SOME INITIAL CONSIDERATIONS:

1. Attack the entire non-compete as having been obtained in ñbad faith,î which accordingly makes it unenforceable in its entirety.

If there is evidence that the employer obtained the covenants not to compete ñin bad faith,î it may be possible to get the court to refuse to enforce it at all and to be unwilling to engage in ñblue pencilingî the agreement. See Laidlaw, Inc. v. Student Transportation of America, Inc., 20 F. Supp. 2d 727, 754 (D. N.J. 1998) (attached as Exh. A.); see also Solari Industries v. Malady, 55 N.J. 571, 576 (1970) (ñWhen an employer, through superior bargaining power, extracts a deliberately unreasonable and oppressive covenant, he is in no position to seek, and should not receive, equitable relief from the courts.î).

2. Opposing the Preliminary Injunction:

a. To obtain injunctive relief, ñthe claimed injury cannot merely be possible, speculative or remote. . . . Injunctions will not be issued merely to allay the fears and apprehensions or to soothe the anxieties of the parties. Nor will an injunction be issued to restrain one from doing what he is not attempting and does not intend to do.î Laidlaw, 20 F. Supp.2d at 766 (internal citations omitted).

b. If the employer has waited to seek the injunction, you may well be able to argue that it has lost its opportunity to argue irreparable harm, since if the harm were so irreparable, it would have moved earlier. ñInjunctive relief at this time would have all the earmarks of the proverbial ïlocking the barn door after the horse has been stolen.Íî Laidlaw, 20 F. Supp. 2d at 768.

c. Balancing the harms: where the harm to the defendant employee outweighs that to the plaintiff former employer, the preliminary injunction should not be granted. See id. (finding that harm to lower level employees of denying them the opportunity to earn a living would outweigh any harm to huge corporation seeking the preliminary injunction).

3. Distinguish between (1) situations involving the sale of a business, where non-competes are paid for and generally fully enforced to the extent reasonable and (2) employment situations, where non-competes are less-favored.

ñCovenants ancillary to the sale of a business ïare accorded far more latitudeÍ than restrictive covenants ancillary to an employment contract... Sound reasons support this different treatment:

If a retail store is purchased at a particular location, the seller receives payment for the good will generated at that location, recognizing that customers would be inclined to continue shopping at the facility. . . . For the seller to thereafter trade on that good will by reopening within the competitive area would destroy the essence of the transaction. Laidlaw, Inc. v. Student Transportation of America, Inc., 20 F. Supp. 2d 727, 754 (D. N.J. 1998).

THE THREE-PART TEST AS SET FORTH
IN SOLARI INDUSTRIES V. MALADY, 55 N.J. 571, 576 (1970).

In determining whether, and to what extent, to enforce a restrictive covenant the court will look at and weight three factors: (1) the extent to which it is ñsimply protect[ing] the legitimate interests of the employer; (2) whether it imposes no undue hardship on the employee; and (3) whether it is not injurious to the public.

A. Factor Number 1 (Protecting Only the Legitimate Interests of the Employer):

1. ñIt must be remembered that restrictive covenants are restraints of trade. The law looks unfavorably towards such restraints.î Laidlaw, 20 F. Supp. 2d at 757.

2. Show that the employer is not attempting to protect legitimate trade secrets or confidential information, but is instead simply attempting to stifle competition. ñMost courts have limited the legitimate protectible interests of an employer to trade secrets and proprietary information . . . and customer relations.î Laidlaw, 20 F. Supp.2d at 758, citing Solari Industries, 55 N.J. at 586.

3. Although an employee may have gained a great deal of knowledge, experience and information during the course of this employment, those are not trade secrets nor confidential information, and therefore may not be protected in a lawsuit. Instead, ñan employee can use those skills in any business or profession he may choose, including a competitive business with his former employer.î Laidlaw, 20 F. Supp. 2d at 757. ñAn employer may not prevent an employee from using the general skills in an industry which have been built up over the employeeÍs tenure with the employer.î Id. at 760.

4. Even though the agreement may state that the ñemployee has gained confidential and proprietary information during the course of his employment,î the court is not bound by the terms of such an agreement. Id. at 758.

5. An employee who leaves a business without taking documents will not be deemed to have taken confidential business information with him concerning detailed sales and pricing figures simply because at one point he had access to those figures: ñ[the employee] would have to be the Rainman to be able to retain, recall, and make use of those myriad figures.î Laidlaw, 20 F. Supp.2d at 759.

6. ñThe general knowledge of [a companyÍs] inner workings alone, however, does not create a protectible interest sufficient to justify enforcement of a restrictive covenant.î Id. at 760.

7. If the information possessed quickly becomes dated, then the employer cannot argue it has a protectible interest in protecting that interest. See [New York computer case]; Laidlaw, 20 F. Supp.2d at 760.

8. Recoupment of costs invested in employee is not a protectible legitimate business interest. National Employment Service Corp. v. Olsten Staffing Service, 2000 N.H. LEXIS 39 (attached as Exhibit B) (refusing to enforce as ñunreasonableî restrictive covenant over temporary workers doing unskilled labor).

B. Factor Number 2 (Undue Hardship):

1. Who Caused the Termination of the Employment Relationship?:

ñThe trial court must determine also whether the enforcement of the covenant will impose any undue hardship on the employee... The trial court should examine also the reason for the termination of the relationship between the parties to the employment contract. Where this occurs because of a breach of the employment contract by the employer, or because of actions by the employer detrimental to the public interest, enforcement of the covenant may cause hardship on the employee which fairly may be characterized as ñundueî in that the employee has not, by his conduct, contributed to it. On the other hand, where the breach results from a desire of an employee to end his relationship with his employer rather than from any wrongdoing by the employer, a court should be hesitant to find undue hardship on the employee, he in effect having brought that hardship on himself.î

Karlin v. Weinberg, 77 N.J. 408, 423-24 (1978)

2. Raise all legitimate counter-claims/affirmative defenses from the beginning and exploit the doctrine of ñunclean hands.î

If the employer has subjected the employee to discrimination, breach of implied contract, or other unlawful treatment in terminating his employment, then enforcement of the non-compete agreement would certainly cause an ñundue hardshipî on the employee. In essence, he would be doubly victimized Æ first by the unlawful termination and then by being prohibited from earning a living in his trade or profession.

3. If the employer is insisting on a period of non-competition, has the employer provided for severance pay for a period of an equal duration in the event the employee is unable to find employment in another, non-competitive position? See Campbell Soup Co. v. Desatnick, 58 F. Supp.2d 477 (D. N.J. 1999) (in enforcing non-compete, court finds it ñquite significantî that employer had provided a ñsafety netî in the form of severance pay for a period equal to that of the non-compete).

C. Factor Number 3: The Public Interest:

Determine if there is some particular public interest that will be negatively impacted if the covenant is enforced – patients being unable to continue a relationship with their physician; public school districts unable to contract for services or supplies, etc.

THE BLUE PENCIL

To the extent the court finds that there are some legitimate employer interests to be protected and that restrictions can be imposed that would not work an ñundue hardshipî on the employee or harm the public interest, the court is free to narrow the geographical, durational, or other terms of the covenant to make it reasonable and therefore enforceable. See Solari, 55 N.J. 571; Jiffy Lube International, Inc. v. Weiss, 834 F. Supp. 683 (D. N.J. 1993).