Estee Lauder Cos., Inc. v. Batra
430 F. Supp. 2d 158 (S.D.N.Y.2006)

Facts:

  • Batra was hired as Global General Brand Manager at Estee Lauder.
    • He signed an employment agreement which contained confidentiality, non-solicitation, and non-compete (12-month duration post-employment) provisions.
    • There was also a choice of law provision, stating that NY law would apply.
  • However, Batra routinely worked on matters for another company, Perricone, during his days at Estee Lauder in breach of his duty of loyalty to Estee Lauder.
    • He even solicited the advice and assistance from a co-worker,  Annie Jackson, and wanted her to leave Estee with him.
  • Batra believed that Estee Lauder would be able to enforce the Non-compete Agreement because he understood that California law does not recognize such agreements.
  • In order to ensure obtaining jurisdiction in California, Batra misled Bousquet–Chavanne into thinking that he would seriously consider staying on at Estee Lauder for a transitional period.
  • On March 13, 2006, Batra confirmed his resignation and, with Perricone, commenced a lawsuit in California state court seeking a declaratory judgment that the Non-compete Agreement is unenforceable under California law.
    • Batra began employment as President of Perricone on Tuesday, March 14, 2006.
    • We don’t know what happened with that lawsuit, but here, Estee sues for a preliminary injunction.

Issues:
(1) Which state’s law controls—New York’s or California’s.
(2) Has Estee Lauder demonstrated irreparable harm?
(3) Was the geographical scope of the non-compete reasonable?
(4) Was the duration of the non-compete reasonable?

Holdings:
(1) New York.
(2) Yes.
(3) Yes.
(4) No.

Reasoning:
(1) To determine the appropriateness of the parties’ choice of law, New York follows the “substantial relationship” approach.

  • Here, the management and control of Estee Lauder is entirely in New York, and a significant portion of Batra’s responsibilities were centered in New York.
  • In sum, California’s interest was not materially greater than New York’s.

(2) Estee Lauder has carried its burden of demonstrating irreparable injury.

  • First, if Batra does misappropriate Estee Lauder’s trade secrets, it would be very difficult to calculate the monetary damages that would successfully redress the loss, given the difficulty in ascertaining empirically how much of a competitive advantage such information gives Perricone and/or how much detriment it might cause to the future profitability of R+F and/or Darphin products.
  • Additionally, Batra developed brand strategies and knew about confidential products under development.

(3) It is concluded that the geographical limitation of the covenant is reasonable under the circumstances.

  • Such broad geographic limitations have been deemed reasonable where warranted by the nature and scope of the employer’s business.
    • Here, Estee Lauder was a worldwide company.
  • Furthermore, Estee Lauder contracted to pay Batra his salary for the duration of the twelve months he would be “sitting out.” Thus, the fact that the geographic scope is all-encompassing dd not render it overbroad and therefore void.

(4) With respect to the durational restriction imposed upon Batra by the Non-compete Agreement, it is concluded that twelve months is not warranted in order to adequately protect Estee Lauder’s interests.

  • A five-month period of enforcement is deemed reasonable.