On September 9, 2025, Justice Jamieson of the Westchester County Commercial Division issued a decision in Digital Media Sys., Inc. v. Center Stage Cinema LLC, 2025 NY Slip Op. 51460(U), holding that the question of the reasonable scope of a restrictive covenant was an issue to be resolved at trial, explaining:
It is well-settled that a restrictive covenant will only be subject to specific enforcement to the extent that it is reasonable in time and area, necessary to protect the employer’s legitimate interests, not harmful to the general public and not unreasonably burdensome to the employee. An employer’s interests justifying a restrictive covenant are limited to the protection against misappropriation of the employer’s trade secrets or of confidential customer lists, or protection from competition by a former employee whose services are unique or extraordinary.
Since there are powerful considerations of public policy which militate against sanctioning the loss of a person’s livelihood, the courts have generally displayed a much stricter attitude with respect to covenants of this type. In the context of employment agreements, the Court of Appeals holds that a covenant not to compete is reasonable only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public.
Here, defendants assert that because the restrictive covenant has no geographical limitation, it must be voided. That is not automatically the case. On this motion to dismiss, the Court cannot determine whether the provision is unduly burdensome, tailored appropriately or unfair. At this stage of the litigation, defendants’ argument that the noncompete covenant is unreasonable does not offer a sufficient basis to dismiss the breach of contract causes of action. Even assuming that the noncompete covenant is overbroad, there is no rule that automatically invalidates overbroad employment agreements not to compete. Even when it is overbroad, a noncompete covenant may be partially enforced if an employer demonstrates, among other things, that it has not overreached and that it has in good faith sought to protect a legitimate business interest, consistent with reasonable standards of fair dealing.
Accordingly, the Court declines to dismiss the breach of contract cause of action at this preliminary stage of the action. That being said, given the relatively small amount at stake; the difficulty in determining damages; and the fact that the year period expires next month, the Court urges the parties to consider resolving this matter expeditiously.
(Internal quotations and citations omitted).