Estee Lauder Companies Inc. v. Batra
| Decision Date | 04 May 2006 |
| Docket Number | No. 06 Civ.2035(RWS).,06 Civ.2035(RWS). |
| Citation | 430 F.Supp.2d 158 |
| Parties | The ESTEE LAUDER COMPANIES INC., Plaintiff, v. Shashi BATRA, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Patterson, Belknap, Webb & Tyler, by Gregory L. Diskant, Esq., Ellen M. Martin, Esq., Christopher M.P. Jackson, Esq., of Counsel, New York, NY, for Plaintiff.
Dickstein Shapiro Morin & Oshinsky, by Howard Graff, Esq., Neal S. Barlia, Esq., Victoria A. Kummer, Esq., of Counsel, New York, NY, for Defendant.
Plaintiff Estee Lauder Companies, Inc. ("Estee Lauder") has moved by order to show cause for a temporary restraining order and preliminary injunction pursuant to Rule 65, Fed.R.Civ.P., to restrain defendant Shashi Batra ("Batra") from breaching the terms of his Confidentiality, Nonsolicitation, and Non-competition Agreement with Estee Lauder (the "Non-compete Agreement") and from engaging in employment with N.V. Perricone M.D. Ltd. ("Perricone").
Batra has cross-moved seeking this Court to abstain or alternatively for a stay, citing Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S.Ct. 1236, 1244, 47 L.Ed.2d 483 (1976). For the reasons set forth below, a preliminary injunction will issue and the motion to abstain is denied.
On March 13, 2006, Batra filed a complaint in California State Court seeking a declaratory judgment that the Non-compete Agreement was void under California Law. On March 15, 2006, Estee Lauder filed its complaint against Batra alleging: (1) breach of Batra's Non-compete agreement and (2) theft of trade secrets. On March 20, 2006, Batra cross-moved this Court by order to show cause for abstention and a stay.
Discovery was expedited. Hearings were conducted by way of deposition on March 22, March 23, and April 4, 2006. The motions of Estee Lauder and Batra were marked fully submitted on April 4, 2006.
For the purposes of this motion, the Court makes the following preliminary findings of fact, pursuant to Fed.R.Civ.P. 52(a) and 65, which are based on the affidavits submitted by the parties and the depositions conducted at the hearing.
Plaintiff Estee Lauder is a corporation organized under the laws of the State of Delaware with its principal place of business located in New York, New York. (Compl. ¶ 6.) Estee Lauder is engaged in the business of manufacturing and marketing skin care, makeup, fragrance, and hair care products. (Bousquet-Chavanne Declaration ("B-C Decl.") ¶ 2.)
Defendant Batra is an individual who resides in San Francisco, California, (Compl.¶ 7.), and did from 2004 until March 10, 2006, when he was employed as a senior executive for two of Estee Lauder's brands, Rodan and Fields ("R + F") and Darphin. On or about March 13, 2006, Batra began employment as the Worldwide General Manager of Perricone.
Estee Lauder employs approximately 6,700 employees in New York and approximately 1,800 employees in California. (Hearing Trans. 03/23/06 at 24). Senior Management of Estee Lauder is located in New York, including the chief executive officer, chief operating officer, chief financial officer, head of operations, manufacturing, head of information systems, senior counsel, head of worldwide Human Resources, and group presidents. (Id. at 25). Of the 14 General Brand Managers, 11 are located in New York. (Id.). The Darphin general manager is located in Paris, the R + F General Brand Manager (Batra) is located in San Francisco, and the Aveda General Brand Manager is located in Minneapolis. (Id. at 25).
In 2003, Estee Lauder acquired R + F, a dermatologist-founded skin care brand, and Darphin, a Paris-based pharmacy skin care and make-up company. (B-C Decl. at 2). Both the R + F and Darphin brands market and sell their products in the cosmetic dermatology market. (Id.)
R + F was founded by Stanford-trained dermatologists Katie Rodan, M.D. and Kathy Fields, M.D. (Id. at 3). R + F develops skin care products marketed to consumers seeking products and regimens created by expert dermatologists. (Id. at 3). The R + F skin care line offers products for specific skin problems, such as severe acne conditions and sensitive skin. (Id.).
Darphin is a Paris-based brand, originally sold in European pharmacy channels, that offers prestige skin care, make-up and personal care products created from plant extracts and botanical aromas. (Id. at 3-4). Darphin products are sold in more than 55 countries and territories. (Id.) In North America, Darphin is primarily distributed through high-end retail establishments and specialty stores. (Id.)
The R + F and Darphin brands report directly to Senior Management in New York. (Hearing Trans. 03/23/06 at 26).
Batra was hired as Global General Brand Manager of R + F as of January 5, 2004. (B-C Decl. at 4). Effective July 1, 2005, Batra also assumed the role as General Manager for Darphin, North America. (Id.) In his role for R + F, Batra was the senior executive in charge of the brand and was responsible for overseeing all aspects of R + F's business, including, research and development, marketing and distribution, pricing, packaging development, corporate finance, regulatory affairs, internet development, and public relations. (Id.) In his role for Darphin, Batra was responsible for marketing and distribution, pricing and overall accounts management strategies for the Darphin brands in North America. (Id.)
Batra had worldwide responsibility for R + F. (Id.) Similarly, he is assuming worldwide responsibility for Perricone. As brand manager of R + F, Batra was responsible for product development and for guiding new product entries into different market segments. (Hearing Trans. 03/23/06 at 36). This required him to participate in new product development meetings and to keep abreast of the technologies and key ingredients for the products developers were asked to create for R + F. (Id. at 36). In this capacity, Batra was responsible for preparing and implementing brand strategies for the R + F brand for fiscal years 2007 and 2008. (Id.)
At the commencement of his employment, Batra signed an employment agreement with Estee Lauder, which contained confidentiality, non-solicitation, non-competition provisions. (See Exhibit B to B-C Decl.). In return for signing the agreement (which all Estee Lauder executive employees are required to sign) Batra received a $100,000 signing bonus. (B-C Decl. at 5). In addition, Batra was provided with a compensation package of $300,000 per year, benefits, an automobile allowance, stock options, and bonus eligibility. (Id.) On July 1, 2004, Batra's base salary was increased to $325,000. (Id.) In July, 2005, in conjunction with his new responsibilities for Darphin, Estee Lauder increased Batra's base salary to $375,000. (Id.)
The non-competition clause, contained in Paragraph 4 of the employment agreement that Batra signed in January 2004, provides as follows:
You recognize that the Company's business is very competitive and that to protect its Confidential Information the Company expects you not to compete with it for a period of time. You therefore agree that during your employment with the Company, and for a period of twelve (12) months after termination of you employment with the Company, regardless of the reason for the termination, you will not work for or otherwise actively participate in any business on behalf of any Competitor in which you could benefit the Competitor's business or harm the Company's business by using or disclosing Confidential Information. This restriction shall apply only in the geographic areas for which you had work-related responsibility during the last twelve (12) months of your employment by the Company and in any other geographic area in which you could benefit the Competitor's business through the use or disclosure of Confidential Information.
In addition, the agreement contained a non-solicitation provision, contained in Paragraph 5, pursuant to which Batra agreed that he would:
not, directly or indirectly, solicit, induce, recruit, or encourage any of the Company's employees to terminate their employment with the Company or to perform services for any other business.
Paragraph 7 of the agreement provides that:
During the period in which you are subject to the non-competition restrictions of paragraph 4, the Company will continue to pay you your last regular salary at the Company. If at any time during this period the Company gives you a written release from the restriction, the Company will no long be obligated to make the payments provided for in this Paragraph.
Batra's employment agreement with Estee Lauder also contains a confidentiality provision, which states:
You recognize that the Company's Confidential Information is extremely valuable to it and that disclosure or use of Confidential information outside the Company could irreparably damage the Company. You therefore agree that you will not use any Confidential Information for any purpose other than to benefit the Company. In furtherance of that commitment you will disclose Confidential Information to other persons within the Company only if they have a need to know the information in order to perform their job responsibilities for the Company and will not disclose Confidential Information to any person outside the Company . ... You understand and agree that your confidentiality obligations under this paragraph will continue after termination of your employment with the Company, regardless of the reason for the termination, as long as the information is not generally known to the public.
Pursuant to the terms of the agreement, "Company" is defined as:
The Estee Lauder Companies Inc. or any entity in which 50 percent or more of the outstanding voting shares are owned...
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