Legacy carriers battle over New York sales employee

American Airlines, Inc. v. Imhof and Delta Airlines, Inc. (S.D.N.Y. June 3, 2009).  After 22 years as an American employee, the managing director of the airline’s New York Sales Division resigned to accept a similar job with Delta.  During the weeks before he resigned, he copied various documents relating to American’s business, including a PowerPoint presentation involving New York passenger sales, from American’s computers to his personal possession.  He did so by downloading some documents to his personal (and newly-purchased) external hard drive and by emailing other documents to his “family e-mail address.”  He even bought a BlackBerry for the purpose of “transferring the contacts on his American-issued BlackBerry to his own.”

After the employee had started work for Delta, American discovered that he had copied the documents and promptly filed a lawsuit seeking an injunction barring him from continuing to work for Delta and for other relief.  Delta claimed that it had not received any of American’s documents from the employee, who offered to return the documents to American or destroy them.

The court granted American’s motion for a temporary restraining order but denied its motion for a preliminary injunction, primarily on the grounds that American had failed to prove that it was likely to suffer “irreparable injury” in the absence of the injunction.  In support of its ruling as to “irreparable injury,” the court found that there was “no material risk” that the employee would retain copies of the downloaded documents, “much less that he would disclose them to Delta,” that, in any event, the documents contained public information and “fluff” rather than “competitively sensitive information” and that American had failed to prove that it was likely to suffer any “material effect” from the employee’s use of sensitive company information that he may have memorized.

In the final paragraph of its opinion, the court suggested that the lesson of this case is that an employer should get an employee to sign a noncompete agreement to prevent the employee from going to work for a competitor rather than attempt to rely on a court to impose, in essence, “the substantial equivalent by judicial decree without paying for it.”  It seems, however, that American’s primary complaint was not that the employee had departed to work for a competitor, but that he had secretly stuffed his pockets with American’s trade secrets as he was on his way out the door to join the competitor.

Update:  On July 28, 2009, American filed a motion requesting that the court dismiss the case without prejudice, with each party to bear his or its own costs and fees.


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