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Spinal Dimensions, Inc. v. Chepenuk - 2007 NY Slip Op 51533(U), 16 Misc. 3d 1121(A), 847 N.Y.S.2d 905 (Sup. Ct.)

Rule:

In order to obtain preliminary injunctive relief, the moving party must demonstrate "that irreparable harm will occur if the injunction is not granted, that such party has a likelihood of success on the merits, and that the balance of equities tip in its favor"

Facts:

Plaintiff SDI sought a preliminary injunction against defendants Damian Chepenuk and David Nowetner to enforce non-compete, non-disclosure, and non-solicitation clauses contained in employment and independent contractor agreements. Defendants were employed by plaintiff SDI until June 2007. The SDI employment agreement signed by each defendant includes provisions that: acknowledge the employee's receipt of "highly valuable, confidential and proprietary information; and a covenant that the employee will protect and preserve such information during and at all times following the employment relationship. They acknowledged "that SDI has a legitimate protectible interest in SDI's [confidential information], goodwill and specialized knowledge acquired by [the employee] during the course of this contract with SDI, and in SDI's near permanent customer relationships. They established an 18-month duration for the post-employment covenants against competition and solicitation. The preliminary injunction requested by plaintiff would restrain defendants from violating a covenant not to compete contained in an employment agreement.

Issue:

Were plaintiffs entitled to preliminary injunctive relief to enforce the restrictive covenants?

Answer:

Yes

Conclusion:

The Court finds that plaintiffs are likely to succeed in establishing that the covenant against post-employment competition set forth in the SDI employment agreements includes, as a matter of contract interpretation, not only the specific customers serviced by defendants, but also the Central New York geographic region. Plaintiffs have demonstrated a legitimate employer interest in enforcing the restrictive covenant with respect to the accounts and customers upon whom they called, sold products to, serviced or otherwise developed professional relationships with in the course of their employment with SDI. Such an interest also extends to the clients of the sales representatives whom defendant Chepenuk supervised. Plaintiffs trained defendants, provided them the opportunity for substantial earnings, gave them access to confidential and sensitive business information and allowed them to build new customer relationships and foster existing relationships through their employment. Defendants left their lucrative employment with plaintiffs (as they certainly are entitled to do), and went to work for a formidable, direct competitor, thus raising legitimate concerns on the part of plaintiffs regarding the possibility of unfair competition.

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