10.07.2015 Views

1E9Ct5D

1E9Ct5D

1E9Ct5D

SHOW MORE
SHOW LESS

Create successful ePaper yourself

Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.

2. Validity of Restrictive Covenants.In the United States, nearly all laws governing the enforceability of restrictive covenantsare state-based. These laws vary, widely, from state-to-state. 25Accordingly, a court’schoice of law will often be decisive. 26To understand the varying schools of thought on the enforceability of post-employmentrestrictive covenants in the United States, it is most efficient to look at examples of statelaws from three divergent states: Delaware, California, and Virginia. Delawarerepresents the majority view on the enforcement of covenants not to compete in theUnited States. That is, in Delaware and most states, court’s will closely scrutinize andnarrowly construe a non-competition agreement, but will generally enforce them if it ispart of a valid agreement that is supported by consideration, is reasonable in time andscope, and serve to protect the employer’s legitimate economic interests. 27These“economic interests” typically include the employer’s confidential information andgoodwill. 28Delaware courts have also adopted a “reasonable alteration” approach,meaning that if a non-competition agreement is found to be overbroad andunenforceable as written, the court may enforce the non-competition agreement in part,25 See, e.g., Brian M. Malsberger, COVENANTS NOT TO COMPETE: A STATE-BY-STATE SURVEY (8 th ed. 2012);Viva R. Moffat, Making Non-Competes Unenforceable, 54 ARIZ. L. REV. 939, 943-952 (2012)(summarizing major variations among states); Gillian Lester & Elizabeth Ryan, Choice of Law andEmployee Restrictive Covenants: An American Perspective, 31 COMP. LAB. L. & POL’Y J. 389, 392(2010) (“states vary widely in their friendliness to employee non-compete agreements”); Cynthia L.Estlund, Between Rights and Contract: Arbitration Agreements and Non-Compete Covenants, 155 U.PENN. L. REV. 379, 391-396 (2006).26 E.g., Curtis 1000, Inc. v. Suess, 24 F.3d 941, 947-948 (7th Cir. 1994) (affirming denial of preliminaryinjunction; refusing to honor covenant’s selection of governing state law where chosen state hadminimal connection to the parties’ relationship).27 Faw, Casson & Co. v. Cranston, 275 A.2d 463, 466-467 (Del. Ch. 1977).28 TriState Courier & Carriage, Inc. v. Berryman, 2004 Del. Ch. LEXIS 43, at *10 (Del. Ch. Apr. 15, 2004).3082723.3

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!