VI. Is the Agreement Reasonable as Applied to the Facts in This Case? What is the Appropriate Remedy?
The Court finds that the plaintiff Lumex established, by a preponderance of the evidence, that it would be irreparably harmed if the defendant Highsmith revealed to Life Fitness the trade secrets and confidential information he learned in his high level position with Cybex. The Court also finds that the plaintiff established sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardship tipping decidedly in its favor.
In this regard, the Court finds that the plaintiff proved that Highsmith learned of trade secrets and confidential information while working for Cybex; that Life Fitness is a "competitor" within the provisions of The Agreement; that the Life Circuit machine is a "competitive product" within the provisions of The Agreement; and that Highsmith's employment with Life Fitness working on the Life Circuit equipment would violate the provisions of paragraph 2(c) of The Agreement, in that he would be working for a "competitor on a competitive product." As stated above, the Court also finds that the disclosure by Highsmith of some Cybex trade secrets and confidential information almost immediately upon entering into the employ of Life Fitness, is inevitable.
Having established the right of the plaintiff to a preliminary injunction, the crucial issues here are the reasonableness of the terms of The Agreement as applied to the facts of this case, and the nature of the appropriate remedy. The plaintiff urges that the Court enjoin the "Defendant Highsmith from working with or for defendant Life Fitness . . . for (the agreed upon) period of six months." The defendants contend that because there is no proof of disclosure of any of the trade secrets, preventing Highsmith from working for six months would be unreasonable.
During the hearing the Court asked the parties to brief the issue that now concerns the Court: Namely, assuming that Highsmith's employment in the Life Fitness Life Circuit product line is not permitted by The Agreement, but there is no proof that Highsmith has, as yet, disclosed any Cybex confidential or trade secret information, with the potential disclosure upon employment very real, should the restrictive covenant be enforced so as to prevent Highsmith from working for Life Fitness for the six-month period?
Most of the cases in this field concern factual situations in which trade secrets have already been disclosed, or the former employer's customers have already been solicited. For example, in Computer Associates Int'l, Inc. v. Bryan, 784 F. Supp. 982 (E.D.N.Y. 1992), a decision of this Court, the defendant misappropriated trade secrets and built and marketed a competing product based on the plaintiff's trade secrets. In Ecolab, Inc. v. Paolo, 753 F. Supp. 1100 (E.D.N.Y. 1991), the defendant misappropriated documents, divulged trade secrets, solicited plaintiff's customers and his new employer improperly gained four customers.
Of greater relevance, are the cases involving restrictive covenants similar to the one at issue, namely, where the former employee agreed not to work for a competitor, on condition that he would receive his salary during that period from his former employer.
Baxter Int'l, Inc. v. Morris, 976 F.2d 1189 (8th Cir. 1992) involved a similar restrictive covenant, stating that, if the former employee would not work for a competitor, his former employer would pay his salary. However, in that case, the period during which the former employee could not work was one year. Also, there was evidence of the potential disclosure of trade secrets, during the new employment. Nevertheless, the district court refused to prevent the former employee from working for the competitor for one year and only restrained the disclosure of the trade secrets. The following statement is in the circuit court opinion:
The court found that even if Microscan compensated Morris during his restraint from employment with Vitek, a protracted absence could alienate Morris's new employer.. . . Accordingly, the district court undertook the task of crafting an injunction that adequately protects Baxter from harm, while imposing no greater restraint on Morris than necessary. . . . We find no abuse of discretion in the district court's order.