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Finding Lack of NY Nexus, Court Dismisses Breach of Non-Compete Claim

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Jonathan Cooper
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As noted in "How to Select a Proper Forum for Disputes Regarding Your Non-Compete," your ability to sue - or be sued - over a non-compete in New York is not automatic; the parties and the subject of the claim will need to have a substantial connection to New York.

Where that connection, or nexus, is lacking, New York's courts are obliged to dismiss the case, allowing the parties to bring their lawsuit where it really belongs. And that is precisely what happened in Tzunami, LTD v. Avepoint, Inc.

In this case, the plaintiff was an Israeli company providing computer data storage and migration services. The defendant was a Germany-based competitor that also maintained a New Jersey office. The essence of the plaintiff's claim was that one of the plaintiff's former officers left to work for defendant, and in the process, stole plaintiff's proprietary trade secrets (and breached his fiduciary duties), in derogation of his non-compete agreement.

There were just a "few" problems with plaintiff's claim, however.

First, they weren't actually licensed to do business in New York. (While that alone is not fatal to the claim - it's correctable by filing for the corporate license - it certainly is problematic).

Second, and more importantly, the officer only worked for the German headquarters of the defendant, and executed all of his agreements in Israel. Simply put, he had no connection to New York whatsoever.

The outcome should not be surprising: the Court dismissed the claim because "the action has no substantial nexus to New York."

Category: General