York law. New York courts will not enforce a non-competition provision in an employment agreement where the former employee was involuntarily terminated. The Court of Appeals noted in Post v. Merrill Lynch, 48 N.Y.2d 84, 421 N.Y.S.2d 847, 849, 397 N.E.2d 358 (1979) that:
where the employer terminates the employment relationship without cause, however, his action necessarily destroys the mutuality of obligation on which the covenant rests . . .
See also Weintraub, et al. v. Schwartz, 131 A.D.2d 663, 516 N.Y.S.2d 946, 948-949 (A.D. 2nd Dep't 1987) ("Assuming plaintiffs have breached their own obligations under the contract, they would be precluded from seeking to enforce against the defendant even the reasonable portion of the restrictive covenant.") (internal citations omitted).
Based upon the record before us, we find that defendants were involuntarily terminated from their positions. The June 17 letter, the first notice that defendants received regarding their employment status, stated unequivocally that the Waterbury plant was closed as of that date and emphasized that all jobs associated with that plant had ceased to exist. June 17 letter, pp. 1-3. SIFCO has admitted that defendants' employment with Selectrons was terminated as of that date. Bellefonte Re Ins. Co. v. Argonaut Ins. Co., 757 F.2d 523, 528 (2d Cir. 1985) ("A party's assertion of fact in a pleading is a judicial admission by which it is normally bound throughout the course of the proceeding"). Specifically, plaintiff alleges that "on or about the 18th day of June, 1992, the employment relationships between the plaintiff's assignor, Selectrons, Ltd. and the defendants . . . were terminated." Complaint P 18. Neither in the June 17 letter, nor elsewhere in the record, is there even the most remote suggestion that defendants termination may have been for cause. Indeed, plaintiff nowhere makes such an allegation.
"An essential aspect [of enforceable restraints on employee mobility] is the employer's continued willingness to employ the party covenanting not to compete." Post, supra at 849. SIFCO has simply made no showing that in response to the foregoing termination of defendants without cause or notice, it made a firm offer to each defendant of continued employment in a position comparable in salary, benefits, responsibility, and location to the employee's previous position with Selectrons. Defendants were offered a consultancy arrangement which, by its terms, not only expressly avoided an employment relationship, but also conditioned each employee's agreement upon modification of the terms of the Confidentiality Agreements under which they had been operating with their previous employer. SIFCO also indicated to at least two of the defendants (Romeo and Debkiewics) that further employment discussions were contingent upon defendants' agreement to enter into this consultancy arrangement. If all of this were not enough, neither SIFCO nor Selectrons had, apparently, even met with, or communicated the fact of their proposed transaction or defendants' concomitant termination to, any of the individual defendants. All that defendants were to learn was set forth after the fact, in the June 17 letter. Indeed, SIFCO later made it clear to Romeo and Debkewics that any offer to either of them would be contingent upon their agreement to relocate to Cleveland-- a significant alteration of their conditions of employment with Selectrons. Even as to defendant Petrucci, SIFCO's verbal offer of employment omitted reference to Petrucci's potential duties as a SIFCO employee, or to the accompanying benefits, and addressed compensation only in the most general terms. Most importantly, it is undisputed that SIFCO never offered to continue the defendants in their previous, or comparable, positions with comparable salary, employment conditions, and benefits. Preliminary discussions or overtures, especially when combined with the requirement that defendants modify the terms of Confidentiality Agreements with their former employer and/or relocate to a distant place, hardly qualify as "continued willingness to employ." Id. Rather, the facts presented to this Court compel the conclusion that defendants were involuntarily terminated by Selectrons on June 17, 1992, and that none of the actions taken by SIFCO subsequent to that date altered the fact of that termination; a termination that SIFCO has admitted in its complaint.
Thus, as a matter of New York law, the Agreements are unenforceable.
Accordingly, defendants' motion for summary judgment is granted.
Dated: New York, New York
March 31, 1994
ALLEN G. SCHWARTZ, U.S.D.J.