New York Employment Lawyer Blog

On November 3, 2011, in Int'l Business Machines Corp. v. Visentin, the Second Circuit Court of Appeals affirmed a Southern District of New York decision denying IBM's application for a preliminary injunction to enforce a non-compete agreement and prevent a former employee from working for a competitor.

Visentin was employed by IBM in numerous roles over twenty-six (26) years. From 2007 through the end of his employment, he was General Manager of IBM's Integrated Technology Services ("ITS") business, where he was responsible for the development and sale of ITS products and services throughout North America.

On January 19, 2011, Visentin announced that he was leaving IBM to work for a competitor, Hewlett-Packard. However, Visentin had previously signed a non-compete agreement with IBM, which provided that he would not, during his employment and for a period of twelve (12) months following the termination of his employment, become employed by any competitor of IBM in any geographic area in the world for which Visentin had job responsibilities during his last twelve (12) months of employment with IBM.

Due to this agreement, Visentin even offered to remain at IBM for a reasonable transition period, but IBM declined that offer. Hewlett-Packard also took steps to avoid any overlap in responsibilities between Visentin's position at IBM and his new position, by insulating Visentin from former IBM customers, restricting his work to segments of its business for which he had not been responsible at IBM, and limiting him to working with established Hewlett-Packard clients.

As you might have guessed, IBM nonetheless instantly brought suit against Visentin alleging breach of the non-compete agreement and misappropriation of trade secrets, and moved for a preliminary injunction.

The Southern District of New York held that the non-competition agreement was overly broad and refused to grant IBM's request for a preliminary injunction. Reiterating the standard under New York law that "properly scoped non-competition agreements are enforceable to protect an employer's legitimate interests so long as they pose no undue hardship on the employee and do not militate against public policy," the Court recognized that while IBM's legitimate business interests were the protection of its confidential information and trade secrets, the agreement prohibited competition in areas where IBM had no legitimate business interests.

Thus, the Court held that IBM had not satisfied its burden of demonstrating that any of its confidential information or trade secrets would be disclosed or relied upon by Visentin as a result of his employment with Hewlett-Packard. According to the Court, Visentin was not a technological expert and was not on the front lines dealing with clients, and therefore had little knowledge of how deals were priced. The Court was also influenced by the fact that there was no evidence of prior wrongdoing or disclosure of confidential information by Visentin. As a result, the Court held that IBM was unable to establish that the non-competition agreement was enforceable under New York law.

Before signing a non-compete agreement, we always recommend that employees have a New York Non-Compete attorney review the agreement to ensure that the employee understands the terms of the agreement and the ramifications of signing it. Lastly, if you already signed a non-compete agreement and now have questions concerning the enforceability of your agreement, it's also smart to consult with a New York employment attorney.

New York law does recognize that "the at-will relationship entails certain limited rights, including the right to maintain an action for tortious interference in certain limited situations." Kanhoye v. Altana Inc., 686 F.Supp.2d 199, 214 (E.D.N.Y. 2009).

Under New York law, the elements of tortious interference with a business relationship are: (1) the plaintiff had business relations with a third party; (2) the defendant interfered with those business relations; (3) the defendant acted for a wrongful purpose or used dishonest, unfair, or improper means; and (4) the defendant's acts injured the relationship. RFP LLC v. SCVNGR, Inc., 788 F.Supp.2d 191 (S.D.N.Y. 2011).

In New York, an at-will employee may only maintain an action for tortious interference with the at-will employment relationship against a co-employee by showing that the co-employee acted outside the scope of his or her authority by inducing the employer to terminate. Kanhoye v. Altana Inc., 686 F.Supp.2d 199 (E.D.N.Y. 2009); See Mahmud v. Kaufmann, 607 F.Supp.2d 541 (S.D.N.Y. 2009)(Under New York law, a plaintiff cannot maintain a tortious interference claim against her employer because an employer cannot be liable for interfering with its own relationship with its employee). A supervisor is considered to have acted outside the scope of his employment as would give rise to liability for tortious interference for inducing employer to terminate at-will employee if there is evidence that the supervisor's manner of interference involved independent tortious acts such as fraud or misrepresentations, or that he acted purely from malice or self interest. Kanhoye v. Altana Inc., 686 F.Supp.2d 199 (E.D.N.Y. 2009).

Employee could not circumvent at-will employment rule, namely, that she could freely be discharged at any time with or without cause, by casting her cause of action against her former co-workers and supervisor as one for tortious interference with employment, absent injury independent of termination. Barcellos v. Robbins, 50 A.D.3d 934, 858 N.Y.S.2d 658 (N.Y.A.D. 2 Dept. 2008). Discharged employee's conclusory allegations that her former co-workers and supervisor made "false and malicious" statements in their "libelous" campaign against her, without more, were insufficient to place their actions outside scope of their employment for purposes of stating claim for tortious interference with employment. Id. Inasmuch as the length of employment is not a material term of at-will employment, a party cannot be injured merely by the termination of her employment. Id.

If you believe that someone unlawfully interfered with your employment, it's smart to contact an New York Employment Attorney as soon as possible to preserve all your legal rights.