Wednesday, November 16, 2011

Second Circuit, Like the First Circuit, Finds an Expired Restrictive Covenant to be Unenforceable

On September 19, 2011, we reported about a First Circuit opinion, authored by retired justice Souter, in EMC Corp. v. Arturi, No. 11-1001, 2011 U.S. App. LEXIS 17834 (1st Cir. Aug. 26, 2011), in which the Court found the non-compete to no longer be enforceable because more than a year had elapsed since plaintiff’s departure from the company and the non-compete was for one year’s duration.  In that case, Justice Souter noted that the non-compete could have been more carefully drafted to account for the delays in obtaining enforcement attendant to litigation.  Recently, the Second Circuit addressed the same drafting problem in Aladdin Capital Holdings, LLC v. Donoyan, 2011 U.S. App. LEXIS, 19083, 2011 Westlaw 4063012 (2d Cir. Sept. 14, 2011).  In Aladdin, the Court stated that the expiration of a restrictive employment covenant renders an employer’s request for injunctive relief moot, as the employer did not include language in the non-compete that provides for an extension of the restrictive covenant during the period of breach, the court was unable to enforce what otherwise might have been an enforceable restrictive covenant.  See also the District Court’s opinion authored by Judge Kravitz at 2011 U.S. Dist. LEXIS 61095 (D. Conn. June 8, 2011) and Van Dyck Printing Co. v. DiNicola, 648 A.2d 877 (Conn. 1994) (finding claim for injunctive relief to be moot).

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