R.R. Donnelley & Sons Co. v. Fagan

767 F. Supp. 1259 (S.D.N.Y. 1991)

 

RULE:

A court will only uphold a non-compete agreement if the scope of the restrictions is reasonable and the restrictions are reasonably necessary to protect a legitimate business interest of the employer. 

FACTS:

Plaintiff employer filed a complaint against defendant employee and a competitor alleging breach of contract, breach of fiduciary duty, tortious interference with contract and unfair competition. At issue was the enforceability of a non-compete agreement and a confidentiality agreement signed by defendant and whether plaintiff was entitled to the equitable relief it sought. Plaintiff sought to enjoin defendant from working for its competitor and from soliciting or assisting in the solicitation of 29 specific purchasers of printing services and from revealing any confidential information about plaintiff. Plaintiff submitted an order to show cause why a preliminary injunction should not be issued and requested a temporary restraining order pending a hearing and the court's decision on the preliminary injunction. The court denied plaintiff’s motion for an injunction in its entirety and granted defendant’s motion for a direct verdict on all claims.

ISSUE:

Was the non-compete agreement between plaintiff employer and defendant former-employee enforceable because of a post-employment compensation provision?

ANSWER:

No.

CONCLUSION:

The reasonableness of the restrictions was measured by their effect, if any, on the general public, the extent of the hardship imposed thereby on the restricted party and whether they were necessary to protect a legitimate business interest of the former employer. Thus, plaintiff employer could not argue that the non-compete agreement should be enforced because it included a post-employment compensation provision, making the non-compete clause and other restrictive covenants reasonable. Moreover, plaintiff failed to show that the defendant employee possessed confidential information as to which plaintiff was entitled to the injunctive protection requested.

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