Law School Case Brief
Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC - 813 F. Supp. 2d 489 (S.D.N.Y. 2011)
New York law subjects contractual non-compete provisions to an overriding limitation of reasonableness. Specifically, an agreement not to compete will be enforced only if it is reasonable in time and area, necessary to protect the employer's legitimate interests, not harmful to the general public, and not unreasonably burdensome to the employee.
While working as a trader on Wall Street in 2002, Plaintiff Lauren Brenner (Brenner) decided to start her own physical fitness business, based upon the concept of a military boot camp. Investing substantial time and all of her savings, on or about December 17, 2003, Brenner opened Pure Power Boot Camp, Inc. (Pure Power). Pure Power is modeled, in part, after United States Marine Corps training facilities. Brenner employed former marines as "drill instructors," viewing it as an opportunity to provide jobs to veterans returning from combat in Iraq. Because Pure Power's training techniques were not developed or taught in the United States military, when new drill instructors are hired, they are required to observe and participate in the Pure Power Program, and teach alongside an experienced instructor, before being allowed to teach on their own. All drill instructors are required to obtain certification as a fitness instructor. A number of marines came to Pure Power to experience the program. One of those marines was Defendant Ruben Dario Belliard. Belliard started working at Pure Power as an independent contractor in April 2005, and was hired as a full-time Pure Power drill instructor in or about July 2006. On Belliard's recommendation, Brenner hired Defendant Alexander Kenneth Fell, another marine, in or about August 2005. Every drill instructor signed an Employment Agreement containing a number of contractual provisions, one of which is a non-compete provision. The non-compete provision states that an employee of Pure Power, for a period of 10 years following employment at Pure Power "shall not, and shall not assist any third party to, conduct any business or be employed by any business that competes directly with the Company."
Around July 2007, while they were still working at Pure Power, Defendants Belliard and Fell began planning their own military-themed gym, Warrior Fitness Boot Camp, LLC (Warrior Fitness). Pure Power brought this action against Warrior Fitness, accusing it of stealing their business model, customers, and confidential and commercially sensitive documents, breaching contractual and employee fiduciary duties, and infringing Plaintiffs' trade-dress. Defendants filed counterclaims asserting violations of the New York Labor Law, violations of the Stored Communications Act, and unauthorized use of Defendants' images in violation of New York Civil Rights Law. The Court's jurisdiction is derived from Plaintiffs' federal statutory trade dress claims, under 28 U.S.C. § 1338(a) and (b).
Was the non-compete provision of the Employment Agreement signed by the drill instructors valid?
The Court held that the non-compete provision of the Employment Agreement signed by the drill instructors was invalid and unenforceable. New York law subjects contractual non-compete provisions to "an overriding limitation of reasonableness. Such agreements may be justified by the employer's need to protect itself from unfair competition by former employees. Here, the non-compete provision is clearly unreasonable in terms of duration and geographic scope. Plaintiffs introduced no evidence to support the proposition that a covenant restricting competition of the kind at issue in this case, anywhere in the world, is reasonable in terms of scope; nor have Plaintiffs pointed to any cases in this jurisdiction that would support the Court drawing such a conclusion. Moreover, a non-compete provision that restricts Defendants Belliard and Fell from accepting any job in the fitness industry that "uses obstacle courses" or "exercises derived from military training" or a "military theme" or "employs the term 'boot camp'" is ambiguous and overly broad.
However, the Court did find that Plaintiffs established that Defendants Belliard and Fell breached their duty of loyalty to Plaintiff Pure Power and were faithless servants. Plaintiffs are entitled to forfeiture damages against Defendant Belliard in the amount of $55,196.70, and punitive damages in the amount of $110,393.40. Plaintiffs are further entitled to forfeiture damages against Defendant Fell in the amount of $40,177.00, and punitive damages in the amount of $40,177.00. Defendant Lee is jointly and severally liable for Belliard's and Fell's forfeiture damages. All of the remaining claims and counterclaims are dismissed with prejudice.
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