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Home / Courts / N.C. Business Court / Tort/Negligence – Interference with Contract – Choice of Law – Covenant Not to Compete – Consideration

Tort/Negligence – Interference with Contract – Choice of Law – Covenant Not to Compete – Consideration

Plaintiff alleges that defendant – plaintiff’s competitor – induced plaintiff’s former employee to breach the non-compete and nondisclosure covenants of her employment contract, which has a Delaware choice of law provision, and the covenants of which were supported with the consideration of continued employment, continued access to confidential information and a new equity award of restricted stock units. Defendant argues that the contract should be governed by North Carolina law and that the stock award was illusory, making the covenants unenforceable for lack of consideration. Defendant’s arguments are not supported by the allegations of the complaint – the only document the court considers when deciding defendant’s motion to dismiss under N.C. R. Civ. P. 12(b)(6).

The court denies defendant’s motion to dismiss.

Plaintiff is a Delaware company, and the forms of consideration alleged in the complaint are valid under Delaware law.

Defendant contends that applying Delaware law would be contrary to the fundamental public policy of North Carolina. Even if that were true, defendant has neither argued nor shown that North Carolina has a materially greater interest in this issue than Delaware and that North Carolina law would apply absent the choice-of-law provision. These are key omissions. Public policy alone is no basis to disregard the parties’ choice of law.

Deciding whether one state or another has a materially greater interest in a dispute is a fact-intensive inquiry, one that courts often deem ill-suited to a Rule 12(b)(6) motion.

And it would be error to assume—again, as defendant apparently does—that North Carolina law would govern this contract dispute absent the choice-of-law provision. Generally, when the parties have not chosen otherwise, the law of the jurisdiction where the contract is executed governs. But the complaint does not say where plaintiff and its former employee executed their agreement. This is a question for discovery.

Motion denied.

IQVIA, Inc. v. Circuit Clinical Solutions, Inc. (Lawyers Weekly No. 020-001-23, 9 pp.) (Adam Conrad, J.) Michael Lord and Lauren Fussell for plaintiff; Todd Sullivan and Douglas Hanna for defendant. 2023 NCBC 1

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