Delaware Business Litigation Report

Court Of Chancery Explains Damages For Breach Of Non-compete Agreement

Great American Opportunities Inc. v Cherrydale Fundraising LLC., C.A. 3718-VCP (January 19, 2010)

This decision is a landmark case on Delaware law on non-compete agreements with employees. It establishes so many new precedents that it is hard to briefly summarize. For example, it holds that it is possible to assign an employee non-compete agreement in connection with an asset sale.

Perhaps the most significant part of the decision is its discussion on how to calculate damages when an at-will employee is lured away by a competitor and then violates his non-competition agreement.  Damages are not, under this decision, what the new employer won in new business with the purloined employee.  Instead, how to calculate damages in such a case is much more complicated and requires a careful reading of this decision.

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