Background
Dimitri Alexeev was a partner in accounting firm Aprio LLP and held a small equity interest in its parent, Aprio Advisory Group, LLC. When a private-equity-backed buyer acquired the parent in August 2024, it required equityholders to sign agreements imposing noncompetition, nonsolicitation, and confidentiality restrictions. Alexeev, a California resident who worked in California, signed the agreement there and received approximately $1 million in equity and deferred cash consideration through the transaction.
After Alexeev resigned in October 2025 and formed a competing firm, the buyer and its affiliates sued him in Delaware for breach of the restrictive covenants, tortious interference, and violations of California and federal trade-secret laws. Alexeev moved to dismiss for lack of personal jurisdiction, improper venue, and failure to state a claim. The court addressed only personal jurisdiction. The plaintiffs relied exclusively on Delaware choice-of-law and forum-selection provisions incorporated from the merger agreement.
The Court’s Holding
The Court of Chancery granted Alexeev’s Rule 12(b)(2) motion and dismissed the action for lack of personal jurisdiction. Applying Delaware conflict-of-laws principles, the court concluded that California would supply the governing law absent the contractual choice because Alexeev signed and performed the agreement in California, lived and worked there, and allegedly breached the covenants there.
California Labor Code Section 925 made the Delaware forum and choice-of-law provisions voidable at Alexeev’s election because he primarily resided and worked in California and was required to accept those provisions as a condition of continued employment. Although called a partner and given equity, Alexeev lacked meaningful management authority and functioned as an employee. He also was not individually represented by counsel in negotiating the provisions. By contesting personal jurisdiction, he elected to invalidate them. Because the plaintiffs identified no other jurisdictional basis, the court dismissed the case without deciding venue, the sufficiency of the claims, or the validity of the restrictive covenants.
Key Takeaways
- California Labor Code Section 925 can defeat Delaware forum-selection and choice-of-law provisions when a California employee was required to accept them as a condition of employment.
- A partner title and equity ownership do not preclude employee status when the individual lacks meaningful control over management and remains subject to the organization’s authority.
- The court did not decide whether California’s statutory exception for restrictive covenants connected to a business sale validated the covenants themselves; that issue concerned the merits, not personal jurisdiction.
Why It Matters
The decision underscores that selecting Delaware law and courts does not necessarily secure a Delaware forum for disputes with California-based employees. Delaware courts may apply California’s employee-protection policy when California has the materially greater interest in the dispute, even if the agreement arose from a merger and the employee held equity.
Transaction planners and employers should separately assess whether restrictive-covenant, choice-of-law, and forum provisions imposed during an acquisition are conditions of continued employment. Individual legal representation must involve actual representation and negotiation to trigger Section 925’s counsel exception.