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Despite the Contractual Agreement to Apply Delaware Law, Because There Was No Conflict Between Delaware and New York Law, and Because the Parties Disagreed About Which Law to Apply, the Court Applied New York Law

The First Department determined there was no conflict between Delaware and New York law concerning non-solicitation agreements. Therefore, because the parties disagreed about which law should be applied (despite the contractual agreement to apply Delaware law), the court applied New York law, the law of the forum state:

By their own terms, all of the nonsolicitation agreements were to be governed by and construed in accordance with Delaware law. Nonetheless, the parties differ as to whether New York law or Delaware law should be applied.In light of the parties’ disagreement as to which state’s law should apply, our first step is to determine whether there is an actual conflict between the laws of the jurisdictions involved … . For an actual conflict to exist, “the laws in question must provide different substantive rules in each jurisdiction that are relevant’ to the issue at hand and have a significant possible effect on the outcome of the trial'” … . Under New York law, an employee’s noncompetition agreement is reasonable and, therefore, enforceable “only if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public” … . The parties’ briefs disclose no conflict of laws that would have a ” significant possible effect on the outcome of the trial'” … . To be sure, the moving defendants argued before the motion court that “Delaware law does not differ significantly from New York law as to the test for enforceability” and that applying New York law “should not make a material difference to the outcome” of the case. Thus, we apply the law of New York, the forum state… . TBA Global LLC v Proscenium Events LLC 2014 NY Slip Op 01266, 1st Dept 2-25-14

 

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