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Fazio v. Temporary Excellence, Inc.

2006 WL 2587625 (N.J. Super. Ch. Div. 2006) (Unpublished)

EMPLOYER-EMPLOYEE; RESTRICTIVE COVENANT; INJUNCTIVE RELIEF — Injunctive relief which would abrogate the enforcement of an employment contract’s restrictive covenant is an extraordinary remedy and requires a sufficiently developed factual record that demonstrates clear and convincing evidence of entitlement to the relief.

A company’s president’s employment agreement had a restrictive covenant allowing no competitive activities for twelve months, calling for non-disclosure of confidential and proprietary information, and containing an agreement not to solicit employees or clients of his employer to become affiliated with any competitor of the employer. Two years after being hired, the president indicated his desire to purchase the company, but he and the company’s owners were unable to agree upon a sale price. A month later, the president filed a multi-count complaint against his employer in which he notably alleged that he had experienced a hostile work environment, harassment, and emotional distress over the previous two years. He also sought voiding of the restrictive covenant and asked for a preliminary injunction restraining the enforcement of the restrictive covenant. In reply papers to the company’s answer, the president, an at-will employee, stated that he was terminated immediately after the filing of the complaint.

The now ex-president asserted that the restrictive covenant had caused him significant financial distress because his monthly expense obligations could not be supported by comparable employment which was barred by the covenant. Though he asserted that he had earned approximately $425,000-$450,000 over the previous two years, he did not provide the Court with a certification as to the nature and extent of his savings.

The Court noted that injunctive relief is an extraordinary equitable remedy that should only be entered upon a showing by clear and convincing evidence of entitlement to that relief. The party seeking the relief must demonstrate that irreparable harm is likely if the relief is denied, the applicable underlying law is well settled, the material facts are not substantially disputed, there exists a reasonable probability of ultimate success on the merits, and the balance of the hardship to the parties favors the granting of this relief. Harm is generally considered irreparable in equity if it cannot be redressed adequately by monetary damages. The Court further noted that a post-employment restrictive covenant is enforceable if it protects the legitimate interests of the employer, imposes no undue hardship on the employee, and does not injure the public interest.

Because any finding regarding the validity for injunctive relief and finding for the enforceability of a restrictive covenant of employment requires a sensitive analysis and balancing of factors under law, the Court was not prepared to rule without sufficient discovery having taken place. As the Court found the factual record insufficient, the ex-president’s request to preliminarily restrain the enforcement of the restrictive covenant was denied.

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