Non-Compete Clause Could Not Be Enforced Outside of Areas Where Comedy Businesses Were Operating

Case: Comedy Club, Inc. v. Improv West Assocs., 9th Cir. No. 05-55739 (1/29/09)

The One Sentence Summary: After remand from the Supreme Court, the Ninth Circuit panel reaffirmed its earlier decision holding that an arbitrator's award enforcing an in-term non-compete clause over the entire country was in manifest disregard of California's law barring restraints on competition, Business and Professions Code section 16600; the non-compete was only enforceable where a comedy club owned by the licensor was operating.



Ninth Circuit Holdings:

• After a remand to consider its earlier decision in light of Hall Street Associates L.L.C. v. Matel, Inc., 128 S. Ct. 1396 (2008), the panel concluded that manifest disregard of the law remains a ground upon which an arbitrator's decision may be reviewed and modified.