It is difficult to ignore the ongoing national debate—within the federal and certain state governments—over the use and enforcement of post-employment restrictive covenants. It is within that landscape that Delaware's Court of Chancery recently issued its memorandum opinion in Hightower Holding v. Gibson, C.A. No. 2022-0089-LWW (February 9, 2023) addressing the applicability of a Delaware choice-of-law clause in certain agreements that contained restrictive covenants, including a covenant not to compete (the covenant).
In denying plaintiff's motion for a preliminary injunction, Vice Chancellor Lori Will found that the plaintiff had not established a reasonable probability of success on the merits of the claim (that the defendant was in breach of the covenant) after holding that Alabama law, rather than Delaware law applied, and that the covenant was likely void under Alabama law. In so ruling, the vice chancellor found that "Alabama's strong interests against enforcing the covenants outweigh Delaware's contractarian policies."
Delaware courts have recognized that Delaware is a jurisdiction where sophisticated parties are free to enter into any number of contractual relationships, secure in the knowledge that their agreements will be upheld and applied as drafted. See NACCO Industries v. Applica, 997 A.2d 1, 35 (Del. 2009) ("Delaware upholds the freedom of contract and enforces as a matter of fundamental public policy the voluntary agreements of sophisticated parties.") and...
Crown Medical Solutions and owners Michelle and Philanzo King have agreed to pay $825,000 to resolve US government allegations that they submitted false Medicare claims for durable medical equipme...