There are three important “take-aways” from New York Supreme Court Justice Charles E. Ramos’ recent decision in Greystone Funding Corporation v. Kutner: (1) termination “without cause” is not a per se prohibition of enforcement of a non-compete unless the language of the contract as in this case so provides; (2) conclusory allegations of breach of fiduciary duty, tortious interference and unfair competition are inadequate and will be dismissed unless supported by facts on each element of proof; and (3) customer and prospect identity and impressions about them are sufficiently sensitive to warrant cause for sealing of a record under 22 NYCRR § 216.1.

Kutner was a senior mortgage originator for Greystone and had a two-year non-compete provision in his employment agreement. That restriction, however, by its explicit terms expired immediately if Greystone terminated Kutner “without cause” rather than two years hence. Justice Ramos thus dismissed the breach of contract action relying on the terms of the agreement itself and not on any “per se” application of unenforceability. While some believe such a doctrine exists in New York, I have written previously why I believe it does not. See After Termination “Without Cause:” Restrictive Covenants, NYLJ February 8, 2007.

Despite the fact that the Complaint alleged that while still employed by Greystone Kutner had recruited co-workers to join him at a competing mortgage lending business and, upon information and belief, he had formed and actively operated a competing business while still employed by Greystone, Justice Ramos held that the Complaint was not plead with sufficient particularity on each element of each cause of action and dismissed the tortious interference, breach of fiduciary duty, unfair competition and related claims. To my knowledge, it is one of the first New York State court decisions to put plaintiffs to a Twombly and Iqbal standard of pleading in a non-compete case.

Finally, trade secret cases always present the conundrum of pleading with sufficient specificity yet not disclosing actual trade secret and proprietary information so as to lose the protections afforded to such information. Justice Ramos properly found “good cause” as required by 22 NYCRR § 216.1 where the information “contained impressions and contemporaneous notes that could harm Greystone’s competitive advantage by having access to a large compilation of their business leads and their internal and contemporaneous impressions.” Relying on Mancheski v. Gabelli Group Capital Partners, 39 A.D.3d 499, 503 (2d Dept 2007) (argued by this author!), Justice Ramos granted the motion to seal portions of the record in this action.

Back to Trade Secrets & Employee Mobility Blog

Search This Blog

Blog Editors

Related Services



Jump to Page


Sign up to receive an email notification when new Trade Secrets & Employee Mobility posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.