The Estee Lauder Companies Inc. v. Batra

430 F.Supp.2d 158 (2006)

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Holding & Decision

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Nature Of The Case

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Facts

P is located in New York, New York, and is engaged in the business of manufacturing and marketing skin care, makeup, fragrance, and hair care products. D resides in San Francisco, California. From 2004 until March 10, 2006, D was employed as a senior executive for two of Estee Lauder's brands, Rodan and Fields ('R+F') and Darphin. On March 13, 2006, D began employment as the Worldwide General Manager of Perricone. D was the senior executive in charge of the brand and was responsible for overseeing all aspects of R+F's business, including, research and development, marketing and distribution, pricing, packaging development, corporate finance, regulatory affairs, internet development, and public relations. In his role for Darphin, D was responsible for marketing and distribution, pricing, and overall accounts management strategies for the Darphin brands in North America. D signed an employment agreement that contained confidentiality, non-solicitation, and non-competition provisions. In return for signing the agreement, D received a $100,000 signing bonus and was provided with a compensation package of $300,000 per year, benefits, an automobile allowance, stock options, and bonus eligibility. D's base salary was increased to $325,000 and again to $375,000. D agreed that during his employment and for a period of twelve (12) months after termination regardless of the reason for the termination, D would not work for or otherwise actively participate in any business on behalf of any Competitor in which he could benefit the Competitor's business or harm P's business by using or disclosing Confidential Information. The restriction was to apply only in the geographic areas for which you had work-related responsibility during the last twelve (12) months and in any other geographic area in which you could benefit the Competitor's business through the use or disclosure of Confidential Information. D also agreed not to directly or indirectly, solicit, induce, recruit, or encourage any of P's employees to terminate their employment with D or to perform services for any other business. During the period of non-competition P would continue to pay you P's last regular salary at the Company. D also agreed not to use any Confidential Information for any purpose other than to benefit P. The confidentiality obligations were to continue after termination as long as the information was not generally known to the public. This agreement was to be governed by, and construed and interpreted in accordance with, the laws of the State of New York without regard to the conflict of law rules thereof. D was in charge of developing strategies for the brands. In the fall of 2006, D met with Perricone and individuals from an investment company called, TSG Consumer Products (TSG). TSG was interested in purchasing Perricone, and Batra was asked to give his opinion on how good the Perricone brand was so that TSG could determine whether or not it would be a profitable investment. D routinely worked on Perricone matters during his day at Pin breach of his duty of loyalty to P, preparing for upcoming meetings with TSG and Perricone, and even drafting the press release for his new position with Perricone on a P computer. D solicited advice and assistance on his work with Perricone from another R+F senior executive, the executive director of marketing, Annie Jackson (Jackson). D regularly solicited Jackson to breach her duty of loyalty to P by assisting him in preparing for meetings with TSG and Perricone. D and Jackson worked on Perricone while at work for P. D was actively courting Jackson to leave her position with R+F to come to Perricone with him. D even created a strategy for Perricone to begin to grow its business, which he drafted on his P computer. On March 7, 2006, D resigned to work for Perricone. D believed that P would not be able to enforce the Non-compete Agreement because he understood that California law does not recognize such agreements. D then misled P into thinking that he would seriously consider staying on at P for a transitional period, even though he admits he was ninety-five percent certain he would not return there. D's goal was simply to cooperate or appear so that P would not sue him to enforce the Non-compete Agreement in New York before he had an opportunity to file his suit against P in California. On March 7, 2006, D and Perricone commenced a lawsuit in California state court seeking a declaratory judgment that the Non-compete Agreement was unenforceable under California law. D began employment as President of Perricone on March 14, 2006. D agreed to refrain from taking up his Perricone position until the resolution of the instant motions. R+F and Darphin products are in direct competition with Perricone products in California department stores. P sought a temporary restraining order and a preliminary injunction

Issues

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Legal Analysis

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