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Nevada Supreme Court Upholds Blue Penciling Of NonCompete

In Golden Road Motor Inn, Inc. v. Islam, 132 Nev. 476, 488, 376 P.3d 151, 159 (2016), the Nevada Supreme Court held that district courts cannot, on their own, blue-pencil a noncompetition agreement to remove unreasonably restrictive, and thus unenforceable, aspects.  See Nevada Supreme Court Refuses To "Blue Pencil" Unreasonable Non-Compete  The Nevada legislature was not in accord and the following year enacted NRS 613.195, which requires district courts to blue-pencil unreasonable noncompetition agreements and enforce the revised agreement.  2017 Nev. Stat., ch. 324, § 1, at 1861.  That would seem to be the end of the story, but it wasn't.  Left unanswered was the effect of NRS 613.195 on agreements entered into before the statute was enacted.

"Yes, blue must be the color of the blues"

In Duong v. Fielden Hanson Isaacs Miyada Robison Yeh, Ltd., 2020 Nev. LEXIS 82, *6, 136 Nev. Adv. Rep. 87, 2020 WL 7866647, the parties entered into an agreement before the enactment of NRS 613.195.  The Nevada Supreme Court, however, declined to address whether the statute applies retroactively.  Instead, the Court held that Golden Road does not prohibit a district court from blue-penciling an unreasonable noncompete agreement when the agreement allows, indeed requests, the court to so.  

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 33
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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