Delaware Chancery Tosses PE-Backed Buyer's Noncompete Suit Against California Ex-Partner

Published November 3, 2026

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Why it matters

Delaware's Court of Chancery dismissed a suit on October 16, 2026, that Evolution Parent Holdings, LLC, a private equity-backed buyer, had brought to enforce restrictive covenants against Alexeev, a former partner of Aprio LLP, the accounting firm it acquired. The court ruled only on personal jurisdiction. The buyer's sole basis for suing in Delaware was an exclusive Delaware forum clause, and the court held that the clause could not be enforced against a California-based individual. Evolution acquired all equity of Aprio's holding company in a merger that closed August 1, 2024, and every equity holder was required to sign a three-year noncompete, nonsolicitation, and confidentiality agreement as a closing condition. Alexeev lived, worked, and signed in California. Evolution sued on April 20, 2026, after some Aprio clients asked about moving their accounts to Alexeev's new firm. The complaint also included tortious interference and trade secret claims under California and federal law. The court found that Section 925 of the California Labor Code applied. That statute bars employers from requiring California-based employees to litigate outside the state as a condition of employment. The court rejected all four of Evolution's arguments that Section 925 did not apply, and it rejected Evolution's reliance on California's business-sale exception for noncompetes, holding that the exception covers restrictive covenants, not forum selection clauses. With the forum clause voided and no other basis for jurisdiction, the case was dismissed. The ruling is consistent with an earlier Chancery decision from 2019 that declined to enforce a Delaware choice-of-law provision against a California employee.

Evolution has not said whether it will appeal or refile in California. The court accepted Delaware law as a permissible choice because Evolution is a Delaware LLC, but it gave that formation little weight as a contact. The ruling leaves open how far its reasoning extends to sellers who are not employees, since the decision turns on Section 925's application to a California-based individual.

For dealmakers, the takeaway is that a Delaware choice-of-law or forum clause in acquisition documents may not protect a sponsor when sellers or equity holders live and work in California. Sponsors with California-based sellers should review their governing law and forum provisions now, and their covenant structures as well. Commentators also flagged that an individual's "partner" title does not control employee status if that person lacks real managerial control, which bears directly on how post-acquisition covenants should be drafted.