 So 351 At all times pertinent to 95 12 2d this matter La R 23 provided in part as follows S 921 A 1 Every contract or agreement or provision thereof by which anyone is restrained from exercising a lawful profession trade An appeal may be taken as a matter of right from a judgment relating to a preliminary injunction La C art 3612 P 5 Louisiana strong public policy restricting these types of agreements is premised on an s underlying state objective to prevent an individual from contractually depriving himself of the ability to support himself and consequently becoming a public burden Kimball v Anesthesia Specialists of Baton Rouge Inc 001954 p 6 La App 1st Cir 9 309 So 405 410 01 28 2d writs denied 01 3316 01 3355 La 3 811 So 883 02 8 2d 5 886 or business of any kind except as provided in this Section shall be null and void C Any person including a corporation and the individual shareholders of such corporation who is employed as an aged servant or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer or and from soliciting customers of the employer within a specified parish or parishes municipality or municipalities or parts thereof so long as the employer carries on a like business therein not to exceed An a period of two years from termination of employment independent contractor whose work is performed pursuant to a written contract may enter into an agreement to refrain from carrying on or engaging in a business similar to the business of the person with whom the independent contractor has contracted on the same basis as if the independent contractor were an employee for a period not to exceed two years from the date of the last work performed under the written contract Footnote and emphasis added Louisiana Revised Statutes 23 is an exception to Louisiana public policy 921C s against noncompetition agreements and as such must be strictly construed Kimball v Anesthesia Specialists of Baton Rouge Inc 00 1954 pp 6 7 La App 1st Cir 9 809 So 405 410 11 writs denied 01 3316 01 28 2d La 3 811 So 883 02 8 2d 01 3355 886 Generally a party seeking the issuance of a preliminary injunction must show that he will suffer irreparable injury if the injunction does not issue and must show entitlement to the relief sought by making a prima facie showing that the party will prevail on the merits of the case Vartech Systems Inc v Hayden 05 2499 p 7 La App l st Cir 12 951 So 247 255 However where an 06 20 2d obligor has failed to perform in accordance with the terms of a noncompetition e Acts 2010 No 164 effective August 15 2010 added the following sentence to Subsection 1 of Paragraph A of La R S 23 921 However every contract or agreement or provision thereof which meets the exceptions as provided in this Section shall be enforceable 6 agreement the court shall order injunctive relief even without a showing of irreparable harm upon proof of the obligor breach s See Id Clear Channel Broadcasting Inc v Brown 040133 p 6 La App 4th Cir 3 901 So 05 30 2d 553 557 see also La R 23 S 921H Even though La R 23 mandates the court to issue injunctive relief S 921 upon proof of the obligor failure to perform the employer must still establish s that it is entitled to relief Vartech Systems Inc 05 2499 at pp 78 951 So at 2d 255 If the agreement is found to be unenforceable or the agreement does not fall within an exception found in La R 23 the employer is unable to establish S 921 that it is entitled to the relief sought CDI Corp v Hough 08 0218 p 6 La App 1st Cir 3 9 So 282 287 09 27 3d Ordinarily a trial court exercises great discretion in granting or denying the requested relief Vartech Systems Inc 05 2499 at pp 8 951 So at 256 2d Absent a clear abuse of that discretion the trial court determination will not be s disturbed on appeal CDI Corp 08 0218 at p 6 9 So at 287 In this case 3d however the underlying issue is whether the noncompetition agreement falls within the exception found in La R 23 The proper interpretation of a S 921C statute is a question of law that we review on a de novo basis CDI Corp 08 0218 at p 7 9 So at 287 3d 1 Employee or Independent Contractor Status Despite the petition allegations and testimony by Mr Sevin that Ms s Derouen was an independent contractor plaintiffs now argue on appeal that Ms Derouen was an employee for purposes of applying La R 23 Plaintiffs S 921 urge that pursuant to the operating manual they maintained the right to terminate 7 stylists for any reason and otherwise maintained control over their stylists and as such Ms Derouen was actually their employee Generally the distinction between employee and independent contractor status is a factual determination decided on a caseby case basis which is subject to a manifest error standard of review See Tower Credit Inc v Carpenter 01 2875 pp 67 La 9 825 02 4 2d So 1125 112930 But in this case defendants counter plaintiffs contentions on appeal urging that the allegations of plaintiffs petition and Mr Sevin s testimony constitute a judicial confession that Ms Derouen was an independent contractor pursuant to La C 1853 We find merit in defendants contention Louisiana Civil Code article 1853 provides A judicial confession is a declaration made by a party in a judicial proceeding That confession constitutes full proof against the party who made it A judicial confession is indivisible and it may be revoked only on the ground of error of fact Well settled jurisprudence establishes that an admission by a party in a pleading constitutes a judicial confession and is full proof against the party making it C T Traina Inc v Sunshine Plaza Inc 03 1003 p 5 La 12 861 So 156 03 3 2d 159 In this instance plaintiffs judicially admitted that Ms Derouen was an independent contractor when they made multiple allegations to that effect in their petition Mr Sevin testimony during trial further confirmed that judicial s confession Mr Sevin Every service that Ms Derouen does off of it THE COURT Okay So she wasn an employee t N she makes 50 Mr Sevin More like THE COURT You paid taxes Mr Sevin More like an independent contractor we 1099 them THE COURT You gave them 1099 s Mr Sevin Yes sir THE COURT So the vacation pay addressed in the operating manual was really a gift in the since sic that they got paid for not being there Mr Sevin Correct THE COURT Right employees But usually vacation pay you talk about in terms of Mr Sevin Oh okay THE COURT These are independent contractors Mr Sevin Yes sir THE COURT Okay And the same thing with the Christmas bonus if there was one That was basically a gift Mr Sevin Yes sir 0 A judicial confession has the effect of waiving evidence as to the subject of the admission Id Article 1853 explicitly provides that a judicial confession may be revoked only on the ground of error of fact C Traina Inc 03 1003 at p 6 T 861 So at 160 Plaintiffs have at no time asserted that its judicial confession 2d that Ms Derouen was an independent contractor was made in error Id It was not until the trial court ruled adversely to plaintiffs and they realized that their admission worked to their detriment with respect to the application of La R S 921C 23 that they retreated from their previous committed stance We conclude based on the record before us that plaintiffs judicial confession that Ms Derouen was an independent contractor was never revoked on the ground of error of fact 2 Work Performed Pursuant to a Written Contract Louisiana Revised Statutes 23 authorizes independent contractors 921C whose work is performed pursuant to a written contract to enter into noncompetition agreements in accordance with the terms of that subsection Plaintiffs urge that if Ms Derouen is considered an independent contractor the operating manual which includes the noncompetition clause satisfies the statutory writing requirement Plaintiffs argue that the trial court misinterpreted La R S 921C 23 by interpreting it to require that the written contract must address how the work is to be performed Plaintiffs assert that the statute does not require the written contract to address any particular terms and because a lack of employer control over a job is indicative of an independent contractor relationship the absence of such terms cannot be fatal to the enforcement of the written agreement at hand We find no merit in these contentions 10 Hiring the services of another person is a form of a contract of lease La C art 2745 Loup v Louisiana State Schoolfor the Deaf 1998 0329 p 4 La App 1st Cir 2 729 So 689 692 For a contract of lease to be valid 99 19 2d there must be a thing a price and consent La C art 2670 In order to enforce a non competition agreement against an independent contractor La R 23 S 921C mandates that the independent contractor work is performed pursuant to a s written contract Interpreting this statutory requirement strictly in accordance with Louisiana public policy against noncompetition agreements we construe s this language as requiring a valid contract of lease in written form A contrary interpretation would defeat Louisiana strong objective of preventing an s individual from contractually depriving himself of the ability to support one self s where the terms of his or her work are not the clear object of the contract Because Just 4 Him operating manual neither specified an agreement as to the s price that Ms Derouen was to be paid nor specified the services she was to perform it did not constitute a contract of lease thus Ms Derouen work was s not performed pursuant to it within the meaning of La S 921C R 23 Accordingly because plaintiffs did not establish that Ms Derouen was performing work pursuant to a written contract as contemplated by La R 23 C they S 921 did not establish that the noncompetition agreement met the requirements of that exception and that they were entitled to the relief sought CDI Corp 08 0218 at p 6 9 So at 287 3d preliminary injunction The trial court properly denied plaintiffs motion for a III CONCLUSION For these reasons we affirm the trial court judgment denying plaintiffs s motion for a preliminary injunction Appeal costs are assessed against plaintiffs appellants AFFIRMED 12
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