{"id":225,"date":"2024-01-08T16:38:24","date_gmt":"2024-01-08T20:38:24","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/?p=225"},"modified":"2024-01-08T16:38:24","modified_gmt":"2024-01-08T20:38:24","slug":"chancery-acknowledges-non-competes-treated-more-skeptically-in-recent-decisions","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/2024\/01\/08\/chancery-acknowledges-non-competes-treated-more-skeptically-in-recent-decisions\/","title":{"rendered":"Chancery Acknowledges Non-Competes Treated More Skeptically in Recent Decisions"},"content":{"rendered":"

The case Sunder Energy, LLC v. Jackson<\/em>, C.A. No. 2023-0988-JTL relates to non-compete covenants contained in an LLC operating agreement.\u00a0 \u00a0In November, the Court of Chancery denied a preliminary injunction enforcing the covenants<\/a>.\u00a0 \u00a0 In Delaware, appeals to the Supreme Court are as-of-right, but only when a case is fully decided — a party appealing a preliminary injunction denial is almost always told to wait, unless the trial court “certifies” an immediate appeal.\u00a0 The Sunder Energy <\/em>plaintiff asked the trial court to do just that, and late last month, Vice Chancellor Laster took the rare step of granting certification<\/a>.<\/p>\n

In his 35-page opinion explaining why he was certifying the appeal, the Vice Chancellor addressed, among other points, the plaintiff’s argument that “over the past few years, there has been a growing trend that disfavors restrictive covenant litigation in the Court of Chancery.”<\/p>\n

That recent trend has been visible on this blog — last year, we discussed a case where the Court refused to apply Delaware law despite a contractual choice-of-law clause in a covenant when the covenant was contrary to fundamental policy of the state of employment<\/a>, and another where the Court refused to ‘blue pencil’\u00a0 an overly-broad covenant into a narrower, more reasonable one<\/a>.<\/p>\n

The Vice Chancellor acknowledged that the plaintiff’s “impression is not unfounded,” and agreed that the decisions of the last decade have shown greater skepticism towards non-compete covenants than the older cases, though reckoning the difference as only “a matter of degree.”\u00a0 While explaining that the trend against covenants was not itself a a major factor in his decision to certify immediate appeal, the Vice Chancellor agreed that the Delaware Supreme Court’s review would be important and clarifying.<\/p>\n

The Delaware Supreme Court gives ‘great weight’ to a trial court’s certification for an immediate appeal, and is often attentive to questions the trial court specifically identifies as needing the higher court’s guidance.\u00a0 Sunder Energy <\/em>is likely to give us the authoritative word on non-competes in Delaware.\u00a0 Watch this space — we will keep you informed on the Supreme Court’s decision whether to accept the immediate appeal, and of any subsequent decision.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The case Sunder Energy, LLC v. Jackson, C.A. No. 2023-0988-JTL relates to non-compete covenants contained in an LLC operating agreement.\u00a0 \u00a0In November, the Court of Chancery denied a preliminary injunction enforcing the covenants.\u00a0 \u00a0 In Delaware, appeals to the Supreme Court are as-of-right, but only when a case is fully decided — a party appealing … <\/p>\n

Continue reading “Chancery Acknowledges Non-Competes Treated More Skeptically in Recent Decisions”<\/span><\/a><\/p>\n","protected":false},"author":598,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"ppma_author":[166],"class_list":["post-225","post","type-post","status-publish","format-standard","hentry","category-general"],"authors":[{"term_id":166,"user_id":598,"is_guest":0,"slug":"mbgonen","display_name":"Michael Gonen","avatar_url":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-content\/uploads\/sites\/16\/2023\/01\/gonenmichael-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/posts\/225","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/users\/598"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/comments?post=225"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/posts\/225\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/media?parent=225"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/categories?post=225"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/tags?post=225"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/wp-json\/wp\/v2\/ppma_author?post=225"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}