What's The Harm? Second Circuit Requires Proof Of Irreparable Harm To Enjoin Restrictive Covenant Violations

The Bottom Line

• Federal district courts in the Second circuit will not presume that a company will suffer irreparable harm for a restrictive covenant violation.
• Parties should not rely on contractual stipulations alone to establish irreparable harm.
• A party seeking a court injunction for the breach of a non-compete or non-solicitation covenant must present actual evidence that it will suffer imminent, irreparable harm.

When companies seek a court injunction for a restrictive covenant violation, they often focus on the covenant's enforceability. They do this by arguing that the non-compete and customer non-solicitation covenants protect legitimate business interests - and is narrowly tailored to protect those interests.