2nd Circuit enforces noncompete in spat over social media accounts

In a unique case involving ownership and access to social media accounts, the U.S. 2nd Circuit Court of Appeals (which handles federal appeals from Connecticut and Vermont) recently enforced a noncompete agreement against one of a wedding dress company’s designers. The decision contains several important reminders for employers.

Facts

Hayley Paige Gutman designs wedding dresses. She signed an employment contract with wedding dress company JLM Couture, Inc. The contract included an agreement stipulating she wouldn’t compete with the company during the term of her employment. (Her contract, unlike most others, was for a fixed period of time.)

JLM and Gutman were unable to agree on a new employment contract. When the negotiations failed, she allegedly changed the password to an Instagram account she managed and purportedly entered agreements with other companies to promote their products on the social media platform.

JLM filed a federal lawsuit seeking, among other things, injunctive relief precluding Gutman from competing with it as well as access to the social media accounts. The lower court agreed with the employer and precluded her from competing with it until her contract with the company ended. The court also gave JLM control of certain social media accounts she had been operating.

2nd Circuit’s decision

On appeal, the 2nd Circuit agreed JLM could enforce the noncompete but found the lower court needed to reconsider the social media accounts.