Christie’s and Heritage Auctions have been locked in a bitter legal war since Heritage’s entire Luxury division team – three 20-somethings – up and jumped ship to Christie’s. According to the $60 million lawsuit that Heritage filed against Christie’s in June 2014, the world’s largest fine arts auction house poached Matthew Rubinger, 26, its key Hermès expert, and two other former-Heritage employees (also in their 20’s). Asserting claims of breach of contract and trade secret misappropriation, Heritage told a New York state court in the summer of 2014, that armed with $40 million in propriety information, Rubinger, Rachel Koffsky and Caitlin Donovan were enlisted to launch Christie’s very own Luxury Accessories division.
Fast forward to February 2018 and the New York State Supreme Court handed Heritage a mixed bag of a ruling. Judge Andrea Masley found, among other things, that Rubinger’s non-compete agreement with Heritage – which required that he not compete with Heritage in the U.S. for 24 months after he left his job – “is plainly reasonable and enforceable,” despite the defendants’ arguments that it is overly broad and thereby, unenforceable. As for whether Rubinger actually breached that non-compete is a matter for trial, as are the amount of damages caused as a result, if applicable.
Christie’s shipped the three Hermès experts off to work in its Hong Kong office, likely in order to avoid claims of breach of their non-compete agreements which were limited in scope to North America. They are, however, still in breach, per Heritage, as instead of working to launch a Far East-specific division, they have actually been developing Christie’s U.S.-based Luxury Accessories branch.
Also up for debate during the parties’ trial, which is schedule for this spring: Whether Christie’s “tortuously interfered” with Rubinger’s contract with Heritage, which was slated to last until December 2014, when it approached him to lure him away.
Judge Masley was willing to find that Rubinger did not breach the “non-solicitation” covenant in his contract when he convinced Koffsky and Donovan to join the rival auction house. She stated the such a clause would only apply if Rubinger had recruited them after his departure, which was not the case since the three all resigned on the same day in May 2014.
Still yet, up for determination at trial, among other issues: Whether Christie’s engaged in unfair competition with Heritage, as a result of Christie’s “wrongfully obtaining Heritage’s confidential information via Rubinger, Koffsky and Donovan,” including years of extensive training, important introductions to sources in Asia, as well as other insider information about the auction house’s expansion and branding plans.