We previously wrote about the June 26, 2009 Memorandum Decision and Order in which the U.S. District Court for the Southern District of New York denied a preliminary injunction sought by IBM to prevent its former employee David L. Johnson from continuing his employment as Senior Vice President of Strategy at Dell Inc.
When presented with a non-compete agreement by IBM, Johnson, who was then hoping to be promoted at IBM, purposefully signed the agreement on IBM’s signature block rather than his own in order to allow himself more time to consider whether to commit to signing the agreement. The District Court held that IBM could not show a likelihood of success on the merits and denied IBM’s preliminary injunction motion, because IBM’s actions after receiving the agreement incorrectly signed by Johnson indicated that it did not really consider the agreement to be valid. IBM immediately appealed to the Second Circuit Court of Appeals.
While the Second Circuit appeal was pending, IBM sought leave from the District Court to bring a second motion for a preliminary injunction against Johnson. In a July 30, 2009 Memorandum Decision and Order, the District Court denied such leave to IBM, on the grounds that the proposed motion (a) sought “essentially the same relief that IBM requested in its first motion,” (b) was “based on information that has been in IBM’s possession since well before” the hearing on the first motion, and (c) “might well encroach upon the Second Circuit’s review of IBM’s appeal.” IBM sought a writ of mandamus from the Second Circuit to vacate this July 30 order, and also appealed the order.
All three of IBM’s pending applications were rejected by a Second Circuit Panel in a Summary Order, dated October 22, 2009. In affirming the June 26, 2009 Order, the Second Circuit found the District Court’s conclusions “well-supported by the court’s finding that Johnson was extremely credible, and that IBM’s designated witness was much less credible chiefly because IBM’s witness lacked familiarity with documents bearing on the controversy.” With respect to the mandamus petition, the Second Circuit agreed with the District Court’s July 30, 2009 Order that the pending appeal “temporarily divested the district court of jurisdiction to consider a second motion arising from the same facts even if IBM asserted a nominally different cause of action.” Finally, with respect to the appeal of the July 30, 2009 Order, the Second Circuit noted that any “conceivable challenge to the appealed-from order would essentially duplicate the arguments we have already rejected with respect to the mandamus petition.”
In this heavily litigated matter, it now appears that IBM may be out of options in its attempt to prevent Johnson from continuing to work for Dell Inc., for which he has been employed since June. However, IBM’s underlying District Court action against Johnson, seeking damages, may continue.