The Estée Lauder Companies Inc. v. Batra, 430 F. Supp. 2d 158 (S.D.N.Y. 2006)

While working as Global General Brand Manager for Estée Lauder, Shashi Batra (a resident of San Francisco) signed a non-compete agreement that prohibited him from competing with the company anywhere in the world for a period of 12 months after his employment ended. Batra had worldwide responsibilities for two of Estée Lauder’s skin care brands. Pursuant to the non-compete agreement, which contained a New York choice-of-law provision, the company would continue to pay Batra’s salary (post employment) during the non-compete period. When Batra announced his resignation to become Worldwide General Manager of Perricone (a competitor), Estée Lauder offered to reduce the duration of the non-compete to four months. Batra responded that he believed the non-compete was unenforceable under California law and immediately filed a lawsuit in California seeking a declaration to that effect. Two days later, Estée Lauder filed the instant lawsuit in the United States District Court for the Southern District of New York, seeking to enforce the non-compete under New York law. In this ruling, the federal judge rejected Batra’s request to apply the abstention doctrine, applied New York law and concluded that because Batra would inevitably disclose Estée Lauder’s trade secrets to Perricone, he should be enjoined from competing with Estée Lauder for five months. Cf. Kelton v. Stravinski, 138 Cal. App. 4th 941 (2006) (ongoing business relationship between business partners did not render covenant not to compete valid).