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Why One NY Court Declined to Modify an Overbroad Non-Compete


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1/1/2016
Jonathan Cooper
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As noted in "When a Non-Compete is Enforceable Under New York Law," although it is true that New York, as a general rule, disfavors non-compete agreements, there nevertheless are circumstances where these agreements will be upheld.

There is an extraordinarily important caveat to keep in mind, however: even if the agreement does not meet the criteria for enforceability set forth by the courts, such as where it is grossly overbroad in geographic scope and/or duration, that doesn't automatically mean that the employee is in the clear.

"Why?" you ask.

Because a court remains empowered to re-write the agreement.

In fact, in its November 2 decision in Crossroads, ABL, LLC v. Canaras Capital, a New York County trial judge clearly suggested that had the defendant asked, the Court may well have been inclined to re-write the non-compete (which was obviously overbroad) and upheld it, stating

"Since there is no practical temporal limitation contained in the provision, this covenant would prohibit [plaintiff] from competing with [defendants] indefinitely, so long as its membership interest remained above 15 percent. Furthermore, there is no geographic limitation provided. There has been no request to modify, or "blue-pencil" this provision, and I decline to do so sua sponte."

The moral of the story is clear: it is - and remains - extraordinarily difficult to predict with any degree of certainty whether a particular non-compete agreement will be upheld in a court of law (at least in New York).

Category: General

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