Payscale Inc. v. Erin Norman and Bettercomp, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

PAYSCALE INC., )
)
Plaintiff, )
)
v. ) C.A. No. 2025-0118-BWD
)
ERIN NORMAN and BETTERCOMP, )
INC., )
)
Defendants. )

MEMORANDUM OPINION
GRANTING MOTION TO DISMISS

Date Submitted: May 27, 2025
Date Decided: June 9, 2025

Steven L. Caponi, Megan E. Hunt, K&L GATES LLP, Wilmington, DE; OF
COUNSEL: Kathleen D. Parker, K&L GATES LLP, Boston, MA; Attorneys for
Plaintiff Payscale Inc.

John A. Sensing, Jesse L. Noa, Tyler E. Cragg, Hannah L. Paxton, POTTER
ANDERSON & CORROON LLP, Wilmington, DE; Attorneys for Defendants Erin
Norman and BetterComp, Inc.

DAVID, V.C.
The plaintiff in this action, Payscale Inc. (“Payscale”), has sued a former

employee and her new employer to enforce restrictive covenants, including a

noncompete, contained in two incentive equity agreements the employee signed

while working at Payscale. Payscale also brings claims for breach of nonsolicitation

and confidentiality provisions in the same agreements, as well as tortious

interference with contractual relations and tortious interference with prospective

business relations. This memorandum opinion concludes that the noncompete is

unreasonable in scope, rendering it unenforceable, and that the remaining counts fail

to state a claim upon which relief may be granted.

I. BACKGROUND
Unless otherwise noted, the following facts are taken from Payscale’s

Amended Verified Complaint (the “Amended Complaint”) and the documents it

incorporates by reference. Am. Verified Compl. [hereinafter “Am. Compl.”], Dkt.

26.

A. Payscale Hires Norman As Its Director Of Sales.

Payscale is a Washington corporation that provides compensation data,

software, and services throughout the United States. Am. Compl. ¶¶ 13, 15, 32. On

November 29, 2021, defendant Erin Norman (“Norman”) began working for

Payscale as Director of Sales, reporting to Payscale’s Senior Vice President of Sales.

Id. ¶ 45; id., Ex. 4.

1
B. Topco And Norman Enter Into The First Incentive Equity
Agreement.

Non-party Sonic Topco, L.P. (“Topco”) is a Delaware limited partnership that

serves as the parent holding company for Payscale and Payscale’s subsidiaries. Am.

Compl. ¶ 14; id., Ex. 3.

On March 14, 2022, Topco and Norman entered into an incentive equity

agreement (the “First Incentive Equity Agreement”) under which Norman was to

receive 150,000 Topco “Profit Interest Units” in the form of “Service Units” and

“Performance Units.” Id., Ex. 1 [hereinafter First Agt.] §§ 1, 4(a). Under the First

Incentive Equity Agreement, Norman was to receive 25% of the Service Units on

February 23, 2023; the remaining 75% of the Service Units over the next three years;

and the Performance Units only upon a sale of Topco. Id. § 4(b). The fair market

value of the Profit Interest Units when Norman received them was $0.00, and they

cannot be transferred or sold unless Topco is sold or agrees to repurchase them. Id.

§§ 5–6, 15.

The First Incentive Equity Agreement includes restrictive covenants (the

“Restrictive Covenants”), including a covenant not to compete (the “Noncompete”),

a nonsolicitation covenant (the “Nonsolicitation Provision”), and confidentiality

obligations (the “Confidentiality Provision”). Id. §§ 7–8. Section 8(e) of the First

Incentive Equity Agreement (the “Cancellation Provision”) states that if Norman

2
breaches the Restrictive Covenants, her Profit Interest Units “shall automatically be

cancelled without payment of any consideration”:

Notwithstanding anything to the contrary herein, if it is determined
following [Norman]’s Separation that [Norman] has breached any of
the covenants in Section 7 or Section 8, in addition to the other remedies
provided herein, (i) [Topco] shall be permitted to retroactively treat
[Norman]’s prior Separation as though [Norman] had been terminated
for Cause for purposes of this Agreement, (ii) all Profits Interest Units
(whether held by [Norman] or one or more of [Norman]’s Transferees
. . . shall automatically be cancelled without payment of any
consideration and (iii) [Norman] shall pay to [Topco] (and/or the
Investor Partners to the extent they exercised the Repurchase Option)
the amount (if any) received by [Norman] (or any of [Norman]’s
transferees) in consideration for the Profits Interest Units pursuant to
the Repurchase Option; provided that the foregoing is not an election
of remedies by [Topco] and [Topco]’s remedies are cumulative and is
entitled to both forfeiture of the Profits Interest Units and actual
damages.

Id. § 8(e) (emphasis added).

The Noncompete provides that, for eighteen months following Norman’s

separation from Payscale (the “Protection Period”), Norman “shall not engage in a

Competitive Activity,” id. § 8(a), defined as follows:

[W]ith respect to [Norman], directly or indirectly, whether as principal,
agent, partner, officer, director, stockholder, employee, consultant or
otherwise, alone or in association with any other Person or entity, own,
manage, operate, control, participate in, render services for, or in any
other manner engage in, anywhere in the United States, any
Competitive Business other than for or on behalf of [Topco] or any
Subsidiary of [Topco]; provided that nothing herein shall prohibit
[Norman] from

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(a) owning a passive interest of up to 2% of any class of securities
of any corporation that is traded on a national securities exchange
or

(b) being employed or engaged by an entity where such work (i)
would not involve any level of strategic, advisory, technical,
creative, or sales activity or (ii) is exclusively in connection with
an independent business line of such entity that is wholly
unrelated to the business operated by the Partnership Group and
the Confidential Information.

Id. § 9 (emphasis added). “Competitive Business” is defined to include “any

business conducted by [Topco] or any of its Subsidiaries as of [Norman]’s

Separation Date or any business proposed to be conducted by [Topco] or any of its

Subsidiaries as evidenced by a written business plan in effect prior to [Norman]’s

Separation Date.” Id. The “Partnership Group” includes Topco and its direct and

indirect subsidiaries, although Payscale is Topco’s “only direct or indirect subsidiary

. . . that is an operating entity.” Id.; Am. Compl. ¶ 69.

The Nonsolicitation Provision provides that during the Protection Period,

Norman shall not:

(i) induce or attempt to induce any employee, advisor or independent
contractor of any member of the Partnership Group to leave the employ
or engagement of the Partnership Group, or in any way interfere with
the relationship between any member of the Partnership Group and any
of their respective employees, advisors or independent contractors, or

(ii) induce or attempt to induce any client, customer, supplier, vendor,
licensor, lessor or other business relation of any member of the
Partnership Group (or any prospective client, customer, supplier,
vendor, licensor, lessor or other business relation with which any
member of the Partnership Group has entertained discussions regarding
a prospective business relationship) to cease or refrain from doing

4
business with any member of the Partnership Group, or in any way
interfere with the relationship (or prospective relationship) between any
such client, customer, supplier, vendor, licensor, lessor or other
business relation and any member of the Partnership Group . . . .

First Agt. § 8(b) (emphasis added).

C. Payscale Promotes Norman To Senior Director Of Sales.

On February 26, 2023, Norman was promoted to Senior Director of Sales,

overseeing Payscale’s “Enterprise Sales teams” for the “West region.”1 Am. Compl.

¶¶ 47–48; id., Ex. 5. In that role, Norman supervised seventeen individuals and

reported to the Senior Vice President of Revenue, the head of Payscale’s sales

division who, in turn, reports to the Chief Operating Officer. Am. Compl. ¶¶ 48–

49.

D. Topco And Norman Enter Into The Second Incentive Equity
Agreement.
On August 14, 2023, Topco and Norman entered into another incentive equity

agreement (the “Second Incentive Equity Agreement,” and with the First Incentive

Equity Agreement, the “Incentive Equity Agreements”), under which Norman was

1
Payscale divides its customers into “East” and “West” regions, based on where the
customers are headquartered. Am. Compl. ¶ 37. The West region included Alaska,
Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas,
Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New
Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington,
Wisconsin, Wyoming, and certain Canadian provinces. Id. ¶ 38. “During Norman’s
employment at Payscale, Enterprise customers were entities with over 1,200 employees.”
Id. ¶ 35.

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to receive an additional 25,000 Profit Interest Units. Am. Compl., Ex. 2 [hereinafter

Second Agt.]. The Second Incentive Equity Agreement contains the same

Restrictive Covenants and Cancellation Provision as the First Incentive Equity

Agreement. Compare First Agt. §§ 7–8 with Second Agt. §§ 7–8.

E. Norman Leaves Payscale And Joins Korn Ferry, Then
BetterComp.

On December 1, 2023, Norman resigned from Payscale. Am. Compl. ¶ 77.

Later that month, she accepted a position as a Client Director at Korn Ferry, a global

organizational consulting firm. Id. ¶ 80. Payscale did not seek to enforce the

Restrictive Covenants at that time. Defs.’ Opening Br. in Supp. of Mot. to Dismiss

Am. Compl. [hereinafter OB] at 9, Dkt. 29.

Ten months later, in October 2024, Norman updated her LinkedIn profile to

reflect that she had left her position at Korn Ferry to work for defendant BetterComp,

Inc. (“BetterComp,” and with Norman, “Defendants”), a California “compensation

market pricing software company and direct competitor of Payscale.” Am. Compl.

¶¶ 6, 17, 82–83. On November 22, 2024, Payscale informed Norman that she was

in breach of the Restrictive Covenants. Id. ¶ 98.

F. Procedural History

On January 31, 2025, Payscale initiated this action through the filing of a

Verified Complaint, seeking to enforce the Restrictive Covenants. Verified Compl.,

Dkt. 1. Payscale moved for expedition and a temporary restraining order. Id. At a

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February 13 hearing, the Court granted expedition but denied Payscale’s request for

temporary injunctive relief. See Dkt. 17.

On March 14, Payscale filed the operative Amended Complaint. Dkt. 26. On

March 21, Defendants moved to dismiss the Amended Complaint (the “Motion to

Dismiss”).2 The Court heard oral argument on May 27. Dkt. 51.

G. The Protection Period Expires.
The Protection Period expired on June 1, 2025. Am. Compl. ¶ 78. However,

Section 8(d) of the Incentive Equity Agreements states that “the Protection Period

will be extended for a period of time equal to the time period” that Norman breached

the Restrictive Covenants, “such that [Norman] is ultimately foreclosed from

engaging in the activities set forth in this Section 8 for a time period equal to the

Protection Period.” First Agt. § 8(d); Second Agt. § 8(d).

II. ANALYSIS
Defendants have moved to dismiss the Amended Complaint under Court of

Chancery Rule 12(b)(6) for failure to state a claim upon which relief may be granted.

When reviewing a motion to dismiss under Rule 12(b)(6), Delaware courts

“(1) accept all well pleaded factual allegations as true, (2) accept even vague

2
On March 28, Payscale filed its Answering Brief in Opposition to the Motion to Dismiss.
Pl.’s Answering Br. in Opp’n to Defs.’ Mot. to Dismiss Am. Compl. [hereinafter AB], Dkt.
36. Defendants filed their Reply Brief in Further Support of the Motion to Dismiss on
April 4. Reply Br. in Supp. of the Mot. to Dismiss Am. Compl. [hereinafter RB], Dkt. 44.

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allegations as ‘well pleaded’ if they give the opposing party notice of the claim, [and]

(3) draw all reasonable inferences in favor of the non-moving party.” Cent. Mortg.

Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011)

(citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002)).

The Amended Complaint brings three counts: Count I alleges a claim against

Norman for breach of the Restrictive Covenants in the Incentive Equity Agreements;

Count II alleges a claim against BetterComp for tortious interference with

contractual relations; and Count III alleges a claim against Norman and BetterComp

for tortious interference with prospective business relations. Am. Compl. ¶¶ 138–

66. For the reasons that follow, all three counts are dismissed.

A. Count I Is Dismissed.
In Count I of the Amended Complaint, Payscale alleges a claim against

Norman for breach of the Restrictive Covenants in the Incentive Equity Agreements.

Id. ¶¶ 138–48. Defendants raise several arguments in support of dismissal, including

that (1) the Incentive Equity Agreements are not binding because they were not

supported by valid consideration; (2) Payscale is not a third-party beneficiary of the

Incentive Equity Agreements and therefore lacks standing to enforce the Restrictive

Covenants; (3) the Restrictive Covenants are unreasonable in scope, rendering them

unenforceable; and (4) the Amended Complaint fails to adequately allege that

8
Norman has breached the Nonsolicitation or Confidentiality Provision. The

following analysis focuses on Defendants’ third and fourth bases for dismissal.

1. The Noncompete Is Unenforceable.
“Delaware courts do not ‘mechanically’ enforce non-competes.” FP UC

Hldgs., LLC v. Hamilton, 2020 WL 1492783, at *6 (Del. Ch. Mar. 27, 2020) (quoting

McCann Surveyors, Inc. v. Evans, 611 A.2d 1, 3 (Del. Ch. 1987)). Instead,

“agreements not to compete must be closely scrutinized as restrictive of trade.”

Faw, Casson & Co. v. Cranston, 375 A.2d 463, 466 (Del. Ch. 1977). A noncompete

is enforceable only when it “(1) [is] reasonable in geographic scope and temporal

duration, (2) advance[s] a legitimate economic interest of the party seeking its

enforcement, and (3) survive[s] a balancing of the equities.” FP UC Hldgs., 2020

WL 1492783, at *6 (quoting Lyons Ins. Agency, Inc. v. Wilson, 2018 WL 4677606,

at *5 (Del. Ch. Sept. 28, 2018)). “To determine the reasonableness of the Non-

Compete, the Court must read the contractual language as a whole, in the context of

the employment relationship.” Hub Gp., Inc. v. Knoll, 2024 WL 3453863, at *8

(Del. Ch. July 18, 2024).

Under the Noncompete, for eighteen months following her separation from

Payscale, Norman “shall not engage in a Competitive Activity,” meaning she cannot

“own, manage, operate, control, participate in, render services for, or in any other

manner engage in, anywhere in the United States, any Competitive Business” for

9
anyone but Topco or its subsidiaries, where “Competitive Business” includes “any

business conducted by [Topco] or any of its Subsidiaries as of [Norman]’s

Separation Date or any business proposed to be conducted by [Topco] or any of its

Subsidiaries as evidenced by a written business plan in effect prior to [Norman]’s

Separation Date.” First Agt. §§ 8(a), 9; Second Agt. §§ 8(a), 9. In other words, for

an eighteen-month period, Norman is prohibited from working anywhere in the

country, in almost any role, for any company engaged in business that Topco or its

subsidiaries were conducting or had proposed to conduct as of Norman’s departure.

a. The Noncompete Is Overbroad In Geographic And
Temporal Scope.
Defendants argue that the Noncompete is overbroad in geographic and

temporal scope, and that it exceeds Payscale’s legitimate business interests.

Beginning with geography and duration, this Court has explained that:

The[se] two dimensions necessarily interact. To be barred for five
years from working in a single county leaves open opportunities for the
former employee in surrounding areas. To be barred from an entire
state for a shorter period, such as a year or less, leaves open the
possibility that the former employee could live off savings, take a long
vacation, or enjoy some garden leave. All else equal, a longer
restrictive covenant will be more reasonable if geographically
tempered, and a restrictive covenant covering a broader area will be
more reasonable if temporally tailored.

Del. Elevator, Inc. v. Williams, 2011 WL 1005181, at *8 (Del. Ch. Mar. 16, 2011).

The Noncompete here is eighteen months in duration—not unreasonable in

isolation—but nationwide in geographic scope. “[T]his court has enforced non-

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competes with a nationwide scope, but only in instances where the competing party

agrees, in connection with the sale of a business, to stand down from competing in

the relevant industry . . . anywhere . . . for a stated period of time after the sale.” FP

UC Hldgs., 2020 WL 1492783, at *7. “These broader restrictions make sense

following the sale of a business” because “[t]he buyer has just paid handsomely for

the business and the broad non-compete clears the seller from the competitive space

while the buyer strives to make the business he just bought successful.” Id. But

where, as here, an employer provides an employee only minimal consideration to

secure a noncompete, this Court has found a nationwide scope overbroad. See, e.g.,

Centurion Serv. Gp., LLC v. Wilensky, 2023 WL 5624156, at *5 (Del. Ch. Aug. 31,

2023) (finding the nationwide scope of a noncompete overbroad, noting the

consideration received was minimal where the employee agreed to the noncompete

“when he was already employed by [the employer]”); FP UC Hldgs., 2020 WL

1492783, at *7 (finding the nationwide scope of a noncompete overbroad where the

employee did not receive “substantial consideration in exchange for his commitment

not to work in [the employer]’s industry anywhere in the United States”).3

3
Payscale relies on Lyons Insurance Agency, Inc. v. Wilson, 2018 WL 4677606 (Del. Ch.
Sept. 28, 2018), where the Court concluded that a noncompete without an “express
geographic limitation” was enforceable. Importantly, however, the Court in that case
denied the plaintiff’s request for injunctive relief in favor of a liquidated damages clause.

11
Defendants argue that the consideration exchanged for the Noncompete here

is not just minimal, but illusory, such that no enforceable contract was formed. They

rely on this Court’s recent decision in North American Fire Ultimate Holdings, LP

v. Doorly, 2025 WL 736624 (Del. Ch. Mar. 7, 2025), where an employee executed

a contract under which he was to receive incentive units “subject to time and

performance vesting.” Id. at *1. The contract included restrictive covenants, and

stated that if the employee breached those covenants, his vested and unvested units

would be “automatically forfeited.” Id. The employer later sued to enforce the

restrictive covenants, and the Court dismissed the complaint, finding that when the

employer “declared that [the employee] forfeited the Units” by breaching the

restrictive covenants, the employer “eliminated the sole consideration for the

restrictive covenants.” Id. at *3.

Defendants contend that, as in Doorly, the only consideration Norman

received in exchange for the Restrictive Covenants—nontransferable Profit Interest

Units with no value at the time of issuance—was “automatically cancelled” upon

her purported breach, “eliminat[ing] the sole consideration for the restrictive

covenants.” Id.; OB at 20. I need not go so far as to conclude that Norman received

12
no consideration in exchange for the Noncompete, however.4 Assuming the Profit

Interest Units had some value when the parties executed the Incentive Equity

Agreements, it nevertheless is not reasonably conceivable that the consideration

exchanged—vanishingly small compared to that received for the sale of a business—

could support an eighteen-month, nationwide prohibition on work in almost any role

for any company engaged in business that Topco or its subsidiaries were conducting,

or had even proposed to conduct, as of Norman’s departure.5

4
Payscale seeks to distinguish Doorly on the basis that the Incentive Equity Agreements
here were “executed in connection with [Norman]’s hiring and promotion.” Am. Compl.
¶ 2; see also id. ¶ 63 (alleging that the Restrictive Covenants were agreed to “in
consideration of the mutual covenants contained in the [Incentive Equity] Agreements and
other good and valuable consideration, including Norman’s signing bonus, salary, raise,
[and] access to Payscale’s confidential information”). As our case law makes clear, new
consideration supporting restrictive covenants “may include a beneficial change in an
employee’s status, like a bonus or promotion.” Doorly, 2025 WL 736624, at *3.
Defendants point out, however, that the Incentive Equity Agreements were executed
months after Norman’s respective hiring and promotion. Norman was hired on November
29, 2021, but the First Incentive Equity Agreement was executed more than three months
later, on March 14, 2022. Similarly, Norman was promoted on February 26, 2023, but the
Second Incentive Equity Agreement was signed more than five months later, on August
14, 2023.
5
Compare, e.g., Kan–Di–Ki, LLC v. Suer, 2015 WL 4503210, at *20 (Del. Ch. July 22,
2015) (concluding that a non-compete restricting competition for five years in twenty-three
states was enforceable, in part, because “when [the purchaser] paid $4 million and then
roughly $300,000 to acquire [the seller’s] interests in two successive businesses, [the
purchaser] acted reasonably and legitimately in insisting on some measure of protection
from the possibility that [the seller] simply would go out and take those clients or otherwise
undermine [the purchaser’s] business”); O’Leary v. Telecom Res. Serv., LLC, 2011 WL
379300, at *3 (Del. Super. Ct. Jan. 14, 2011) (reviewing a four-year national noncompete
that was negotiated after the sale of a business for a substantial price); Tristate Courier &

13
b. The Noncompete Is Broader Than Necessary To
Protect Payscale’s Legitimate Business Interests.
The Noncompete is also broader than necessary to protect Payscale’s

legitimate business interests.

First, the overbreadth of the Noncompete’s nationwide scope is compounded

by the unlimited geographic scope of the Nonsolicitation Provision. It is difficult to

conceive how Norman could work as a salesperson in Topco’s or its subsidiaries’

lines of business anywhere in the world and be certain not to run afoul of the

Nonsolicitation Provision’s broad prohibition on soliciting even prospective clients,

given the difficulty in knowing who those unnamed prospective clients might be.

The practical effect is that Norman is restrained from working not only nationwide,

but worldwide. An international scope exceeds Payscale’s legitimate economic

interests, as Payscale provides “services to customers nationwide”—not worldwide.6

Am. Compl. ¶ 15. While “a noncompete’s geographic scope need not perfectly

Carriage, Inc. v. Berryman, 2004 WL 835886, at *1–2, *10, *13 (Del. Ch. Apr. 15, 2004)
(reviewing a noncompete entered into in connection with a sale of stock for $150,000 and
observing, “[b]ecause the Covenant is part of a contract for the sale of stock, this inquiry
is less searching than if the Covenant had been contained in an employment contract”);
Faw, Casson & Co., 375 A.2d at 465 (explaining that noncompetes “are subject to
somewhat greater scrutiny when contained in an employment contract as opposed to
contracts for the sale of a business”).
6
Notably, while the Noncompete applies nationally (and arguably internationally),
Norman was responsible only for Enterprise customers in the West region. Am. Compl.
¶¶ 48, 59.

14
match the employer’s footprint at the time of contracting, at least in the context of a

sale of the business[,] . . . the employer must still have a legitimate business interest

in the protected area.” Cleveland Integrity Servs. v. Byers, 2025 WL 658369, at

*10–11 (Del. Ch. Feb. 28, 2025). Here, Payscale does not. See id. (finding “a

geographic scope prohibiting competition anywhere in North America” was

“facially broader than necessary to protect Plaintiff’s U.S. business interests”);

Intertek Testing Servs. NA, Inc. v. Eastman, 2023 WL 2544236, at *4 (Del. Ch. Mar.

16, 2023) (explaining that “incongruity between the [global] geographic scope” of a

noncompete and the plaintiff’s nationwide business “leads me to conclude the non-

compete is unreasonably broad and unenforceable”).

Second, although Payscale argues that the Restrictive Covenants are intended

to protect Payscale’s business, the Noncompete applies more broadly to Topco and

all of its unnamed subsidiaries. The Noncompete does not describe the lines of

business in which any of those entities operate, rendering the provision unreasonably

vague. See, e.g., Hub Gp., Inc., 2024 WL 3453863, at *9 (finding a noncompete

overbroad where the plaintiff “could not articulate or describe” the business

conducted by all the entities included under the definition of “Competing

Business”); Centurion Serv. Gp., 2023 WL 5624156, at *4 (finding a noncompete

overbroad because it “fail[ed] to define precisely what [the company’s] ‘business’

is”); FP UC Hldgs., 2020 WL 1492783, at *7 (same). The Noncompete also

15
prohibits Norman from working in the same line of business as Topco (managing

investments), even though Norman is not alleged to have any special knowledge of

Topco’s business that it conceivably could have an interest in protecting.

Finally, two limitations to the definition of “Competitive Activity” do not save

the Noncompete. The Incentive Equity Agreements define “Competitive Activity”

to permit work in a position that “(i) would not involve any level of strategic,

advisory, technical, creative, or sales activity or (ii) is exclusively in connection with

an independent business line of such entity that is wholly unrelated to the business

operated by the Partnership Group and the Confidential Information.” First Agt.

§ 9; Second Agt. § 9. Those carve-outs do little to limit the reach of the Noncompete.

“[S]trategic, advisory, technical, creative, or sales activity” is so broad as to

encompass virtually any position. And, as noted above, the Incentive Equity

Agreements do not define the business lines “operated by the Partnership Group.”

First Agt. § 9; Second Agt. § 9. Even with these limiting clauses, the Noncompete

prohibits activity beyond Payscale’s legitimate economic interests, rendering it

unenforceable.

c. The Court Will Not Blue Pencil The Noncompete.
The Court will not blue pencil the Noncompete. “Delaware courts have the

discretionary power to blue pencil overbroad restrictive covenants to align a

company’s legitimate interests and an individual’s right to be free from unreasonable

16
restrictions on their livelihood.” Sunder Energy, LLC v. Jackson, 2024 WL

5052887, at *8 (Del. Dec. 10, 2024) (emphasis added). “[T]he court’s decision to

exercise that equitable power should be based on the covenants themselves and the

circumstances surrounding their adoption . . . .” Id. at *12. For example, “Delaware

courts have exercised their discretion to blue pencil restrictive covenants under

circumstances that indicate an equality of bargaining power between the parties,

such as where the language of the covenants was specifically negotiated, valuable

consideration was exchanged for the restriction, or in the context of the sale of a

business.” Id. at *8.

Even drawing all reasonable inferences in Payscale’s favor,7 the Amended

Complaint does not allege any facts that conceivably could warrant blue penciling.

The Amended Complaint does not allege that Norman entered into the Incentive

Equity Agreements in connection with the sale of a business, but through her

employment. Nor does the Amended Complaint allege facts suggesting that the

parties enjoyed equal bargaining power, or even that the Restrictive Covenants were

7
Payscale argues that the availability of blue penciling raises fact issues. AB at 34.
“Although the Supreme Court’s affirmance [in Sunder Energy, LLC] was based on a
developed record after trial, I do not read Sunder to require a trial on the availability of
blue penciling where, as here, a noncompete is facially invalid and the [alleged] facts do
not support such a remedy.” See Weil Hldgs. II, LLC v. Alexander, 2025 WL 689191, at
*7 n.7 (Del. Ch. Mar. 4, 2025).

17
negotiated. Accordingly, the Court will not exercise its discretion to blue pencil the

Noncompete.

2. The Amended Complaint Fails To Adequately Allege A
Breach Of The Nonsolicitation Or Confidentiality Provision.

The Amended Complaint fails to adequately allege that Norman has breached

the Nonsolicitation Provision or the Confidentiality Provision. The Amended

Complaint alleges “on information and belief” that, through her work for

BetterComp, “Norman breached . . . Section 8(b)(ii), which prohibits the solicitation

of Payscale’s customers or prospective customers,” and “is using Payscale’s

confidential information to solicit prospective customers to enter into contracts with

BetterComp instead of with Payscale.” Am. Compl. ¶¶ 96, 132. These conclusory

allegations, unsupported by any additional pled facts, fail to state a claim for breach

of either provision. See Intertek Testing Servs. NA, Inc., 2023 WL 2544236, at *5–

6 (dismissing a claim for breach of contract where the complaint only “assert[ed]—

without supporting facts—that [the defendant] ‘violat[ed] his various duties under’”

a stock purchase agreement’s nonsolicitation provision); Fitzgerald v. Cantor, 1999

WL 66526, at *1 (Del. Ch. Jan. 14, 1999) (“Conclusory allegations . . . are not

accepted as true without specific supporting factual allegations.”).

* * *

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To summarize, the Noncompete is unenforceable, and the Amended

Complaint fails to state a claim for breach of the Nonsolicitation Provision or the

Confidentiality Provision. Count I is dismissed.

B. Count II Is Dismissed.
In Count II of the Amended Complaint, Payscale alleges a claim against

BetterComp for tortious interference with contractual relations.

To state a claim for tortious interference with contract, a plaintiff must allege

“(1) a contract, (2) about which defendant knew, and (3) an intentional act that is a

significant factor in causing the breach of such contract, (4) without justification,

(5) which causes injury.” Bhole, Inc. v. Shore Invs., Inc., 67 A.3d 444, 453 (Del.

2013) (emphasis omitted) (citation omitted).

The parties’ briefing concedes that Count II turns on the enforceability of a

contract, and therefore rises or falls on Count I. See OB at 37; AB at 35. Because

Count I dismissed, Count II is also dismissed.

C. Count III Is Dismissed.
In Count III of the Amended Complaint, Payscale alleges a claim against

Norman and BetterComp for tortious interference with prospective business

relations.

To state a claim for tortious interference with prospective business relations,

a plaintiff must allege “(1) a reasonable probability of a business opportunity;

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(2) intentional interference by a defendant with that opportunity; (3) proximate

causation; and (4) damages.” Beard Rsch., Inc. v. Kates, 8 A.3d 573, 607–08 (Del.

Ch. 2012). When evaluating the sufficiency of such allegations, “[o]ur courts reject

‘vague statements about unknown customers,’ allegations of ‘a nebulous,

unascertainable class of business relationships,’ or speculative prospects.” Preston

Hollow Cap. LLC v. Nuveen LLC, 2020 WL 1814756, at *12 (Del. Ch. Apr. 9, 2020)

(citations omitted). “Instead, to succeed, [a plaintiff] must . . . . ‘identify a specific

party who was prepared to enter into a business relationship but was dissuaded from

doing so by the defendant.’” Id. (emphasis added) (citation omitted).

Count III fails to state a claim because the Amended Complaint does not plead

facts supporting an inference of either a reasonable probability of any specific

business opportunity, or intentional interference with any such opportunity. The

Amended Complaint alleges “on information and belief” that “Norman and

BetterComp knew and know of Payscale’s prospective and potential contractual and

business relations with its existing customers and prospective customers” and “have

interfered with and continue to interfere with Payscale’s prospective business

relations without justification or privilege,” but fails to plead any facts in support.

Am. Compl. ¶¶ 161–62. “[C]onclusory statements that Defendants thwarted

Plaintiffs’ business opportunities, . . . are insufficient to survive at the motion to

dismiss stage.” Glob. Discovery Biosciences Corp. v. Harrington, 2023 WL

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8295946, at *7–8 (Del. Ch. Dec. 1, 2023) (finding that a plaintiff “fail[ed] to plead

a prima facie claim for tortious interference with prospective business relations”

where the complaint did not “assert potential contracts or opportunities that

Defendants interfered with”).

The Amended Complaint also alleges that “BetterComp has been deliberately

targeting Payscale’s customers by recruiting Payscale’s employees,” but fails to

allege that BetterComp acted unfairly when competing for employees. Am.

Compl. ¶ 135. A claim for tortious interference with prospective business relations

“is unusual, in that its application, even if the[] elements are met, is circumscribed

by consideration of competing rights. Thus, the elements of the tort must be

considered in light of a defendant’s privilege to compete in a lawful manner.”

Kuramo Cap. Mgmt., LLC v. Seruma, 2024 WL 1888216, at *33 (Del. Ch. Apr. 30,

2024) (quoting Preston Hollow Cap. LLC, 2020 WL 1814756, at *12). A defendant

has a privilege to compete if “(a) the relation concerns a matter involved in the

competition between the actor and the other and (b) the actor does not employ

wrongful means and (c) his action does not create or continue an unlawful restraint

of trade and (d) his purpose is at least in part to advance his interest in competing

with the other.” Id. at *34 (quotation omitted). The only “wrongful” conduct

adequately alleged is violation of a Noncompete that the Court has found

unenforceable. Count III therefore fails to state a claim.

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III. CONCLUSION
For the reasons explained above, the Motion to Dismiss is GRANTED and

the Amended Complaint is DISMISSED.

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