Commercial Division Blog

Posted: August 9, 2023 / Written by: Jeffrey M. Eilender, Samuel L. Butt, Seth D. Allen, Joshua Wurtzel, Channing J. Turner / Categories Commercial, Injunctions Attachments and Other Preliminary Remedies, Tortious Interference

Court Granted Motion for Reargument and Modified Preliminary Injunction To Include Defendant Company to Whom Defendant Employee Disclosed Confidential Information

On June 20, 2023, Justice Barry R. Ostrager of the New York County Commercial Division issued a decision and order on motion in Jordan, Edmiston Group, Inc. v. Wong, 2023 NY Slip Op 32090(U), granting in part the motion for reargument. The Court had previously granted a limited injunction against defendant employee for breaching the non-disclosure provision of the Employee Confidentiality and Non-Competition Agreement by disclosing confidential information to defendant company. The motion for reargument related to plaintiff’s claim for tortious interference by defendant company.  The Court explained:

The Court overlooked that plaintiff's claim against BrightTower, LLC ("BrightTower") for tortious interference with contract encompassed both the noncompete provisions and the non-disclosure provisions of the Employee Confidentiality and Non-Competition Agreement (the "Agreement") entered into between plaintiff and defendant Wong. Though the Court ruled that there was no likelihood of success on the merits on plaintiff's claim that BrightTower tortiously interfered with the non-compete provision of the Agreement, the Court failed to consider whether BrightTower wrongfully interfered with the non-disclosure provision of the Agreement. Had the Court fully considered this issue in its May 1, 2023 decision (NYSCEF Doc. 48), the ruling on the underlying motion would have been different.

On May 1, 2023, the Court granted an injunction against defendant Joshua Wong because plaintiff established a likelihood of success on the merits of its claim that Mr. Wong breached the non-disclosure provision of the Agreement by disclosing JEGI Confidential Information to BrightTower. NYSCEF Doc. No. 48. This finding, and the evidence supporting this finding, is relevant to plaintiff's claim against BrightTower for tortious interference with the nondisclosure provision of the Agreement. Testimony adduced at the April 25, 2023 hearing established that

BrightTower likely had knowledge of the existence of a valid non-disclosure agreement between plaintiff and Mr. Wong. Plaintiff also presented an email exchange between Mr. Wong and a BrightTower employee whereby the BrightTower employee requested that Mr. Wong provide to BrightTower a list of active prospects and key relationships, which evidence suggests that confidential information likely was disclosed by Mr. Wong to BrightTower (at BrightTower's suggestion) in contravention of the various non-disclosure agreements to which Mr. Wong was bound. Accordingly, plaintiff has established a likelihood of success on the merits of its claim against BrightTower for tortious interference with the non-disclosure provision of the Agreement.

In addition, for the same reasons enumerated in the May 1, 2023 Decision, plaintiff has established that it would suffer irreparable harm should BrightTower use any of plaintiff's confidential information that it has received from Mr. Wong1 and that the balance of the equities weighs in plaintiff's favor in this regard. A limited injunction against BrightTower regarding the use of plaintiff's confidential information is therefore appropriate.

The Court declines to revisit its ruling in any other respect because plaintiff failed to establish that the Court overlooked or misapprehended any other fact or law which would warrant reargument.

Accordingly, Motion Sequence 003 for reargument is granted in part. Upon reargument, the preliminary injunction entered on May 1, 2023 (NYSCEF Doc. 48) is modified to the extent of granting a limited injunction against defendant BrightTower. Defendant BrightTower is enjoined from reviewing or in any way using JEGI's Confidential Information (as defined in the Agreement and pursuant to any Non-Disclosure Agreements pursuant to which defendant Wong was bound). The injunction does not apply to any proprietary or confidential information of JEGI's prospective clients that was already in BrightTower's possession prior to Mr. Wong's involvement with BrightTower. The Court expects the parties to act in good faith and pursuant to the letter and spirit of the May 1, 2023 decision.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you have questions about tortious interference or the difference between non-compete and non-disclosure provisions.