Posts tagged with "controlling"

Connecticut Law Governs Non-Compete for Employee Based in Company’s Brazil Office

MacDermid, Inc. v. Selle, 535 F.Supp.2d 308

Mr. Raymond Selle worked for MacDermid, Inc. for thirty years in various capacities at facilities in Connecticut, Maryland, and Sao Paulo, Brazil.  MacDermid is a specialty chemical company engaged in a range of development, manufacture, and sale of chemicals and their corresponding processes.  Mr. Selle resigned from the company in 2007 while stationed in Brazil and immediately began work at Enthone, a West Haven based company with a presence in Brazil, as its South American New Business Development Manager.  MacDermid brought suit against Mr. Selle to enforce employment agreements from 1996 and 2002, seeking to prevent his employment at Enthone and the disclosure of confidential information.

MacDermid’s basis for legal action was two restrictive covenants signed by Mr. Selle and the vast amount of confidential information he acquired while employed at MacDermid.

Employment Agreement

The first “Employee’s Agreement” was signed November 24, 1996 and included a one-year non-compete agreement prohibiting employment with an industry competitor and an indefinite confidentiality agreement.  Mr. Selle signed a second non-compete and non-disclosure agreement on June 25, 2022 when he began his position at MacDermid’s Sao Paulo office.

Additionally, the agreement stipulated that its provisions were to be “construed and enforced in accordance with the laws of the State of Connecticut, without regard to conflict of law principles”.  MacDermid sought to enforce both the one-year non-compete clause and the indefinite confidentiality clause.  The company claimed that Mr. Selle was privy to considerable confidential information while employed there, including business strategies, research & development projects, and customer contact information and transaction history.

The Court’s Decision

The federal court found in favor of MacDermid, enjoined Mr. Selle from employment with Enthone or any other of MacDermid’s industry competitor until September 10, 2008 (the duration of the one-year prohibition), and enjoined him from disclosing any confidential or proprietary knowledge acquired during his employment with MacDermid.  The court found that there was “no basis for doubting the validity and enforceability of his [Selle’s] 1996 and 2002 employment agreements with MacDermid”.  Mr. Selle’s tried to make the claim that the restrictive covenants were too broad and favored the employer but the court concluded that the covenant’s provisions were narrow and limited in scope so as not to dramatically disadvantage the employee.

The court also discussed and decided what jurisdiction’s law to apply.  Mr. Selle argued that Brazilian law should govern the agreement and legal proceedings since that was where he found new employment at Enthone.  Mr. Selle made this assertion because he felt that Brazilian law reflects a fundamental public policy against the enforcement of restrictive covenants in employment contracts.  The court however held that Connecticut law superseded Brazilian law in this case and would govern the restrictive covenant, as specified and agreed to in the 1996 and 2002 agreements.

Conclusion

This case shows that in certain restrictive covenants, Connecticut law (or any state’s law) can be governing even when employment takes the employee out of the country.  The choice of law provision establishes the controlling legal principles (in this case, those of Connecticut) of the restrictive covenant and is characterized by global application.

If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Connecticut Federal Court Applies Louisiana Law to Enforce Non-Compete to Protect Confidential Information

In United Rentals, Inc. v. Myers, 2003 U.S. Dist. LEXIS 25287, United Rental, Inc. was a Delaware corporation with principal business operations in Connecticut that employed Ms. Charlotte Myers in its Shreveport, Louisiana office from May 20, 2002, to March 7, 2003.  She signed an employment agreement with United Rentals on her first day of work that contained non-compete and confidentiality clauses that prohibited employment for a period of twelve months at any competing company located within one hundred miles of a United Rentals location where she worked.  The restrictive covenants further stated that the state and federal courts in Fairfield County, Connecticut would have jurisdiction in the event that legal proceedings ensued.  Upon her voluntary termination from United Rentals, Ms. Myers began to work at Head & Enquist Equipment, Inc., a competitor, at an office located approximately ten miles away from the United Rentals’ Shreveport office.  United Rentals contacted her to remind her of the restrictive covenants and her obligations under them but she continued her employment with Head & Enquist.  United Rentals sued Ms. Myers in Connecticut federal court for breach of the non-compete and confidentiality agreements and sought a court injunction to enforce their provisions.  The court found in favor of United Rentals and granted its request to enforce the non-compete agreement.

Ms. Myers presented various arguments to the court to persuade it to deny enforcement of the agreement, but the court ultimately found in favor of United Rentals.  She argued that Louisiana law should be controlling in the legal dispute, and further asserted that Louisiana law does not permit “choice of law” clauses in employment agreements.  The court investigated Ms. Myers’ contention and explained that the proper procedure to determine if a “choice of law” clause is permissible is to consult the law of the state being selected, in this case, that of Connecticut.  Connecticut law however cannot be the “choice of law” state when there is another state with a “materially greater interest…in the determination of the particular issue”.  The court held that Louisiana did in fact have a greater interest in the dispute and thus Louisiana law was applicable and controlling for the case.

Although Louisiana law is less than favorable to United Rentals with regard to “choice of law” clauses, it still recognizes that parties are entitled to a remedy in connection with a violation of a confidentiality agreement “if the material sought to be protected is in fact confidential”.  Courts generally view the disclosure of confidential information as sufficient evidence for a company to establish that it would suffer irreparable harm if an injunction were not granted.  During her employment with the company, Ms. Myers was exposed to and had access to United Rentals’ trade secrets, contract details, customer data, financial information, and marketing plans/strategies.  The court held that this was clearly sensitive and confidential information, the content of which entitled United Rentals to protection in the form of a court-ordered injunction.

The court held for United Rentals despite applying Louisiana law in response to Ms. Myers’ justified assertion that this specific “choice of law” provision was not valid.  Although Louisiana law shuns “choice of law” provisions in non-compete agreements, it does support injunctions when it is necessary and proper for a company to protect its confidential business information.

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.