Hercules Pharms., Inc. v. Cherne
24-2545
2d Cir.Apr 14, 2025Background
- Hercules Pharmaceuticals, Inc., a New York-based pharmaceutical distributor, employed Brant Cherne as Director of Business Development.
- Cherne signed an Employee Confidentiality and Non-Compete Agreement with Hercules.
- Cherne resigned on August 1, 2024, and immediately joined NDC Distributors, alleged by Hercules to be a direct competitor.
- Hercules sued Cherne, alleging breach of the non-compete, misappropriation of trade secrets, breach of contract, breach of fiduciary duty, and unfair competition under federal and state law.
- The District Court granted a preliminary injunction preventing Cherne from working for NDC or soliciting Hercules's customers and enforced the restrictive covenant.
- Cherne appealed the preliminary injunction order to the Second Circuit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Irreparable harm | Cherne’s conduct caused irreparable harm as per contract and facts | Injunction unnecessary; no irreparable harm shown | District Court did not err: irreparable harm exists |
| Likelihood of success on the merits | Strong likelihood due to Cherne’s actions & prior admissions | Higher standard for mandatory injunction; district court erred | Preliminary injunction was proper under correct standard |
| Reasonableness/scope of restrictive covenant | Limited duration and conduct; covenant is enforceable | Covenant is overly broad; bars Cherne from entire industry | District Court correctly found covenant reasonable |
| Public interest | Enforcing lawful agreements serves public policy | Not specifically addressed | Public interest supports enforcing the agreement |
Key Cases Cited
- N. Atl. Instruments, Inc. v. Haber, 188 F.3d 38 (2d Cir. 1999) (establishes standard for irreparable harm in trade secrets and non-compete cases)
- Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir. 1999) (addresses irreparable harm and enforceability of restrictive covenants)
- BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (N.Y. 1999) (sets the standard for reasonableness of non-compete covenants in New York)
- Benihana, Inc. v. Benihana of Tokyo, LLC, 784 F.3d 887 (2d Cir. 2015) (public interest supports enforcement of valid contractual agreements)