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Cruise sales rep gets partial win on noncompete case

Posted On: Apr. 25, 2018 2:17 PM CST

Cruise sales rep gets partial win on noncompete case

A federal appeals court has partially reversed a U.S. District Court’s grant of summary judgment in litigation filed against a former employee by a cruise sales vendor in a complex case involving the Family Medical Leave Act and a charge of a breach of a noncompete covenant.

Karen D’Onofrio began working as a sales representative for Vacations to Go, a division of Houston-based Vacation Publications Inc., the world’s largest seller of ocean-going cruises, in 2012, according to Tuesday’s ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Karen D’Onofrio v. Vacation Publications Inc. v. Michael D’Onofrio et al.

She signed a noncompete agreement saying she would not work during her employment, or for 18 months thereafter, for a direct or indirect competitor in a job related to sales or marketing of cruises, according to the ruling.

Ms. D’Onofrio’s husband, Michael, had been severely injured in a car accident in 2011. in April 2014, he purchased a franchise of a company that also sells cruises and other travel-related products and services. To support his application, he sent a screenshot of his wife’s sales records, including her sales totals, but not customer information.

In July 2014, Ms. D’Onofrio asked for FMLA leave to care for her husband. She was given the option of taking unpaid leave or working remotely a few times per week and continuing to service her accounts. She chose the latter, the ruling said. She then attended a training session for her husband’s franchise.

When she failed to respond to Vacations to Go client emails and voicemails during her FMLA leave, her clients were brought in-house. After a manager mistakenly sent an email stating she no longer worked at Vacations, Ms. D’Onofrio wrongly believed she had been terminated.

Ms. Donofrio filed suit against Vacations, charging it with interfering with her FMLA rights. Vacations countersued on charges including breach of her noncompete covenant. The U.S. District Court in Houston granted Vacations summary judgment dismissing the case.

A three-judge appeals court panel unanimously partially reversed the lower court’s ruling. The panel reaffirmed dismissal of Ms. D’Onofrio’s charge Vacations had violated her FMLA rights.

However, it reversed dismissal of Vacations’ breach of covenant claim, among other charges. Vacation’s noncompete covenant was “unreasonable,” said the court.

“Under Texas law, covenants not to compete that ‘extend the clients with whom the employee had no dealings during (her) employment’ or amount to industry-wide exclusion are ‘overbroad and unreasonable,’” said the panel, in citing an earlier ruling.

The case was remanded for further proceedings.