The Chancery Court once again upheld the enforceability in general of covenants not to compete, but based on the facts of the case determined that there was no breach proven, due to a prior settlement agreement. American Homepatient, Inc. v. Collier, et al. . The non-competition agreement in this matter was for one year and a radius of 50 miles, which the court found reasonable in scope and duration. (Footnotes also refer to other cases upholding similar temporal and geographic scopes.) The court listed the elements for enforceability in general of these agreements. The court balanced the equities and also found a legitimate interest being advanced. The industry involved was medical equipment services and in-home patient care, which relied heavily on referral networks. After finding no breach of the covenant, the court also rejected claims for tortious interference with a contract (hiring of an employee with a covenant); tortious interference with prospective economic advantage; and the common law tort of “unfair competition”.
As a reminder for new readers and those who may not have read the link that explains this blog, the theme of this blog is primarily to summarize recent cases fom the Delaware Chancery Court and Delaware Supreme Court on matters of corporate and commercial law. I also touch on legal ethics; e-discovery and related topics of interest to those who spend much of their time on business litigation. Most posts are very short blurbs about the issues addressed in a case with a link for the reader to download the entire case if the issues decided by the court are of interest.