On January 8, 2018, the U.S. Supreme Court declined to consider an appeal from a former Stryker Corp. sales representative. The appeal arose from a case involving a non-compete agreement between a Louisiana employee and a Michigan employer.
The non-compete agreement contained a forum-selection clause stating that any dispute arising out of the agreement must be brought in a Michigan court—state or federal. The former Stryker employee, Christopher Ridgeway, argued the Sixth Circuit was wrong to find Michigan law — and not Louisiana law — applied. Michigan law favors non-compete agreements; Louisiana, where the sales representative lived and worked, severely restricts them.
After applying Michigan law over Louisiana law, a jury found Ridgeway had violated the non-compete agreement and awarded Stryker approximately $745,000 in damages. Ridgeway appealed the decision to the Sixth Circuit Court of Appeals, which agreed with the trial court (Ridgeway v. Stryker Corporation).
Whose State has a materially greater interest in enforcing the Noncompete Agreement
In affirming this decision, the Court reasoned the sales representative had consented to jurisdiction in Michigan through the agreement’s forum-selection clause. The Court also concluded the Federal District Court properly enforced the agreement’s Michigan choice-of-law provision.
The Court rejected Ridgeway’s argument that Louisiana’s interest in protecting its employees from unfair non-compete clauses was materially greater than Michigan’s interest in protecting its businesses from unfair competition:
On balance, Louisiana’s interest in protecting its employee from unfair non-compete clauses is not materially greater than Michigan’s interest in protecting its businesses from unfair competition.
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Absent such evidence that Louisiana’s interest was not just greater but materially greater, there is no reason to disturb the parties’ choice of Michigan law.
As the above case illustrates, non-compete disputes are complicated by geography. This is because non-compete law is state dependent. And some states favor non-compete restrictions, while others do not, with significant variations between these two extremes.
To eliminate – or at least reduce – the uncertainty about what law will control, a best practice is to specifically identify it. Also, for employers operating in multiple states, know what is the most favorable law for enforcing non-compete restrictions.
For employees, it is important to understand whether your employment agreement has a forum selection clause (it probably does). This sort of provision will identify what law and where a dispute must be resolved. As the above case illustrates, even if you work exclusively in your home state and have no real connection with an outside state, you still may be required to litigate a dispute across the country.
For more information about non-compete law, and defending or pursuing non-compete litigation, contact attorney Jason Shinn. He routinely works with individuals and companies in non-compete disputes.