Skip to main content

Trading Partners Collaboration, LLC v. Kantor

2009 WL 1653130 (U.S. Dist. Ct. D. N.J. 2009) (Unpublished)

EMPLOYER-EMPLOYEE; NON-COMPETITION — A court will not enforce an employee’s non-competition agreement where the agreement, by its very terms, places no limit on the restrictions that the ex-employee could endure because the employee’s ex-employer’s activities could be changed at any time.

An individual was employed as a marketing director for an organization that fostered collaboration among trading partners engaged in the sale of consumer goods. When the individual was hired, he signed a confidentiality and non-competition agreement. The agreement included restrictions on competition with the organization and its affiliates for a period of two years after the termination of his employment. During his employment, the marketing director gained access to the organization’s trade secrets and other proprietary information. While employed, he began engaging in activities for his personal benefit or for the benefit of a new industry organization he was creating to compete with his employer. He also allegedly made false and disparaging remarks about his employer to his employer’s current and prospective customers. As a result of these activities, he was terminated for cause. Following his termination, he continued to engage in activities to further the competing business organization he had created. On several occasions, the individual was notified by his ex-employer’s attorney that his actions were in violation of the agreement and that he should cease and desist. The organization finally sued in federal court.

The Court refused to issue a temporary restraining order to prevent the ex-employee from operating his business. It believed that the ex-employer was not likely to succeed on the merits. First, the Court ruled that the agreement was overly broad. Under the agreement, the ex-employee could conceivably enter into a business or profession that was not currently competing with his ex-employer’s business or its affiliates only to find out, months later, his former employer or one of its affiliates had changed its business plan to encompass his chosen area of employment. It held that the agreement, by its very terms, placed no limit on the activities that the ex-employee could restrict because those activities could be changed at any time. The agreement also applied to all fifty states. Thus, the Court ruled that the agreement was unenforceable as it pertained to restrictions on its former employee’s business activities and the geographic limitations placed on his employment. Second, as to the ex-employer’s claim that it former employee had violated the Consumer Fraud and Abuse Act, the Court noted that extensive information relating to the ex-employer’s clients that was available to the public on its website and in its promotional materials. The Court ruled that the ex-employer had not offered any evidence that showed that its ex-employee had misappropriated any confidential information. Third, as to the ex-employer’s allegations that the former employee had violated the New Jersey Computer Related Offenses Act, the Court found that the ex-employer failed to prove that its ex-employee knowingly or purposefully took any confidential information from the ex-employer’s computer without authorization. The Court noted that the former employee had testified that he was not in possession of any customer lists or pricing information, but agreed to turn over any confidential information he may have had in his possession. Finally, the Court held that the ex-employer failed to submit sufficient evidence for it to find that the former employee misappropriated trade secrets in violation of New Jersey law. It ruled that there was no proof that indicated that the ex-employee had conveyed trade secrets to any third parties.

66 Park Street • Montclair, New Jersey 07042
tel: 973-783-3000 • fax: 973-744-5757 •