Opinion
600506/2005.
Decided November 23, 2005.
Plaintiff commenced this action against the defendants by filing its complaint and moved for a temporary restraining order, which was granted on February 9, 2005. In its complaint, the plaintiff seeks injunctive relief and money damages. The complaint sets forth ten causes of action, of which five seek injunctive relief and five seek money damages. Defendants opposed the TRO, and moved to dismiss the plaintiff's complaint in this case under CPLR 3211(a)(7), based on plaintiff's alleged failure to state a cause of action in any of the ten causes of action. In the alternative, with respect to the causes of action against defendant Pfizer, the defendant seeks a stay of this court's proceeding under CPLR 2201, and an order directing the parties to follow the alternative dispute resolution in the contract. A hearing on the TRO was held on February 28, 2005, and finding lack of "irreparable harm", I dissolved the TRO. I now address the pending motions to dismiss made by the defendants.
At argument I found that the plaintiff had an "adequate remedy at law" for damages. The complained of conduct was confined to defendant Pfizer's work location for which plaintiff previously had a contract and there was no threat of any injury from any other location. The contract price received, or to be received, by defendant DynPro would provide an adequate basis from which to compute any potential claims of the plaintiff. (Tr. 48). Pending the outcome of this motion, the parties consented that defendants Pfizer and DynPro would be required to notify the plaintiff in the event the individual defendants changed their historical work locations. In view of the dismissal of the causes of action seeking injunctive relief, the notification requirement is removed.
A summary of the complaint is set forth below, including a description of each cause of action, relief sought, relevant defendant, and the numbering of each cause of action: No. Relevant Defendants Description of cause of action Relief Sought
1 Individual defendants breach of restrictive covenant injunction
2 Individual defendants breach of restrictive covenant damages
3 Pfizer DynProtortious interference with contract injunction
4 Pfizer DynProtortious interference with contract damages
5 Pfizer solicitation of employees injunction
6 Pfizer solicitation of employees images
7 All defendants misappropriation of trade secrets injunction
8 All defendants misappropriation of trade secrets damages
9 All defendants unfair competition injunction
10 All defendants unfair competition damages
Plaintiff entered into a Professional Services Agreement with defendant Pfizer ("Pfizer Agreement" or "Agreement"), dated March 18, 2002. (See Narasimhan Aff, Ex. A). Under that Agreement, plaintiff agreed to supply "overall operational support" for defendant Pfizer's "Data Warehouse applications within Information Architecture" (Agreement, Schedule A). Plaintiff alleged that it was responsible for a "variety of computer applications in order to access and use" the data warehoused by Pfizer. (Complaint, par. 10, 11). The data systems, plaintiff alleged, had to be "available on a twenty-four hour a day, seven days a week basis" (Id. par. 11). To provide such services, in 2002 plaintiff hired the four individual defendants Swaminathan Ramamurthy, Siva Kumar Palanisamy, Jagan Mohan Srinivasan and Srinivasa Vasa. (Id. par. 12). These individuals were computer consultants and knew of the general methods in the computer industry for trying to reconcile various computer software data programs with various types of computer hardware. (Complaint, par 12, Gangidi Reply Aff, par. 9). At the hearing on the TRO, the plaintiff was unable to describe any trade secrets or confidential business or proprietary information that plaintiff provided to the individual defendants for their job assignment with Pfizer. Plaintiff was permitted to submit a supplemental affidavit of Anil Srivastava, which similarly failed to describe any trade secret or confidential information. The individual defendants used their general computer skills to solve the data storage problems of Pfizer, and learned of the specific Pfizer computer and data needs and preferences from Pfizer. The Pfizer Agreement also included a non-solicitation provision which prohibited either party from soliciting for hire the employees of the other party. Finally, disputes arising from the Agreement generally required resolution by an alternative dispute procedure, unless irreparable harm was shown.
11.1.The Company and Contractor mutually agree to refrain from hiring or soliciting for hire any employee or Personnel of the other who is assigned to the Work during the term of this Agreement and for a period of three (3) months from the termination or expiration thereof.
13.1. In the event of a dispute involving the interpretation or application of any provision of this Agreement, the parties agree not to commence litigation until they have first notified each other of their intent to implement the terms of this Section after first having employed their best efforts to jointly resolve such dispute. If the parties cannot resolve their differences in such fashion within thirty (30) days' of either party's receipt of such notice of the intent of the other party to implement the terms of this Section, the following alternative dispute resolution process (the venue of which shall be New York, New York) shall be immediately implemented: 13.1.1.Upon written request of either party, the dispute will be referred for negotiation to representatives of the parties who have no direct operational responsibility for the matters involved in the dispute and who have authority to resolve the dispute. 13.1.2.If these representatives have not agreed on a resolution of such dispute within ten (10) Business Days of its referral to them, the dispute shall be promptly submitted to a neutral adviser (the "Adviser") who shall be chosen from the list of arbitrators registered with the American Arbitration Association. The Adviser shall, within fourteen (14) days of the submissions, recommend, in writing, a procedure for resolving the dispute and shall specify in such writing whether such procedure shall be binding, non-binding or involve a combination of binding and non-binding procedures. 13.1.3. If the parties do not mutually agree upon the process recommended by the Adviser within ten (10) Business Days' of their receipt of the Adviser's written recommendation, they shall promptly convene a non-binding hearing (the "Mediation"). The rules for the Mediation will be established by the Adviser, after consultation with the parties. 13.1.4. If the dispute cannot be resolved, either through the procedure recommended by the Adviser or through the Mediation, within such period as the Adviser shall deem reasonable, the Adviser shall, at the request of either party, certify to the parties that the matter is incapable of resolution. 13.1.5. No litigation may be commended concerning the dispute until the Adviser has certified in writing that the dispute is incapable of resolution, provided that any party may commence litigation (a) on any date after which such litigation could be barred by an applicable statute of limitations; or (b) if litigation is otherwise necessary to prevent irreparable harm to the moving party. 13.1.6. Each party shall bear its own expenses in connection with the alternative dispute resolution procedures set forth in this Section, except that the parties shall split equally the fees and expenses of the Adviser, including the costs associated with any Mediation, and the fees and expenses of any other person designed by the Adviser to assist the parties. 13.2. All communications made in connection with the alternative dispute resolution procedure set forth in this Section shall be treated as communications for the purpose of settlement and as such shall be deemed to be confidential and inadmissible in any subsequent litigation by virtue of Rule 408 of the Federal Rules of Evidence, as the same may be amended from time to time.
The individual defendants entered into employment agreements with the plaintiff. (Complaint, par. 13). The defendants, Ramamurthy, Palanisamy, and Srinivasan, signed identical agreements which provide, in relevant part, that for a period of eighteen months after leaving employment with plaintiff, they will not "engage directly, or indirectly, in any activities which compete with the business interests of [plaintiff]" (Complaint, par 14; Gangid Aff., Exs. 2, 3, 4, 5). The agreements further provide that they will not "disclose or use" trade secrets, confidential information, or the business methodology of the plaintiff.
6) COVENANT NOT TO COMPETE (a) During the Term of Employment, and for Eighteen (18) months thereafter, the Employee agrees not to engage, either directly or indirectly, in any activities which compete with the business interests of the Company. (b) In addition, the Employee shall not at any time, during or after the termination of employment, work for or on behalf of any business other than the Company under this Agreement, which uses as its name, in whole or in part, Globaldata, Inc. Or implies, represents, or misleads anyone into thinking that such business is or was affiliated with Globaldata, Inc., or any other affiliate of the Company. (c) Upon the termination of the Employee's employment for any reason, the Employee shall not, directly or indirectly, (1) solicit or divert business from any customer or prospective customer of the company with which the Employee had any contact while employed by the Company, or (2) encourage any employee to terminate their employment with the Company; or (3) encourage any customer or supplier to terminate its business relationship with the Company. (d) Employee shall not take employment with the customer or the end-client during the term of this Agreement and for a period of 18 months after the termination of the Agreement, whatever may be the reason for termination, unless agreed to by the COMPANY. For the purpose of this Paragraph 6, the Employee shall be deemed directly or indirectly engaged in a business if he/she participates in such business as proprietor, partner, joint venturer, stockholder, director, officer, lender, manager, Employee, consultant, advisor, or agent or if he/she controls such business. The Employee shall not for purposes of this paragraph, be deemed a stockholder or lender if he holds less than five percent (5%) of the outstanding equity or debt of any publicly owned corporation engaged in the same or similar business as that of the Company, provided that the Employee shall be in a control position with regard to such corporation.
5) NON-DISCLOSURE (a)The Employee shall not at any time during or after his/her employment directly or indirectly, disclose or furnish to any other person, firm or corporation or otherwise use for his/her own benefit: (i) any information concerning the methods of conducting or obtaining business, of marketing or advertising, or of obtaining customers used by the Company; (ii) any confidential information acquired by him/her during the course of his/her employment by the Company, including, without limiting the generality of the foregoing, the names of any customers or prospective customers of, or any person, firm or corporation, who or which have or shall be traded or dealt with the Company (whether such customers have been obtained by the Employee or otherwise) technical specifications of the products sold by the Company, price lists, customer lists, prospect lists and/or the terms of this Agreement; and/or (b)The Employee shall not at any time, during or after his/her employment, use for his/her own benefit, reveal, divulge, or publish or make known to any person, firm entity or corporation, directly or indirectly, any knowledge or information or any facts concerning any trade secrets, know how, ideas, methods, discoveries, inventions, devices or manner of programming, compiling or preparing any of the products manufactured or discovered by the Company or any of its clients and customers, whether the same shall or may have been originated by, been discovered by or invented by the Employee for the Company and/or otherwise, and the Employee shall assist and cooperate in whatever manner requested by the Company to obtain patent protection therefore and to otherwise perfect title to same in the name of the Company. Nor shall the Employee reveal, divulge or make known to any person, firm corporation, or entity, any secret or confidential information of any nature obtained directly or indirectly from the Company or its business, and the Company shall retain all business knowledge and information which the Employee shall acquire or create during employment respecting formulas, algorithms, methods, discoveries, invention and devices and the business of the Company, its successor or assigns. (c)Upon termination of the Employee's services, irrespective of the time, manner or causes of the same the Employee shall, as part of his/her final duties, surrender to the Company all lists, books, keys, records, documents, work in process and work products provided by, belonging, to, relating to or used in connection with the Company business and/or the business of any customer(s) or client(s) of the Company and all other property belonging to the Company or to the Company's customer(s) or client(s). (Id.)
The individual defendant Vasa signed an agreement, dated December 27, 2002. It "provides that [defendant Vasa] will not compete with [plaintiff] at Pfizer for a period of one year after he ceases working for [plaintiff]", and also that such defendant "will not disclose [plaintiff's] confidential information" (Complaint p. 15; Gangid Aff., Ex. 5).
The Agreement with Pfizer was for an initial term of one year, with a right of termination upon thirty days notice by either party. (Agreement, par 3.1, Narasimhan Aff., Ex. A). The plaintiff continued to provide services to defendant Pfizer in 2003 and 2004. Plaintiff alleges that it was notified in or about October, 2004 that Pfizer intended to seek other bidders to provide the services provided by plaintiff. (Complaint, par. 17). A Request for a Proposal was sent out on approximately November 8, 2004 to four companies, including the plaintiff and defendant DynPro, Inc. (Ex F; Narasimhan Aff, par 18). On approximately December 10, 2004, Pfizer decided to employ DynPro and replace plaintiff. (Complaint, par 18; Narasimhan Aff., par. 18).
Although Plaintiff does not specifically allege that the Agreement was renewed, it so implies because it alleges that December 31, 2004 was "the last effective date of [plaintiff's] contract with Pfizer" (Complaint, par. 20).
Apparently Pfizer was billed by plaintiff at a certain hourly rate. The parties negotiated a reduced rate for 2004, and Pfizer wanted a further reduction in price, to which plaintiff was unwilling to agree (Narasimhan Aff, par 11).
Plaintiff alleges that on October 15, 2004, senior Pfizer employees, who oversaw plaintiff's services for Pfizer, held a meeting with the four individual defendants, and two other employees from plaintiff, all of whom were providing services to Pfizer on behalf of the plaintiff. It is alleged that a Pfizer employee told the plaintiff's employees to treat the meeting as "confidential" In addition, plaintiff's employees were advised that, if plaintiff's contract was not renewed, Pfizer wanted the plaintiff's employees to work for Pfizer through the new vendor. (Complaint, pars. 28-29) Finally, it is alleged that the Pfizer employee asked plaintiff's employees to provide him with an e-mail setting forth their "immigration status, salary, and other employment information, so that this information could be provided to the company that replaced [plaintiff]." (Complaint, par. 30). It is alleged that the individual defendants complied with this request, that they were contacted by defendant DynPro based on such furnished information, and they were hired by defendant DynPro to provide the same services to Pfizer as they had when they were employed by plaintiff. (Complaint, pars. 30-32).
After plaintiff learned that DynPro was selected as its replacement, plaintiff held another meeting with Pfizer on December 13, 2004 (Gangidi Reply Aff., par 21). At that time plaintiff claims it advised defendant Pfizer that the individual defendants had contracts with plaintiff which would be violated if they went to work for a new vendor. This was confirmed by an e-mail, dated December 13, 2004 (Gangidi Aff, Exhibit 10), and was repeated in an e-mail on December 16, 2004 from plaintiff to Pfizer which provided: "Please be advised that our employees are under contract to us and that both the Pfizer agreement and our agreements with our employees prohibit you or your new vendor from soliciting employees or making private deals with them" (Gangidi Reply Aff., par 21; Lederman Aff, Ex. D).
Also, on or about December 16, 2004, the plaintiff sent e-mails to each of the four individual defendants which advised them that the Pfizer Agreement "ends on 12/31/04 and so does your contract with GlobalData" (see Gupta Aff., Exs. B, C and D). In those e-mails the plaintiff also requested that the individual defendants return all Pfizer property in their possession. On or about December 17, 2004, plaintiff's lawyer sent a letter to defendant Dynpro which stated in part:
"We are advised that you have attempted to contact employees of GlobaData who are providing services to Pfizer, Inc in order to try and induce them to leave their employment with GlobalData and to become affiliated with Dynpro.
Please be advised that our employees are under contract with GlobalData and that such contract contains restrictions on such employees' ability to provide services to Pfizer, Inc other than on behalf of GlobalData or to otherwise compete with GlobalData. You should also be advised that Pfizer, Inc is likewise under certain restrictions with regard to employing directly or indirectly employees of GlobalData.
We, therefore, demand that you cease and desist from further solicitation of or interference with GlobalData's relationship with its employees. Should you fail to do so, our client is prepared to enforce its rights and remedies under law and to hold Dynpro liable for all damages that may arise from its actions" (Gangidi Reply Aff, Exhibit 1).
In spite of the plaintiff's December 16, 2004 e-mails to the individual defendants, the plaintiff alleges that it began looking for other projects for them, and advised each of them that plaintiff expected to get them new jobs (Gangidi Reply. Aff. Par 26). On or around December 22, 2004, plaintiff sent a e-mail to defendant Srinivasan, and to defendant Palanisamy, which requested a meeting to discuss new positions. (Id., and Ex 3 4). Plaintiff claims it had conversations with defendants Vasa and Ramamurhty for the same purpose, (id. Par. 26), and that defendant Vasa sent his resume to plaintiff (Id. Ex. 5). However, each of the individual defendants told plaintiff "they had decided to go with DynPro, and stay at the Pfizer site" (id. par. 27). As a result, on or about December 23, 2004, plaintiff sent letters to each of the four individual defendants advising them that they had executed written agreements which prohibited them from providing services to Pfizer "directly or indirectly, other than on behalf of GlobalData" and that such restriction applied to any such services they might render on behalf of DynPro. (Id. par 22 and Ex. 2). Plaintiff commenced this lawsuit in early February, 2005, when it became clear that the individual defendants began employment at defendant DynPro and rendered services to defendant Pfizer at the Pfizer work site.
On a motion to dismiss, it is basic that the pleadings are to be liberally construed. (CPLR 3026), and I am required to "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory." ( E.g., Leon v. Martinez, 84 NY2d 83, 87).
The First, Third, Fifth, Seventh and Ninth causes of action seek injunctive relief. A necessary element for such relief is "irreparable harm". (e.g., Preston Corp v. Fabrication Enter., 68 NY2d 397, 406). As I stated at argument, plaintiff will not sustain any "irreparable harm" and has an adequate remedy at law a conclusion which I am satisfied still obtains. Therefore, these causes of action are dismissed.
In the Second Cause of Action, the plaintiff claims that the individual defendants breached the restrictive covenant contained in the respective employment agreements, which provide that each defendant will not "engage directly, or indirectly, in any activities which compete with the business interests of [plaintiff]" (Complaint, par 14). There was an eighteen month restriction imposed on three of the defendants, and a twelve month restriction imposed on defendant Vasa. (Id. par 15). There was no geographical limitation set forth in the covenant. However, plaintiff concedes that the restriction should be limited so as to apply only to Pfizer's Data Warehouse project (Gangidi Reply Aff., par 24).
There is no dispute that the individual defendants commenced employment with defendant DynPro and continued to provide the computer services to defendant Pfizer, which they had previously provided through the prior employment with plaintiff. The plaintiff also alleges that, by virtue of their employment with DynPro, the individual defendants are "wrongfully making use of and inevitably disclosing to others Globaldata's trade secrets and confidential information" in violation of the non-disclosure provisions set forth in the employment contracts. (Complaint, par. 22 25).
The defendants contend that, as a matter of law, this cause of action must be dismissed because plaintiff has only plead in conclusory fashion the existence of trade secrets and confidential information, and plaintiff cannot articulate or demonstrate the existence of any such protected information. Moreover, the restrictive covenant is unenforceable because it is overlybroad, without any geographical restriction, and the time limitations are unreasonable. Finally, defendants contend that plaintiff breached the employment contracts by terminating the individual defendants without cause, which rendered the restrictive covenant unenforceable.
The enforcement of restrictive covenants has been the focus of a great deal of litigation, and the guiding legal standards were stated by the Court of Appeals in BDO Seidman v. Hirshberg, 93 NY2d 382 (1999). They were recently applied by the First Department in Crown It Services, Inc. v. Koval-Olsen, 11 AD3d 263, 264 (2004). "In order to be enforceable, an anticompetitive covenant ancillary to an employment agreement must be reasonable in time and area, necessary to protect the employer's legitimate interests, not harmful to the public, and not unreasonably burdensome to the employee." The legitimate interests of an employer can be demonstrated where it is claimed that the employee is misappropriating employer trade secrets, making use of confidential information, or where the employee's services are unique or extraordinary, ( BDO Seidman, supra, 93 NY2d at 389), and such factors may be important in seeking injunctive relief ( see Crown It Services, Inc., supra at 265). BDO Seidman recognized another legitimate interest of the employer "in preventing former employees from exploiting or appropriating the goodwill of a client or customer, which had been created and maintained at the employer's expense, to the employer's competitive detriment." ( BDO Seidman, at 392, quoted and applied by the First Department in Crown It Services, Inc, supra at 265 with respect to a claim for damages).
In this case, I am only considering the causes of action for damages not injunctive relief. Here, as in Crown It Services, the plaintiff had a pre-existing relationship with its client (Pfizer). ( See 11 AD3d at 264). It is reasonable to infer that plaintiff expended time and effort cultivating a business relationship with Pfizer. The individual defendants "enjoyed a close relationship" with Pfizer, and Pfizer sought and obtained their services after their employment with plaintiff ended. Thus, plaintiff's goodwill with Pfizer represents a legitimate employer interest, worthy of protection by a restrictive covenant. In Crown It Services, supra, although the plaintiff lost its customer account, the First Department held that the customer goodwill was still protected by a restrictive covenant, which was breached when a former employee continued to work for such customer. Thus, the fact that plaintiff lost the Pfizer contract does not preclude its legitimate need for protection of its client goodwill with Pfizer. In view of this conclusion, it is unnecessary for plaintiff to its demonstrate legitimate employer interest by virtue of employee disclosure or use of confidential information or trade secrets, which plaintiff has failed to establish.
Although there are various definitions of trade secrets, confidential or proprietary employer information (see e.g. Ashland Management Inc. v. Janien, 82 NY2d 395, 407 [1993]; DoubleClick Inc. v. Henderson, 1997 WL 731413, [Sup. Ct. NY Cty 1997]), the plaintiff has failed to point to any information or special formula provided by plaintiff to the individual defendants. The individual defendants were computer consultants and they only possessed the general skills required to coordinate data processing with available computer hardware. Plaintiff has failed to point to any specific methodology which it developed and provided to the individual defendants for use in servicing the Pfizer contract. Thus, plaintiff's allegations concerning these items are "bald conclusory" statements without any legal significance. As discussed below, the plaintiff's failure to demonstrate such trade secrets, or confidential data dooms its causes for action for misappropriation of trade secrets (Eighth Cause of Action) and unfair competition (Tenth Cause of Action).
The time and area restrictions must also be reasonable. The eighteen/twelve month time restriction is reasonable on its face, and in fact an eighteen month restriction was upheld by the Court of Appeals in BDO Seidman, while a twelve month restriction was upheld by the First Department in Crown It Services. However, the covenant may be overbroad with respect to area, since it contains no geographical limitation. Nonetheless, even when a covenant is overbroad in certain respects a court can "cure the unreasonable aspect of an overbroad employee restrictive covenant through the means of partial enforcement or severance." ( BDO Seidman, supra at 394), if the court so concludes after a "case specific analysis, focusing on the conduct of the employer in imposing the terms of the agreement." Although the Court upheld the covenant in BDO Seidman, and allowed it to be "blue penciled", permitting for its modification, that was only after the Court reviewed all of the relevant facts and circumstances. BDO Seidman, was a decided on a motion for summary judgment, so all available facts were before the Court. Here, the matter is before me on a motion to dismiss, and all of the facts and circumstances have not been presented, and no hearing was held regarding the relevant facts and circumstances as to the imposition of the restrictive covenant. Such a hearing will have to await discovery of the relevant facts, and thus this issue cannot be decided on a motion to dismiss.
Moreover, to decide if the covenant may be modified and rendered enforceable will depend on, in part, whether the covenant was "imposed as a condition of defendant's employment", or "even his continued employment". ( BDO Seidman, 93 NY2d at 395). It is also important to know if the covenant was imposed in "bad faith" or the result of "coercion". Here, a question of employer bad faith has been raised concerning whether plaintiff terminated the contracts of the individual defendants without cause. The undisputed facts in this case are unclear as to whether plaintiff, in fact, terminated the individual defendants on December 16, 2004 by its e-mails, in view of the subsequent e-mails and alleged conversations in which plaintiff sought to find other employment for the individual defendants.
If any "termination" resulted from the defendants' decision to violate an enforceable restrictive covenant, then such termination may be for cause. Thus, in the absence of the facts and circumstances concerning the alleged "termination," it is premature to rule as a matter of law, that the covenant is unenforceable because there has been an employee termination without cause.
Defendants cite three cases to support the view that an employee termination without cause precludes the enforcement of a restrictive covenant. ( In re UFG Int'l, Inc., 225 B.R. 51, [S.D.NY, 1998]; SIFCO Industries, Inc. v. Advanced Plating Technologies, Inc., 867 F.Supp. 155 [S.D.NY, 1994]; Handel v. Nisselson, 1998 WL 889041 [S.D.NY, 1998]). Those cases rely upon an arguably distinguishable Court of Appeals case which held that a termination without cause could not be the basis to forfeit an employee's pension benefits. See Post v. Merrill Lynch, Pierce, Fenner Smith, Inc., 48 NY2d 84 [1979]). In any event, the facts here are unclear as to whether a termination in fact took place; and if so, whether it was the result of the individual defendant's announced intention to work for a competitor in violation of the restrictive covenant. These facts need to be clarified.
Accordingly, subject to factual development, it is premature to rule as a matter of law that the Second Cause of Action fails to state a cognizable claim for breach of a covenant not to compete. The factual development will determine whether the covenant may be modified so as to render it enforceable, or whether it is the result of employer overreaching, which will render it unenforceable. At this juncture, the defendants' motion to dismiss this claim is denied.
In the Fourth Cause of Action, plaintiff seeks damages against defendants Pfizer and DynPro for their alleged wrongful interference with the restrictive covenant provision set forth in the employment agreement with the individual defendants. Plaintiff alleges, as expanded in its supporting affidavit, that both Pfizer and DynPro were advised of the existence of the restrictive covenants prior to the expiration of the Pfizer Agreement. (Complaint par. 28-33; 36-37; Gangidi Reply Aff. par. 17-23). Indeed, there is documentary evidence that plaintiff advised both Pfizer and DynPro as to the existence of such restrictive covenant. Plaintiff alleges that defendants Pfizer and DynPro, in spite of such knowledge, intentionally interfered with its restrictive covenant with the individual defendants. Such allegations are sufficient to set forth a claim of tortious interference with plaintiff's contract rights. ( Cf. Anderson Properties, Inc v. Sawhill Tubular Division, Cyclops Corporation, 149 AD2d 950 [4th Dept., 1989]
Defendants Pfizer and DynPro seek to dismiss this Fourth Cause of Action because they claim the restrictive covenant is unenforceable. As previously indicated, regarding the Second Cause of Action, it is premature to determine the validity of the restrictive covenant in issue based on a motion to dismiss. Once that issue is resolved based on a fuller review of the relevant facts, then it will be possible to revisit this issue. In addition, defendants claim they were not aware of plaintiff's contract rights with the individual defendants. However, I am required at this stage, to accept plaintiff's allegations as pled, and defendants' contested factual issue cannot be resolved on this motion to dismiss.
The alternative dispute resolution procedures set forth in the Agreement between plaintiff and defendant Pfizer do not apply to this cause of action. It does not arise out of the contract between them; instead, it arises from Pfizer alleged actions outside of that Agreement which allegedly impinge plaintiff's agreement with the individual defendants. (See the discussion below regarding the Sixth Cause of Action, which does implicate the alternative dispute provisions).
In the Sixth Cause of Action Plaintiff alleges that defendant Pfizer breached paragraph 11.1 of the Agreement, which provides that both parties "mutually agree to refrain from hiring or soliciting for hire any employee or Personnel of the other who is assigned to the Work during the term of this Agreement and for a period of three (3) months from the termination or expiration thereof."Paragraph 13 sets forth an alternative dispute resolution process which the parties agreed to adhere to, with certain exceptions discussed below, in the event of "a dispute involving the interpretation or application of any provision of this Agreement." Pfizer moves to dismiss this cause of action, or in the alternative to stay it and to direct the parties to follow the alternative dispute procedures.
Since the — Sixth Cause of Action involves a dispute between the parties regarding the "interpretation or application" of the Professional Services Agreement, there is a factual dispute as to whether defendant Pfizer took any action in contravention of its obligations under paragraph 11.1. While unquestionably, this claim states a cause of action, it is necessary to decide if this is, initially, the proper forum. Under paragraph 13.1.5, either party may resort to litigation in the event "such litigation could be barred by an applicable statute of limitations" or "if litigation is otherwise necessary to prevent irreparable harm to the moving party".
Plaintiff commenced this action and obtained a TRO, alleging that it would experience irreparable harm as a result of the actions of the defendants. I have now determined that the plaintiff will not "suffer irreparable harm" because it can adequately protect its interests by a claim for damages. Since the action has already been commenced, and the exceptions to the alternative dispute resolution procedures do not apply with respect to this Sixth Cause of Action, Pfizer's motion to stay this cause of action is granted, and the parties are directed to follow the alternative dispute resolution procedures set forth in the Agreement with respect to this cause of action.
Both the Eight and Tenth Causes of Action hinge on the existence of "trade secrets" or "confidential information," which the defendants are alleged to have misappropriated (Eighth Cause of Action) and exploited by the individual defendants with assistance from defendants Pfizer and DynPro (Tenth Cause of Action) (Complaint, pars. 47-51, 53, and 57; Plaintiff's Memorandum in Support for Injunctive Relief, pp 11-13). Defendants contend that plaintiff's allegations in this regard are mere "bald legal conclusions" without any foundation and are not entitled to any legal significance. I agree. Since the defendants have failed to describe any trade secrets or confidential information supplied to the individual plaintiffs, it is apparent that such allegations provide no support for these causes of action. Therefore, the Eighth and Tenth Causes of Action are dismissed.
Accordingly, it is: ORDERED that the First, Third, Fifth, Seventh, Eight, Ninth and Tenth Causes of Action in the Complaint are severed and dismissed; and it is further ORDERED that the Sixth Cause of Action is stayed pending completion of the alternative resolution provisions of the Pfizer Agreement; and it is further ORDERED that the remainder of the action shall continue; and it is further ORDERED that the defendants are directed to serve an answer to the complaint within 20 days after service of a copy of this order with notice of entry; and it is further ORDERED that the Clerk is directed to enter judgment accordingly.