Delaware Business Litigation Report

Court of Chancery Partially Grants Plaintiffs' Motion For A Preliminary Injunction Enforcing A Non-Competition Agreement

Deloitte & Touche USA LLP v. Lamela, C.A. No. 1542-N, 2005 WL 2810719 (Del. Ch. Oct. 21, 2005). Plaintiffs sought a preliminary injunction against Defendant to prevent him from soliciting any current, former or prospective clients that he had contact with while employed by Plaintiffs. Plaintiffs hired a number of former employees of Arthur Andersen, including Defendant. Arthur Andersen employees, including Defendant were subject to post-resignation non-competition agreements, but Plaintiffs paid Arthur Andersen millions of dollars to enable Arthur Andersen employees to join Plaintiffs free of the restrictive covenants. When Defendant became a partner of Plaintiffs, he signed a partnership agreement containing non-competition provisions that required him to keep certain information confidential and precluded him from soliciting clients that he or his particular office provided services to. After leaving Plaintiffs, Defendants solicited clients of Plaintiffs. Defendant argued that he could solicit certain clients without violating the non-competition agreement because Plaintiffs did not have a legitimate business interest in: (1) clients it did not provide certain services to; (2) clients Defendant did not serve while at Plaintiff; (3) clients subject to Sarbanes-Oxley restrictions; (4) clients that Defendant served at Arthur Andersen; and (5) clients who put tax engagements out for competitive bidding. Applying Florida law, the Court held that Plaintiffs had a legitimate business interest in the third and fourth categories and was entitled to a preliminary injunction barring Defendant from soliciting those clients. Subsequently, the Court denied Plaintiffs' motion for reargument. Deloitte & Touche USA LLP v. Lamela, C.A. No. 1542-N, 2006 WL 345007 (Del. Ch. Feb. 7, 2006) http://courts.delaware.gov/opinions/(shflcr452r1gon3zewev0555)/download.aspx?ID=72310. Share