Recent Blog Posts
- New York Federal Judge Declines to Enforce Employee Non-Solicit Clause In a very thorough analysis following a 3 day Preliminary Injunction hearing Judge Jed Rakoff declined to issue injunctive relief to a former employer seeking to enjoin four former employees and their new employer from competing or from soliciting clients or employees. The decision is far ranging in the employee movement context touching upon inadvertent retention of confidential information, the propriety of new employers providing broad indemnifications and large signing bonuses to the recruits, and the scope of allowable “preparatory... More
- Non-Solicit Violation: $4.5 Million Punitive Damage Award Upheld Rarely do we see punitive damages being awarded in cases involving the movement of employees and information between firms. The Superior Court of Pennsylvania last week affirmed a punitive damage award granted by a Judge of the Court of Common Pleas in such a matter, albeit which also found tort liability against the new employer and the five former employees.
The decision in B.G. Balmer & Co., Inc. v. Frank Crystal & Co. Inc., et al. sets forth a classic example of... More
- Bad Leaver Pays the Price A former California State judge in an arbitration awarded nearly $1.7 million to an employer against its former employee based primarily on his acts taken going out the door. His joking email with a co-worker after recruiting three others, characterizing their resignations as “Three bullets to the back of the head” of his employer, was clearly shooting himself in the foot in the eyes of the arbitrator. The Award is interesting for many reasons – – the interplay between fiduciary... More
- Florida Restrictive Covenant Statute Remains “Truly Obnoxious” In New York Courts If you are an employer with employees in New York (or elsewhere) who have signed an agreement containing a Florida choice of law clause and non-compete and/or non-solicit restrictive covenants, it may be time to revise your agreement.
We blogged last year regarding a decision of the New York Appellate Division, Fourth Department in Brown & Brown, Inc. v. Johnson, holding that a Florida choice of law provision in an employment agreement among a Florida corporation, its New York subsidiary, and... More
- If You Can’t Touch It, You Must Acquit As a follow up to our prior post on the trials and tribulations of former Goldman Sachs programmer Sergey Aleynikov, once again he obtained a judicial ruling that overturned a conviction following a jury trial. In a 72-page opinion the trial court, Justice Daniel Conviser, concluded that there was insufficient evidence to support the jury’s conclusion that Mr. Aleynikov had violated New York’s unlawful use of secret scientific material statute. N.Y. Penal Law § 165.07.
Much like the Second Circuit found in... More
- Recent Source Code Trade Secret Theft Conviction The Manhattan District Attorney’s office last week prevailed over Sergey Aleynikov, the former Goldman Sachs high frequency trading programmer accused of stealing computer source code from the bank, on just one count of the three of which he was charged. It is somewhat hard to imagine how one might be found guilty of “unlawful use of secret scientific material” (N.Y. Penal Law § 165.07 as defined in § 155.00(6)), yet not get convicted for “unlawful duplication of computer related material”... More
- Leave The Source Code Behind U.S. Attorneys in many jurisdictions are more willingly stepping into the fray between financial services firms and their former employees who have misappropriated trade secret information. In a recently reported case out of the Northern District of Illinois, two former employees of Citadel LLC, a Chicago based premier hedge fund in the high frequency trading space, pled guilty and received three-year sentences for their participation in a scheme to steal source code from Citadel and a prior employer in order... More
- Restrictive Covenants: Better To Ask And Disclose When recruiting an executive, or when being recruited, it is best practice for the future employer, the employee and any executive recruiting firm involved in the placement to address head-on the existence of any restrictive covenant limiting the future activities of the employee. The New York State Supreme Court – First Department Appellate Division – yesterday upheld a claim that by not clearly disclosing the existence of a non-solicitation restriction in an executive recruit’s employment agreement, the head hunter involved... More
- New York Appellate Court Finds Florida Restrictive Covenant Statute “Truly Obnoxious” The New York Appellate Division, Fourth Department, recently held in Brown & Brown v. Johnson, 1109 CA 13-00340 (February 6, 2014) that a Florida choice-of-law provision in an employment agreement among a Florida corporation, its New York subsidiary and a New York based and resident employee containing restrictive covenants is unenforceable because it is “truly obnoxious” to New York public policy.
Defendant Theresa A. Johnson was hired by plaintiffs, insurance intermediaries, in December 2006 to provide actuarial analysis for plaintiffs. On... More
- SDNY Judge Instructively Opines On Employee No Hire Agreement A recent decision from the United States District Court for the Southern District of New York, Reed Elsevier Inc. v. Transitions Holding Co., Inc., provides a useful overview of New York law on restrictive covenants. At issue was an employee non-poach agreement between two companies entered as a result of a settlement in the context of the earlier hiring of another senior executive with a non-compete. Not an unusual situation. What is somewhat unique is that the alleged “poaching” occurred in... More