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New York Non-Compete and Non-Solicitation Case Involving Delta Enterprise Corp.


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1/1/2016
Jonathan Cooper
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Under many New York employment agreements, employees are subjected to non-competition and non-solicitation provisions. In addition, many agreements call for an extension of those restrictions if the employee is in violation of the terms. A recent New York Appellate Court decision seems to confirm that tolling provisions will be upheld in a court of law. As a result, all employees should be aware that the non-competition and non-solicitation provisions in their employment agreements could last for longer periods than initially thought. To determine whether your employment agreement contains such terms and how long you might be subject to non-competition provisions, contact a New York non-compete agreement attorney.

In the recent case addressing this issue, Delta Enterprise Corp. v. Cohen, the plaintiff was a manufacturer of products sold under licenses, including products that use images of Barbie, Spongebob Squarepants, and Hot Wheels. The defendant was Ralph Cohen, who worked at Delta for approximately seven years. Mr. Cohen was the co-head of the Toddler Furniture Division in 2009 and 2010.

In its lawsuit, Delta claimed: 
  • that Mr. Cohen misappropriated confidential information;
  • that Mr. Cohen began a business in direct competition with Delta; and
  • that the misappropriation and subsequent starting of the new business were actions Delta in violation of a Confidentiality Agreement signed by Mr. Cohen 

Delta’s Confidentiality Agreement contained two-year non-competition and non-solicitation clauses. It also contained a provision that tolled those two clauses during any period in which Mr. Cohen was in violation of its terms.

In its decision, the Court upheld the validity of Delta’s claim that the two year non-competition and non-solicitation clauses should be tolled during the time period in which Mr. Cohen was in violation of those provisions. As a result, all employees subject to New York non-competition agreements should be very careful when evaluating the length of time they might be subject to these restrictive covenants.

To learn more about employment agreements, contact a New York non-compete agreement lawyer at (888) 497-3410.


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