In Western Industries-North, LLP v. Lessard, et al., 2012 U.S. Dist. LEXIS 33683, United States District Judge James Cacheris, a U.S. District Court Judge in Alexandria, Virginia, recently granted a plaintiff’s motion for a temporary restraining order based on a non-compete and non-solicitation agreement containing a New Jersey choice of law provision. In this case, plaintiff, which provided bed-bug control and detection services through the use of specially trained bedbug detection dogs, filed suit and sought a temporary restraining order against a former employee who left with one of the bedbug detection dogs and started his own bedbug detection business.
The non-compete at issue likely would not have withstood the scrutiny of a Virginia court under the Virginia Supreme Court’s recent Home Paramount case. This non-compete barred the former employee from being a “ ‘stockholder of any corporation’ in any county or counties in the state in which [the employee] worked” during his previous employment with his former employer. Such a broad bar to passive investment in a competing business would likely not survive scrutiny under Home Paramount. Judge Cacheris, however, held that under New Jersey law, a court possesses the authority to limit the application of an overly-broad non-compete.This case again shows the usefulness of choice of law clauses in non-compete agreements. It is likely that the non-compete at issue would not have survived if Virginia non-compete law was applied to this case. By including a valid forum selection clause choosing a different state’s law, the plaintiff was able to enforce the non-compete clause