Opinion ID: 765735
Heading Depth: 3
Heading Rank: 2

Heading: Use of the Client List in Breach of a Duty

Text: 36 We next consider whether the defendants' use of a trade secret-specifically the list of client contacts-was in breach of a duty. As explained below, New York law imposes a duty not to use trade secrets in competition with a former employer, and the Employment Agreement clearly reinforces this duty, requiring that Haber keep all trade secrets and client lists strictly confidential. Accordingly, we affirm on this point and therefore affirm the District Court's determination that North Atlantic has demonstrated a sufficient likelihood of success on the merits of its misappropriation of trade secrets claim. 37 Both this Circuit and numerous New York courts have held that an agent has a duty 'not to use confidential knowledge acquired in his employment in competition with his principal.' ABKCO Music Inc. v. Harrisongs Music, Ltd., 722 F.2d 988, 994 (2d Cir. 1983) (quoting Byrne v. Barrett, 268 N.Y. 199, 206, 197 N.E. 217, 218 (1935)). Such a duty exists as well after the employment is terminated as during its continuance. Id. (internal quotation marks omitted); accord L.M. Rabinowitz & Co. v. Dasher, 82 N.Y.S.2d 431, 435 (Sup. Ct. 1948) (It is implied in every contract of employment that the employee will hold sacred any trade secrets or other confidential information which he acquires in the course of his employment. This is a duty that the employee assumes not only during his employment but after its termination.) (internal citations omitted). Despite this implied duty, it is of course possible for an employer and employee to agree by contract to limit this duty. As explained below, however, Haber and North Atlantic did not do so in this case: Indeed, the Employment Agreement provided expressly that Haber had a comparable duty to maintain the confidentiality of TMI's and North Atlantic's trade secrets. 38 Haber's Employment Agreement requires that he keep secret and retain in the strictest confidence all confidential matters which relate to [North Atlantic], including, without limitation, customer lists, trade secrets, pricing policies and other confidential business affairs of [North Atlantic]...and any affiliate. The agreement also prohibits him from disclos[ing] any such confidential matter to anyone. The Employment Agreement contains no limitation on its duration; rather it applies both during [and] after his period of service with [North Atlantic]. In this way, it makes explicit an employee's implied duties under New York law with respect to confidential information. 39 Based upon the facts in the record, it is clear that Haber violated the duties imposed both by the Employment Agreement and by New York's laws. That is, the requirement that he keep and retain [customer lists and trade secrets] in the strictest confidence by its very terms precludes his using that confidential information for the benefit of a competitor business. Furthermore, common sense dictates the conclusion that the customer lists to which the Employment Agreement refers must encompass the list of client contacts at issue on this appeal. Particularly in light of the duty imposed by New York law not to use trade secrets in competition with a former employer, it is clear here that the use of the list of client contacts was in violation of a duty. 8 40 The defendants contend that the Employment Agreement does not control in this case. This is so, they allege, because evidence surrounding the Employment Agreement's formation suggests that the parties contemplated Haber's being able to solicit clients upon his leaving North Atlantic. Regardless of what such parol evidence might suggest, we may not consider it because the agreement is unambiguous on its face and because the agreement contains a valid general merger clause. See, e.g., Primex Int'l Corp. v. Wal-Mart Stores, Inc., 89 N.Y.2d 594, 599, 679 N.E.2d 624, 627, 657 N.Y.S.2d 385, 388 (1997) (noting that a general merger clause require[s] full application of the parol evidence rule in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing); Mizuna, Ltd. v. Crossland Fed. Sav. Bank, 90 F.3d 650, 659 (2d Cir. 1996) (applying New York's parol evidence rule). Likewise, the defendants contend that the Asset Purchase Agreement provides a more limited duty of non-solicitation for Haber than that imposed by the preliminary injunction. We hold, however, that the Employment Agreement is clear on its face as to Haber's duties with respect to trade secrets and that nothing in the Asset Purchase Agreement contradicts it on this point. 41 Thus, the Employment Agreement reinforces Haber's duty under New York law not to use his former employer's trade secrets against the employer. Accordingly, the District Court properly concluded that North Atlantic has demonstrated a likelihood of success on the merits of its misappropriation of trade secrets claim.