Background
GI DI Rushmore Parent, L.P. (“Holdco”) is the private-equity holding company through which GI Partners controls Bluepeak, a fiber-optic internet provider operating in several midwestern and southern states. In 2021, Bluepeak recruited Donald Stoops, a thirty-year telecom veteran living and working in Oklahoma, by offering him a Vice President role with a significant incentive equity package that would compensate for a substantial reduction in base salary. Stoops resigned from his prior employer and started work in reliance on a term sheet promising equity. Six weeks later, Bluepeak presented him with a take-it-or-leave-it Incentive Unit Grant Agreement (the “Unit Agreement”) containing non-compete, non-solicitation, confidentiality, and non-disparagement covenants typically found in employment agreements—covenants that would continue for two years after his employment ended and that could survive even the forfeiture of the equity that supposedly justified them.
The Unit Agreement incorporated by reference Holdco’s 123-page limited partnership agreement (the “Partnership Agreement”), which contained a Delaware exclusive-forum selection clause. Bluepeak never gave Stoops a copy of the Partnership Agreement, never told him where to find it, and refused his repeated requests to see it. Holdco treated the document as highly confidential; only a handful of C-suite executives had ever reviewed it—at least one of whom had sufficient bargaining power to negotiate his own employment agreement that contracted around the Delaware forum clause and choice-of-law provision entirely. Stoops did not see the Partnership Agreement until this litigation.
In early 2026, Stoops resigned from Bluepeak and accepted a COO role at Dobson Fiber, a direct competitor in Oklahoma. Holdco filed suit in the Delaware Court of Chancery, invoking the Delaware forum clause hidden inside the Partnership Agreement, and moved for a preliminary injunction barring Stoops from working at Dobson pending trial.
The Court’s Holding
Vice Chancellor Laster denied the preliminary injunction because Holdco failed to establish a reasonable likelihood that the court could exercise personal jurisdiction over Stoops. The court held that the Delaware forum clause—the only possible basis for jurisdiction, as Stoops otherwise has no ties to Delaware—is either invalid or unenforceable on two independent grounds. First, Oklahoma law governs the employment-related provisions of the Unit Agreement under a Restatement (Second) conflict-of-laws analysis, because Oklahoma has a materially greater interest than Delaware in regulating how businesses compensate and restrict Oklahomans. Oklahoma’s Access Statute, 15 Okla. Stat. § 15-216, voids any contractual stipulation restricting a party from enforcing rights in the ordinary tribunals of the state. The Delaware forum clause is exactly such a stipulation, and it is therefore void under controlling Oklahoma law.
Second, the court held that even if Delaware law applied, it would decline to enforce the forum clause on these facts. While parties may freely incorporate documents by reference—including documents containing forum selection clauses—the party against whom the clause is enforced must have received those materials, understood their contents, or at minimum been clearly told where to find them. That requirement is especially stringent for contracts of adhesion. Here, Holdco not only failed to provide the Partnership Agreement but actively refused Stoops’ requests for it and treated the document as a confidential internal record. The court characterized Holdco’s attempt to enforce it as an effort to bind Stoops to a “secret forum selection clause,” which it deemed unreasonable and declined to enforce.
Because the Delaware forum clause fails on both grounds, the court found that Holdco could not demonstrate a reasonable likelihood of success on the merits—a prerequisite to preliminary injunctive relief—and denied the application. The court expressly noted additional hurdles to the injunction it need not reach, including the merits of the underlying covenant claims.
Key Takeaways
- A forum selection clause buried in an incorporated-by-reference document that was withheld from the counterparty—and that the drafter treated as confidential—will not be enforced, regardless of whether Delaware or Oklahoma law applies.
- Oklahoma’s Access Statute (15 Okla. Stat. § 15-216) can invalidate a Delaware forum selection clause when the agreement’s employment-related covenants primarily concern an Oklahoma resident’s right to work in Oklahoma, giving Oklahoma a materially greater interest than Delaware in the dispute.
- On a preliminary injunction motion, personal jurisdiction is analyzed as part of the “reasonable likelihood of success on the merits” inquiry; inability to establish jurisdiction defeats the motion outright.
- A private equity firm’s attempt to characterize a holding company as a “single-purpose equity compensation vehicle” will not be accepted where the record shows it is actually the controlling entity in the ownership structure—a distinction that can affect how courts analyze the parties’ relative bargaining power and the nature of the agreement.
Why It Matters
This decision puts private equity sponsors and portfolio companies on notice that reflexively routing restrictive covenant enforcement through Delaware courts—by embedding forum clauses in confidential LP agreements and incorporating them by reference into employee equity grants—carries real risk, particularly when the employee lives and works in a state with protective labor statutes. The opinion signals that Delaware courts will scrutinize the mechanics of incorporation by reference, not just its formal validity, and will decline to act as the default enforcer of adhesive covenants against employees who never had meaningful opportunity to review the documents that purport to bind them.
More broadly, the decision highlights the structural tension in incentive equity arrangements where the same document simultaneously grants compensation and imposes employment-style restrictions, while being drafted entirely by and for the employer. The court’s pointed observation that at least one C-suite executive with actual bargaining power successfully negotiated away the very clauses being enforced against Stoops underscores that the “Delaware law governs” boilerplate in standard-form equity grants is not self-executing—especially when it conflicts with the public policy of the state where the employee actually works.