Firm Obtains Favorable Result for Private Jet Services Group, Inc.

Firm Obtains Favorable Result for Private Jet Services Group, Inc.

For Release: December 2, 2014

Montgomery McCracken partner Charles Palella, assisted by associate David Brown, recently obtained a favorable decision on behalf of Private Jet Services in a case involving an employee’s non-compete restrictive covenant.

In Air Charter Service, Inc. v. James Kilmetis and Private Jet Services Group, Inc., a New York state court judge refused to enforce a worldwide non-competition clause that would have enjoined a director of sales, James Kilmetis, from working for a company in competition with one of the largest executive and commercial aircraft charter businesses.  ACS had hired James Kilmetis as one of their sales representatives.  James’ employment contract with ACS contained 6-month, worldwide non-compete, non-disclosure, and non-solicitation clauses.  After several years at ACS, James left ACS and began working as the Director of Sales at Private Jet Services Group, Inc., recognized by the Inc. 5000 list as one of the fastest growing private jet consulting firms in the United States.

The plaintiff, Air Charter Service, Inc. brought suit to enjoin all competing commercial and executive aircraft charters from employing James.  ACS also sought to prohibit James from disclosing ACS’s “confidential information” and from contacting or soliciting any of ACS’s clients, vendors or customers in any manner.

The court agreed with our attorneys’ argument that ACS had failed to establish a likelihood of success on the merits that either ACS’s customer lists were confidential or constituted a trade secret or James’s services were unique and extraordinary.  In so holding, the court held that ACS did not establish that its customer base “was developed over a long period of time from sources other than the public domain.”  The court also noted that even though James was very knowledgeable and well-regarded, that alone is not enough to establish that his services were unique.”

In ruling on the plaintiff’s motion for a temporary restraining order and preliminary injunction, Supreme Court Justice Jerome C. Murphy held that “restrictive covenants contained in employment contracts that tend to prevent an employee from pursuing a similar vocation after termination of employment are disfavored in the law.”

New York law has long held that a restrictive covenant in employment contract will be enforced “only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public.”  BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 388-89 (1999) (citingReed, Roberts Assocs., Inc. v. Strauman, 40 N.Y.2d 303, 307 (1976)).  And New York courts have “limited the cognizable employer interests under the first prong . . . to the protection against misappropriation of the employer’s trade secrets or of confidential customer lists, or protection from competition by a former employee whose services are unique or extraordinary.”  BDO Seidman, 93 N.Y.2d at 389.

Case citation:  Air Charter Service, Inc. v. James Kilmetis and Private Jet Services Group, Inc., No. 606070/2014 (N.Y. Sup. Ct., Nassau County Dec. 2, 2014).