MW represented MasterCard in an action against two former executives in its information security department and NIKE alleging employee raiding and theft of confidential information. MasterCard claimed that the two executives, who resigned to join NIKE, breached agreements not to solicit MasterCard’s employees and suppliers, among other things. MasterCard also alleged that NIKE tortiously interfered with the executives’ non-solicitation agreements.
In February 2016, the court denied in significant part NIKE’s motion to dismiss MasterCard’s claims. As a primary basis for dismissal, defendants urged that New York does not enforce non-solicitation clauses between non-competitors. According to defendants, since MasterCard and NIKE were in different lines of business, the non-solicitation clauses were unenforceable as a matter of law. The court rejected this argument, holding that MasterCard had a legitimate interest in preventing NIKE from poaching employees from its highly developed information security department. The court found it important that the two companies competed for employees and vendors in the area of information security, even if they were not competitors in the same product market.
The decision may be cited as authority that, for purposes of restrictive covenants, courts are not limited to judging reasonableness solely between industry competitors, but should look to the nature of alleged violations. Here, restrictive covenants may be enforced where “poaching” of information-security employees has occurred because companies compete for information, skilled employees and vendors (even if not for customers).
Partners Martin Edel and Adam Safer represent Mastercard. The case is Mastercard Int'l Inc. v. Nike, Inc., No. 15 Civ. 14 (S.D.N.Y.).