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When a NY Court Issues a TRO Against You in a Non-Compete Case


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1/1/2016
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In the context of non-compete cases - just as in any other type of litigation - courts can get it wrong.

Indeed, this just happened to one of my clients in a Suffolk County action where the court held that my client was bound to the non-compete agreement he had with his employer, and therefore barred from working for a competitor - even though they had fired him for a completely unrelated reason. (For example, as noted in "How a Non-Compete Can Remain Enforceable in NY - Even if You're Fired," the general rule in New York is that employees cannot be held to their non-compete agreements with their former employers if they've been fired.)

Generally, at that point, you will be faced with two primary options:

(1) Move to Reverse, Vacate or Modify the TRO. Obviously, this tactic seeks a reversal of the Court's decision. The challenges with this option are several, however:

  • First, if the Court granted your former employer's application for a TRO, barring you from seeking (or continuing) gainful employment with one of their competitors, you will likely need a stay of the trial Court's order just to continue receiving a paycheck.
  • Second, securing a stay, especially when a court has already - albeit preliminarily - ruled against you is much harder done than said.
  • Third, and aside from the great expenses that is usually entailed with vacating or modifying an earlier court order, it is important to bear in mind that such applications, whether before a trial or appellate court, often aren't decided for weeks or months, by which time the issues raised on the motion or appeal may be largely rendered moot. That leads us to option #2, which is ...

(2) Explore Settlement. In many instances, the former employee has relatively nominal funds available for settlement purposes (after all, s/he just lost their job). Therefore, and naturally, that should lead the former employer to consider what they hope to accomplish by continuing to press a protracted litigation.

There is an important caveat to this rule, however: this option is not always viable, particularly where there is a significant amount of money, or the moving of clients away from the former employer is at stake.



Category: General

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