Imminent Risk of Irreparable Harm is Requisite for Enforcing Non-Compete Agreements
Minnesota Mining and Manufacturing Co. v. Francavilla, 191 F.Supp.2d 270
The Minnesota Mining and Manufacturing Company (3M) is an international conglomerate that maintains its Optical Component business operations in St. Paul, Minnesota and West Haven, Connecticut. 3M sues the St. Paul facility primarily for research and development while the West Haven office focuses on the manufacturing of optical fibers, one of only a few such facilities in the world. Mr. Sergio Francavilla worked at the West Haven facility as a Senior Manufacturing Specialist from December 13, 1999 to November 21, 2001. He oversaw the production of specialty optical fibers and designed a new “Modified Chemical Vapor Deposition Laboratory”. Additionally, he designed and implemented an improvement project to update the facility’s process that launched in July 2001.
The parties signed an employment agreement on December 13, 1999 that contained a non-compete clause that he could not work for a company that produced competing products with 3M for a period of two years following termination. The one exception to this provision was that he could work for a competing company so long as it was a “large conflicting organization whose business is diversified” and he accepted employment in a division that was not in direct competition with 3M. The employment agreement also contains a non-disclosure clause that prohibits any disclosure of 3M’s confidential information that Mr. Francavilla was privy to during his employment with the company. A final clause stipulated that any product developed by Mr. Francavilla while a 3M employee was 3M’s exclusive property.
Mr. Francavilla submitted a resume to StockerYale, a Massachusetts company that manufactures specialty optical fiber products. StockerYale extended a job offer to him on October 31, 2001 for the position of Director of Manufacturing/Specialty Optical Fiber. He tendered his resignation and informed his superiors that his last day would be November 23, 2001 and that his new employer was not a direct competitor. 3M sued Mr. Francavilla in federal court however when it learned the identity of his new employer and asked the court to enforce the non-compete agreement. The court found that Mr. Francavilla had breached the restrictive covenant and granted 3M’s request for an injunction to prevent Mr. Francavilla’s continued employment at StockerYale.
Mr. Francavilla argued that 3M failed to show that his actions would likely cause irreparable harm to the company. The court rejected this contention and held that there was a good chance of disclosing former employer’s confidential information when there is “a high degree of similarity between an employee’s former and current employment”. The imminent risk of irreparable harm is requisite for a court to grant a request for an injunction in connection with a non-compete agreement. The court felt that there was indeed immediate risk of 3M’s confidential information being disclosed by Mr. Francavilla at his new employer and held that enforcement of the restrictive covenant was necessary to protect that information. Mr. Francavilla had access to very valuable information during his employment at 3M, specifically in the field of research and development. The specialty optical fibers industry is quite small and any disclosure of confidential information could prove to be extremely damaging to a company.
The court also addressed the reasonableness of the time and geographical restrictions, concluding that both were reasonable and enforceable. Two years is not an overly restrictive limitation and only restricts his employment is a very niche industry, leaving him with many options to pursue a career. The covenant does restrict Mr. Francavilla’s future employment opportunities but “does not force the defendant [Mr. Francavilla] to sacrifice his livelihood”.
While the enforceability of a non-compete agreement hinges on the reasonableness of its provisions, the court focused on the requisite imminent risk of irreparable harm to justify granting an injunction. The court spent a great deal of time discussing this requisite factor in non-compete legal disputes and stated that it is a crucial component when determining whether to grant a request for an injunction.
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.