FEDERAL COURT IN VIRGINIA FOLLOWS KENTUCKY LAW
The United States District Court in Norfolk handed down an interesting decision this week in Senture, LLC v. Dietrich and Swider. The case is only in the early stages of litigation but some pretty novel arguments were made and ruled upon by the court.
Dietrich and Swider were employees of Senture, a Kentucky company that offers services
for national security programs. At Senture, the employees marketed services developed specifically for the government’s new Transportation Workers’ Identification
Credential (“TWIC”) security program. After the employees left their employment at Senture they went to work for a Senture competitor. Senture filed suit alleging the employees breached the covenant not to compete (Count I) and confidentiality provisions (Count II) in their employment agreements, tortiously interfered with Senture’s business expectancy (Count III), and engaged in a statutory business conspiracy(Count IV).
One of the interesting twists to the case is that Senture’s noncompete agreement contained a “choice of law” provision requiring the application of Kentucky law to any decision about the validity of the noncompete agreement. The employees’ creatively argued that applying Kentucky law to a dispute filed in Virginia courts was against “public policy” and should render the noncompete agreement unenforceable. Despite the employee’s unique argument, the court found that choice of law provisions in noncompete agreements were not in violation of public policy in Virginia.
The lesson: Just because your noncompete states that some state’s law (other than Virginia) controls your agreement doesn’t mean the agreement is invalid. If you are in Virginia and your noncompete agreement applies another state’s law….you may just need legal advice from an employment attorney who practices in that other state!