Sunder Energy, LLC v. Jackson, 305 A.3d 723

Background

Sunder Energy is a Delaware LLC (headquartered in Utah) that sold residential solar agreements and had an exclusive installer relationship with Freedom Forever; it used a two-class LLC agreement (Common Units for two founders; Incentive Units for other co‑founders).
The 2019 LLC Agreement (and a 2021 amendment) converted minority co‑founders’ interests into non‑voting Incentive Units and embedded broad restrictive covenants (Competition, Personnel, Customer, Stakeholder) and a sweeping confidentiality clause that apply to holders and their “Affiliates.”
In September 2023, Tyler Jackson (Sunder’s head of sales and an Incentive Unit holder) and many of his direct reports moved to Solar Pros / Freedom Solar Pros; Jackson signed a consulting agreement with Solar Pros and then resigned from Sunder.
Sunder sued in Delaware seeking a preliminary injunction to enforce the Covenants against Jackson and a tortious‑interference injunction against Freedom and related defendants.
The Court denied the preliminary injunction: it found the Covenants unenforceable because (a) Nielsen and Britton breached fiduciary duties in procuring the LLC amendments (making enforcement inequitable) and (b) the Competition and Personnel Covenants are facially unreasonable and overbroad.
The Court also rejected Sunder’s tortious interference claim: Utah law governs that claim and requires independently wrongful or "improper means;" the court found no reasonable likelihood that Freedom used such improper means (and also noted the lack of an enforceable underlying contractual right).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Choice of law for Covenants	Sunder: Delaware law governs (Delaware LLC; choice clause)	Defs: Utah or Texas law may control because employment/compensation contacts are centered elsewhere	Court analyzed under Delaware law (Sunder chose DE); concluded analysis could proceed under Delaware law because Covenants fail under DE as a matter of law
Validity of Covenants given procurement	Sunder: Covenants are part of amended LLC agreement and enforceable	Defs (Jackson): Nielsen/Britton, as fiduciaries, breached duty of disclosure when procuring the 2019/2021 agreements, so provisions cannot be enforced	Court: Nielsen and Britton breached fiduciary duty of disclosure; equitable defense allowed; Covenants cannot be enforced against Jackson on that basis
Reasonableness of Competition & Personnel restrictions	Sunder: Restrictions protect legitimate business interests (investment in sales force, goodwill)	Jackson: Restrictions are facially overbroad (who/what/where/when), bind "Affiliates," can be indefinite, and operate oppressively	Court: Competition and Personnel Covenants are unreasonable in scope and effect and therefore unenforceable
Tortious interference by Freedom defendants	Sunder: Freedom induced breaches and solicited Sunder personnel; tortious interference warrants injunction	Freedom: Utah law governs; Utah requires "improper means" (independently tortious conduct); communications were truthful and not improper; also no underlying enforceable contract breach	Court: Utah law applies; Sunder cannot show improper means or an underlying breach; tortious‑interference claim fails on preliminary‑injunction showing

Key Cases Cited

Malpiede v. Townson, 780 A.2d 1075 (Del. 2001) (describing fiduciary duties and disclosure obligations)
AB Stable VIII LLC v. Maps Hotels & Resorts One LLC, 268 A.3d 198 (Del. 2021) (elements of breach of contract and injunctive relief principles)
In re COVID‑Related Restrictions on Religious Servs., 285 A.3d 1205 (Del. Ch. 2022) (preliminary injunction standard explained)
Kurz v. Holbrook, 989 A.2d 140 (Del. Ch. 2010) (application of fiduciary disclosure duties in closely held entities)
Feeley v. NHAOCG, LLC, 62 A.3d 649 (Del. Ch. 2012) (fiduciary duties in LLC context)
C.R. England v. Swift Transp. Co., 437 P.3d 343 (Utah 2019) (Utah standard for "improper means" in tortious interference)