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C.A. No. 2023-0988-JTL
Court of Chancery for the State of Delaware
November 22, 2023
Key Takeaway. The Delaware Court of Chancery may not apply Delaware law if another state has a significant interest in the matter. The court will not enforce unreasonable restrictive covenants, and will not blue-pencil the covenants to make them reasonable.
Bonus Takeaway: When drafting governing documents, managers must ensure that adequate disclosures are given regarding material changes and provisions that affect other members.
Sunder Energy, LLC ("Sunder") is solar power system dealer headquartered in Utah. Up until September 2023, Freedom Forever LLC, ("Freedom"), with headquarters in California, had an agreement with Sunder to install the systems. The relationship between Sunder and Freedom began to deteriorate. Tyler Jackson ("Jackson"), Sunder's regional sales manager, co-founder, and resident of Texas, signed an employment agreement in September 2023 with Solar Pros LLC ("Solar"), a competing solar dealer with a relationship with Freedom. During this time, nine managers who reported to Jackson and over 300 sales personnel also made the switch from Sunder to Solar. Two of Sunder's co-founders revamped Sunder's LLC agreement without Jackson's knowledge, giving Jackson Incentive Units in Sunder. The LLC agreement placed restrictive employment covenants upon the holders of the Incentive Units. Sunder alleges that Jackson...