Summary
In Ashland Management Inc., v. Atair Investments NA LLC, 14 N.Y.3d 774, 898 N.Y.S.2d 542 [2010] the court reiterated the rule, not applicable here, that an employee may Solicit clients upon termination.
Summary of this case from B N Textile Inc. v. AlhalabiOpinion
No. 21.
Argued February 11, 2010.
Decided March 25, 2010.
APPEAL, by permission of the Appellate Division of the Supreme Court in the First Judicial Department, from an order of that Court, entered December 23, 2008. The Appellate Division affirmed an order of the Supreme Court, New York County (Shirley Werner Kornreich, J.; op 2006 NY Slip Op 30532[U]), which had granted a motion by defendants for summary judgment solely to the extent of dismissing the fifth and sixth causes of action, and denied a cross motion by plaintiff to reinstate a previously issued preliminary injunction. The following question was certified by the Appellate Division: "Was the order of this Court, which affirmed the order of the Supreme Court, properly made?"
Following the resignation of defendants from their employment with plaintiff and their opening of a competing business, plaintiff commenced the present action asserting seven causes of action for: (1) an injunction directing defendants to cease and desist from using any information in their new business that they acquired when employed with plaintiff; (2) and (3) breach of fiduciary duty; (4) breach of confidentiality agreements; (5) conversion; (6) tortious interference with plaintiffs contractual relations; and (7) unfair competition as against the corporate defendant.
Ashland Mgt. Inc. v Altair Invs. NA, LLC, 59 AD3d 97, modified.
Gordon Haffner, LLP, Harrison ( David Gordon of counsel), for appellants.
Grayson Associates, Greenwich, Connecticut ( Eric D. Grayson of counsel), for respondent.
Before: Chief Judge LIPPMAN and Judges CIPARICK, GRAFFEO, READ, SMITH, PIGOTT and JONES concur.
OPINION OF THE COURT
The order of the Appellate Division should be modified, without costs, by dismissing the first, second, third, fourth and seventh causes of action to the extent they seek injunctive relief or damages for defendants' misappropriation of client lists or trade secrets prior to their resignation, and otherwise affirmed. The certified question should be answered in the negative.
The confidentiality agreements executed by defendants did not prohibit them from soliciting plaintiffs clients or contacting its business referrers after their termination of employment. Moreover, plaintiff failed to raise a triable issue of fact as to whether its customer lists constituted a trade secret ( see Leo Silfen, Inc. v Cream, 29 NY2d 387) and whether defendants improperly used plaintiffs performance data or took any confidential customer information before leaving plaintiffs employ. But plaintiff did raise questions of fact regarding whether defendants breached their fiduciary duties by using plaintiffs time and resources to form a new business and promote themselves while still working for plaintiff. An issue of fact also exists as to whether defendants improperly accessed plaintiffs Federal Express account to discover client information after their employment with plaintiff had ceased.
Order modified, without costs, in accordance with the memorandum herein and, as so modified, affirmed. Certified question answered in the negative.