Centurion Service Group, LLC v. Eric Wilensky
C.A. No. 2022-0422-MTZ
Del. Ch.Aug 31, 2023Background
- Centurion Service Group, LLC sued former employee Eric Wilensky for breach of Section 5(a) of his Employment Agreement, a broad non‑competition provision.
- Section 5(a) prohibits Wilensky for the Term plus two years after termination from engaging in any business that is Centurion’s "Business" or a "Competitive Activity" in the "Restricted Area." "Business" and "Restricted Area" include actual and actively planned activities during Wilensky’s long (≈17‑year) tenure; "Restricted Area" includes the United States (and foreign areas where Centurion is then soliciting or planning to solicit).
- Wilensky moved to dismiss the single breach count, arguing Section 5(a) is unenforceable as overbroad in geographic and temporal scope, vague, and not supported by a legitimate economic interest.
- The Court considered choice of law (Delaware vs. Illinois), concluded Delaware law governs the restrictive‑covenant inquiry, and proceeded under Delaware standards for enforceability.
- Applying Delaware law, the Court held the covenant’s combination of nationwide scope (plus foreign areas) and two‑year duration—tied to any activity Centurion then did or planned to do during Wilensky’s lengthy term—was unreasonable and not justified by a particularly strong economic interest.
- The Court ruled Section 5(a) unenforceable, declined to blue‑pencil the provision, and granted Wilensky’s motion to dismiss the breach claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law | Delaware choice‑of‑law clause should control | Illinois has the greater interest so Delaware clause should not displace Illinois law | Delaware law governs; choice‑of‑law issue does not change outcome |
| Geographic & temporal scope reasonableness | Two‑year restriction is reasonable; "Restricted Area" limits scope to areas where Centurion operates or plans to operate | Covenant is nationwide (and potentially global) and tied to any planned activity during a 17‑year term, making it overbroad | Covenant is unreasonable when assessed holistically (geography + duration) |
| Legitimate/protectable interest | Centurion needs protection for customer relationships, deals, and confidential lists accessed by Wilensky | Alleged interests are vague, ordinary employee access claims; no showing of a "particularly strong" interest that would justify a nationwide 2‑year ban | Centurion failed to show a particularly strong economic interest warranting enforcement |
| Blue‑penciling vs. invalidation | If overly broad, court can narrow the covenant to make it enforceable | Overbreadth is structural; narrowing would rewrite the parties’ bargain and is improper | Court declined to blue‑pencil and invalidated Section 5(a) in full |
Key Cases Cited
- Faw, Casson & Co. v. Cranston, 375 A.2d 463 (Del. Ch. 1977) (agreements not to compete must be closely scrutinized)
- Kuhn Constr., Inc. v. Diamond State Port Corp., 990 A.2d 393 (Del. 2010) (contract terms must be given effect so no part is mere surplusage)
- Focus Fin. Partners, LLC v. Holsopple, 241 A.3d 784 (Del. Ch. 2020) (choice‑of‑law clause may yield to another state’s law when that state has materially greater interest)
