Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC
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Full Opinion
OPINION
Plaintiffs Pure Power Boot Camp, Inc., Pure Power Boot Camp Franchising Corporation, Pure Power Camp Jericho Inc., and Lauren Brenner (collectively âPlaintiffsâ or âPure Powerâ), brought this action against Defendants Warrior Fitness Boot Camp, LLC, Alexander Kenneth Fell, Ruben Dario Belliard, Jennifer J. Lee, and Nancy Baynard (collectively âDefendantsâ or âWarrior Fitnessâ), accusing Defendants of stealing their business model, customers, and confidential and commercially sensitive documents, breaching contractual and employee fiduciary duties, and infringing Plaintiffsâ trade-dress. Defendants filed counterclaims asserting violations of the New York Labor Law, violations of the Stored Communications Act, and unauthorized use of Defendantsâ images in violation of New York Civil Rights Law. The Courtâs jurisdiction is derived from Plaintiffsâ federal statutory trade dress claims, under 28 U.S.C. § 1338(a) and (b).
The parties consented to trial before this Court, pursuant to 28 U.S.C. § 636(c). The Court presided over a bench trial from January 24 to February 4, and March 14-18, 2011. The following Opinion constitutes the Courtâs findings of fact and conclusions of law.
BACKGROUND
I. Factual Background
While working as a trader on Wall Street in 2002, Plaintiff Lauren Brenner (âBrennerâ) decided to start her own physical fitness business, based upon the concept of a military boot camp. Investing substantial time and all of her savings, on or about December 17, 2003, Brenner opened Pure Power Boot Camp, Inc. (âPure Power Boot Campâ), a facility located at 38 West 21st Street in Manhattan. Pure Power Boot Camp is modeled, in part, after United States Marine Corps training facilities. It is designed in military camouflage colors and decor and, unlike traditional gyms, does not have a membership fee; instead, clients sign renewable contracts for âtours of duty,â meaning that ârecruitsâ â as Pure Power clients are called â sign up for a program to attend a certain number of sessions per week for a set number of weeks. If a recruit does not show up for a scheduled class, Pure Power personnel contacts them directly.
An important part of Brennerâs concept is to use physical objects as part of an indoor obstacle course, modeled after a Marine Corps outdoor obstacle course at Fort Knox, to build confidence, physical fitness, and self-empowerment in her clients. To construct this obstacle course, Brenner contacted a company that built high rope courses. The owner of that company arranged for Brenner to visit Fort Knox and inspect the outdoor obstacle course there, in order to assess whether any of the individual obstacles were *501 suitable for use in a smaller, indoor facility to be used by civilians. Brenner did so and adapted some of the Marine Corpsâ obstacles to her concept. She designed the facility decor as well as the arrangement of the obstacles, using a flooring made of a crushed rubber tire material designed to look like outdoor dirt. The obstacles are surrounded by a running track, separated by a border of dark sand bags. One of Brennerâs insights was that people will stick to an exercise regime if they work out in a group. She thus concluded that classes should be limited to 16 people who go through âtrainingâ together, and are called ârecruits.â The recruits wear a Pure Power Boot Camp T-shirt and camouflage pants. Another important component of her plan is to use the physical obstacles to build self-confidence. In addition, Brenner designed fitness routines involving the obstacles in order to develop various body muscles and muscle strength, as well as cardiovascular health.
Brenner employed former marines as âdrill instructors,â viewing it as an opportunity to provide jobs to veterans returning from combat in Iraq. In addition, Brenner felt that the hiring of military personnel would lead to good press coverage for her business. Because Pure Powerâs training techniques were not developed or taught in the United States military, when new drill instructors are hired, they are required to observe- and participate in the Pure Power Program, and teach alongside an experienced instructor, before being allowed to teach on their own. All drill instructors are required to obtain certification as a fitness instructor.
After the Pure Power facility was constructed according to her design, Brenner traveled to the Marinesâ Garden City Reserve Base to make a presentation to marines who had recently returned from combat service. Shortly following that presentation, a number of marines came to Pure Power to experience the program. One of those marines was Defendant Ruben Dario Belliard (âBelliardâ).
Belliard started working at Pure Power Boot Camp as an independent contractor in April 2005, and was hired as a full-time Pure Power drill instructor in or about July 2006. On Belliardâs recommendation, Brenner hired Defendant Alexander Kenneth Fell (âFellâ), another marine, in or about August 2005. Fell started working as a full-time Pure Power drill instructor in or about September 2006. Both Belliard and Fell were well-liked and sought-after instructors. Indeed, Belliard eventually became Pure Powerâs head drill instructor. Belliard was paid more than the other Pure Power drill instructors and when Brenner was not around, Belliard was left in charge. Brenner placed great trust in Belliard and, at least from her perspective, came to view him as a close friend.
Pure Power was a unique concept and unlike most other exercise facilities. It was an immediate success, garnering attention from a variety of media outlets, including MSNBC and Inside Edition. Brenner personally appeared on a variety of television shows, including NBCâs The Today Show, the Donny Deutsch Show, and the Anderson Cooper Show on CNN. Brennerâs intent when she created Pure Power was not to have one location, but to develop a business plan that could be rolled out as a national franchise. In 2006, she took steps to franchise the Pure Power concept. She hired a franchise attorney, with whom she developed a business plan, as well as a start-up manual and an operations manual, which described how to open and operate a Pure Power facility. Brenner also participated in the Franchise Expo show in California, and took Belliard *502 along to assist her. Pure Power had a booth at the show and a USA Today reporter featured Pure Power as a top new franchise in 2006. (See Pls.â Ex. 211.) The publicity that Pure Power received led to numerous inquiries from potential franchisees.
In preparation for Pure Powerâs franchising roll-out, Brenner had the drill instructors sign an Employment Agreement as a condition of continued employment. With the exception of Fell, every drill instructor, Belliard included, admits to having signed an Employment Agreement. Fell, however, disputes having signed such an Employment Agreement, while Brenner insists that he did.
The Employment Agreement contains a number of contractual provisions, including: (1) a provision that requires employees of Pure Power to devote their âskills and best efforts to the Companyâ and to work to further the companyâs best interests; (2) a nondisclosure provision; (3) a provision that precludes Pure Power employees from challenging the validity or enforceability of Pure Powerâs alleged âIntellectual Propertyâ; (4) a non-compete provision; and (5) a non-solicitation provision. (See Pls.â Ex. 329.) The non-compete provision precludes post-termination employment, anywhere in the world, for a period of ten years, at any business that competes directly with Pure Power, which includes any company that uses âobstacle coursesâ or âexercises derived from military trainingâ or a âmilitary theme.â The non-solicitation provision precludes solicitation, or assisting in the solicitation of, any Pure Power clients.
To assist in the franchising of the Pure Power business, Brenner also hired a trade dress attorney, who recommended that Pure Power register its trade dress. Pure Powerâs initial application for registration of its trade dress was rejected by the United States Patent and Trademark Office (âUSPTOâ). After Plaintiffs submitted additional documentation, the USP-TO eventually granted Plaintiffs a service mark. In the USPTO registration, the Pure Power trade dress is described as follows:
THE MARK CONSISTS OF A DRAWING OF AN EXERCISE FACILITY, STYLED TO LOOK LIKE A MILITARY BOOT CAMP TRAINING COURSE COMPRISED OF CAMOUFLAGE WALL AND CEILING DECOR, CRUSHED RUBBER FLOORING, A TIRE RUN, CLIMBING WALLS, CLIMBING NETS, AND HURDLES, WITH THE TERMS âDESIRE,â âSTRE,â âCOURAGE,â AND âUTY.â 1
(Pls.â Ex. 140.)
Before actively pursuing franchise opportunities, Brenner decided to open a second fitness facility â Pure Power Boot Camp Jericho Inc. (âJerichoâ) â located in Jericho, New York. The Jericho location looks somewhat different than the Manhattan location and has more obstacles. Brenner offered Belliard a partnership in the Jericho location, which he refused, stating that he did not have enough money to invest. In the first few months that the Jericho facility was open, Brenner spent the majority of her time there.
Around July 2007, while they were still working at Pure Power, Defendants Belliard and Fell began planning their own military-themed gym â Warrior Fitness Boot Camp, LLC (âWarrior Fitnessâ). Jennifer J. Lee Fell (âLeeâ), who was a Pure Power client from March 2006 until April 2008, and is now Fellâs wife, was, at that time, an owner and silent partner in *503 Warrior Fitness. Unbeknownst to Brenner, Fell was then dating Lee in violation of an express Pure Power policy banning social relationships between the drill instructors and Pure Power clients. Defendants Belliard and Fell believed that Leeâs business school education and her extensive background in business plan drafting would be useful in raising the capital necessary to open Warrior Fitness. Lee was involved in the lease negotiations for spaces Warrior Fitness considered, and, ultimately, rented at 29 West 35th Street in Manhattan â a mere 15 blocks away from Pure Power. Her name is listed as a tenant on the current Warrior Fitness lease. She hired Warrior Fitnessâs media company and legal counsel and prepared a cost-benefit analysis for the business. Lee also lent Fell $100,000.00, which Fell used to open Warrior Fitness.
Defendants took a number of steps to promote Warrior Fitness. While still a Pure Power client, Lee sent emails to Pure Power clients and others, promoting Warrior Fitness and providing detailed descriptions of the Warrior Fitness class offerings. The Warrior Fitness class times and promotional language closely mirrored those of Pure Power. Some of these emails were sent while Belliard was still employed at Pure Power. Defendants also organized a cocktail party, at which a number of Pure Power clients were present, where Fell announced that he would be opening Warrior Fitness. Defendant Nancy Baynard (âBaynardâ), who was a client of Pure Powerâs from January 2006 until late 2007, and who was secretly dating Belliard, created the Jen and Nancy Party List (âParty Listâ) â a list of names of people who were to be invited to a party celebrating Belliardâs birthday and the grand opening of Warrior Fitness. All of the Defendants contributed names of people whom they believed might be interested in joining Warrior Fitness. As Baynard testified at trial, the Party List was created to obtain a better understanding of the general interest in Warrior Fitness. The party never took place, however, and, according to Defendants, the Party List was never used.
But Defendantsâ efforts went beyond merely promoting and planning Warrior Fitness. As part of Defendantsâ combined efforts to open Warrior Fitness, Defendant Belliard stole documents from Brennerâs private office and personal computer, included Pure Powerâs business plan, start-up manual, and operations manual. Belliard also stole a folder with Employment Agreements of Pure Power employees, including his own, and destroyed those agreements. In addition, Belliard, without permission, downloaded a copy of Pure Powerâs confidential customer list onto a thumb-drive. The theft of the customer list, the theft of the business plan, and the theft of the Pure Power files all took place on different dates and times. Finally, Plaintiffs contend that Belliard also stole and destroyed a draft of a book that Brenner was writing, entitled âUnleash the Warrior Goddess Within.â
Belliard shared the stolen materials, including Pure Powerâs client list, with Defendants Fell and Baynard. Belliard also provided a copy of Pure Powerâs business plan, operations manual, and start-up manual to Lee, who knew that these materials had been stolen from Pure Power. Plaintiffs contend that Lee relied upon these documents in drafting the Warrior Fitness business plan. During that same period of time, to further promote the success of Warrior Fitness, Lee disparaged Brenner and Pure Power in speaking to other Pure Power clients. Third-party witnesses testified that Lee expressly told them that Brenner treated her employees badly and did not pay them. There was also testimony that Lee told Pure Power clients that *504 Brenner âhated homosexualsâ and that she had fired a former Pure Power employee because he was gay. At no time while Lee was enrolled at Pure Power, discussing Belliardâs and Fellâs plans to open Warrior Fitness and denigrating Brenner and Pure Power more generally, did she ever disclose her significant financial interest in Warrior Fitness or her personal relationship with Fell.
Although Fell was fired from Pure Power, it was of his own doing. Specifically, Fell, while working at Pure Power, refused to comply with several of Brennerâs explicit instructions, which led to a heated exchange in which Fell repeatedly screamed at Brenner, daring Brenner to fire him. Left with no choice, Brenner terminated Fellâs employment on March 16, 2008. Approximately two weeks later, on April 1, 2008, Belliard quit Pure Power, without providing Brenner with notice. Before Belliard quit Pure Power, at a time when Brenner was spending most of her time at the recently-opened Jericho facility, Belliard informed Brenner of certain alleged problems relating to another Pure Power drill instructor. Belliard recommended that this employee be fired, and Brenner, who placed a great deal of trust in Belliard, took his advice and did so. She did not know at the time that Belliard intended to quit his job at Pure Power. The loss of three senior full-time employees, in such close succession, left Pure Power understaffed and in a vulnerable position.
On April 28, 2008, Brenner found out about Defendantsâ plan to open Warrior Fitness and the fact that confidential materials had been stolen from her office at Pure Power. Elizabeth Lorenzi (âLorenziâ), who was an employee of Pure Power, knew that Fell had used the Pure Power computer. She and Cheryl Dumas (âDumasâ and, collectively, âThird Party Defendantsâ), a close friend of Brennerâs and a Pure Power client, were able to access and print emails from three of Fellâs personal email accounts. While there is no evidence that Brenner herself accessed â or requested that Lorenzi and/or Dumas access Fellâs email accounts on her behalfâ Brenner read the emails, which provided a detailed picture of Belliardâs and Fellâs scheme to set up Warrior Fitness and undermine Brennerâs and Pure Powerâs reputations and business, before they left Pure Power, and the work that Lee and Baynard did to support those efforts. The content of these emails provided the basis for much of Plaintiffsâ original Complaint.
Belliard and Fell, along with them girlfriends at the time, Lee and Baynard, opened Warrior Fitness on or about May 12, 2008.
II. Procedural Background
Approximately a week after gaining access to Fellâs email accounts, Plaintiffs commenced an action in New York State Supreme Court. At that time, Plaintiffs sought a temporary restraining order, seeking, among other things, to prevent Defendants from opening their competing business. The state court determined that Plaintiffsâ non-compete agreement was unenforceable as drafted, and allowed Defendants to open Warrior Fitness. (See Transcript, dated May 6, 2008 (âTRO Hr.â), attached as Ex. B. to Declaration of Daniel Schnapp, dated Oct. 24, 2008, at 28, 43.) The state court, however, directed Defendants to return certain materials that they had stolen from Pure Power and also instructed Defendants to make alterations in the decor of Warrior Fitness to further distinguish its appearance from that of Pure Power, and, thus, remedy some of the trade dress issues raised by Plaintiffs. (See id. at 41-42.) Defendants then removed this action to this Court and sought an order precluding the use or disclosure *505 of specific emails obtained by Plaintiffs from Fellâs email accounts.
In a Report and Recommendation, dated August 22, 2008, this Court found that Plaintiffsâ actions in accessing Fellâs personal email accounts, without his permission, constituted a violation of the Stored Communications Act, 18 U.S.C. § 2701 et seq. The Court recommended that Plaintiffs be precluded from using in this litigation emails obtained outside normal discovery procedures. 2 The Court also recommended that Plaintiffs be required to return or destroy all copies of emails that contained privileged attorney-client communications. No objections to the Report and Recommendation were filed, and on October 23, 2008, United States District Judge John G. Koeltl adopted the Report in its entirety. See Pure Power Boot Camp v. Warrior Fitness Boot Camp, 587 F.Supp.2d 548, 551 (S.D.N.Y.2008) (âPreclusion Decisionâ).
After discovery was complete, the parties submitted cross-motions for partial summary judgment. Plaintiffs sought summary judgment on Defendantsâ claims under the SCA and the Electronic Communications Privacy Act (âECPAâ). Defendants sought summary judgment on the same SCA and ECPA claims. This Court granted in part Defendantsâ motion for partial summary judgment, finding that Plaintiffs had accessed Fellâs emails in violation of the SCA. See Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, 759 F.Supp.2d 417 (S.D.N.Y.2010). In particular, the Court concluded that Defendants had established four separate violations of the SCA and, as a result, were entitled to statutory damages in the amount of $4,000. See id. at 428-29. The questions of which of the named Plaintiffs was liable for the SCA violations, and whether punitive damages, attorneysâ fees, and costs should be awarded, were left to be determined at trial. See id. at 429-30. The Court also granted Plaintiffsâ motion for partial summary judgment, concluding that there had been no violation of the ECPA. See id. at 430-31.
DISCUSSION
Plaintiffs seek damages and injunctive relief on the following claims: (1) breach of contract against Fell and Belliard; (2) breach of the common law duty of loyalty against Belliard, Fell, Lee, and Baynard; (3) unjust enrichment against all Defendants; (4) common law unfair competition against all Defendants; (5) violation of New York General Business Law § 360 against all Defendants; (6) statutory trade dress infringement; (7) conversion against Fell and Belliard; (8) defamation against Lee; (9) tortious interference with prospective economic advantage against all Defendants; and (10) tortious interference with contract against Lee and Baynard. 3
Defendantsâ Third-Party Complaint asserts the following counterclaims: (1) violation of the New York Labor Law against all Plaintiffs; (2) violations of the SCA against Plaintiffs and Third-Party Defendants; and (3) unauthorized use of imagery in violation of New York Civil Rights Law § 51 against all Plaintiffs. 4
*506 The Court will address, in turn, each of these separate thirteen causes of action.
I. Breach of Contract
Plaintiffs contend that both Belliard and Fell breached their Employment Agreements: (1) by failing to devote their skill and best efforts to Pure Power, and by disparaging and undermining the reputation of Pure Power; (2) by disclosing confidential and commercially sensitive information; (3) by using Pure Power Intellectual Property (as defined in the Employment Agreement) in a competing business; (4) by competing directly with Pure Power within ten years of being employed by Pure Power; and (5) by soliciting Pure Powerâs customers.
Defendants respond that certain provisions of the Employment Agreement are unenforceable, under New York law, because they are overbroad and unreasonably restrain Defendants from working in their profession. Defendants further contend that Fell did not sign an Employment Agreement, and that the signature appearing on the agreement produced by Plaintiffs is a forgery.
A. Existence of an Agreement
To establish breach of contract under New York law, Plaintiffs must show: â(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) a breach of contract by the defendants, and (4) damages.â Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir.2004); accord JP Morgan Chase v. J.H. Elec. of New York, Inc., 69 A.D.3d 802, 803, 893 N.Y.S.2d 237, 239 (2d Depât 2010).
To start, the Court concludes that it is not necessary to resolve, as a factual matter, whether Fell signed an Employment Agreement, because even if the Court were to find that Fell did so, Plaintiffs have failed to prove their breach of contract claims against Fell.
B. Non-Compete Provision
Plaintiffs contend that Defendants Belliard and Fell breached the non-compete provision of the Employment Agreement. The noncompete provision states that an employee of Pure Power, for a period of ten years following employment at Pure Power:
shall not, and shall not assist any third party to, conduct any business or be employed by any business that competes directly with the Company. A business that competes directly with the Company shall include, but not be limited to, any physical exercise program, confidence program or gym: (i) that uses obstacles courses; (ii) that uses methods or exercises derived from military training; (iii) that uses a military theme in any way; or (iv) that employs the term âboot campâ in the name or description of the program or gym.
(Pls.â Ex. 329.)
New York law subjects contractual non-compete provisions to âan overriding limitation of reasonableness.â Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 70 (2d Cir.1999) (quoting Karpinski v. Ingrasci, 28 N.Y.2d 45, 49, 320 N.Y.S.2d 1, 268 N.E.2d 751 (1971)). Specifically, an agreement not to compete will be enforced only if âit is reasonable in time and area, necessary to protect the employerâs legitimate interests, not harmful to the general public, and not unreasonably burdensome to the employee.â Reed, Roberts Assoc. v. Strauman, 40 N.Y.2d 303, 307, 386 N.Y.S.2d 677, 353 N.E.2d 590 (1976). Such agreements may be justified by the employerâs need to protect itself from unfair competition by former employees. *507 See BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 391, 690 N.Y.S.2d 854, 712 N.E.2d 1220 (1999).
Here, the non-compete provision is clearly unreasonable in terms of duration and geographic scope. Indeed, Plaintiffs have conceded that the ten-year prohibition is overly broad in terms of duration, and courts have consistently held non-compete provisions of this duration unreasonable and, therefore, unenforceable. See, e.g., Bakerâs Aid, a Div. of M. Raubvogel Co., Inc. v. Hussmann Foodservice Co., 730 F.Supp. 1209, 1216 (E.D.N.Y.1990) (concluding that a covenant not to compete for a period of ten years was unenforceable because it was overbroad and not reasonably necessary to prevent the disclosure of the plaintiffs proprietary information or the misuse of the plaintiffs plans and specifications); see also Todd Chem. Co. v. Di Stefano, 30 A.D.2d 879, 292 N.Y.S.2d 811 (2d Depât 1968) (holding that a restrictive covenant, with a ten-year term, was unenforceable).
In addition, the non-compete provision does not provide for any geographic limitations. Plaintiffs introduced no evidence to support the proposition that a covenant restricting competition of the kind at issue in this case, anywhere in the world, is reasonable in terms of scope; nor have Plaintiffs pointed to any cases in this jurisdiction that would support the Court drawing such a conclusion. Indeed, the case law suggests just the opposite. See, e.g., Silipos, Inc. v. Bickel, No. 06 Civ. 2205(RCC), 2006 WL 2265055, at *6 (S.D.N.Y.2006) (holding that a restrictive covenant with worldwide restrictions on competition is not reasonable); Heartland Sec. Corp. v. Gerstenblatt, No. 99 Civ. 3694(WHP), 2000 WL 303274, at *7 (S.D.N.Y. Mar. 20, 2000) (refusing to fully, or partially, enforce a non-compete with no geographic limitations); see also Good Energy, L.P. v. Kosachuk, 49 A.D.3d 331, 332, 853 N.Y.S.2d 75 (1st Depât 2008) (holding unenforceable a non-compete covenant that covered the entire United States where employer only operated in eight states); Garfinkle v. Pfizer, Inc., 162 A.D.2d 197, 197, 556 N.Y.S.2d 322, 323 (1st Depât 1990) (refusing to enforce a restrictive covenant whose geographic scope âencompasses the entire worldâ).
Moreover, a non-compete provision that restricts Defendants Belliard and Fell from accepting any job in the fitness industry that âuses obstacle coursesâ or âexercises derived from military trainingâ or a âmilitary themeâ or âemploys the term âboot campâ â is ambiguous and overly broad. Brenner herself was unclear as to whether the non-compete provision purported to preclude employment at a fitness facility that used military-style pushups, testifying that she was unsure of the difference between military exercises and exercises conducted in the Army or the Marines. In addition, as Brenner also testified, âeverybody is usingâ the term âboot campâ nowadays. Thus, on the basis of the non-compete provision, Defendants Belliard and Fell would be prohibited from working at any place that calls itself a boot camp (e.g., âboot campâ makeup school). In short, the non-compete provision is unreasonably burdensome to Defendants because its enforcement is likely to result in the loss of Belliardâs and Fellâs ability to earn a living as fitness instructors.
Accordingly, the Court finds the non-compete provision of the Employment Agreement to be both imprecise and clearly overbroad, as well as unreasonably burdensome. It is, therefore, unenforceable as a matter of law.
1. Severance or Partial Enforcement
Anticipating that the Court might find the non-compete provision overbroad, in *508 the alternative, Plaintiffs ask the Court to âblue-pencilâ the Employment Agreement. In particular, Plaintiffs seek partial enforcement of the non-compete provision for a period of three years and limited to the United States.
New York courts have âexpressly recognized and applied the judicial power to sever or grant partial enforcement for an overbroad employee restrictive covenant.â Estee Lauder Cos. Inc. v. Batra, 430 F.Supp.2d 158, 180 (S.D.N.Y.2006) (internal quotation and citations omitted). Partial enforcement may be justified so long as âthe employer demonstrates an absence of overreaching, coercive use of dominant bargaining power, or other anti-competitive" misconduct, but has in good-faith sought to protect a legitimate business interest, consistent with reasonable standards of fair dealing.â BDO Seidman, 93 N.Y.2d at 394, 690 N.Y.S.2d 854, 712 N.E.2d 1220. The burden lies with the employer to show that a restrictive covenant should be partially enforced. See Spinal Dimensions, Inc. v. Chepenuk, 16 Misc.3d 1121(A), No. 4805-07(RMP), 2007 WL 2296503, at *11 (N.Y.Sup.Ct. Aug. 9, 2007).
In BDO Seidman, the New York Court of Appeals determined that it could âseverâ from a restrictive covenant, which was limited in duration, portions of the contract that the court deemed overbroad, thereby rendering the covenant partially enforceable. BDO Seidman, 93 N.Y.2d at 395, 690 N.Y.S.2d 854, 712 N.E.2d 1220. Notably, â[n]o additional substantive terms [were] required. The time and geographic limitations on the covenant remain[ed] intact. The only change [was] to narrow the class of [plaintiffs] clients to which the covenant applied.â Id.; see also Karpinski 28 N.Y.2d at 51-52, 320 N.Y.S.2d 1, 268 N.E.2d 751 (severing the overbroad portion of the restrictive covenant prohibiting the defendant from practicing general dentistry and enforcing only that portion of the covenant prohibiting defendant from practicing oral surgery).
Here, Plaintiffs have not requested that the Court âseverâ the non-compete provision of the Employment Agreement in a particular manner. Instead, Plaintiffs have asked the Court to insert or introduce new substantive terms into the non-compete agreement that the contracting parties themselves have not agreed upon. Even in the context of a temporary restraining order, where there is some urgency in addressing contemporaneous conduct that violates a noncompete agreement, New York courts are reluctant to rewrite a contractual non-compete provision by adding time and geographic limitations that the court, and not the parties themselves, has deemed reasonable. See, e.g., Crippen v. United Petroleum Feedstocks, Inc., 245 A.D.2d 152, 153, 666 N.Y.S.2d 156, 156-57 (1st Depât 1997) (refusing to partially enforce a restrictive covenant by limiting its geographic scope because to do so would âalter the original contract so drastically as to preclude a present finding that plaintiff would have accepted the contractâ and stating that âdefendant should have drafted the agreement to include such provisions from the start and allowed plaintiff to decide whether to signâ).
But, here, Plaintiffs not only seek to have the Court rewrite the contractual non-compete provision, they also seek to have the Court apply it retroactively. Yet, a state court, when presented with the relevant facts in May 2008, when Defendants first opened Warrior Fitness, refused to shut it down. Likewise, the District Court, when asked in June 2008 to close Warrior Fitness, denied Plaintiffsâ application for a preliminary injunction. (See Order, dated Oct. 28, 2008.) Now, *509 more than three years later, Plaintiffs again ask the Court to find Defendants liable for breach of the non-compete provision and seek to have the Court close Warrior Fitness, and pay as damages all of the profits earned by Warrior Fitness in the last three years, notwithstanding the Courtâs conclusion that the restrictive covenant is overbroad and unenforceable. Plaintiffs have failed to cite any cases in this jurisdiction where a court, several years after the alleged violation of a non-compete provision, has rewritten or blue-penciled a restrictive covenant in the manner sought by the Plaintiffs, instead directing the Courtâs attention to inapposite case law. See, e.g., Omni Consulting Grp., Inc. v. Marina Consulting, Inc., No. 01-CV-511A (RJA), 2007 WL 2693813, at *6 (W.D.N.Y. Sept. 12, 2007) (blue-lining a non-solicitation provision in response to a summary judgment motion where â[t]he provision as a whole [was] not overbroad,â and where the restriction applied only to defendantâs ability to hire a single individual, who could perform the contracted computer services from anywhere in the United States, and â[did] not impact [defendantâs] ability to maintain its businessâ); Unisource Worldwide, Inc. v. Valenti, 196 F.Supp.2d 269, 277 (E.D.N.Y.2002) (blue-lining a non-compete provision in the context of a motion for a preliminary injunction). Moreover, the request to rewrite the geographic scope of the non-compete provision to cover the entire United States is unreasonable and would be unduly onerous to Defendants Belliard and Fell. Pure Power presently operates in two locations in the New York metropolitan area and has no imminent plans to open other facilities in other states. Yet, Plaintiffs seek to prohibit Belliard and Fell from not just operating, but working in, facilities located anywhere in the United States that employ military-style exercises.
Finally, there was a coercive use of âbargaining powerâ by Plaintiffs that the BDO Seidman court, in a similar context, found unlikely to conform with reasonable standards of fair dealing. Specifically, the non-compete provision was drafted by Pure Powerâs attorneys, at the request of Brenner, and Belliard was required to sign the Employment Agreement, on the spot, after he had been working at Pure Power for a number of years, as a condition of his continued employment at Pure Power, and not in exchange for a promotion, greater responsibilities, or any other benefit beyond continued employment. See, e.g., Scott, Stackrow & Co., C.P.A.âs, P.C. v. Skavina, 9 A.D.3d 805, 807-08, 780 N.Y.S.2d 675, 678 (3d Depât 2004) (refusing to partially enforce a restrictive covenant where plaintiff, âfrom a superior bargaining position,â required defendant to sign the employment agreement âas a condition of continued employmentâ and not in exchange for âa fiduciary relationship, a position of increased responsibility within the firm or any other significant benefitâ); Spinal Dimensions, 2007 WL 2296503, at *11 (concluding that plaintiffs failed to meet their burden in justifying partial enforcement, in part, because â[a]s in Scott, Stackrow, there has been no showing here that in exchange for agreeing to the ... restrictive covenant, defendant assumed a position of greater responsibility or trust, or otherwise obtained any benefit beyond the ability to continue to serve as an independent contractorâ). Accordingly, Plaintiffs have failed to establish that rewriting and partially enforcing the non-compete provision is warranted.
C. Solicitation of Pure Poiver Clients
Plaintiffs contend that Defendants Belliard and Fell violated the non-solicitation provision of the Employment Agreement, which states that an employee of Pure *510 Power, for a period of ten years following employment at Pure Power:
shall not, and shall not assist any third-party to, solicit any client or customer of [Pure Power] to discontinue his or her use of [Pure Powerâs] products and services or to use the competing products or services of another business.
(Pls.â Ex. 329.)
A non-solicitation provision is a type of restrictive covenant. As discussed, in order for a restrictive covenant to be enforceable, the employer must show that the restriction is necessary to protect the employerâs legitimate business interests. Under New York law, an employerâs legitimate business interests are generally limited âto the protection against misappropriation of the employerâs trade secrets or of confidential customer lists, or protection from competition by a former employee whose services are unique or extraordinary.â BDO Seidman, 93 N.Y.2d at 389, 690 N.Y.S.2d 854, 712 N.E.2d 1220. Nevertheless, even where there is no showing that a former employee has obtained a competitive advantage through the misappropriation of confidential customer information, or that the employee provided unique or extraordinary services, the employer retains âa legitimate interest in preventing former employees from exploiting the goodwill of a client or customer, which had been created and maintained at the employerâs expense, to the employerâs competitive detriment.â Id. at 392, 690 N.Y.S.2d 854, 712 N.E.2d 1220.
In order to demonstrate that a former employee performed unique or extraordinary services, the employer must show that the employee was irreplaceable and that the employeeâs departure caused some special harm to the employer. See Ken J. Pezrow Corp. v. Seifert, 197 A.D.2d 856, 857, 602 N.Y.S.2d 468, 469 (4th Depât 1993). The employeeâs services must be âtruly special, unique or extraordinary, and not merely of high value to his or her employer.â H & R Recruiters, Inc. v. Kirkpatrick, 243 A.D.2d 680, 681, 663 N.Y.S.2d 865 (2d Depât 1997).
With respect to the alleged use of confidential customer lists by a former employee, a restrictive employment covenant will not be enforced unless the plaintiff can demonstrate that the information contained in the lists was not readily available through other sources.
See Ken J. Pezrow Corp.,
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