As covered in prior posts (e.g., on our blog and Lexology), there has been an uptick in authority from the Delaware courts concerning restrictive covenants, including whether the scope of a particular covenant is enforceable under Delaware law, whether Delaware law even applies notwithstanding a Delaware “choice of law” provision, or whether the restrictive covenant is supported by adequate consideration. These cases arise in a variety of contexts; for example, some cases were in connection with an asset or business sale and others in the employer-employee setting, and the cases have different procedural postures, some being decided on a motion to dismiss, others at the preliminary injunction stage, and at least one on summary judgment.   

This recent case involves Payscale Inc. filing a lawsuit in the Delaware Court of Chancery in January 2025, seeking to enforce restrictive covenants that were part of its contract with a former director of sales who went on to work for a competitor, BetterComp Inc. The Court of Chancery dismissed Payscale's complaint, which brought claims against both the former employee and BetterComp, holding that a 18-month, nationwide scope noncompete was overbroad and unenforceable. On appeal, Payscale argued that it adequately pled a cause of action as a matter of law and that the Court of Chancery was premature in dismissing its complaint and that discovery should have ensued.  A video of the oral argument can be found here:  Oral Arguments Video Recordings - Supreme Court - Delaware Courts - State of Delaware. This case could shed additional light on Delaware's treatment of restrictive covenants.