National Elevator Cab & Door Corp. v. H&B, Inc.

282 F. App'x 885
CourtCourt of Appeals for the Second Circuit
DecidedJune 27, 2008
DocketNo. 08-0808-cv
StatusPublished
Cited by4 cases

This text of 282 F. App'x 885 (National Elevator Cab & Door Corp. v. H&B, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Elevator Cab & Door Corp. v. H&B, Inc., 282 F. App'x 885 (2d Cir. 2008).

Opinion

SUMMARY ORDER

Defendant-appellant H&B Elevators (“H&B”) appeals from a January 24, 2008 memorandum and order of the United States District Court for the Eastern District of New York (Robert M. Levy, Magistrate Judge) denying reconsideration of the Magistrate Judge’s order of July 20, 2007, which granted a motion for a preliminary injunction brought by plaintiff-appellee National Elevator Cab & Door Corp. (“National”).1 We assume the parties’ familiarity with the underlying facts, the procedural histoi’y, and the issues presented for review.

We review the grant of a preliminary injunction for abuse of discretion. Lusk v. Vill. of Cold Spring, 475 F.3d 480, 484 (2d Cir.2007). “We will find such an abuse of discretion if the district court applies legal [887]*887standards incorrectly[,] ... relies upon clearly erroneous findings of fact, or proceeds on the basis of an erroneous view of the applicable law.” Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111, 119 (2d Cir.2007) (internal quotation marks omitted).

A party seeking a preliminary injunction ordinarily must show: (1) a likelihood of irreparable harm in the absence of the injunction; and (2) either a likelihood of success on the merits or sufficiently serious questions going to the merits to make them a fair ground for litigation, with a balance of hardships tipping decidedly in the movant’s favor.

Doninger v. Niehoff, 527 F.3d 41, 47 (2d Cir.2008).

The Magistrate Judge, based on evidence presented at the preliminary injunction hearing, found that H&B’s solicitation of National’s clients “would likely harm National’s good will because it would affect National’s general reputation in the market.” Nat’l Elevator Cab & Door Corp. v. H & B, Inc., 07-1562, 2008 WL 207843, at *6 (E.D.N.Y. Jan. 24, 2008). On this basis, he concluded that National had shown it would suffer irreparable harm if H&B was not enjoined from violating the non-competition clause contained in its agreement with National (the “Agreement”). Cf. Tom Doherty Assoc. v. Saban Entertainment, Inc., 60 F.3d 27, 37-38 (2d Cir.1995) (noting that “a loss of prospective goodwill can constitute irreparable harm”). The Magistrate Judge further observed that the Agreement itself stipulated (1) that “money damages would not be a sufficient remedy for any breach” by H&B and (2) that, in the event of any such breach, National would be entitled to an injunction or other equitable relief. Nat’l Elevator Cab & Door Corp., 2008 WL 207843, at *6. Noting that H&B — a sophisticated business entity — had signed the Agreement after consulting with counsel, the Magistrate Judge concluded H&B’s endorsement of the Agreement constituted an additional factor weighing in favor of the conclusion that National had made the required showing of irreparable harm. Cf. Ticor Title Ins. Co. v. Cohen, 173 F.3d 63, 69 (2d Cir.1999) (observing that an employee’s adoption of a contract provision “conced[ing] that in the event of [the employee’s] breach of the post-employment competition provision, [the company] shall be entitled to injunctive relief, because it would cause irreparable injury ... might arguably be viewed as an admission by [the employee] that [the company] will suffer irreparable harm were he to breach the contract’s non-compete provision”).

Regarding the likelihood that National would suffer irreparable harm if H&B was not enjoined from confidential information belonging to National — to which H&B gained access only by signing the Agreement — the Magistrate Judge noted that the Agreement provided H&B with

access to information about National that it would not otherwise have — including National’s entrance design, marketing plan, outsourcing and pricing information — which showed H&B how it could be profitable ... in the New York market. Although it expressly agreed to all of the terms of the Agreement, H&B reneged, proceeded to engage in a campaign of aggressive and underhanded tactics, and immediately lured away National’s largest customer as well as its [elevator] entrance installer, who abandoned National on one day’s notice. With that backdrop, one can easily conclude that H&B can and will cause irreparable, unquantifiable harm to National’s customer relations and reputation in the industry if it is not enjoined.

[888]*888Nat’l Elevator Cab & Door Corp., 2008 WL 207848, at *8 (footnotes omitted).

With regard to National’s likelihood of success on the merits, the Magistrate Judge — relying on Abdul Wali v. Coughlin, 754 F.2d 1015 (2d Cir.1985)—determined that, to establish a likelihood of success on the merits of its litigation, National need only show that its probability of prevailing was “better than 50 percent.” See, e.g., Abdul Wali, 754 F.2d at 1025 (noting that, “to establish that ... he is likely to prevail on the merits of the underlying controversy,” an applicant for injunctive relief “need only make a showing that the probability of his prevailing is better than fifty percent”); Mohammed v. Reno, 309 F.3d 95, 102 (2d Cir.2002) (defining “ ‘less than a likelihood of success’ to mean something less than 50 percent” and “more likely than not” to mean a “likelihood ... [of] more than 50 percent”).

The Magistrate Judge then correctly noted that, under New York law, the test for enforceability of a non-competition agreement between two businesses is “reasonableness.” See, e.g., Mohawk Maintenance Co. v. Kessler, 52 N.Y.2d 276, 437 N.Y.S.2d 646, 419 N.E.2d 324, 328 (1981) (“ [Agreements restricting the parties’ right to compete [have been] recognized by the courts and ... held fully enforceable if the restrictions ... [are] ‘reasonable’ in geographic scope and duration[,] ... particularly in cases where the agreement in question is made in connection with the sale of a business and its accompanying ‘good will’ ”); accord Cliff v. R.R.S. Inc., 207 A.D.2d 17, 19, 620 N.Y.S.2d 190 (N.Y.App. Div.3d Dep’t 1994) (noting that “a contract for the sale of a business may contain an express covenant not to compete” and that such provisions will usually “be enforced if reasonable in geographic scope and duration” (citations omitted)). Looking to the substance of the non-competition clause, the Magistrate Judge observed that it (1) covered only “the highrise residential market” of metropolitan New York; (2) applied only to “three customers one of which ... [was off-limits] as to both cabs and entrance installation and [two of which were off-limits] as to entrance installation” only; (3) was only operational for five years in the first instance; and (4) could easily be “tailored]” as necessary by the District Court.

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Bluebook (online)
282 F. App'x 885, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-elevator-cab-door-corp-v-hb-inc-ca2-2008.