Cooley Alert

US District Judge Patti B. Saris of the US District Court for the District of Massachusetts recently held that stock options will suffice as “mutually agreed upon consideration” and “fair and reasonable consideration” under the Massachusetts Noncompetition Agreement Act in Cynosure LLC. v. Reveal Lasers LLC, No. 22-cv-11176-PBS (D. Mass. Nov. 9, 2022). As explained in a 2018 Cooley alert, the Massachusetts Noncompetition Agreement Act requires employers to provide consideration to support a noncompete agreement in the form of either precisely defined “garden leave” payments or other undefined “mutually agreed upon consideration.” For employees who enter into a noncompete agreement in the course of their employment, the Massachusetts Noncompetition Agreement Act requires employers to also provide consideration that’s “fair and reasonable,” which is another undefined term. By holding that stock options may suffice as both “mutually agreed upon consideration” and “fair and reasonable consideration,” Judge Saris shed long-awaited insight into the question of “What quantum or type consideration is sufficient to serve as ‘mutually agreed upon consideration’?”

Judge Saris also concluded that a Delaware governing law clause does not exempt a noncompete agreement from meeting the minimum requirements of the Massachusetts Noncompetition Agreement Act if the noncompete agreement is with a Massachusetts-based employee. In fact, Judge Saris declined to enforce a noncompete...

Read Full Story: https://news.google.com/__i/rss/rd/articles/CBMihgFodHRwczovL3d3dy5jb29sZXkuY...