District Court of the Eastern District PA Rules in Favor of Former Employee in Non-Compete Dispute.
The District Court of the Eastern District of Pennsylvania in Catalyst Outdoor Advertising, LLC v. Douglas denied the plaintiff’s Motion for Preliminary Injunction. 2018 BL 184866 (E.D. Pa. May 24, 2018, No. 18-1470). Jennifer Douglas (Douglas) is a former employee of Catalyst Outdoor Advertising, LLC (Catalyst) and has recently located to New York City to work for City Outdoor, LLC (Outdoor). Before being terminated by Catalyst, Douglas signed a non-compete and restrictive covenant agreement which prevented her from engaging “in the same or similar business” as Catalyst for two years. Neither agreement included a specified geographic limitation and therefore, could be applied to the entire world. Catalyst engages in outdoor advertising, mainly by acquiring and renting billboards in Pennsylvania and New Jersey. One month after Catalyst terminated Douglas, she accepted a position for Outdoor. Outdoor is located in New York City and specializes in the billboard advertising business primarily in the New York.
Catalyst brought a suit seeking preliminary injunctive relief to enjoin Douglas from continuing her employment at Outdoor. When deciding on whether preliminary injunctive relief is appropriate the Court considered four factors: 1. The likelihood that catalyst will succeed on the merits; 2. The threat of irreparable harm to Catalyst if an injunction is not granted; 3. Whether granting an injunction will result in greater harm to Douglas than Catalyst; and 4. Whether injunctive relief will be in the public interest.. The Court rejected Catalyst’s motion based on its failure to satisfy the first two factors.
Catalyst argued that Douglas should be enjoined from her employment with Outdoor because the restrictive covenant was reasonably necessary for their protection of legitimate business interests. The legitimate business interest in this matter, according to Catalysts, was the preservation of trade secrets, development plans, and pricing. Additionally, Catalyst argued that the two employers shared a common competitive market and therefore the lack of a geographic limitation should not prevent preliminary injunction because Outdoor is involved in the same market.
The Court accepted Catalyst’s argument that there was a legitimate business interest to protect but rejected the argument that Outdoor and Catalysts shared the same competitive market, and thus, denied Catalysts motion for preliminary injunctive relief. Without a specified geographic, the court determined that the two companies’ respective markets will determine if they are, in fact, “competing.” Since Catalyst primarily operated in Philadelphia while Outdoor focused in Manhattan and the Bronx, the court determined that these were, in fact, two separate markets and that these two companies were not competing. Thus, the court found that Catalyst failed to satisfy the first factor required to win a preliminary injunction.
Lastly, the Court held that Catalyst did not face the risk of any irreparable harm. The fact that Douglas did not have any confidential information and because of the entirely different markets, there was no threat of irreparable harm. Without the two companies engaging in the same competitive market, Catalyst was not able to establish a legitimate harm. Therefore, the Court rejected the motion for preliminary injunctive relief and Ms. Douglas may continue her employment until a decision is reached at trial.
For more information, call Sidkoff, Pincus & Green at 215-574-0600 or contact us online. Our non-compete lawyers represent clients in Philadelphia.