Employing a novel strategy, Adam Wolek and Clarissa Toth of Fox Rothschild freed a former promotional sales rep at a Kansas City-based marketing firm from unlawful noncompete and non-solicitation agreements.
Vice Chancellor J. Travis Laster in the Delaware Chancery Court granted a preliminary injunction on Thursday, ruling that the restrictive covenants asserted by our client’s former employer, SLWM, LLC, were not enforceable.
Our client sought the preliminary injunction in December 2024 to stop SLWM from threatening to enforce a restrictive covenant that was preventing him from starting a new job.
Traditionally, employees must wait months — if not years — to learn if an employer is going to enforce noncompete, non-solicitation or other restrictive covenants. The Fox team took a different approach, choosing instead to ask the court up front if the restrictive covenant could ever be enforced. It was one of the first times attorneys moved to proactively free a client from a restrictive covenant.
Our client was a vice president for SLWM, selling branded goods. According to court documents, he signed several employment agreements during his tenure at SLWM and its predecessors, including one in 2022 that included restrictive covenants and one in 2024 that did not. The 2024 agreement demoted our client from vice president to senior sales executive and decreased his compensation.
Before resigning, our client told SLWM’s CEO he intended to leave and work for a competitor. The CEO responded by threatening him with restrictive covenants in the 2022 agreement and noting how much it would cost to fight back in court.
After our client formally resigned, he contacted Fox Rothschild. In turn, Wolek and Toth filed suit and sought a preliminary injunction to prevent SLWM from enforcing or attempting to enforce the 2022 agreement’s restrictive covenants. They argued the 2024 agreement superseded the 2022 agreement and didn’t include any restrictive covenants. Alternatively, they argued the restrictive covenants in the 2022 agreement were overbroad and unenforceable.
The Court granted Fox’s motion for preliminary injunction after expedited discovery and a hearing, finding that there was a reasonable probability of success on the merits because the 2024 agreement appeared to be controlling. The Court further held that there was a reasonable probability the 2022 agreement’s restrictive covenants also were unenforceable as they were overbroad in length, geographic scope and subject matter restriction.
Fox attorneys Seth A. Niederman and Lauren B. Sabol assisted.
Original source can be found here.