IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

HIGHTOWER HOLDING, LLC,

 Plaintiff,

 v.

JOHN GIBSON,

 Defendant.

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 C.A. No. 2022-0086-LWW

MEMORANDUM OPINION

Date Submitted: November 9, 2022

Date Decided: February 9, 2023

Daniel C. Herr, LAW OFFICE OF DANIEL C. HERR LLC, Wilmington, Delaware; 

Matthew D. Henneman & Scott D. Smith, HENNEMAN RAU KIRKLIN & SMITH 

LLP, Houston, Texas; Attorneys for Plaintiff HighTower Holding, LLC

John H. Newcomer, Jr., MORRIS JAMES LLP, Wilmington, Delaware; Andrew P. 

Campbell, Todd Campbell & Erin G. Godwin, CAMPBELL PARTNERS, LLC, 

Birmingham, Alabama; Attorneys for Defendant John Gibson

WILL, Vice Chancellor 
1

This decision considers plaintiff HighTower Holding, LLC’s request for a 

preliminary injunction enjoining defendant John Gibson from breaching covenants 

not to compete. Gibson agreed to these covenants when HighTower purchased an 

investment advisory business in which Gibson was a partner. If enforced, the 

covenants would arguably bar Gibson from managing a hedge fund he launched after 

separating from HighTower.

I conclude that HighTower has not carried its burden of demonstrating that it 

is likely to succeed after trial on its claims that Gibson breached the non-compete 

provisions. Despite the parties’ choice of Delaware law to govern their contracts, 

Alabama law—which has a substantially stronger relationship to this dispute than 

Delaware—applies. Alabama maintains a legislatively expressed public policy 

against broad non-compete provisions (particularly concerning professionals) that

outweighs Delaware’s interest in enforcing contracts. HighTower’s motion for a 

preliminary injunction is therefore denied.

I. FACTUAL BACKGROUND

The background is drawn from the plaintiff’s Verified Original Complaint 

(the “Complaint”), the record developed in connection with the plaintiff’s motion 
2

for a preliminary injunction, and documents subject to judicial notice. Based on the 

current record, the following facts are those that I would likely find after trial.1

A. The Protective Agreement and the LLC Agreement

Defendant John Gibson is a licensed financial advisor residing in Alabama.2 

In 2012, Gibson was hired as a Financial Analyst at Twickenham Wealth Advisors, 

a financial advisory firm in Huntsville, Alabama.

3

 

Around September 2013, Twickenham became an affiliate firm of plaintiff 

HighTower Holding, LLC, which provides financial advisory services through 

subsidiaries across the United States.

4

 In January 2019, Gibson and his Twickenham

1

See In re Dollar Thrifty S’holder Litig., 14 A.3d 573, 578 (Del. Ch. 2010); 

Braunschweiger v. Am. Home Shield Corp., 1991 WL 3920, at *1 (Del. Ch. Jan. 7, 1991) 

(“Because of the tentative nature of factual conclusions reached in a preliminary injunction 

proceeding, it is open to the court to further consider factual matters thereafter.” (citing 

Univ. of Texas v. Camenisch, 451 U.S. 390, 399 (1981))); In re Books-A-Million, Inc. 

S’holders Litig., 2016 WL 5874974, at *1 (Del. Ch. Oct. 10, 2016) (explaining that the 

court may take judicial notice of “facts that are not subject to reasonable dispute” (citing 

In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 170 (Del. 2006))).

Citations in the form of “Pl.’s Opening Br. Ex. __” refer to exhibits to the Plaintiff’s 

Opening Brief in Support of its Motion for Preliminary Injunction. Dkt. 28. Citations in 

the form of “Def.’s Answering Br. Ex. __” refer to exhibits to the Transmittal Affidavit of 

John H. Newcomer, Jr., Esquire in Support of Defendant’s Answering Brief in Opposition 

to Plaintiff’s Motion for Preliminary Injunction. Dkt. 30.

2

See Verified Original Compl. (Dkt. 1) (“Compl.”) ¶ 7; Def.’s Answering Br. Ex. 1 

(“Gibson Dep.”) 13, 16; Pl.’s Opening Br. Ex. 16 (“Gibson Registration History”); 

BrightHaven, https://www.brighthavencapital.com/about (last visited Feb. 8, 2023). 

3 Compl. ¶ 10; see Def.’s Answering Br. Ex. 11 (“Berg Dep.”) 97.

4 Compl. ¶ 11; see Hightower Advisors, https://hightoweradvisors.com (last visited Feb. 8, 

2023).
3

partners—Henry “Moss” Crosby, Jr., Rob Warren, Jamie Day, Wes Clayton, and 

Michael Ahearn (collectively, with Gibson, the “Partners”)—sold a majority interest 

in Twickenham to HighTower.

5

The sale was made pursuant to a Unit Purchase Agreement and other ancillary 

agreements.

6

 Gibson received more than $600,000 in cash and more than 100,000 

HT Holding, LLC units valued at $1.80 per unit.7 

In connection with the transaction, each Partner signed a Standard Protective 

Agreement (the “Protective Agreement”) containing restrictive covenants.

8

 

Section 5 of the Protective Agreement provides:

During the Restricted Period [ending February 1, 2024], 

Principal [Gibson] shall not, directly or indirectly . . . (i) 

own any interest in, manage, control, participate in, 

consult with or be or become engaged or involved in any 

Person engaged in or to engage in the Business within the 

United States or any other jurisdiction in which 

HighTower or the Partner Firm [HTT Newco] does 

business (the “Territory”) . . . or (ii) make any investment 

(whether equity, debt or other) in, lend or otherwise 

provide any money or assets to, or provide any guaranty 

5 Compl. ¶ 12 & n.5; id. ¶ 11. Crosby was a Managing Partner of Twickenham and cofounded the company with Clayton. Id. ¶ 19 n.12.

6

Id. ¶ 12; Pl.’s Opening Br. Ex. 3 (“Unit Purchase Agreement”); see Pl.’s Opening Br. 

Ex. 1 (“Protective Agreement”); Pl.’s Opening Br. Ex. 2 (“LLC Agreement”); Pl.’s 

Opening Br. Ex. 4 (“Partnership Services and Affiliation Agreement”); Pl.’s Opening Br. 

Ex. 5 (“Contribution and Exchange Agreement (Personal Goodwill)”). 

7 Compl. ¶ 14; Unit Purchase Agreement § 1(a), Sched. A; see Gibson Dep. 158-59.

8 Compl. ¶¶ 13, 15-16. 
4

or other financial assistance to any Person engaged in or 

to engage in the Business in the Territory . . . .

9

The Partners, HighTower, and HT Holding also became members in a new 

HighTower entity—HTT Newco, LLC.10 HighTower became the majority member 

of HTT Newco, and the Partners were designated as principals.

11

 HTT Newco was 

formed to provide certain services—pursuant to a Partnership Services and 

Affiliation Agreement—to facilitate HighTower’s operation of the Twickenham 

business.

12

 

9 Protective Agreement § 5.

“Business” means “(i) the business of acquiring and/or recruiting investment 

advisor firms and/or investment advisors or broker personnel; (ii) the business of providing 

services or products relating to investment management or advice and product or services 

ancillary thereto; or (iii) any other business that HighTower conducts or operates or takes 

material steps toward conducting or operating at any time during the term of the Partner 

Arrangements.” Id. § 11(a).

“Restricted Period” means the “period ending on the date that is the later of (i) 24 

months immediately following the voluntary or involuntary termination of the Partnership 

Arrangements for any reason and (ii) 60 months following the date of the last payment to 

or on behalf of Principal under the [Unit Purchase] Agreement.” Id. § 4. The last Unit 

Purchase Agreement payment was made to Gibson on February 1, 2019. Compl. ¶ 15 n.7. 

Therefore, the restrictions in the Protective Agreement extend to February 1, 2024.

10 Id. ¶ 12.

11 LLC Agreement Sched. A, Art. I. A majority of the principals had the authority to 

manage the company subject to certain negative and affirmative covenants based on 

HighTower’s prior written consent. Id. § 5.1.

12 Partnership Services and Affiliation Agreement § 3(d). A subsidiary operating company

of HighTower held the employees and assets HighTower purchased from Twickenham. 

Id. at Preamble. HTT Newco provided certain services to this operating company and other 

affiliates of HighTower. Id. Each Partner also transferred to HTT Newco his goodwill in 

the Twickenham business—“all of his personal and ongoing business relationships with 

clients and key businesses, as well as [his] experience and reputation . . . that comes from 
5

The members of HTT Newco, including Gibson, executed a February 1, 2019 

Amended and Restated Limited Liability Company Agreement (the “LLC 

Agreement”) that also contained restrictive covenants.

13

 Section 6.7(c) of the LLC 

Agreement provides:

During the Restricted Period [ending July 7, 2025], no 

Restricted Member [Gibson] shall, directly or indirectly, 

on such Restricted Member’s own behalf or on behalf of 

any other Person . . . (i) own any interest in, manage, 

control, participate in, consult with or be or become 

engaged or involved in any Person engaged in or to engage 

in the Business within the United States or any other 

jurisdiction in which any Restrictive Covenant 

Beneficiary [HighTower or HTT Newco] does business 

(the “Territory”) . . . or (ii) make any investment (whether 

equity, debt or other) in, lend or otherwise provide any 

money or assets to, or provide any guaranty or other 

financial assistance to any Person engaged in or to engage 

in the Business in the Territory . . . .

14

the personal, direct and intimate involvement . . . in interacting with clients and other key 

business relations.” Contribution and Exchange Agreement (Personal Goodwill) § 1.

13 Compl. ¶¶ 12, 18.

14 LLC Agreement § 6.7(c).

“Business” means “(i) so long as the Partner Agreements are in effect, the business 

of the Company [i.e., HTT Newco] and any Permitted Partner Assignee as contemplated 

by the Partnership Services and Affiliation Agreement, and (ii) thereafter, the business of 

the Company and any Permitted Partner Assignee providing wealth management, 

investment advisory and brokerage services or products relating and ancillary thereto.” 

Id. Art. I.

“Restricted Period” means “(i) a period of forty-eight (48) months immediately 

following the date that such Restricted Member . . . no longer holds any direct or indirect 

interest in the Units as a result of a repurchase of such Units upon a Cause Event pursuant 

to the terms of Section 9.4 hereto, or (ii) a period of twenty-four (24) months immediately 

following the date that such Restricted Member . . . no longer holds any direct or indirect 

interest in the Units for any other reason.” Id. § 6.7(b). As of July 7, 2021, the terms of 
6

B. Gibson’s Resignation

On November 30, 2020, Gibson told Crosby of his desire to start a hedge 

fund.

15

 Crosby was concerned about the potential implications for HighTower and 

asked Gibson to raise the idea with all of the Partners.

16

Gibson met with the Partners on December 9.

17

 He expressed his intention

to start an “Opportunistic Hedge Fund” that would allow him to deliver favorable 

returns to HighTower clients.18 Gibson hoped to run the fund as a separate entity

within HighTower.

19

 But he indicated that if he were unable to do so, he would leave 

HighTower to launch the fund on his own.20

The Partners warned Gibson that opening a hedge fund apart from HighTower

could violate the restrictive covenants in the Protective Agreement and the LLC 

Agreement.

21

 Gibson said that he would wait to launch the fund until the agreements

subsection (i) of the “Business” definition were met. Compl. ¶ 18 & n.11; see infra note 

28 and accompanying text (describing Gibson’s resignation and the repurchase of his 

interests in HTT Newco). The restrictions in the LLC Agreement therefore extend to July 

7, 2025.

15 Compl. ¶ 19.

16 Id. ¶ 20.

17 Id. ¶ 22.

18 Id. 

19 Id.; see Def.’s Answering Br. Ex. 9 at 1 (describing the structure of the proposed 

venture).

20 Compl. ¶ 22.

21 Id. 
7

expired.

22

 On December 11, HighTower’s Executive Director of Compliance called 

Crosby to report that Gibson had asked for guidance on avoiding the restrictive 

covenants with HighTower.23

On December 14, the Partners confronted Gibson about his planned course of 

action and asked him to reconsider.24 The Partners suggested that they reconvene a 

few days later, but Gibson turned over his office keys and laptop.25 On December 

16, Gibson tendered a resignation letter and told the Partners that he intended to 

adhere to the restrictive covenants.26 Two days after Gibson’s resignation, 

HighTower sent Gibson a letter reminding him of his post-employment obligations 

under the Protective Agreement and the LLC Agreement.27 

In June 2021, the Partners and Gibson reached an agreement for the 

repurchase of Gibson’s equity interests in HTT Newco.

28

 

22 Id. 

23 Id. ¶ 23.

24 Id. ¶ 25.

25 Id. 

26 Id. ¶ 26.

27 Pl.’s Opening Br. Ex. 10. 

28 Compl. ¶ 30. In furtherance of the Twickenham sale, Gibson and the other Partners 

contributed their HTT Newco units to HTT Holdco, LLC. Id. ¶ 18 n.10. At the time of his 

resignation from HighTower, Gibson did not own any interest in HTT Newco except 

through his interest in HTT Holdco. Id.
8

C. BrightHaven’s Formation

In March 2020, Gibson formed BrightHaven Capital, LLC under Alabama 

law and the fund BrightHaven Alpha, LP under Delaware law.

29

 In November, 

Gibson formed BrightHaven Capital Management, LLC as an Alabama entity.

30

On July 26, 2021, Gibson registered BrightHaven Capital Management as an 

investment advisor firm with the Securities and Exchange Committee.

31

 Gibson 

registered as an investment advisor representative with BrightHaven Capital 

Management the next day.

32

On September 8, 2021, BrightHaven Alpha filed a Notice of Exempt Offering 

of Securities that listed BrightHaven Capital as its General Partner, BrightHaven

Capital Management as its Investment Manager, and Gibson as the Manager of 

29 Pl.’s Opening Br. Ex. 11 (“BrightHaven Capital Certificate of Formation”); Pl.’s 

Opening Br. Ex. 12 (“BrightHaven Alpha Entity Details”).

30 Pl.’s Opening Br. Ex. 13 (“BrightHaven Capital Management Certificate of Formation”). 

31 Compl. ¶ 31; Pl.’s Opening Br. Ex. 15 (“BrightHaven Capital Management SEC 

Registration”).

32 Compl. ¶ 31; see Gibson Registration History.
9

BrightHaven Capital Management.

33

 BrightHaven Alpha also listed an Alabama 

address as its “Principal Place of Business and Contact Information.”

34

D. HighTower Loses Clients.

While at HighTower, Gibson managed relationships with about 40 clients.

35

 

He was also responsible for leading Portfolio Allocation and Management for 

HighTower’s entire client base, comprised of nearly $1.5 billion in assets under 

management.36 HighTower alleges that since Gibson’s resignation, accounts 

totaling $3.3 million in assets under management have terminated their relationships 

with HighTower.37 

E. This Litigation

On January 26, 2022, HighTower filed its Complaint against Gibson. The 

Complaint advances seven claims. Only two claims—that Gibson breached the 

33 Pl.’s Opening Br. Ex. 17 (“BrightHaven Alpha SEC Registration”). 

On January 7, 2022, Gibson’s father, Phillip Gibson, formed BrightHaven Financial 

Advisors, LLC under Alabama law and serves as its Chief Executive Officer and Chief 

Compliance Officer. Pl.’s Opening Br. Ex. 19; Pl.’s Opening Br. Ex. 20. HighTower 

argues that Philip Gibson has acted in concert with John Gibson to compete with its 

business. Pl.’s Opening Br. in Supp. of Its Mot. for Prelim. Inj. (Dkt. 28) (“Pl.’s Opening 

Br.”) 48-54. These allegations do not appear in the Complaint.

34 See BrightHaven Alpha SEC Registration. This same address was listed as the 

“Registered Office Street Address” and “Registered Office Mailing Address” for 

BrightHaven Capital and BrightHaven Capital Management. See BrightHaven Capital 

Certificate of Formation; BrightHaven Alpha Entity Details.

35 Compl. ¶¶ 10, 33.

36 Id.

37 Id. ¶¶ 27-29, 33.
10

Protective Agreement (Count I) and the LLC Agreement (Count II)—are relevant to 

this decision.

38

 

Along with the Complaint, HighTower filed a motion for expedited 

proceedings and a motion for a preliminary injunction.39 On June 24, I granted the 

motion to expedite and permitted the parties to undertake limited discovery before a 

preliminary injunction hearing.40 I heard oral argument on HighTower’s motion for 

a preliminary injunction on November 9.41

II. LEGAL ANALYSIS

“A preliminary injunction may be granted where the movant[] demonstrate[s]: 

(1) a reasonable probability of success on the merits at a final hearing; (2) an 

imminent threat of irreparable injury; and (3) a balance of the equities that tips in 

favor of issuance of the requested relief.”42 The three elements are not necessarily 

38 Id. ¶¶ 37-44. HighTower also alleges that Gibson engaged in unfair competition (Count 

III), breached his duty of loyalty to HighTower (Count IV), tortiously interfered with 

HighTower’s business relationships (Count V), and unjustly enriched himself (Count VI). 

Id. ¶¶ 45-56. HighTower’s Complaint includes a claim “for preliminary injunction” (Count 

VII). Id. ¶¶ 57-63. 

39 Dkt. 1. 

40 Dkt. 17. 

41 Dkts. 35, 36. 

42 Cabela’s LLC v. Wellman, 2018 WL 5309954, at *3 (Del. Ch. Oct. 26, 2018) (quoting 

Nutzz.com, LLC v. Vertrue Inc., 2005 WL 1653974, at *6 (Del. Ch. July 6, 2005)).
11

given equal weight. “A strong showing on one element may overcome a weak 

showing on another element.”43

HighTower’s motion for a preliminary injunction focuses on whether it has a 

reasonable probability of succeeding on its claims that Gibson breached the 

non-compete provisions in the Protective Agreement and the LLC Agreement.

44

 

HighTower does not need to prove that it will prevail on those claims at trial. Rather, 

it need only “show that there is a reasonable probability that it would prevail at a 

final hearing on the merits of one or more of these claims.”45 

For the reasons discussed below, HighTower has not established a reasonable 

probability of success on the merits of these breach of contract claims. Alabama

law, rather than Delaware law, applies. The non-compete provisions are likely void 

under Alabama law. And Alabama’s strong interests against enforcing the covenants 

outweigh Delaware’s contractarian policies.

43 Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 579 (Del. Ch. 1998).

44 Pl.’s Opening Br. 38-47. The Protective Agreement and the LLC Agreement also 

contain a non-solicitation covenant and confidentiality obligations. HighTower only 

addressed its claims for breach of the non-competition covenants in its preliminary 

injunction briefing. See Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues 

not briefed are deemed waived.”).

45 ZRii, LLC v. Wellness Acq. Grp., Inc., 2009 WL 2998169, at *8 (Del. Ch. Sept. 21, 2009).
12

A. Alabama is the Default State.

Both the Protective Agreement and the LLC Agreement contain Delaware 

choice of law provisions.

46

 Delaware follows the Restatement (Second) of Conflicts 

of Laws, which provides that a contractual choice of law will generally control.47 

An exception to the Restatement recognizes, however, that the law of the default 

state—i.e., that which would apply absent a choice of law provision—will govern in 

certain circumstances. The law of the default state will apply if “enforcement of the 

covenant would conflict with a ‘fundamental policy’” of the default state’s law, and 

the default state “has a materially greater interest in the issues—enforcement (or not) 

of the contract at hand—than Delaware.”48

Alabama, having “the most significant relationship to the transaction and the 

parties,” is the default state.49 The Protective Agreement and the LLC Agreement 

46 Protective Agreement § 12(e); LLC Agreement § 14.9.

47 Ascension Ins. Hldgs., LLC v. Underwood, 2015 WL 356002, at *2 (Del. Ch. Jan. 28, 

2015).

48 FP UC Hldgs., LLC v. Hamilton, 2020 WL 1492783, at *8 (Del. Ch. Mar. 27, 2020) 

(first quoting Ascension, 2015 WL 356002, at *6-8; and then citing Restatement (Second) 

Conflict of Laws (“Restatement”) §§ 187-88 (1971)).

49 Restatement § 188(1). Section 188(2) of the Restatement provides that the “contacts to 

be taken into account” in determining the state with the “most significant relationship” 

include: “(a) the place of contracting, (b) the place of negotiation of the contract, (c) the 

place of performance, (d) the location of the subject matter of the contract, and (e) the 

domicil, residence, nationality, place of incorporation and place of business of the parties.” 

Id. § 188(2); see also FP UC, 2020 WL 1492783, at *9 (describing overarching principles 

that the court may consider in conducting the “most significant relationship” analysis 

(citing Restatement § 6)).
13

were negotiated and executed in Alabama.50 The Twickenham business acquired by 

HighTower was located in Alabama.51 The relevant agreements were performed in 

Alabama.52 The alleged infringement also centers on Alabama given that the 

BrightHaven entities (except BrightHaven Alpha) are formed under Alabama law.

53

 

BrightHaven Capital Management is also registered as an investment advisor firm 

in Alabama, and Gibson is registered as an investment advisor representative in 

Alabama.

54

 Finally, Gibson has resided in Alabama at all relevant times.

55

 

50 See Def.’s Answering Br. in Opp’n to Pl.’s Mot. for Prelim. Inj. (Dkt. 30) (“Def.’s 

Answering Br.”) 18. Because HighTower has not refuted this assertion, I assume its truth 

for purposes of my analysis.

51 See Berg Dep. 97.

52 Restatement § 188 cmt. e (explaining that “the state where performance is to occur has 

an obvious interest in the question whether this performance would be illegal”); accord FP 

UC, 2020 WL 1492783, at *9.

53 See BrightHaven Capital Certificate of Formation; BrightHaven Capital Management

Certificate of Formation; BrightHaven Alpha Entity Details; supra note 33 (describing 

BrightHaven Financial Advisors).

54 See BrightHaven Capital Management SEC Registration.

55 See Compl. ¶¶ 7; Gibson Dep. 13. Gibson’s “Alabama domicile at the time of 

contracting further supports an inference that the parties anticipated his performance (i.e., 

non-competition) might well occur in that state—meaning his performance was not divided 

‘equally’ among multiple states.” FP UC, 2020 WL 1492783, at *9 (quoting Restatement 

§ 188 cmt. e); cf. Restatement § 188 cmt. e (“[T]he place of performance can bear little 

weight in the choice of the applicable law when . . . performance by a party is to be divided 

more or less equally among two or more states.”).
14

Delaware’s ties are limited by comparison. HighTower, HTT Newco, and 

BrightHaven Alpha are Delaware entities.

56

 And the relevant agreements contain 

Delaware choice of law provisions.

57

The heavy weight of Alabama’s relationship to this matter indicates that its

law would apply absent the parties’ selection of Delaware law. I therefore go on to

consider “whether the enforcement of the covenant[s] would conflict with a 

56 See Compl. ¶ 6; LLC Agreement § 2.1; BrightHaven Alpha Entity Details.

57 HighTower cites several cases for the proposition that a Delaware court will enforce a 

Delaware choice of law provision so long as there is a “material relationship” to Delaware. 

Pl.’s Reply Br. in Supp. of Its Mot. for Prelim. Inj. (Dkt. 32) (“Pl.’s Reply Br.”) 12-13. 

According to HighTower, the Delaware choice of law provision and the presence of 

Delaware entities constitute “material relationships.” Id. (citing Johnson v. Student 

Funding Grp., LLC, 2015 WL 351979, at *2 (Del. Super. Ct. Jan. 26, 2015); Greetham v. 

Sogima L-A Manager, LLC, 2008 WL 4767722, at *14 (Del. Ch. Nov. 3, 2008); OmniMax 

Int’l v. Dowd, 2019 WL 3545848, at *2 (Del. Super. Ct. July 17, 2019); Abry P’rs V, L.P. 

v. F & W Acq. LLC, 891 A.2d 1032, 1047 (Del. Ch. 2006)). These cases are distinguishable 

from the present matter. 

First, Johnson involved a choice of forum provision rather than one concerning the 

choice of substantive law. 2015 WL 351979, at *2. Similarly, neither Greetham nor Abry 

involved restrictive covenants. In Greentham, the plaintiff sought to enforce a draft 

servicing agreement as a contract or, alternatively, sought damages under a promissory 

estoppel theory. 2008 WL 4767722, at *13. In Abry, the plaintiff sought rescission of a 

stock purchase agreement—or, alternatively, damages—for fraudulent inducement. 891 

A.2d at 1041. Finally, OmniMax held that Delaware law applied because “no other state 

has a greater material relationship. The Plaintiff [wa]s headquartered in Georgia, the 

Defendant reside[d] in Texas, and the Plaintiff’s work territory encompassed all of North 

America.” 2019 WL 3545848, at *2. Here, Alabama is the default state since it has the 

most significant relationship to the litigation.
15

‘fundamental policy’” of Alabama.58 If so, I must then assess whether Alabama “has 

a materially greater interest in the issues . . . than Delaware.”59

B. The Restrictive Covenants Conflict With Alabama Policy.

“Alabama’s policy against covenants not to compete is a fundamental public 

policy.”60 “[I]t is well-settled [that] Alabama law ‘frowns on restrictive 

covenants.’”

61

 The legislature codified this policy in the Code of Alabama, which 

provides that “every contract by which anyone is restrained from exercising a lawful 

profession” is void, unless one of a few outlined exceptions apply.62 One relevant 

exception provides that:

the following contract [is] allowed to preserve a 

protectable interest . . . One who sells the good will of a 

business may agree with the buyer to refrain from carrying 

on or engaging in a similar business and from soliciting 

customers of such business within a specified geographic 

58 FP UC, 2020 WL 1492783, at *8 (quoting Ascension, 2015 WL 356002, at *6-8).

59 Id.

60 Cherry, Bekaert & Holland v. Brown, 582 So. 2d 502, 507-08 (Ala. 1991) (holding that

“the contractual choice of North Carolina law c[ould not] be given effect and that Alabama 

law will govern th[e] agreement”).

61 FP UC, 2020 WL 1492783, at *10 (quoting McGriff Seibels & Williams, Inc. v. Sparks, 

2019 WL 4600051, at *13 (N.D. Ala. Sept. 23, 2019)).

62 Ala. Code § 8-1-190(a). Effective January 1, 2016, Section 8-1-190 superseded the 

previous version of the statute, which had been codified at Section 8-1-1. The amendment, 

however, “preserves the current presumption previously found in Section 8-1-1 of the Code 

of Alabama, 1975 against contracts in restraint of trade.” Id. Ala. Cmt.; see also 

id. § 8-1-197 Ala. Cmt. (“This section is intended to codify current Alabama case law.”). 

Thus, “case law decided prior to January 1, 2016, is still good law for guidance on issues 

arising under the new statute.” DJR Assocs., LLC v. Hammonds, 241 F. Supp. 3d 1208, 

1225 (N.D. Ala. 2017).
16

area so long as the buyer, or any entity deriving title to the 

good will from that business, carries on a like business 

therein, subject to reasonable time and place restraints. 

Restraints of one year or less are presumed to be 

reasonable.63

As part of the Twickenham sale, Gibson executed a Contribution and 

Exchange Agreement (Personal Goodwill),64 through which he assigned to HTT 

63 Ala. Code § 8-1-190(b)(3).

Section 8-1-190(b)(4) provides:

An agent, servant, or employee of a commercial entity may 

agree with such entity to refrain from carrying on or engaging 

in a similar business within a specified geographic area so long 

as the commercial entity carries on a like business therein, 

subject to reasonable restraints of time and place. Restraints of 

two years or less are presumed to be reasonable.

That statute likely does not apply here because Gibson resigned from his position 

as an employee of HighTower as part of the Twickenham sale. See Partnership Services 

and Affiliation Agreement § 1 (“Prior to the Effective Date, each of the Principals [Gibson 

and the Partners] has resigned from his or her position as an employee of any HighTower 

Party to which he or she was employed.”). Instead, Gibson was a member and principal of 

HTT Newco, which provided services to HighTower as an independent contractor. Id. § 

11 (providing that HTT Newco, Gibson, and the Partners were independent entities from 

HighTower); see supra notes 11-12 and accompanying text (describing HTT Newco’s 

role); Berg Dep. 21 (“[T]he principals of Hightower Twickenham are not direct employees 

of [HighTower].”). Thus, Gibson was not “[a]n agent, servant, or employee of” 

HighTower at the time of execution of the Protective Agreement or the LLC Agreement. 

Ala. Code § 8-1-190(b)(4); see Clark Substations, L.L.C. v. Ware, 838 So. 2d 360, 363 

(Ala. 2002) (“The employee-employer exception to the voidness of noncompete 

agreements does not save a noncompete agreement unless the employee-employer 

relationship exists at the time the agreement is executed.”). At oral argument, HighTower 

acknowledged that “[t]his is not an employee agreement situation” but rather a “sale of 

business scenario.” Oral Arg. Tr. (Dkt. 36) 18, 11-12.

64 Unit Purchase Agreement § 1(a)(iv), Sched. B (providing that “[a]t the Closing,” the 

parties were to “execute and deliver” the Protective Agreement and the Contribution and 

Exchange Agreement (Personal Goodwill)).
17

Newco “all of his personal and ongoing business relationships with clients and key 

businesses, as well as [his] experience and reputation . . . that comes from the

personal, direct and intimate involvement . . . in interacting with clients and other 

key business relations.”65 These assigned interests seemingly fall within the 

meaning of “good will of a business” under the Alabama statute.66 But additional 

considerations lead me to conclude that the restrictive covenants at issue likely run 

afoul of Alabama law and public policy.

1. Professional Exemption

First, the statutory exception for the sale of a business “do[es] not apply to 

professionals.”67 This exemption—to the exception—flows from Alabama’s 

65 Contribution and Exchange Agreement (Personal Goodwill) § 1.

66 See First Alabama Bancshares, Inc. v. McGahey, 355 So. 2d 681, 683 (Ala. 1977) 

(holding that an acquisition of a bank included the sale of good will because “[t]he utmost 

trust and personal faith is required of a banker by his customers”); Cent. Bank of the S. v. 

Beasley, 439 So. 2d 70, 72-73 (Ala. 1983) (same); Kershaw v. Knox Kershaw, Inc., 523 

So. 2d 351, 358 (Ala. 1988) (“Where one sells his stock he necessarily disposes of his 

interest in the good will of the business conducted by the corporation to the same extent as 

he parts with his interest in any other property of the corporation. . . . [Even though] ‘good 

will’ was not specified as an asset in the sale, it was ‘incident to and inherent in] the 

business itself, and was, therefore, included in the exchange of stock.” (citations omitted)).

67 FP UC, 2020 WL 1492783, at *10 (quoting Benchmark Med. Hldgs., Inc. v. Barnes, 328 

F. Supp. 2d 1236, 1243 (M.D. Ala. 2004)); Benchmark, 328 F. Supp. 2d at 1243 (“[T]he 

statutory exceptions allowing non-compete agreements in the sale of good will of a 

business and in employment contracts do not apply to professionals.”); Friddle v. 

Raymond, 575 So. 2d 1038, 1040 (Ala. 1991) (“Although the remaining subsections of 

§ 8-1-1 provide for exceptions to the general rule, including an exception for the sale of 

the good will of a business, this Court has stated on numerous occasions that a 

‘professional’ cannot fall within these statutory exceptions.”). 
18

interest in its citizens “being able to receive [professional] services.”68 Alabama 

courts have recognized “professional” exemptions for: accountants;69 physicians 

specializing in otolaryngology (ear, nose, and throat);

70 ophthalmologists;71 physical 

therapists;72 and veterinarians.73 By contrast, optometrists,74 orthotists and 

prosthetists,75 tax preparation specialists,76 and exterminators77 are not considered 

“professionals.”

68 Benchmark, 328 F. Supp. 2d at 1253. The statutory basis for this exemption comes from 

the fact that “profession” is included in Section 8-1-190(a)’s general prohibition against 

restrictive covenants but excluded from Section 8-1-190(b)’s exceptions. See Thompson 

v. Wiik, Reimer & Sweet, 391 So. 2d 1016, 1019 (Ala. 1980) (“Having included 

‘profession’ in [Section 8-1-190(a)], and omitted this term in [Section 8-1-190(b)], an 

affirmative inference is created that the legislature did not intend to include professions in 

[Section 8-1-190(b)], such interpretation being aided by resort to the maxim ‘expressio 

unius est exclusio alterius.’” (quoting Odess v. Taylor, 211 So.2d 805, 811 (Ala. 1968))).

69 Gant v. Warr, 240 So. 2d 353, 355-56 (Ala. 1970) (holding that the practice of accounting 

by a certified public accountant is a “profession”); Burkett v. Adams, 361 So. 2d 1, 3 (Ala.

1978) (applying Grant in concluding that “public accountants” are “professionals”); 

Cherry, 582 So. 2d at 505 (same).

70 Oddess, 211 So. 2d at 811-12.

71 See Salisbury v. Semple, 565 So. 2d 234, 236 (Ala. 1990).

72 Benchmark, 328 F. Supp. 2d at 1250-56.

73 Friddle, 575 So. 2d at 1039-40.

74 See Ala. Bd. of Optometry v. Eagerton, 393 So. 2d 1373, 1378 (Ala. 1981) (analyzing 

whether optometry was a “learned profession” for tax purposes). 

75 J.E. Hanger, Inc. v. Scussel, 937 F. Supp. 1546, 1557 (N.D. Ala. 1996).

76 See H&R Block E. Enters., Inc. v. Lewis, et al., C.A. No. 1:05cv0801-RBP, slip op. at 

21 (N.D. Ala. Jan. 27, 2006).

77 Dobbins v. Getz Exterminators of Ala., Inc., 382 So. 2d 1135, 1137 (Ala. Civ. App. 

1980).
19

Alabama courts have not opined on whether an investment advisor like 

Gibson is a “professional” for purposes of the exemption.

78

 One Alabama court 

enforced a non-compete against a banker without considering the banker’s

professional status.79 Another observed, in dicta, that “the licensing of securities 

brokers does not, in and of itself, compel the conclusion that securities brokers are 

engaged in a profession.”80

After reviewing the relevant Alabama case law, however, I believe there is a 

meaningful risk that Alabama policy would be offended if the non-competes were 

enforced against Gibson. Alabama courts look to several factors in assessing 

whether a line of work constitutes a profession: “(1) professional training, skill, and 

experience required to perform certain services; (2) the delicate nature of the services 

offered; and (3) the ability and need to make instantaneous decisions.”81 These 

factors weigh in favor of viewing Gibson as a professional who is exempt from the 

sale of business exception.

82

 

78 See G.L.S. & Assocs. v. Rogers, 155 So. 3d 263, 269-70 (Ala. Civ. App. 2014) (declining 

to opine, at the motion to dismiss stage, on whether a FINRA-registered securities broker 

was a professional). 

79 See First Alabama Bancshares, 355 So. 2d at 684.

80 G.L.S., 155 So. 3d at 270.

81 J.E. Hanger, 937 F. Supp. at 1557 (citing Friddle, 575 So. 2d at 1039).

82 I am not holding, as a matter of law, that a hedge fund manager or investment advisor is 

necessarily a “professional” who is exempt from the exceptions in the Alabama Code.
20

Gibson is a registered investment advisor who spent years achieving the

various licenses that allow him to serve clients.

83

 Managing clients’ finances can 

certainly be a delicate endeavor and investment decisions may require quick 

thinking. Beyond that, investment advisors like Gibson owe fiduciary duties to their 

clients.84 Gibson’s position seems considerably closer to an accountant (who is a 

“professional” under Alabama law) than a seasonal tax preparer (who is not).85 

Furthermore, “the public interest” in having Gibson’s investment advising “services 

available to” the public would be impaired if Gibson were barred from continuing 

his work at BrightHaven.

86

Rather, I conclude that HighTower has failed to demonstrate a reasonable probability of 

success on this issue and that public policy considerations appear to favor Gibson. 

83 See Gibson Registration History (noting that Gibson holds Series 7, Series 66, and SIE 

licenses and is a registered investment advisor representative); Gibson Dep. 16 (same); 

BrightHaven, https://www.brighthavencapital.com/about (last visited Feb. 8, 2023) 

(indicating Gibson is a “CFA Charterholder”); Ala. Code § 8-6-3(b) (requiring investment 

advisors transacting business in Alabama to register with the state). 

84 See Benchmark, 328 F. Supp. 2d at 1250-56 (explaining that an individual who provides 

“hands-on” services to the public, rather than overseeing others, was a professional against 

whom a noncomplete could not be enforced).

85 Compare H&R Block, slip op. at 21-22 (N.D. Ala. Jan. 27, 2006) (stating that the “court 

c[ould not] conclude, as a matter of law, that [tax preparers] were professionals” but 

holding that the restrictive covenant should not apply because tax preparers held seasonal 

positions and “were unskilled and had only a limited relationship with the 

client/customers”) with Burkett, 361 So. 2d at 3 (describing “public accountants” as 

professionals after discussing the field as a “common calling in the spirit of public service” 

that is “incidentally a means of livelihood” (citations omitted)).

86 Benchmark, 328 F. Supp. 2d at 1255; see infra note 103 (noting that a preliminary 

injunction would harm Gibson’s clients and investors).
21

2. Unreasonable Restraints

Even if Gibson were not considered a “professional” within the exemption,

HighTower is not likely to succeed on the merits of its claims due to the overbreadth

of the non-compete provisions. Alabama’s public policy against broad restrictive 

covenants is evident from its legislation. Section 8-1-190(b)(3) of the Alabama 

Code states that non-compete provisions in the sale of the business context must be 

“subject to reasonable time and place restraints.”87 The relevant provisions likely 

run afoul of that requirement for several reasons.

First, the covenants are broad in duration and geography. 

The restrictions in the Protective Agreement and the LLC Agreement both 

became effective on February 1, 2019 and expire on February 1, 2024 and July 7, 

2025, respectively.88 These five-year limitation periods well exceed the one-year 

period presumed to be reasonable under the Alabama Code.89 The United States 

87 Ala. Code § 8-1-190(b)(3); see also Picker Int’l, Inc. v. Parten, 935 F.2d 257, 260 (11th 

Cir. 1991) (“Alabama courts will enforce a non-compete agreement if it (1) falls within a 

statutory exception to the general prohibition, and (2) is reasonably limited as to territory, 

duration and subject matter” (quoting Nationwide Mut. Ins. Co. v. Cornutt, 907 F.2d 1085, 

1087 (11th Cir. 1990))); Clark v. Liberty Nat. Life Ins. Co., 592 So. 2d 564, 565-66 (Ala. 

1992) (“The courts will enforce a covenant not to compete that fits within the exception of 

§ 8-1-1(b) only if: ‘1. the employer has a protectable interest; 2. the restriction is reasonably 

related to that interest; 3. the restriction is reasonable in time and place; [and] 4. the 

restriction imposes no undue hardship [on the employee].’” (quoting DeVoe v. Cheatham, 

413 So. 2d 1141, 1142 (Ala. 1982))).

88 Compl. ¶ 15 n.7; id. ¶ 18 n.11; Protective Agreement at Preamble; LLC Agreement at 

Preamble.

89 Ala. Code § 8-1-190(b)(3).
22

District Court for the Middle District of Alabama observed that “[a] survey of 

Alabama cases strongly suggests that the five year period is at the outer most limits 

of what is considered reasonable by the Alabama Courts. The great weight of 

authority suggests that, to be reasonable, a non-competition agreement’s time 

restraint should be shorter.”90

With respect to geographic scope, the restrictions at issue cover “the United 

States or any other jurisdiction in which [HighTower or HTT Newco] does 

business.”91 “To secure enforcement of a non-compete clause within a particular 

territory, the employer must demonstrate that it continues to engage, in that locale, 

in the activity that it seeks to enjoin.”92 But Gibson is only registered as an 

investment advisor in Alabama, meaning that he cannot transact business outside of

the state.

93

 

90 Concrete Co. v. Lambert, 510 F. Supp. 2d 570, 583-84 (M.D. Ala. 2007) (citing cases); 

see also Mason Corp. v. Kennedy, 244 So. 2d 585, 589-90 (Ala. 1971) (invalidating a 

restrictive covenant with a five-year limitations period); Sheffield v. Stoudenmire, 553 So. 

2d 125, 126-27 (Ala. 1989) (same); Cajun Steamer Ventures, LLC v. Thompson, 402 F. 

Supp. 3d 1328, 1340 (N.D. Ala. 2019) (“[B]ecause only a restraint up to two years is 

presumed reasonable [under Section 8-1-190(b)(4)], and because [plaintiff] provided no 

allegations or facts why the five-year restraint was reasonable, the court cannot find the 

five-year restraint is reasonable in time.”).

91 Protective Agreement § 5; LLC Agreement § 6.7(c).

92 Nationwide, 907 F.2d at 1088.

93 See Gibson Registration History (reflecting registration as an investment advisor only in 

Alabama, not in any other states nor with any federal regulator); see also Nobles-Hamilton 

v. Thompson, 883 So. 2d 1247, 1251 (Ala. Civ. App. 2003) (noting that a covenant covering 

“anywhere” would be unreasonable); Morris-Shea Bridge Co., Inc., v. Cajun Indus., LLC, 
23

Finally, HighTower is not reasonably likely to succeed in demonstrating that 

the covenants are “reasonably related” to the good will interest it purchased.94 The 

covenants broadly restrict Gibson from engaging in the expansively defined

“Business.”95 This restriction seems broader than necessary to protect the good will

2021 WL 4084516, at *5-6 (S.D. Tex. Feb. 22, 2021) (applying Alabama law to invalidate 

a restrictive covenant covering all of North America).

HighTower relies on the Alabama Supreme Court’s decision in Kershaw v. Knox 

Kershaw, Inc. to argue that a five-year, nationwide restriction is reasonable. There, the 

restrictive covenant applied to “any county or province within the United States and 

Canada in which [the plaintiff] . . . shall do business at any time during said five (5) year 

period.” Kershaw, 523 So. 2d at 359. The court held that the original covenant, which 

used the phrase “shall do business,” was unreasonably broad and unenforceable because it 

prohibited new and “unidentifiable areas” of business. Id. But it went on to explain that 

the non-compete was enforceable for five years “to the extent that it prohibits [defendant] 

from leasing the specified equipment in any place in the United States or Canada where 

[plaintiff], did business prior to or on” the date the defendant separated from the plaintiff’s 

business. Id.

I read Kershaw as undermining HighTower’s position. The covenant in the 

Protective Agreement restricts Gibson from engaging in “any other business that 

HighTower conducts or operates or takes material steps toward conducting or operating at 

any time during the term of the [Partnership Services and Affiliation Agreement].” 

Protective Agreement § 11(a) (emphasis added); see also LLC Agreement Art. I (defining 

“Business” as “(i) so long as the Partner Agreements are in effect, the business of the 

Company [i.e., HTT Newco] and any Permitted Partner Assignee as contemplated by the 

Partnership Services and Affiliation Agreement, and (ii) thereafter, the business of the 

Company and any Permitted Partner Assignee providing wealth management, investment 

advisory and brokerage services or products relating and ancillary thereto” (emphasis 

added)). Like the invalid covenant in Kershaw, the covenants here contemplate restrictions 

in presently “unidentifiable areas” of business, “subject[ing Gibson] to the future decisions 

of [HighTower].” Kershaw, 523 So. 2d at 359.

94 See Picker, 935 F.2d at 260; Clark, 592 So. 2d at 565.

95 LLC Agreement § 6.7(c) (prohibiting Gibson from “becom[ing] engaged or involved in 

any Person engaged in or to engage in the Business within . . . [the Territory]”); Protective 

Agreement § 5 (same). See supra notes 9 & 14 for the definitions of “Business” in the 

LLC Agreement and the Protective Agreement.
24

HighTower purchased. For example, the covenants would prohibit Gibson from 

developing new client relationships unrelated to those sold to HighTower.96

C. Alabama’s Interests Outweigh Delaware’s Interests.

As discussed above, Alabama has a strong policy opposing the enforcement 

of non-competes. Against this is Delaware’s interest in freedom of contract and in 

“upholding a lingua franca for sophisticated commercial parties.”97 

“The entire purpose of the Restatement analysis is to prevent parties from 

contracting around the law of the default state by importing the law of a more 

contractarian state, unless that second state also has a compelling interest in 

enforcement.”

98

 Here, Alabama’s interest in preventing the enforcement of 

96 Cf. James S. Kemper & Co. Se. v. Cox & Assocs., Inc., 434 So. 2d 1380, 1383-85 (Ala. 

1983). In James S. Kemper & Co., plaintiff James S. Kemper & Co. was an insurance 

brokerage business engaged in property and casualty insurance. While employed by 

Kemper, the defendant had operated in the lumber industry casualty insurance field. The 

Alabama Supreme Court upheld a restrictive covenant prohibiting the former employee 

from “[i]n any way disturb[ing], or seek[ing] to secure discontinuance of, any insurance 

business (of which the [former employee] has secured any knowledge due to [his] 

employment by the Company [Kemper], or produced by [him] during the [his] 

employment) carried by the company, or its successor or assignee.” Id. at 1383. The court 

reasoned that the “restrictions in the covenant reasonably relate[d] to the protection of 

Kemper’s interest in a narrow, identifiable group of clients and potential clients, where 

Kemper ha[d] a work product investment in those clients with which [the former employee] 

was involved.” Id. at 1384. The restriction was “limited to two identifiable groups; the 

covenant d[id] not restrict [the former employee] from dealing with non-lumber customers 

or even with lumber customers that [we]re not currently customers or quoted prospects of 

[the Company].” Id. at 1385 (emphasis added). The covenants here are not so limited to 

“narrow, identifiable group[s] of clients and potential clients.”

97 FP UC, 2020 WL 1492783, at *11.

98 Ascension, 2015 WL 356002, at *5; see also FP UC, 2020 WL 1492783, at *11.
25

non-competes against an Alabama resident working in Alabama is more significant

than Delaware’s general contractarian policies. “Alabama’s legislature specifically 

addressed the enforceability of non-competes when applied to professionals, and it 

acted to protect its citizens’ ability to access professional services.”99 Alabama also 

codified a policy against overbroad non-competes.

100

The Alabama Code states that Section 8-1-190 “expresses fundamental public 

policies of the State of Alabama.”

101 It further provides that the Alabama Code shall

“govern and shall be applied instead of any foreign laws that might otherwise be 

applicable in those instances when the application of those foreign laws would 

violate [Alabama’s] fundamental public polic[ies].”

102

 To apply Delaware law in 

these circumstances would undermine these legislatively expressed interests.

* * *

HighTower has not demonstrated a reasonable likelihood of success on the 

merits of its claims for enforcement of the non-competes in the Protective 

Agreement and the LLC Agreement. The provisions are likely unenforceable under 

99 FP UC, 2020 WL 1492783, at *11; see supra note 68 and accompanying text (describing 

the statutory basis for the professional exemption).

100 See supra note 87 and accompanying text (describing the statutory basis for the

reasonableness requirement). 

101 Ala. Code § 8-1-197.

102 Id.
26

Alabama law. I therefore need not consider whether HighTower has shown a risk 

of irreparable harm and a favorable balance of the equities.103

III. CONCLUSION

HighTower’s motion for a preliminary injunction is denied. An appropriate 

order will be entered by the court. The parties are to confer on what, if any, further 

proceedings are appropriate in this matter and file a joint status update within 30 

days of this decision.

103 I note that the balance of the equities appears to favor Gibson. An injunction would 

harm not only Gibson but also his clients and investors. Those clients’ funds could be put 

at risk if Gibson suddenly ceased operating BrightHaven. See Cantor Fitzgerald, 724 A.2d 

at 587 (explaining that the court may “consider the impact an injunction will have on the 

public and on innocent third parties”).