Amex Distrib. Company v. Mascari

Arizona Court of Appeals · 1986 · Corporations

724 P.2d 596 (Ariz. Ct. App. 1986)

Updated August 22, 2026

Corporationsemployment restrictive covenantstrade secretsnoncompetition agreementsnoncompeterestrictive covenantblue-pencilcustomer information

Facts

Amex, a produce brokerage company, hired Mascari when he was nineteen and later groomed him to manage its lettuce operations in Yuma and Salinas. In 1979, after Mascari had already gained substantial experience, he signed an employment agreement containing paragraph 6, which barred him during and after employment from using customer information to compete, and paragraph 10a, which barred him for 36 months from competing with Amex or doing business with any customer Amex had at termination or during the prior 36 months. After Amex terminated him in 1984, Mascari started his own brokerage business and did business with customers he had dealt with while at Amex. There was no evidence that Mascari took or copied any Amex customer list, and the produce brokerage business was highly competitive, with customers generally accessible to brokers and often dealing through more than one broker.

Issue

Whether paragraph 6's ban on using customer information and paragraph 10a's 36-month noncompetition and customer non-solicitation restrictions were enforceable against Mascari, and whether the court could save any part of those provisions under Arizona's blue-pencil rule. Also at issue was whether the trial court properly denied Mascari attorney's fees below.

Rule

In Arizona, employment restrictive covenants are disfavored and strictly construed against the employer, but reasonable restraints no broader than the employer's legitimately protectable interests may be enforced. Under the blue-pencil rule, a court may eliminate grammatically severable unreasonable provisions, but it may not rewrite an overbroad covenant to create a narrower restriction. A restriction on use of customer information that functions as an unlimited noncompetition covenant is invalid, and a customer-based or competitive restraint is unreasonable when its scope or duration exceeds what is necessary to protect the employer's customer relationships and goodwill.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeshore Packaging, a distributor in Chicago, requires account manager Nora Patel to sign a clause stating that after her employment ends, she may never use any knowledge about the company's customers' preferences, purchasing cycles, or negotiation habits "to compete directly or indirectly" with the company. In that industry, customer identities are widely known, and competing distributors routinely learn buyers' needs through ordinary sales calls.

If Nora leaves and begins soliciting those buyers for a rival, which is the strongest argument about the clause's enforceability under Arizona law as described here?

Explanation. The majority treated a confidentiality provision as invalid where, in substance, it barred the former employee from using customer information to compete without any time limit. The court emphasized that customer information is protectable only if it is truly confidential and substantially inaccessible; where customers are generally known and reachable by competitors, the clause boils down to a perpetual noncompete and is invalid.