District Court Issues Preliminary Injunction to Enforce a Non-Compete Clause

The Eastern District of Pennsylvania issued a preliminary injunction to enforce a non-compete clause in a dealer agreement when Defendant was persuading the Plaintiff’s customers to cancel their agreements with Plaintiff to switch to an agreement with other alarm companies. Vector Sec., Inc. v. Stewart, 88 F. Supp. 2d 395, 402 (E.D. Pa. 2000). In Vector Sec., Plaintiff sought a preliminary injunction to enforce a non-compete clause in an agreement between Vector Security Systems and City-Wide Home Security Services. Defendant conceded that he had persuaded Vector’s subscribers to terminate their agreement with Vector and switch to an agreement with other alarm companies. Vector had bought from City-Wide ninety-seven accounts that have now been terminated.

The Court held that Vector had showed that it “has a reasonable probability of success on the issue of the covenant’s enforceability.” Vector showed that it had an interest in maintaining long-lasting relationships with its customers. Further, Vector showed that if the preliminary injunction is not issued, Vector will be “irreparably harmed” because of the loss in business. Vector depends on long-lasting relationships with its customers, referrals for new customers, and additional services to current customers. The Court reasoned that the “relative harm to interested parties” is not sufficient to deny the preliminary injunction because Defendants can still sell alarm systems and is only prohibited from seeking Vector’s customers. Therefore, preliminary injunction will be granted to enforce the non-compete clause.

For more information, call our non-compete lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.