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How Violation of a New York Non-Compete Can Be Deemed "Irreparable Harm"

As noted in "Why Restraining Orders Are So Important in a New York Non-Compete Case," a critical component to lawsuits arising out of the violation of a non-compete agreement is the plaintiff's seeking of an injunction, or restraining order, barring the former employee from unfairly competing by poaching the employer's clients or employees.

 

In order to obtain a restraining order, however, the plaintiff will be required to demonstrate, among other things, that they are about to suffer imminent, irreparable harm unless the injunction is granted. Consequently, the next question should be obvious:

 

How does an employer show that unless an injunction is granted protecting against the (further) violation of the non-compete agreement, the company will suffer "irreparable harm"?

 

Fortunately, the Federal Courts in New York have provided some guidance, stating:

 

""The Second Circuit has recognized that damage to one's business reputation and loss of customer goodwill can constitute irreparable harm. Xelus, Inc. v. Servigistics, Inc., 371 F.Supp.2d 387, 390 (W.D.N.Y. 2005) (citing Register.Com, Inc. v. Verio, Inc., 356 F.3d 393, 404 (2d Cir. 2004)); see also Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 69-70 (2d Cir.1999) (it is "very difficult to calculate monetary damages that would successfully redress the loss of a relationship with a client that would produce an indeterminate amount of business in years to come").

 

Granted, this is only one prong within the context of what is required to obtain a TRO in New York. That said, it is perhaps the most important one.