DUE PROCESS DENIED: THE FORGOTTEN CONSTITUTIONAL LIMITS ON CHOICE OF LAW IN THE ENFORCEMENT OF EMPLOYEE COVENANTS NOT TO COMPETE

Abstract

Employers often face significant difficulties in enforcing their former employees’ covenants not to compete (“noncompetes”), especially when the employee relocates to a state that has strong public policies against noncompetes. This Article examines the choice of law issues that arise in that context. Unlike previous treatments of the subject, this Article is the first to recognize that courts in states with highly restrictive policies against noncompetes have often failed to appreciate the limits that the Due Process Clause places on their authority to apply local law to invalidate noncompetes. Disregard for due process limits on choice of law means that modern noncompete litigation is usually decided by which party wins the race to the courthouse. Contrary to conventional wisdom, the employee holds a decide advantage in such contests. This Article offers a new, two-step approach that aims to revive often-forgotten constitutional limits on choice of law, levels the playing field in multi-state litigation, and removes the parties’ incentives to sue first and ask questions later.