In June 2016, the New York County Supreme Court handed down a decision that's not great for employees under non-compete agreements with their former employers. In Ashley v. Westside Veterinary Center, the plaintiff employee, Ashley, was under a three-year non-compete agreement with her former employer, a veterinary practice called Westside Veterinary. Ashley was fired from Westside Veterinary, and she subsequently took a position with a competing veterinary practice, Animal General. Westside engaged legal counsel, and counsel sent a letter to Animal General, asserting that Ashley's employment with Animal General violated her non-compete, and gently threatening legal action against Animal General for interference with the non-compete. Animal General fired Ashley within a week.
Ashley sued her former employer Westside Veterinary for tortious interference with prospective economic advantage, alleging that Westside had wrongfully interfered with her new employment by sending the letter. Westside Veterinary eventually brought a motion for summary judgment to dismiss that claim. The court granted Westside's motion, noting that where a defendant "sends a letter to the plaintiffs employer to enforce rights it believes are legal and enforceable, such conduct does not rise to the level of wrongful means necessary to prove a claim for tortious interference." Ashley argued that the non-compete agreement was not, in fact, enforceable, that Animal General and its attorney should have known that, and thus to send a letter threatening to enforce the agreement was tortious. The Court rejected this argument, stating "It is not relevant to the instant litigation whether the Non-Compete Agreement was actually enforceable against plaintiff or whether Westside should have known that the Non-Compete Agreement was not enforceable." Apparently, defendants testified in depositions that they relied in good faith on counsel's advice that the agreement was enforceable, and legal counsel herself also testified that "she believed that the Non-Compete Agreement was legal and enforceable based on its scope." Thus, the court concluded that the letter created no liability because Westside "merely notified Animal General that its purpose was to insist upon its rights under the Non-Compete Agreement, an agreement which Westside believed to be enforceable based on the advice and counsel of Attorney Parker, a partner at Proskauer Rose."
The case is particularly interesting for two points. First, it means that former employers will be permitted to take action to protect their rights under non-compete agreements, even if those agreements might not be enforceable, and even if doing so might lead to the termination of a former employee's new at-will employment. (This isn't uncommon.) We think the agreement here was likely not enforceable (e.g., it was overbroad, Ashley had been fired, there were no trade secrets at stake), but that is a matter for another blog post. Second, we see the plaintiff's counsel allowed during depositions to probe rather deeply into counsel's advice to the defendants and counsel's work product. The heart of the dispute may have arisen from interpersonal factors not revealed in court documents, but the outcome sets precedent for New York employers and employees going forward.