It is merely a separate agreement between the assignor and assignee in which the assignor gives its rights under the contract to the assignee for good and valuable consideration. Since an assignment is not a modification to the original agreement, it does not need to be in writing and signed by the parties to the original agreement. However, if the terms of the original agreement are altered by the assignment, such as if Kethan's terms of employment changed (different salary, different working hours, different responsibilities) then the assignment could arguably be a modification of the original agreement. However, in this case nothing about Kethan's work environment changes.
Further, the court determined that due to Kentucky public policy and case precedent, noncompetition agreements are assignable because Kentucky public policy favors enforcement of noncompetition agreeements as long as they are reasonable. This policy is designed to protect businesses from unscrupulous employees who attempt to abuse their connections they gain as employees and take valuable business with them when they leave, which is exactly what Kethan did in this case when he went to work for FirstChoice. The court of appeals also used general contract law treatise's that note most contracts are generally assignable and enforceable by the assignee unless the contract explicitly states otherwise or the assignment goes against...
According to Choate v. Koorsen Protective Servs., Inc. A noncompetition clause that is enforceable in Kentucky is assignable as part of a business's sale of its assets. The court did not find that the Choate case was distinguishable from the present case in any significant way. Therefore the ruling in the Choate case is applicable here. Thus, the employment agreement at hand and its applicable noncompetition clauses are assignable to MHA and enforceable by MHA.
MY ASSESSMENT: I do not agree with the reasoning of the dissent in this case but I do agree with the dissent's conclusion here. It is good public policy to allow mergers and acquisitions in business without requiring the acquiring organization to modify in writing every employment agreement of the acquired organization. If a company is going to sell most or all of its assets, then it is natural that the employment agreements of such company would be included in those assets. However, it does not appear that the employment agreement contained a clause stating that Kethan's employment was of a specific and unusual nature such that his violating the noncompete would substantially harm MedEcon in such a way that monetary compensation would be unfit to make it whole. Although the court should have remanded the case for final judgment, the court should not have reversed the lower court's denial of a preliminary injunction.
