Cantor Fitzgerald Beats $9 Million Judgment in Noncompete Appeal

Cantor Fitzgerald LP succeeded Monday in overturning a $9 million court judgment won by six ex-partners who challenged income-forfeiture provisions tied to their noncompete agreements.

The decision by Delaware’s top court reverses a ruling by a judge who rejected the “forfeiture for competition” clauses last year. Siding with the ex-partners, Vice Chancellor Morgan T. Zurn said in January 2023 that the state’s policy in favor of robust employment competition outweighed its otherwise strong interest in enforcing voluntary contracts like the forfeiture agreements.

“We balance the relevant policy interests differently,” Delaware Supreme Court Justice Gary F. Traynor wrote in a 36-page opinion. “When sophisticated actors avail themselves of the contractual flexibility” found in the state’s limited partnership statutes, “our courts should, absent unconscionability, bad faith, or other extraordinary circumstances, hold them to our agreements,” Traynor said.

The ruling sends the case back to Delaware’s Chancery Court for further proceedings concerning whether the former Cantor partners did in fact compete against the financial services firm.

The case is Cantor Fitzgerald LP v. Ainslie, Del., No. 162, 2023, 1/29/24.