Sloppy Drafting of Non-Compete Agreement Leads to Dismissal for Want of Jurisdiction in Delaware
Posted:
Monday, July 20, 2009
By:
Joshua C. Dickinson
Topic:
Agreements
In Mobile Diagnostic Group Holdings, LLC v. Suer, 972 A.2d 799 (Del. 2009), a Delaware Court emphasized the importance of careful drafting of a non-competition agreement. Plaintiff sued a former employee/California resident in a Delaware court to enforce a non-compete agreement. The Defendant moved to dismiss for lack of personal jurisdiction. The former employer argued that the Defendant waived personal jurisdiction by agreeing in the parties' non-competition agreement to consent to service of process and choice of law provisions designating Delaware. The Court disagreed holding that no express consent of personal jurisdiction existed in the agreement, and the evidence did not show sufficient contacts with Delaware to warrant exercise of jurisdiction. The Court distinguished cases in which the non-compete agreements had express venue provisions.
This is another lesson that non-competition and other restrictive covenants not properly and thoughtfully drafted on the front end can lead to significant problems in enforcement through litigation. The end result of this case is that the employer must now file suit in California (if any restrictive period remains on the agreement). As has been reported on this website previously, enforcing restrictive covenants in California is very difficult.