by David Baron, Elyse Moy, Anne Patin, Seward & Kissel LLP - JDSupra

Delaware court declines to enforce restrictive covenants in LLC agreement but grants interlocutory appeal.

In Sunder Energy v. Jackson, et al., a company, Sunder, sued a former employee, Jackson, for breaching a non-compete and employee non-solicit. The covenants were in Sunder’s LLC agreement (the “LLCA”), which had been amended in 2019 and 2021 to include them, and by which Sunder claimed Jackson was bound through his receipt of incentive units. As drafted, the covenants ran while Jackson held the units and for two years thereafter. None of the eight named parties resides in Delaware. The only tie to the state is that Sunder is a Delaware LLC.