Following Delaware, US Appeals Court Reverses Noncompete Ruling

A federal appeals court panel on Wednesday reversed a district court’s summary judgment decision against an auto parts company seeking to claw back restricted stock unit awards from a former plant manager who went to work for a competitor.

The ruling follows the Delaware Supreme Court’s endorsement of broad enforcement for forfeiture-for-competition agreements, issued in response to certified questions from the US Court of Appeals for the Seventh Circuit about the state court’s January 2024 decision finding that Cantor Fitzgerald LP properly withheld $9 million in equity payments from six former partners.

The Delaware decision “makes clear” that LKQ Corp. ...