Joseph K. White (an ex-cop) was employed by Michael G. Kessler & Associates (a forensic accounting and investigation firm) as an investigator. Mr. White's employment agreement contained a covenant not to compete and confidentiality provisions which restricted Mr. White from working for "a similar business" within Nassau and Suffolk Counties and the City of New York for a two-year period following the cessation of the employment relationship. Additionally, Mr. White was required to "take all steps necessary to preserve and protect the confidentiality of any and all confidential information, trade secrets or intelligence learned."
In Michael G. Kessler & Assoc., Ltd. v. White, the Kessler firm alleged that Mr. White breached these provisions by accepting work as an investigator at two competing companies within the delineated geographic area and time frame. It was also alleged that White released proprietary information to third parties. White's motion to dismiss the case met with resistance at both the Suffolk County Supreme Court, and, on appeal to the Appellate Division, Second Department. In its affirmance of the Supreme Court's decision, the appellate court noted as follows:
Restrictive covenants in employment agreements will be enforced if reasonably limited temporally and geographically, and to the extent necessary to protect the employer's use of trade secrets or confidential customer information...[White] failed to demonstrate that the confidentiality provisions of the agreement were unduly broad and unnecessary to protect the [Kessler's] clients and any trade secrets/intelligence in light of [Kessler's] submissions establishing the sensitive nature of its business...or that the noncompetition clause was unreasonable with respect to its temporal and geographical limitations or as applied to [White] in light of his limited tenure with [Kessler]....
So, exercise extreme caution and be armed with information (such as the advice of counsel) before signing an agreement that contains these kind of representations or restrictions.
For a copy of the Appellate Division's decision in the Kessler case, please click on the following link: