R. Francis Underwood Defeats Delaware Corporation's Non-Compete Agreement in Delaware Court of Chancery

So notes this alert from Wilson Sosini Goodrich & Rosati. From the beginning of the alert:

In non-competition agreement disputes involving California employees, it is common to encounter an agreement stating that the law of another state governs the non-compete. Since non-competes in California are generally unenforceable under California law, non-compete disputes involving California employees typically involve employees moving to California from another state, those working in California for a company with its principal operations in another state, or California-based employees that have signed a non-compete as part of an M&A transaction. Common to each of these situations (although not always the case) is the use of a non-compete agreement providing that its interpretation is governed by the law of a state other than California. 

In Ascension Insurance Holdings, LLC v. Underwood et al. (January 28, 2015), the Delaware Court of Chancery addressed whether a non-compete agreement entered into in connection with an acquisition, and governed by Delaware law, could be enforced against a California-based employee competing against his employer in California. The court, concluding that California law (and not Delaware law) must be applied despite a Delaware choice-of-law provision, refused to enforce the non-compete agreement, and denied the former employer's request for an injunction prohibiting the employee from competing.

The full text of the opinion can be found here. California's policy against non-compete agreements is notably strong, as I have written here. Since the employee, Underwood, negotiated and signed the contract in California and was expected to abide by the non-compete restriction within California, I think that the Delaware Court of Chancery made the right decision to refuse to recognize the choice of law provision in the contract.

While my interest in non-compete agreements and conflict of law issues drove me to post about this case, I also took note of the case due to the defendant's last name - Underwood. Readers of this blog should know that I am a fan of House of Cards and that I often look out for any intersections between the show and the world of law. The strategy of challenging a Delaware corporation's choice of law provision in a Delaware court seems bold. It struck me as something that Francis Underwood (the central character in House of Cards) would pursue were he to find himself in the defendant's circumstances.

While the defendant's full name as stated in the court's opinion -- "Roberts F. Underwood" -- initially dispelled my suspicion that the defendant was channeling the legendary politician, I decided to investigate further. Some Google searching led me to a Utah insurance agent registration profile for "Roberts Francis Underwood," who is employed at Alliant Insurance. Most notably, that page revealed that Underwood had previously been associated with Ascension Insurance before becoming associated with Alliant.

This suggests that the defendant's full name is, in fact, Roberts Francis Underwood. This may explain why the Delaware Court of Chancery may have felt pressured into bending to Underwood's will (although the strong legal arguments on Underwood's side probably deserve some of the credit).

Same-Sex Marriage, Child Custody, and the Miller Perspective

This week in my Conflict of Laws course we arrived at the subject of interstate disputes over judgments in child custody cases.  This led us to the case(s) of Miller v. Jenkins (or, as our book listed it, Janet Miller-Jenkins v. Lisa Miller-Jenkins).  A good summary of the case from the New York Times is available here, but here is my attempt to lay out the facts in as brief a manner as I can.

The Miller v. Jenkins series of cases arose from a string of complicated facts.  Lisa Miller and Janet Jenkins entered into a civil union in Vermont in 2000.  Lisa gave birth through artificial insemination during this union, but eventually filed a petition for dissolution of the union in 2003.  The Vermont court released a temporary order granting Lisa custody of the child, Isabella, and giving Janet visitation rights.

This is where things got chaotic.

Lisa went to Virginia and sought a court order that she be declared the sole parent of Isabella.  Before the Virginia court released its order, the Vermont court issued a ruling reaffirming its jurisdiction.  Nevertheless, the Virginia court declared that Lisa was Isabella's sole parent and that Janet had no rights of visitation.  The Vermont court then held Lisa in contempt for failing to allow Janet to visit Isabella in violation of the court's custody order.

Litigation ensued, and the courts ultimately decided that the Virginia trial court's decision had violated the Parental Kidnapping Prevention Act (28 U.S.C. 1738A).  Despite this outcome, Lisa continued to refuse Janet's visitation requests and was again held in contempt for violating the Vermont trial court's order.  Each time she was held in contempt, Lisa would appeal the ruling.  Eventually, the Vermont court ordered that Janet be given sole custody of Isabella.

Lisa took Isabella and, with the aid of various religious organizations, fled to Ontario.  From there they flew to El Salvador and ultimately to Nicaragua.  Timothy Miller (no relation to Lisa) was a missionary who flew with Lisa and Isabella to Nicaragua and was later arrested for aiding and abetting kidnapping.  Kenneth Miller, a pastor (also no relation to Lisa), was also involved in the scheme.  He helped purchase clothing to disguise Lisa and Isabella as Mennonites, secured their travel plans, and was ultimately arrested and convicted for aiding and abetting the kidnapping, and sentenced to 27 months in prison.

Lisa and Isabella have not yet been located.

The casebook that presented this case told the story of the case's aftermath in the notes, and noted that it seemed strange that conservative religious organizations helped Lisa as much as they did.  Lisa, after all, had been in a same sex union, which Kenneth and Timothy Miller would have considered an afront to their beliefs.

News coverage of the story provides some insight into the full state of affairs.  Additionally, the pastors and organizations involved in Lisa's flight have blogged extensively on their points of view, and this provides a dimension of the story that seemed lacking in the cases, casebook, and media coverage.  Because this angle of the story investigates Lisa Miller's circumstances (and involves an oddly large number of people named "Miller"), I call it the "Miller Perspective."

The Jurisdictional Consequences of Disembodied Brains

This quarter, I am working as a teaching assistant for the UCLA Department of Philosophy.  This fall, I have been assigned to help with the class, Introduction to the Philosophy of Mind.  In preparing for this class, I decided to reintroduce myself to some books and essays on philosophy of mind that I won, including Daniel Dennett's essay, Where am I?

In this essay, Dennett presents a thought experiment in which he is charged with the task of dismantling a nuclear device.  Because the device emits radiation that would severely damage the brain of anybody nearby, scientists remove Dennett's brain and place it into a vat in Texas, where it is connected to a number of radio transmitters and receivers that connect to transmitters and receivers in Dennett's body.  Dennett, justifiably confused about whether he should identify with his body or brain, proceeds to name his brain, "Yorick" and his body, "Hamlet."

Dennett then discusses the legal liabilities that may follow from this setup:

Suppose, I argued to myself, I were now to fly to California, rob a bank, and be apprehended. In which state would I be tried: in California, where the robbery took place, or in Texas, where the brains of the outfit were located? Would I be a California felon with an out-of-state brain, or a Texas felon remotely controlling an accomplice of sorts in California? It seemed possible that I might beat such a rap just on the undecidability of that jurisdictional question, though perhaps it would be deemed an interstate, and hence Federal, offense. 

I am no expert on determining state jurisdiction over criminal actions, although I think that the different states would not have a problem concluding that Dennett was present.  I am thinking of a logic similar to the approach employed by the Court in Hyde v. United States, 225 U.S. 347 (1912) where the Court found that a defendant was constructively present in Washington DC because the events of a conspiracy involving the defendant were carried out in DC at a certain time.  Certainly the question would be much easier in a tort context, as the tort would have occurred in California, and because it is likely that the victim is a California resident.

I doubt that Dennett's thought experiment will manifest itself when I end up practicing, but with technology developing the way it is, you never know.