Non-competition Agreement Enforced by Buyer of Assets (Missouri). An asset purchaser prevailed in enforcing the seller’s non-competition agreements with its key employees because, under Missouri law, the agreements were properly assignable. The 8th Circuit’s decision provides another reminder that asset purchasers should carefully consider state-specific non-competition laws in order to assure that seller’s key employees are subject to desired post-closing restrictive covenants and trade secret protections. Further, purchasers should consider executing new agreements at or soon after closing, in order to prevent post-closing challenges to their business protections. See Symphony Diagnostic Services v. Greenbaum for the 8th Circuit’s decision re Missouri law.
2016.08.06 Arkansas Law - Assignment Arguably Enforceable. In Stuart C. Irby v. Tipton, the 8th Circuit reviews Arkansas law concerning both (1) the assignability of non-competitition agreements by a selling company to a purchaser of its assets, and (2) the standards for evaluating whether or not non-competition provisions are enforced. For both issues, the court found potential for the successor employer to prevail at trial, depending on the facts.
Successor Liability Generally
7th Circuit. "RM did not assume the top hat plan's liabilities; nor, so far as appears, did it connive with Rand McNally to deprive participants of their top hat benefits; nor was it (again so far as appears) a mere continuation of Rand McNally under another name. So Feinberg has not made a case for successor liability-at least under the conventional common law principles of successorship liability summarized above. The first [condition for successor liability] is that the successor had notice of the claim before the acquisition . . . . The second condition is that there be substantial continuity in the operation of the business before and after the sale, and is satisfied if no major changes are made in that operation” Feinberg v RM Acquisition, 7th Cir. 1/6/2011.