Sempris, LLC v. Watson

Noncompete agreements signed by employees of a company that are later acquired remain valid.

Opinion (Montgomery): In 2009, Richard Watson (“Watson”) was hired as a vice president with Provell, Inc. (“Provell”), managing rewards clubs. At the time of his hiring, Watson signed a noncompete and confidentiality agreement, agreeing not to work for a competitor for a year after leaving Provell. In 2011, Sempris, LLC (“Sempris”) acquired Provell’s interests. As a result of the acquisition, Watson became a Sempris employee, without signing any further noncompete or confidentiality agreements. Watson left Sempris for a competitor, Reunion, a few months after the acquisition. Sempris filed a motion for a temporary restraining order to prevent Watson from working with Reunion, alleging that Watson would “inevitably” disclose trade secrets. The court determined that Sempris did not prove the threshold factor of threat of irreparable harm, and further noted that the other factors weighed in Watson’s favor, since Sempris did not prove that Reunion was a competitior in the same market. However, the court determined Watson to still be bound by the noncompete and confidentiality agreement. Accordingly, the district court DENIED plaintiff’s motion for a temporary restraining order.