National Instrument, LLC v. James Braithwaite

ACK, representing National Instrument, LLC, successfully enforced a non-compete agreement against James Braithwaite, a former employee who sought employment with one of National Instrument's direct competitors. Considering an issue of first impression in Maryland, Judge Kaye A. Allison of the Circuit Court for Baltimore City ruled that a covenant not to compete is among the assets that a successor corporation assumes when two companies merge.

Mr. Braithwaite was a long time employee of National Instrument and, during his employment held significant managerial positions, including Director of Manufacturing and Director of Operations, where he played an important role in designing manufacturer systems and with client relations. National Instrument was originally formed as a corporation, but, subsequent to Braithwaite's signing of his non-compete agreement, merged into a newly formed limited liability company, National Instrument, LLC. Mr. Braithwaite resigned from his employment and announced his intention to take a position with National Instrument's competition. Braithwaite asserted that the LLC was not the entity with which he had signed the non-compete agreement and that the Corporation had improperly transferred a personal services contract without his consent. The Court found that under Maryland's statute governing corporate mergers the covenant not to compete passed to the LLC by operation of law. The Court also ruled that the covenant not to compete, which only prevented Braithwaite from working for National Instrument's direct competitors in North America, was sufficiently narrow in its scope and therefore fully enforceable.