10th Circuit denies injunction in noncompete case

The U.S. 10th Circuit Court of Appeals (which covers New Mexico employers) recently affirmed the denial of a preliminary injunction to prevent former KeyBank National Association employees from allegedly doing business with and soliciting the regional bank’s customers and misappropriating its trade secrets and confidential information.

Facts

KeyBank sued two former employees, Charles Williams and Timothy Weldon, for allegedly breaching their noncompete agreements after leaving the company and using its trade secrets and confidential information to divert business to their new employer, Newmark Knight Frank.

KeyBank then requested a preliminary injunction to prevent Williams and Weldon from soliciting the customers and misappropriating its trade secrets and confidential information. The district court denied the request for the injunction because the former employer failed to show a probability of irreparable harm.

KeyBank appealed the denial of its request for a preliminary injunction, contending the court’s determination that it hadn’t suffered irreparable harm was an abuse of discretion. Specifically, the bank alleged the lower court disregarded evidence it had sustained actual, unquantifiable injury in the form of diminished customer relations, goodwill, and competitive standing.

High bar

To obtain a preliminary injunction (an order immediately preventing former employees from doing business with the ex-employer’s competitors), the former employer must show it will suffer irreparable injury if the injunction is denied.