Austrian appeals court confirms decision in favor of Sycor in proceedings against Arineo 

A decision by the Austrian appeals court, the Higher Regional Court of Linz, confirms the fundamental essence of the decision by the Regional Court of Wels as the court of first instance, which ruled in favor of Sycor Austria: Among other things, the decision requires Arineo as the opposing party to cease unfair poaching of further employees in Austria and confirms that the opposing party is liable for all damage that has and will be incurred by Sycor Austria due to the unfair poaching of employees.

Sycor Austria is the plaintiff. The motions to cease and desist, insofar as they were allowed, are limited to Austria. “Based on the courts’ findings, we nonetheless believe that the decision is of special interest for the proceedings pending in Germany as well,” says Sycor CEO Rüdiger Krumes.

The court of appeals confirmed the finding that there was a systematic plan to poach employees and customers of the Sycor Group and that this plan was controlled and also implemented by a group of former Sycor managers including Dr. Marko Weinrich, the current CEO of Arineo. The decision by the Higher Regional Court of Linz is not legally binding.

Among other things, the court of appeal noted that the main damage incurred by the plaintiff as a result of the anticompetitive conduct of the defendants is due to the poaching of employees. This is because, in the opinion of the court of appeals, customers will often switch along with employees when anticompetitive poaching of employees occurs in this specific sector, given the close support relationship and the knowledge these employees have about customers’ problems.

As regards the background of these cases, Sycor has concrete evidence that Arineo engaged in unfair practices to poach employees and customers. The Göttingen-based IT service provider responded by bringing proceedings against Arineo GmbH in Germany in September 2019. Sycor’s Austrian subsidiary had previously brought proceedings against Arineo GmbH and Arineo Austria GmbH in Austria, among others, in July 2019, and a decision has now been made on appeal.

Näder Holding and the Sycor Group have incurred damages amounting to millions of euros in total.

Details of the decision by the Higher Regional Court of Linz:

• The Higher Regional Court of Linz approved Sycor Austria’s motion to cease and desist the unfair poaching of further employees (only) in Austria in its entirety. The corresponding appeal on the part of the defendants was rejected.
• Furthermore, the Higher Regional Court of Linz approved the request to hold the defendants jointly and severally liable for all damages incurred by Sycor Austria due to the unfair poaching of employees by the defendants. The appeal by the defendants in this regard was rejected as well. Joint and several liability means that each defendant is liable for the damage in its entirety.
• The appeal of the defendants was only upheld regarding the matter of Sycor Austria’s right to sue for actions against its group companies; in this regard, the court of appeal ruled that Sycor Austria does not have the right to sue. In the opinion of the appeals court, Sycor Austria’s claim for declaratory relief was also to be restricted in the area rejected by the court of first instance regarding the motion to cease and desist, namely the alleged unfair communication with customers.
• Sycor Austria’s appeal of the court of first instance’s rejection of the motion to cease and desist for alleged unfair communication with customers (for the purpose of poaching) by the defendants was rejected by the court of appeal.
• The decision is not legally binding and can be appealed. The Supreme Court of Justice (OGH) in Austria is the appellate court having jurisdiction. It is the court of last resort. Appeals to the Supreme Court of Justice are limited to legal issues of considerable importance.
• Decision by the court of first instance: The Regional Court of Wels as the court of first instance reached a decision on June 15, 2021, after a comprehensive procedure of taking evidence that ended in April 2021. The court largely allowed Sycor’s claims, notably in regard to ceasing the poaching of employees and establishing the liability of the defendants for damage due to the unfair poaching of employees.
• Legal remedies of the parties against the decision by the court of first instance. The decision by the court of first instance was challenged by both Sycor Austria and the defendants in the form of an appeal to the Higher Regional Court of Linz. Sycor Austria only appealed the rejection of the motion to cease and desist for unfair communication with customers (for the purpose of poaching). The appeal of the defendants encompassed the entire decision, insofar as the complaint by Sycor Austria was allowed, notably in regard to ceasing the poaching of employees and the establishment of the defendants’ liability for damages due to unfair poaching of employees.