Nuvasive, Inc. v. Patrick Miles ( 2019 )

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
NUVASIVE, INC., a Delaware )
Corporation, )
)
Plaintiff, )
)
v. ) C.A. No. 2017-0720-SG
)
PATRICK MILES, an individual, )
ALPHATEC HOLDINGS, INC., a )
Delaware Corporation, and ALPHATEC )
SPINE, INC., a California Corporation, )
)
Defendants. )
MEMORANDUM OPINION
Date Submitted: July 16, 2019
Date Decided: August 26, 2019
Philip Trainer, Jr. and Aaron P. Sayers, of ASHBY & GEDDES, Wilmington,
Delaware; OF COUNSEL: Rachel B. Cowen, Michael J. Sheehan, and Emory D.
Moore, Jr., of MCDERMOTT WILL & EMERY, Chicago, Illinois; Christopher W.
Cardwell, of GULLET, SANFORD, ROBINSON & MARTIN, Nashville,
Tennessee, Attorneys for Plaintiff.
Philip A. Rovner and Jonathan A. Choa, of POTTER ANDERSON & CORROON
LLP, Wilmington, Delaware; OF COUNSEL: Micha Danzig, Eric J. Eastham, and
Paul M. Huston, of MINTZ LEVIN COHN FERRIS GLOVSKY & POPEO, P.C.,
San Diego, California, Attorneys for Defendant Patrick Miles.
GLASSCOCK, Vice Chancellor
Parties in jurisdiction “A” contract for services to be performed in jurisdiction
“A”, but provide for the contract to be construed under the laws of jurisdiction “B.”
Will such a contractual choice be respected? The motivations of the parties may be
as benign as importing a well-developed body of commercial law into their
agreement, or may be as problematic as an attempt to contract around a fundamental
public policy of the jurisdiction in which they operate. In either event, the question
involves issues of freedom of contract, public policy, and comity.
Delaware is well known as having a well-developed body of business law; for
this reason, perhaps, this Court has had occasion to address this question several
times. Generally, our courts respect the parties’ choice of law, as they do other
contractual choices agreed to, as binding on the parties. Repeatedly, however, the
issue has been one of Delaware’s respect for an individual’s freedom to contract,
and other jurisdictions’ policy determination that the benefits of such freedom are
outweighed by freedom to pursue a trade or manner of earning a living. In other
words, this jurisdiction will—within reason—allow individuals to contract away the
right to pursue a trade or occupation, post-employment; in other jurisdictions—
notably California—such attempts are void. Where parties see a contractual
advantage to employing a non-compete or a non-solicitation agreement in
California, they may attempt to import Delaware law by contract. That is the case
in the matter now before me.
Delaware has adopted the rationale of the Restatement (Second) of Conflict
of Laws, under which, if the other jurisdiction’s law would apply absent the parties’
contractual choice of Delaware Law, and where the application of Delaware law
would frustrate a fundamental policy of the other jurisdiction, the court must weigh
the interests involved. If the other jurisdiction’s interest materially outweighs that
of Delaware, the court must apply that jurisdiction’s law, notwithstanding the
parties’ contractual choice of law. Such is the case, this Court has found, with
respect to post-employment non-compete provisions, in light of California policy.
In an earlier bench decision in this case I found, consistent with our case law, that
such non-compete provisions are generally against fundamental California policy,
and that California’s policy interest materially exceeds Delaware’s interest in
freedom of contract; consequently, I applied California law, under which the non-
compete provision is void. 1
Remaining in this case is a related issue, on which the Defendant seeks
summary judgment. The employment contract between Plaintiff NuVasive, Inc.
(“NuVasive”) and Defendant Patrick Miles, which purports to import Delaware law
into a California employment relationship, prohibits not only post-employment
competition with the employer, but solicitation of customers and employees as well.
Are these post-employment non-solicitation contractual provisions so inimical to
1
See June 7, 2019 Bench Ruling.
2
California policy that Delaware must refrain from enforcing them, despite the
parties’ stated choice of the application of Delaware law? I conclude the answer is
yes, as described below.
I. BACKGROUND
The relevant factual background is short. The facts in this matter are laid out
in more detail in my Memorandum Opinion in this matter issued on September 28,
2018. 2
A. Miles’ Employment Agreement
On September 11, 2016, Miles entered into an employment agreement (the
“Agreement”) with NuVasive, a Delaware corporation doing business in California.3
The Agreement contained a non-compete covenant and a non-solicitation covenant.4
According to the non-solicitation covenant, “for a one year period following the
termination of [Miles’] employment for any reason,” he would “not hire or solicit,
directly or indirectly, any former or current employees of NuVasive, its subsidiaries
and/or distributors, or solicit the business of any customers, clients, medical partners
. . . of NuVasive, its subsidiaries and/or distributors.”5 In other words, it was both
an employee and customer non-solicitation covenant. The Agreement had a
2
NuVasive, Inc. v. Miles, 2018 WL 4677607 (Del. Ch. Sept. 28, 2018).
3
See Def.’s Br. in Support of Mot. for Partial Summ. J., Ex. A; Pl.’s Br. in Opp’n to Def. Mot. for
Partial Summ. J., Ex. B [hereinafter “Employment Agreement”].
4
Employment Agreement at 2.
5
Id.3
Delaware choice of law provision and a Delaware choice of forum provision. 6 Miles
left NuVasive on October 1, 2017 and on October 2 he joined a purported
competitor. 7 NuVasive filed its Complaint in this Court on October 10, 2017, 8 which
alleged, among other things, that Miles had breached the non-compete and non-
solicitation covenants of the Agreement.
B. Procedural History
Miles brought a Motion for Partial Summary Judgment on March 6, 2018, in
which he reasoned that California law should govern the non-compete and non-
solicitation covenants, under which, per Miles, both were unenforceable.9 In a
September 28, 2018 Memorandum Opinion, I denied the Motion as it related to
summary judgment on the Plaintiff’s claims on breach of the non-compete
covenant. 10 I applied this Court’s analysis in Ascension Insurance Holdings, LLC v.
Underwood 11 of the Restatement (Second) of Conflict of Laws to the non-compete
covenant in the Agreement. 12 I found that enforcement of the covenant would not
violate the fundamental policy of California because this particular covenant
6
Id. at 3.
7
NuVasive, 2018 WL 4677607, at *2.
8
D.I. 1. On June 27, 2018, I granted NuVasive’s Motion for Leave to file an Amended Complaint;
NuVasive filed its Amended Complaint on June 28, 2018, which added Alphatec Holdings, Inc.
and Alphatec Spine, Inc. as Defendants. See June 27, 2018 Oral Argument 29:17–30:20; D.I. 105.
9
See D.I. 36; Def.’s Br. in Support of Mot. for Partial Summ. J.
10
NuVasive, 2018 WL 4677607, at *7.
11
2015 WL 356002 (Del. Ch. Jan. 28, 2015).
12
NuVasive, 2018 WL 4677607, at *3.
4
appeared to fit into a statutory exception to California’s general prohibition on non-
compete covenants, under which non-compete clauses in employment contracts
negotiated by counsel for the employee were enforceable.13 I assumed, without
deciding, that Miles’ counsel had negotiated the agreement.14 The Delaware choice
of law provision in the Agreement was therefore not inconsistent with California
policy, and enforceable. 15 I did not, however, in the September 28, 2018
Memorandum Opinion make a determination on the non-solicitation covenant
because it appeared, at that point in time at least, that California law was unclear on
the enforceability of non-solicitation covenants. 16
On February 6, 2019, Miles filed a Renewed Motion for Summary Judgment
and pointed to persuasive evidence of record that he had not been represented by
counsel during negotiation of the Agreement, and that therefore the statutory
exception in California law to California’s general prohibition on non-compete
covenants had not in fact been implicated.17 In a Bench Ruling on June 7, 2019, I
returned to the Ascension analysis with that factual clarification, found that the
Delaware choice of law provision was unenforceable and that California law should
apply, and granted the Renewed Motion as it pertained to the Plaintiff’s claims
13
Id. at *4–6.
14
Id. at *2 n.6.
15
Id. at *7.
16
Id. at *3. I also noted there appeared to be some factual dispute. Id.
17
D.I. 179.
5
related to Miles’ alleged breach of the non-compete covenant. 18 Miles had also
renewed his initial Motion as to the non-solicitation claims brought by the Plaintiff,
arguing that the law had been clarified as to California’s public policy. I requested
supplemental briefing on only that issue.19 Supplemental briefing was completed on
July 16, 2019 and I considered the matter submitted for decision as of that date.
II. ANALYSIS
The Restatement (Second) of Conflict of Laws analysis performed in
Ascension is, I find, the proper lens with which to view the non-solicitation covenant
in the Agreement, 20 and whether the Delaware choice-of-law provision in the
Agreement is enforceable as to that covenant. The Restatement, as explained in
Ascension, requires the following analysis in determining choice of law. If (1)
California law would apply absent the Delaware choice of law provision, and if (2)
enforcement of the non-solicitation covenant would conflict with California
fundamental policy, and if (3) California has a materially greater interest in
enforcement of the covenant than does Delaware, California law would apply to the
Agreement here, despite the Delaware choice of law provision.21 As I explained in
my September 28, 2018 Memorandum Opinion, California has the strongest contacts
18
June 7, 2019 Bench Ruling, at 3:15–8:20.
19
Id. at 8:21–9:23.
20
Restatement (Second) of Conflict of Laws § 187 (1971).
21
Ascension Ins. Hldgs., LLC v. Underwood, 2015 WL 356002, at *2 (Del. Ch. Jan. 28, 2015).
6
to the Agreement and absent the choice of law provision, California law would
apply. 22 I must then consider whether enforcement of the non-solicitation covenant
would conflict with the “fundamental policy” of California, and, if so, whether
California has a materially greater interest in enforcement of the Agreement than
Delaware.
A. The Fundamental Policy of California on Non-Solicitation Covenants
The non-solicitation covenant in the Agreement covers a one year post-
employment period. It bars Miles’ solicitation of both NuVasive’s employees and
customers. The parties appear to agree that the fundamental policy of California
regarding non-solicitation covenants (if any) is reflected in California’s Business
and Professions Code Section 16600 (“Section 16600”), as interpreted and applied
in California case law. 23 Section 16600 reads “[e]xcept as provided in this chapter,
every contract by which anyone is restrained from engaging in a lawful profession,
trade, or business of any kind is to that extent void.”24 That provision, as explained
22
NuVasive, Inc. v. Miles, 2018 WL 4677607, at *5 (Del. Ch. Sept. 28, 2018) (applying
Restatement (Second) of Conflict of Laws § 188 (1971) to determine which state has the strongest
contacts to the Agreement).
23
Pl.’s Suppl. Mem. Regarding Cal. law Permitting Emp. Non-Solicitation Agreement [hereinafter
Pl.’s Suppl. Mem.], at 2 (“[Section 16600] merely prohibits non-competition agreements. It does
not apply to employee non-solicitation agreements.”); Def. Patrick Miles’ Suppl. Br. in Support of
Mot. for Summ. J. Addressing the Unenforceability of Emp. Non-Solicitation Agreements Under
Cal. law [hereinafter Def.’s Suppl. Mem.], at 5 (“Miles focuses herein on the reasons why the
employee non-solicitation provision is also void under Section 16600, as confirmed by AMN
Healthcare and all subsequent California decisions.”).
24
Cal. Bus. & Prof. Code § 16600 (West).
7
above, prohibits covenants not to compete. I find, based on California precedent,
that it applies to non-solicitation provisions as well.
1. Customer Non-Solicitation Covenants Conflict with the
Fundamental Policy of California
In its supplemental briefing, NuVasive fails to address customer non-
solicitation covenants. 25 Miles, helpfully, points to the California Supreme Court’s
2008 decision in Edwards v. Arthur Anderson LLP, holding that customer non-
solicitation covenants are restraints on individuals’ engagement in their lawful
profession, and thus prohibited by Section 16600. 26 Therefore, I find that customer
non-solicitation covenants conflict with California fundamental policy.
2. Employee Non-Solicitation Covenants Conflict with the
Fundamental Policy of California
The California Supreme Court in Edwards wrote that “[u]nder [Section
16600’s] plain meaning . . . an employer cannot by contract restrain a former
employee from engaging in his or her profession, trade, or business unless the
25
See Pl.’s Suppl. Mem.; see also Pl.’s Opp’n to Def. Patrick Miles’ Renewed Mot. for Partial
Summ. J.
26
189 P. 3d 285, 292 (Cal. 2008). In Edwards, a plaintiff challenged two clauses in his
employment agreement, one prohibited him from “performing professional services of the type he
provided while at [the defendant], for any client on whose account he had worked during the 18
months prior to his termination,” and the other prohibited him from “soliciting,” defined as
“providing professional services to any client of [the defendant’s] Los Angeles office.” Id.(citations omitted). The California Supreme Court concluded that the “noncompetition agreement
was invalid,” and wrote that “the agreement restricted [the plaintiff] from performing work for [the
defendant’s] Los Angeles clients and therefore restricted his ability to practice his accounting
profession . . . and was therefore invalid because it restrained his ability to practice his profession.”
Id.8
agreement falls within one of the exceptions to the rule.”27 The court in Edwards
was not, however, presented with a covenant prohibiting solicitation of the
employer’s employees. 28 NuVasive points to three California Federal District Court
opinions which upheld employee non-solicitation covenants post-Edwards.29 Miles,
however, points to a subsequent California Court of Appeal’s decision, which holds
that employee non-solicitation covenants are generally void under Section 16600.30
That case, AMN Healthcare, Inc. v. Aya Healthcare Services, Inc., was decided by
the California Court of Appeal on November 1, 2018,31 after I issued my September
28, 2018 Memorandum Opinion (which noted that California law appeared unclear
on the enforceability of non-solicitation covenants). Miles further points to
California Federal District Court cases decided post-AMN Healthcare, which rely
27
Id. at 291. The Plaintiff acknowledges, at least, that Edwards “confirmed California’s blanket
rule against non-competes.” Pl.’s Suppl. Mem., at 2.
28
See Edwards, 189 P. 3d at 291 n.4; see also AMN Healthcare, Inc. v. Aya Healthcare Servs.,
Inc., 239 Cal. Rptr. 3d 577, at 589 (Cal. Ct. App. 2018).
29
See Pl.’s Suppl. Mem., at 4–5 (citing Sonic Auto., Inc. v. Younis, 2015 WL 13344624, at *2
(C.D. Cal. May 5, 2015), Sunbelt Rentals, Inc. v. Victor, 2014 WL 492364, at *9 (N.D. Cal. Feb.
5, 2014), and Thomas Weisel Partners LLC v. BNP Paribas, 2010 WL 546497, at *6 (N.D. Cal.
Feb. 10, 2010)). NuVasive has also cited case law from “states with similar statutes” to California
to support the viability of employee non-solicitation covenants under California law. Pl.’s Suppl.
Mem., at 5–6. These cases are inapt; I am not opining as to the proper construction of California
law, by extension of interpretations of similar laws in other states; I am attempting to determine
what California’s fundamental policy is, based on California statute and case law.
30
See Def.’s Suppl. Mem.; see also Def. Patrick Miles’ Opening Br. in Support of His Renewed
Mot. for Partial Summ. J., at 21–28.
31
239 Cal. Rptr. 3d 577 (Cal. Ct. App. 2018).
9
on AMN Healthcare for the proposition that employee non-solicitation covenants are
generally void under Section 16600.32
In AMN Healthcare, the individual defendants worked as “travel nurse
recruiters” for the plaintiff, that is they recruited healthcare professionals to work on
a temporary basis at medical care facilities throughout the United States. 33 The
recruited healthcare professionals were “deemed to be [employees] of [the plaintiff]
while on temporary assignment through [the plaintiff].” 34 The defendant recruiters
had, as a condition of employment with the plaintiff, agreed for a period of time after
their termination not to solicit employees of the plaintiff to leave plaintiff’s
employ. 35 Nonetheless, the defendant recruiters left the plaintiff for a competitor
and allegedly contacted healthcare professionals they had previously recruited,
employed by the plaintiff, and solicited those healthcare professionals to join them
at their new employer. 36
The California Court of Appeal in AMN Healthcare found that the non-
solicitation provisions were void. The AMN Healthcare court noted that California
had long ago split with the common law of other states, which allowed for
“reasonable” restraints on trade, in favor of a broad prohibition on restraints, with
32
See Def.’s Suppl. Mem., at 9–11 (citing Barker v. Insight Glob., LLC, 2019 WL 176260 (N.D.
Cal. Jan. 11, 2019) and WeRide Corp. v. Kun Huang, 379 F. Supp. 3d 834 (N.D. Cal. 2019)).
33
AMN Healthcare, 239 Cal. Rptr. 3d at 580–81.
34
Id. at 581.
35
Id. at 583.
36
Id. at 583–84.
10
certain limited exceptions. 37 According to the California Court of Appeal, “Section
16600 expresses California’s strong public policy of protecting the right of its
citizens to pursue any lawful employment and enterprise of their choice.”38 The
court then grappled with its own precedent.
In Loral Corp. v. Moyes, 39 a 1985 decision by the California Court of Appeal,
a “noninterference” covenant that prevented a former executive from “raiding” his
former employer was found on its face not to be void under Section 16600 after the
court applied a reasonableness standard and found the restraint to be no more
significant “than a restraint on solicitation of customers or disclosure of confidential
information.”40 Moyes was decided before Edwards, and the California Court of
Appeal in AMN Healthcare expressed doubt on “the continuing viability of Moyes
post-Edwards,” because the California Supreme Court in Edwards found the
language of Section 16600 to be unambiguous in its use of the word “restrain.”41
37
Id. at 587. “‘[A]t common law and in many states, a restraint on the practice of a trade or
occupation, even as applied to a former employee, is valid if reasonable[.]’ However, California
long ago rejected the so-called ‘rule of reasonableness’ when it enacted Civil Code former sections
1673 through 1675, the predecessor sections to Business and Professions Code sections 16600
through 16602. ‘At least since 1872, a noncompetition agreement has been void unless specifically
authorized by sections 16601 or 16602.’ These legislative enactments ‘settled public policy in
favor of open competition, and rejected the common law “rule of reasonableness,” [and] [t]oday
in California, covenants not to compete are void, subject to several exceptions.’” Id. (quoting The
Ret. Grp. v. Galante 98 Cal. Rptr. 3d 585, 589–90 (Cal. Ct. App. 2009) (quoting Bosley Med. Grp.
v. Abramson, 207 Cal. Rptr. 477, 480 (Cal. Ct. App. 1984); quoting Bosley, 207 Cal. Rptr. At 480;
and quoting Edwards v. Arthur Anderson LLP, 189 P. 3d 285, 290 (Cal. 2008))).
38
Id. (internal quotations and citations omitted).
39
219 Cal. Rptr. 836 (Cal. Ct. App. 1985).
40
Id. at 843; see also AMN Healthcare, 239 Cal. Rptr. 3d at 589.
41
AMN Healthcare, 239 Cal. Rptr. 3d at 589–90; Edwards, 189 P. 3d at 291, 293.
11
The Edwards court wrote that “if the Legislature intended the statute to apply only
to restraints that were unreasonable or overbroad, it could have included language
to that effect.”42 Under this reading of Edwards, the court in AMN Healthcare
reasoned that the employee non-solicitation covenant was a restraint under Section
16600 and void.43
AMN Healthcare, however, noted that even if Moyes’ reasonableness standard
survived Edwards, the non-solicitation covenant at issue was distinguishable as the
recruiters “were in the business of recruiting,” and enforcement of the covenant
would not be a reasonable restraint. 44 As a result, the court in AMN Healthcare
found the non-solicitation covenant unenforceable based on either its analysis of
Edwards or its application of a reasonableness standard pursuant to Moyes. 45 The
Plaintiff argues that “Moyes remains good law” and that AMN Healthcare is
distinguishable because the non-solicitation covenant at issue “was a non-compete
in disguise,” 46 because as applied it banned the defendants from pursuing their trade
as recruiters. As noted, however, California Federal District Courts have interpreted
42
AMN Healthcare, 239 Cal. Rptr. 3d at 590 (quoting Edwards, 189 P. 3d at 293).
43
Id. at 589–90.
44
Id. at 590 (emphasis in original).
45
Id.
46
Pl.’s Suppl. Mem., at 2, 6.
12
AMN Healthcare to stand for the former, that is, as a general prohibition on
employee non-solicitation covenants.47
California fundamental policy, as expressed in statute and case law, is against
restraint on the pursuit of lawful professions, unless exempted by statute. The
California Court of Appeal found in Moyes that the “noninterference” covenant was
reasonable, noting that it might actually promote trade and business, and that the
covenant did not prevent employees from following a former employee to a
competitor, it only prevented that former employee from reaching out to his former
colleagues. 48 It expressed the view that employee non-solicitation covenants were
no more a restraint of competition than customer non-solicitation covenants. The
California Supreme Court in Edwards subsequently found that the latter, however,
was itself a prohibited restraint, as described above. Edwards also specifically
rejected judicial employment of a “reasonableness” standard to construe Section
16600, as applied in Moyes.49 It is notable that in Edwards, the defendant argued
47
See Barker v. Insight Glob., LLC, 2019 WL 176260, at *3 (N.D. Cal. Jan. 11, 2019) (“Having
considered the AMN [Healthcare] decision and reviewed Loral and Edwards, the Court is
convinced by the reasoning in AMN [Healthcare] that California law is properly interpreted post-
Edwards to invalidate employee nonsolicitation provisions. . . . [T]he Court is not persuaded that
the secondary ruling in AMN [Healthcare] finding the nonsolicitation provision invalid under
Loral based upon those employees’ particular job duties abrogates or limits the primary holding.”);
see also WeRide Corp. v. Kun Huang, 379 F. Supp. 3d 834, 852 (N.D. Cal. 2019).
48
AMN Healthcare, 239 Cal. Rptr. 3d at 589; Loral Corp. v. Moyes, 219 Cal. Rptr. 836, 844 (Cal.
Ct. App. 1985).
49
Edwards v. Arthur Anderson LLP, 189 P. 3d 285, 290 (Cal. 2008) (“[I]n 1872 California settled
public policy in favor of open competition, and rejected the common law ‘rule of reasonableness,’
when the Legislature enacted the Civil Code.” (citations omitted)).
13
that Section 16600 embodied prior common law and therefore “embraces the rule of
reasonableness in evaluating competitive restraints.”50 The California Supreme
Court in Edwards (quoting the California Court of Appeal below), however, held
that “[f]airly read, the foregoing authorities suggest [S]ection 16600 embodies the
original, strict common law antipathy toward restraints of trade, while the [S]ection
16601 and 16602 exceptions incorporated the later common law ‘rule of
reasonableness’ in instances where those exceptions apply.” 51
California statutory law embodies a “strict antipathy” towards any restraint on
trade, and contractual provisions to the contrary—be they ever so reasonable—are
void unless they fit within a statutory exception to that general rule. The contractual
restraint on soliciting a business’s employees for pursuit of trade is a restraint of
trade. AMN Healthcare stands for the proposition that employee non-solicitation
covenants present a restraint void under Section 16600. The alternative reading of
AMN Healthcare (striking the employee non-solicitation clause as unreasonable)
does not persuade me that employee non-solicitation clauses, even if reasonable, are
consonant with California fundamental policy. The language in Edwards and, more
recently, in AMN Healthcare as I read it, therefore supports a finding that employee
50
Id. at 291.
51
Id. at 292 (emphasis added). NuVasive has not argued that the non-solicitation covenant at issue
falls into one of the statutory exceptions to Section 16600 (where a rule of reasonableness test may
apply), only that the covenant is permitted by Section 16600.
14
non-solicitation covenants are a restraint of trade in violation of California
fundamental policy as expressed in Section 16600.
B. California has a Materially Greater Interest in the Enforcement of Non-
Solicitation Covenants than Delaware
I have found that both employee and customer non-solicitation covenants are
against California’s fundamental and “strong public policy of protecting the right of
its citizens to pursue any lawful employment and enterprise of their choice.” 52 I
must thus address the last step of the Ascension analysis: whether California has a
materially greater interest than Delaware in enforcing (or precluding) non-
solicitation covenants. As in Ascension, I note that the contract provision at issue
would be void under California law, as in violation of a specific public policy. The
Supreme Court of California has described that public policy as sufficiently strong
that it must not be “diluted by judicial fiat.”53 Delaware’s interest in freedom of
contract is a fundamental but general interest, and is manifestly outweighed by
California’s interest in overseeing conditions of employment relationships in that
State. Therefore, I find California’s policy interest to substantially outweigh
Delaware’s interest here.
52
AMN Healthcare, 239 Cal. Rptr. 3d at 587 (internal citations omitted).
53
Edwards, 189 P. 3d at 293 (internal citation omitted).
15
III. CONCLUSION
For the foregoing reasons, the Agreement’s choice of law provision selecting
Delaware law to govern the non-solicitation covenant, as with the non-compete
covenant, is unenforceable. As a result, Miles’ Renewed Motion for Partial
Summary Judgment is granted and Miles is entitled to summary judgment to the
extent that the Plaintiff’s claims rest on breach of the non-compete and non-
solicitation covenants in the employment agreement.54 The parties should submit an
appropriate form of order.
54
Miles has also separately moved for summary judgment on the Plaintiff’s breach of contract
claim on the grounds that the Agreement contained a liquidated damages provision, which, per
Miles, had been satisfied. D.I. 145. In my June 7, 2019 Bench Ruling, I reserved decision on that
Motion because it would be mooted if Miles prevailed on summary judgment on the breach of
contract claim on the grounds that the non-compete and non-solicitation covenants were
unenforceable. June 7, 2019 Bench Ruling, at 10:7–17. As I am granting Miles’ Renewed Motion
for Partial Summary Judgment as to both the non-compete and non-solicitation covenants and
therefore granting summary judgment to Miles on Count I, breach of contract, of the Amended
Complaint, Miles’ separate Motion for Summary Judgment on Count I is now moot.
16