Lincoln Steel Products, Inc. v. Schuster

7 Citing cases

  1. Greenwich Co v. Barrie House

    91 A.D.2d 398 (N.Y. App. Div. 1983)   Cited 65 times
    Upholding non-compete clause and stating "much will depend on whether the covenant involves a total ban on competition with the former employer or, as here, the far lesser restriction of a ban on solicitation of its customers"

    However, the issue which constitutes the crux of this motion for partial summary judgment can indeed be resolved now. That issue is the extent to which trade secrets, or some other special circumstance (set forth infra), must be present in order to render a nonsolicitation agreement enforceable. It is clear that in the absence of an express nonsolicitation agreement, an ex-employee not in possession of trade secrets will not be precluded from soliciting his former employer's customers (see Leo Silfen, Inc. v Cream, 29 N.Y.2d 387; Tepfer Sons v Zschaler, 25 A.D.2d 786), unless he has engaged in an act such as stealing or memorizing his employer's customer lists (see Lincoln Steel Prods. v Schuster, 49 A.D.2d 618). The ex-employee's knowledge of trade secrets will, on the other hand, bar him from so soliciting, even without an express agreement (see Town Country House Home Serv. v Newbery, 3 N.Y.2d 554; Lepel High Frequency Labs. v Capita, 278 N.Y. 661). At the other extreme, a broad noncompetition covenant, as opposed to a less restrictive nonsolicitation covenant, will also not be enforced absent some circumstances such as the employee's possession of a trade secret (see Reed, Roberts Assoc. v Strauman, 40 N.Y.2d 303, supra) or some unique or extraordinary ability or skill of the employee (see Purchasing Assoc. v Weitz, 13 N.Y.2d 267, supra; Frederick Bros. Artists Corp. v Yates, 271 App. Div. 69, affd 296 N.Y. 820). This appeal focuses on the middle case: where there is an agreement, but it is a mere nonsolicitation covenant. It is conceded that the defendant salesmen do not possess any unique or extraordinary abilities or skills. Are trade secrets necessary for the enforcement of these

  2. American Institute of Chemical Engineers v. Reber-Friel Co.

    682 F.2d 382 (2d Cir. 1982)   Cited 61 times
    Holding that the protection of an employer's legitimate interests is limited to protection "from unfair competition which stems from the employee's use or disclosure of trade secrets confidential customer lists, ... or confidential customer information ... to protect the good will of the employer's business or perhaps when the employer is exposed to special harm because of the unique nature of the employee's services."

    Id. at 391-92, 328 N.Y.S.2d at 427, 278 N.E.2d at 639. Accord Tour and Study, Inc. v. Hepner, 77 A.D.2d 843, 432 N.Y.S.2d 148 (1st Dept. 1980); Continental Dynamics Corp. v. Kanter, 64 A.D.2d 975, 408 N.Y.S.2d 801 (2d Dept. 1978); Lincoln Steel Products, Inc. v. Schuster, 49 A.D.2d 618, 371 N.Y.S.2d 157 (2d Dept.), appeal dismissed, 38 N.Y.2d 738, 381 N.Y.S.2d 41, 343 N.E.2d 759 (1975); cf. Reidman Agency, Inc. v. Musnicki, 79 A.D.2d 1094, 435 N.Y.S.2d 837 (4th Dept. 1981) (when defendant "lawfully had possession" of documents and surrendered them, no injunction would issue). Reber was in possession of AIChE customer lists and other information only because it had been chosen by AIChE to be its agent.

  3. Webcraft Technologies, Inc. v. McCaw

    674 F. Supp. 1039 (S.D.N.Y. 1987)   Cited 39 times
    Finding that a customer list of prospective customers "put together from easily available sources" may not have constituted a trade secret despite the fact that "considerable work [went] into compilation of the list"

    The Court also noted that "if there has been a physical taking or studied copying, the court may in a proper case enjoin solicitation. . . ." 328 N.Y.S.2d at 427, 278 N.E.2d at 639; see also Lincoln Steel Products, Inc. v. Schuster, 49 A.D.2d 618, 371 N.Y.S.2d 157 (2d Dept.), appeal dismissed, 38 N.Y.2d 738, 381 N.Y.S.2d 41, 343 N.E.2d 759 (1975). Another factor for consideration is whether the effort invested in developing the customers simply involved widespread canvassing, as was the case in Leo Silfen, or whether the employer actually worked to create a market for a new service or good. Compare id., 328 N.Y.S.2d at 429, 278 N.E.2d 640 with Town Country House Home Service, Inc. v. Newberry, 3 N.Y.2d 554, 170 N.Y.S.2d 328, 147 N.E.2d 724 (1958).

  4. Reed, Roberts v. Strauman

    40 N.Y.2d 303 (N.Y. 1976)   Cited 393 times   11 Legal Analyses
    Holding that the loss of a vice-president with significant responsibilities regarding internal company policy did not constitute irreparable harm for the purposes of obtaining a preliminary injunction

    Rather Silfen argued that in light of the funds expended to compile the list it would be unfair to allow the defendant to solicit the clients of his former employer. We held that where the employee engaged in no wrongful conduct and the names and addresses of potential customers were readily discoverable through public sources, an injunction would not lie. Similarly here there was no finding that Strauman acted wrongfully by either pilfering or memorizing the customer list (compare Lincoln Steel Prods. v Schuster, 49 A.D.2d 618). More important, by Reed, Roberts' own admission every company with employees is a prospective customer and the solicitation of customers was usually done through the use of nationally known publications such as Dun and Bradstreet's Million Dollar Directory where even the name of the person to contact regarding these services is readily available (Leo Silfen, Inc. v Cream, supra, pp 392-393).

  5. American Printing Converters, Inc. v. JES Label & Tape, Inc.

    103 A.D.2d 787 (N.Y. App. Div. 1984)   Cited 2 times

    Further, the record in this case is devoid of any proof that defendant Esther Scattoreggio copied the list, and the admitted fact that defendants solicited a relatively small number of plaintiff's customers does not permit the inference that she memorized the list. Thus, no cause of action for unfair competition has been established ( Continental Dynamics Corp. v. Kanter, supra; Lincoln Steel Prods. v. Schuster, 49 A.D.2d 618, app dsmd 38 N.Y.2d 738). Also, while the evidence supports the theory that defendant Scattoreggio secretly formed the defendant corporation while still in plaintiff's employ, such conduct does not, without more, constitute actionable employee disloyalty ( Maritime Fish Prods. v. World Wide Fish Prods., 100 A.D.2d 81). Finally, we note that it was error to exclude an officer of the corporate defendant from the courtroom during a portion of the trial, where there were no unusual circumstances ( Lunney v. Graham, 91 A.D.2d 592; Carlisle v. County of Nassau, 64 A.D.2d 15). Titone, J.P., Thompson, Bracken and O'Connor, JJ., concur.

  6. Continental Dynamics Corporation v. Kanter

    64 A.D.2d 975 (N.Y. App. Div. 1978)   Cited 23 times
    Finding that while no trade secret existed in customer lists, "an employee's physical taking or studied copying of such lists may, nevertheless, form the basis for a cause of action for unfair competition"

    Consequently, the covenants not to compete are not enforceable (see Columbia Ribbon Carbon Mfg. Co. v A-1-A Corp., 42 N.Y.2d 496). Since the names of potential customers were readily ascertainable from public sources, the defendants' solicitation of the plaintiff's customers from casual memory is not a legally cognizable wrong (see Leo Silfen, Inc. v Cream, 29 N.Y.2d 387, 391). However, where customer lists do not rise to the level of trade secrets, an employee's "physical taking" or "studied copying" of such lists may, nevertheless, form the basis for a cause of action for unfair competition (Leo Silfen, Inc. v Cream, supra, p 392; Lincoln Steel Prods. v Schuster, 49 A.D.2d 618, app dsmd 38 N.Y.2d 738). The statements, under oath, by the plaintiff's officials that defendant Kanter did not return customer lists and that papers were missing from defendant Levine's file cabinet, create an issue of fact as to whether the defendants physically appropriated customer lists prepared by the plaintiff. Therefore summary judgment should not have been granted with respect to the third, fourth, fifth, sixth, seventh, tenth, eleventh, twelfth and thirteenth causes of action, which allege that the defendants appropriated customer lists and leads.

  7. Penton Learning Sys., LLC v. Defense Strategies Inst. Grp.

    2014 N.Y. Slip Op. 32130 (N.Y. Sup. Ct. 2014)   Cited 1 times

    Whether any Penton records copied or downloaded by Johnson or Engelman constituted trade secrets, is irrelevant. See Leo Silfen, Inc. v Cream, 29 NY2d 387, 391-392 (1972) ("a physical taking or studied copying" of an employer's records, may be enjoined, "not necessarily as a violation of a trade secret, but as an egregious breach of trust and confidence while in plaintiff's' service"); Falco v Parry, 6 AD3d 1138 (4th Dept 2004); Amana Express Intl. v Pier-Air Intl., 211 AD2d 606 (2d Dept 1995); Lincoln Steel Prods, v Schuster, 49 AD2d 618 (2d Dept 1975); Pure Power Boot Camp, Inc. v Warrior Fitness Boot Camp, LLC, 813 F Supp 2d at 521-522; see also Churchill Communications Corp. v Demyanovich, 668 F Supp 207, (SD NY 1987) ("surreptitious removal, copying, or withholding of an employer's customer lists or information for later competitive purposes breaches the obligation of loyalty ...") (internal citation and quotation marks omitted); see also Tour & Study v Hepner, 77 AD2d 843, 843 (1st Dept 1980, Bloom, J., dissenting).