Columbia Ribbon & Carbon Mfg. Co., Inc. v. A-1-A Corp., A-1-A

• Citation: 398 N.Y.S.2d 1004,369 N.E.2d 4,42 N.Y.2d 496
• Decision Date: 18 October 1977
• Docket Number: A-1-A
• Parties: , 369 N.E.2d 4 COLUMBIA RIBBON & CARBON MANUFACTURING CO., INC., Appellant, v.CORPORATION et al., Respondents.
• Court: New York Court of Appeals

Page 1004

398 N.Y.S.2d 1004

42 N.Y.2d 496, 369 N.E.2d 4

COLUMBIA RIBBON & CARBON MANUFACTURING CO., INC., Appellant, v. A-1-A CORPORATION et al., Respondents.

Court of Appeals of New York.

Oct. 18, 1977.

Arthur M. Lieberman and James M. Rhodes, Jr., New York City, for appellant.

A. Bernard Frechtman and Joel A. Klarreich, New York City, for William E. Trecker, respondent.

FUCHSBERG, Judge.

We are here required to determine whether a covenant made by a salesman not to compete with his employer after the termination of employment is enforceable in whole or in part.

Defendant William E. Trecker was employed in what was essentially a sales capacity for several years by plaintiff Columbia Ribbon and Carbon Manufacturing Co Inc., a manufacturer and supplier of consumable supplies, such as carbon paper and inked ribbons, to the word and data processing industry. He signed an employment agreement containing the following restrictive covenant:

"1. Employee will not during his employment or after the end thereof, irrespective of the time, manner or cause of the termination of said employment, directly or indirectly, disclose to any person, firm or corporation, the name, address or requirements of any customer or prospective customer of the Company and * * * he will not divulge any other information that he has or shall have acquired during his period of employment, insofar as the same is or may be necessary to protect the Company's business.

"3. The Employee further expressly covenants that he will not, for a period of twenty-four months after the termination of his employment with the Company, directly or indirectly, for himself, or his agent or employee of, or on behalf of, or in conjunction with any person, firm, or corporation, sell or deliver any goods, wares and merchandise of the kind or character sold by the Company at any time during the term of his employment with the Company, or in any other manner, engage in the sale and delivery thereof within any territory to which the Employee was assigned during the last twenty-four months prior to termination." (So far as appears from the record, the "territory" is at least nationwide.)

Following Trecker's demotion from sales manager to salesman, he terminated his employment with Columbia and obtained a position with defendant A-1-A Corporation, a competitor. ^* Columbia thereupon sought to enforce the restrictive covenant by enjoining Trecker from competing with it "in the United States for a period of two years" and also to restrain him permanently from soliciting or selling to customers that he had serviced while in its employ.

On cross motions for summary judgment, Special Term dismissed Columbia's complaint. The Appellate Division affirmed, by a divided court, and, for the reasons that follow, we now, in turn, affirm its order.

Since there are "powerful considerations of public policy which militate against sanctioning the loss of a man's livelihood" (Purchasing Assoc. v. Weitz, 13 N.Y.2d 267, 272, 246 N.Y.S.2d 600, 603, 196 N.E.2d 245, 247), restrictive covenants which tend to prevent an employee from pursuing a similar vocation after termination of employment are disfavored by the law (see Clark Paper & Mfg. Co. v. Stenacher, 236 N.Y. 312, 142 N.E. 316; Mandel, Preparation of Commercial Agreements (1973 ed.), p. 148). Such covenants will be enforced only if reasonably limited temporally and geographically (Gelder Med. Group v. Webber, 41 N.Y.2d 680, 683, 394 N.Y.S.2d 867, 869, 363 N.E.2d 573, 576; Reed, Roberts Assoc. v. Strauman, 40 N.Y.2d 303, 307-308, 386 N.Y.S.2d 677, 680, 353 N.E.2d 590, 593), and then only to the extent necessary to protect the employer from unfair competition which stems from the employee's use or disclosure of trade secrets or confidential customer lists (Reed, Roberts Assoc. v. Strauman, supra, p. 308, 386 N.Y.S.2d p. 680, 353 N.E.2d p. 593). Thus, where the employer's past or prospective customers' names are readily ascertainable from sources outside its business, trade secret protection will not attach and their solicitation by the employee will not be enjoined (Leo Silfen, Inc. v. Cream, 29 N.Y.2d 387, 392, 328 N.Y.S.2d 423, 427, 278 N.E.2d 636, 639).

On the other hand, if the employee's services are truly " 'special, unique or extraordinary' " and not merely of "high value to his employer", injunctive relief may be available though trade secrets are not involved (Purchasing Assoc. v. Weitz, supra, 13 N.Y.2d pp. 272, 274, 246 N.Y.S.2d pp. 603,...