published Feb 12, 2018 5:25:00 PM, by Chris Dolmetsch
(Bloomberg) —

International Business Machines Corp. called foul on Microsoft Corp.’s hiring of its chief diversity officer in a case that elevates recruiting and promotion of an inclusive workforce to the level of safeguarding proprietary technology.

IBM claims the information that Lindsay-Rae McIntyre possesses — including confidential data about diversity, strategies and initiatives — can cause “real and immediate competitive harm” if she’s allowed to move immediately to Microsoft. IBM sued to enforce a one-year non-competition agreement.

While the lawsuit highlights the contention that can ensue when a senior employee bolts for a rival, it also shines a light on the increasing role that diversity measures play in corporate America. Technology and financial companies have reserved those fights in the past to employees who possessed key technical or strategic knowledge, not those entrusted to make decisions on hiring and the makeup of the workforce.

IBM is wrongly seeking to enforce an “overbroad” non-competition clause against an employee who has taken no confidential information, McIntyre’s lawyers responded in court filings.

“IBM surprisingly seeks a draconian temporary restraining order and preliminary injunction to prevent McIntyre from working — for an entire year, in any position, anywhere in the world, for any company IBM deems to be a ‘competitor’ in any dimension,” her attorneys said.

U.S. District Judge Vincent L. Briccetti temporarily barred McIntyre from moving to Microsoft over her attorneys’ objections and scheduled a conference for Feb. 22.

“McIntyre was at the center of highly confidential and competitively sensitive information that has fueled IBM’s success” in diversity and inclusion, the company said in a statement. “While we understand Microsoft’s need to deal with mounting criticism of its record on diversity, IBM intends to fully enforce Ms. McIntyre’s non-compete agreement to protect our competitive information.”

In its complaint, filed Monday in federal court in White Plains, New York, IBM pointed to Microsoft’s own attempts to keep details about its diversity efforts secret. In a separate lawsuit, in which Microsoft is accused of discriminating against women in technical and engineering roles, the Redmond, Washington-based company insisted that internal communications and documents about its diversity data and strategies be filed under seal because they’re so sensitive.

Non-competition clauses are common in the technology industry, covering most employees, said Evan Starr, an assistant professor at the University of Maryland’s Robert H. Smith School of Business.

“Many companies, especially in the tech industry, they have these contracts that are signed by almost everybody,” Starr said. “It’s a blanket thing that everybody is kind of bound by.”

Executive Positions

Microsoft announced Sunday that it hired McIntyre, who spent more than two decades at IBM, where she held executive positions including vice president in human resources before being named chief diversity officer and vice president of leadership succession planning in 2015.

McIntyre oversaw teams responsible for developing artificial intelligence-based tools and methods used to track career development, recommend growth and promotion opportunities and measure diversity metrics, IBM said.

The mother of three young children and the primary earner in her household, McIntyre sought and accepted the Microsoft role partially because it would allow her to relocate her family from New York to Washington, which is a few hours from her parents and other relatives, her attorneys said.

IBM’s diversity-related trade secrets aren’t valuable to Microsoft and McIntyre wouldn’t be able to use them in her new role, her attorneys said. Also, there is a “growing trend of transparency” in the technology industry regarding diversity initiatives and most companies publicly release information in order to attract candidates, McIntyre’s lawyers said.
Microsoft was sued two years ago by three women who accused the software maker of maintaining “an abusive, toxic ‘boy’s club’ atmosphere, where women are ignored, abused, or degraded.” They said their expert consultants have determined that discrimination at the company cost female employees more than 500 promotions and $100 million to $238 million in pay, according to Oct. 27 court filings.

The women are seeking class certification that would expand the lawsuit to cover more than 8,600 female employees who had worked at the company since 2012. IBM made a reference to the lawsuit because Microsoft had asserted that diversity exhibits, if disclosed, would cause it competitive harm.

The case is International Business Machines Corp. v. McIntyre, 18-cv-01210, U.S. District Court, Southern District of New York (White Plains.)