Suffolk County Court Upholds Validity of Non-Compete Agreement – For Now September 1, 2009

In a decision that was published in this morning’s New York Law Journal, Justice Pines of Suffolk County denied the defendants-employees’  motion to dismiss their former employer’s claims seeking damages resulting from these employees’  solicitation of the company’s clients (or in legal terms,  breach of contract, breach of fiduciary duty, and tortious interference) while they were still employed by the plaintiff.  (That branch of the employees’ motion seeking to dismiss the employer’s request for an injunction, i.e., an Order barring them from continuing their solicitation of the plaintiff’s clients and current employees, was denied as well.)

The significance of this decision should be apparent: although New York’s courts generally look to invalidate non-compete agreements, in this case the Court went out of its way to hold that the plaintiffs’ claims should survive dismissal (at least at this introductory stage of the commercial litigation) because the non-solicitation agreement that the defendants-employees signed was not overly broad, and was legitimately tailored to protect the plaintiff-employer’s proprietary interests. (The defendants were barred from forming a competing business while still employed by plaintiff, or from soliciting the plaintiff’s customer base or employees in New York City, Nassau and Suffolk Counties for a 2 year period following termination.)

There is also an important lesson to be learned from this case: the plaintiff acted wisely in having a competent attorney draft their non-compete agreements. That modest investment a few years back may save them untold sums of money now.

Jonathan Cooper is a New York Business Litigation and New York Commercial Litigation Lawyer with a focus on New York breach of contract and New York business fraud claims before the Nassau, Queens, Brooklyn, Bronx, Westchester and Suffolk County courts of New York State. For more information, feel free to contact his Long Island office at 516-791-5700.

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