In a September 7, 2011 decision by Justice Fried, the court upheld the plaintiff’s breach of contract claim which alleged that the defendant former employee breached the confidentiality, non-compete, and non-solicitation provisions of his employment agreement. First, the court rejected the defendants’ argument that the claim failed because it did not allege damages with specificity. To survive a pre-answer motion to dismiss, a pleading need only state allegations from which damages attributable to the defendant’s conduct could be reasonably inferred, which the court found, the plaintiff did. The court also determined that the plaintiff, which provided research and analysis services to hedge funds, adequately pled that its client list was a trade secret and was thus “confidential information”, because the complaint specifically alleged that the plaintiff expended significant time and expense over years to develop its client list, took significant steps to protect its client data, and built its business with the intent not to make its existence known in the industry. Those allegations also adequately supported a claim for misappropriation of trade secrets. Turning to the non-compete provision, the court rejected the defendants’ argument that the provision was unenforceable because it lacked a geographic limitation, finding that the absence of such limitation does not automatically invalidate an entire non-compete, where the plaintiff sufficiently alleged that the former employee had access to its crucial business and the employer had a legitimate interest in preventing the employee from using that information to its detriment. Finally, the court concluded that the non-solicitation provision was overly broad because it prevented the former employee from soliciting any client, regardless of whether the employee had a relationship with that client during his employee, and therefore would prevent the employee from soliciting any hedge funds for fear that he might inadvertently solicit the plaintiff’s client.
Novus Partners, Inc. v Vainchenker, Sup Ct NY County, September 7, 2011, Fried, J, Index No. 650683/11