A New Jersey federal judge on Tuesday lifted a nearly three-year preliminary injunction on two former ADP employees who the company claims poached former and current clients on their way to work for a competitor, despite a noncompete clause.

Senior Judge William Martini, of the U.S. District Court for the District of New Jersey.

“At this juncture the Court, even assuming the covenants and tolling provisions are enforceable, need only look to the contractual language and timeline of alleged violations to find that ADP's enforceable interest has expired,” wrote U.S. District Judge William J. Martini in the opinion.

The two defendants originally named in separate suits by ADP were Jordan Lynch and John Halpin, who were alleged to have violated the company's noncompete clause when the two left to work for competitor Ultimate Software Group.

While ADP conceded in lifting the injunction on Lynch, the judge ruled on Tuesday that time was also up for Roseland-based payroll processor ADP on the second employee, Halpin.

“Accordingly, ADP has received the benefit of its bargain as to the one-year restrictive covenants and there is nothing left for the Court to enforce or enjoin,” Martini said. “The Court therefore lifts the preliminary injunction as to defendant Halpin.”

In addition to lifting the injunction, the judge also denied ADP's motion for sanctions filed on March 25 for alleged violations of the preliminary injunction by Halpin on Oct. 18, 2018.

The court entered into the preliminary injunction on June 30, 2016, and previously denied requests by Lynch and Halpin to lift it during its nearly three-year run.

The court revisited the preliminary injunction, it said, because of other cases stayed, pending developments in related matters currently before the Third Circuit. Among the related cases are ADP, LLC v. Rafferty and ADP, LLC v. Mark.

John Schmidt Jr. of Lindabury, McCormick, Estabrook & Cooper of Westfield, representing Lynch and Halpin, said early Wednesday that he chooses not to comment at this time as the litigation concerning the scope of the covenants and potential damages continues.

Timothy Lowe of McDonald Hopkins in Detroit and Harris Freier of Genova Burns in Newark, who represented ADP, did not return calls.

The preliminary injunction was to prevent Lynch and Halpin from engaging in certain conduct pursuant to several restrictive covenants in their employment contracts with ADP.

In arguments before the court, ADP conceded that the preliminary injunction should be lifted against Lynch, but not against Halpin because the company “has not received the full benefit of the terms Halpin agreed to when he accepted awards of restricted stock” nor found evidence of a full, 12-month compliance by Halpin, according to court documents.

In their defense, Lynch and Halpin both argued in separate briefs before the court that: One, ADP was overreaching in trying to enforce the one-year restrictive covenant nearly three years after they left the company; two, the preliminary injunction generally does not comport with New Jersey law and there was a split in authority between district court and New Jersey state courts.

Lynch and Halpin also argued that the law in this district does not generally support equitable tolling of the restrictive covenants.

The case previously went up on appeal on the issue of the noncompete clause's enforceability. On Feb. 8, 2017, the U.S. Court of Appeals for the Third Circuit said Lynch and Halpin, as employees of ADP, had clicked a box on the company's website after reading terms of the company's stock award program and were bound by those terms, which included a noncompete clause.

ADP alleged in its suit that Lynch and Halpin began soliciting current and former ADP clients when they joined a competitor, and Martini partially granted a company motion for a preliminary injunction to enforce the noncompete clause. Lynch and Halpin were enjoined from soliciting current ADP clients and certain prospective ADP clients. The two appealed the preliminary injunction.

The defendants claimed on appeal that they only affirmed that they read the relevant documents, but the plaintiff lacked proof that they agreed to their contents. They also claimed that, because some facts about the case were contested, the district court should have held a hearing prior to granting the injunction.

But the Third Circuit in 2017 affirmed the preliminary injunction and rejected the claims by the pair that the website's statement—that “you must select the checkbox to indicate you have read all associated documents before you can proceed”—indicated only that they had read the terms but had not agreed to be bound by them. The appeals court said the district court correctly concluded that the defendants agreed to be bound by the terms and that no hearing was necessary because a preliminary injunction may be issued on the basis of affidavits and other written evidence.

Halpin left ADP on Dec. 23, 2015, and began working at ADP's competitor, Ultimate, a few days thereafter. From January 2016 to June 2017, ADP alleged Halpin solicited several of its clients and that he continued to violate the preliminary injunction and/or restrictive covenants by working at Ultimate, thereby tolling any one-year period.

“The Court finds this argument unavailing,” wrote Martini in Tuesday's decision. “Both defendants Lynch and Halpin have worked at Ultimate since 2016, and ADP states that 'ADP is not aware of any conduct (by Lynch) that violates the preliminary injunction since it was issued on June 30, 2016.'”

“ADP concedes that the one-year restrictive covenant is not tolled as to Lynch based on solely his work for Ultimate, and the Court finds that the same reasoning applies to Defendant Halpin,” Martini wrote.

“Moreover, the Court never enjoined either defendant from working at Ultimate, and Halpin's continued employment there—without more—does not violate the preliminary injunction nor trigger the tolling provision.”