Labor & Employment Law Daily Wrap Up, PROCEDURE—8th Cir.: Preliminary injunction vacated in dueling noncompete cases, (Jun 9, 2025)

By Todd Harrison, J.D.

Three insurance company employees argued that Nebraska law should apply, thus making the noncompete provisions unenforceable, while their former employer contended Texas law should apply, rendering the covenants enforceable.

Vacating a district court’s order granting preliminary injunctive relief to three insurance company employees and remanding for further proceedings, the Eighth Circuit found that the lower court had applied the wrong standard when considering an antisuit injunction and should have instead applied the first-filed rule in assessing whether to grant such relief. It also found that the court erred in determining that the employees would not suffer irreparable harm in the absence of a preliminary injunction, but that an injunction should nonetheless issue because irreparable harm would occur to Nebraska state policy. Finally, the court noted that a declaratory judgment may be appropriate relief based on the district court being the place where the suit was first filed (Beber v. NavSav Holdings, LLC, Nos. 23-2965, 23-2966, and 23-2967 (8th Cir. Jun. 6, 2025)).

Acquisition. In 2022, the Texas insurance company NavSav Holdings acquired the Nebraska insurance company Universal Group, Ltd. NavSav renegotiated employment terms with Universal’s employees. The employees were asked to sign three covenants, including a covenant not to compete, a covenant not to solicit NavSav customers, and a covenant not to solicit NavSav employees. The choice of law provision and forum-selection clauses in the covenants chose Texas law and the state court in Jefferson County, Texas, where NavSav is headquartered.

Switching companies. On June 16, 2023, three Nebraska-based employees who had signed the covenants joined a rival insurance company based in Lincoln, Nebraska. NavSav alleged that the employees took customers with them who were worth about $510,000 in annual insurance premiums.

Legal actions. Multiple legal actions commenced. First, one of the employees sued NavSav in Nebraska state court seeking declaratory and injunctive relief, arguing that Nebraska law should control and the covenants were thus unenforceable. NavSav then sued the three employees and their new employer in Texas state court. The two other employees then sued NavSav in Nebraska state court, also seeking declaratory and injunctive relief.

Ultimately, the Nebraska cases were removed to the federal district court in Nebraska, while the Texas case was removed to a federal district court in Texas. Applying Nebraska law, the district court in that state granted antisuit and preliminary injunctions in the employees’ favor. The preliminary injunctions forbade NavSav from making any further filings in the Texas case and from taking any actions to enforce the covenants.

On appeal, NavSav argued that the federal district court in Nebraska erred in preliminarily enjoining NavSav from: (1) litigating its Texas case; and (2) attempting to enforce its noncompete and nonsolicitation covenants.

Dataphase. In the present case, the district court applied the Dataphase standards for injunction relief in issuing the antisuit injunctions. Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109 (8th Cir. 1981). The standards set forth in Dataphase are similar to other standards courts weigh when considering a preliminary injunction. However, the court here explained that orders enjoining a party from proceeding with a duplicative, second-filed lawsuit in another forum are not subject to the Dataphase standards for injunctive relief.

Instead of applying the Dataphase factors, a district court should apply the first-filed rule in assessing whether to grant an antisuit injunction. Because the district court applied the improper legal standard, the appellate court vacated the antisuit injunctions and remanded the matter for application of the first-filed rule analysis.

Irreparable harm. Turning to the issuance of the preliminary injunctions forbidding NavSav from attempting to enforce its employment covenants, the district court had determined that any economic injuries suffered by the employees were not irreparable because they could be recompensed through money damages. However, the district court did find that Nebraska’s clear public policy against overbroad restrictive covenants in employment contracts would be irreparably harmed by the enforcement of the covenants in question.

The district court acknowledged that no binding authority supported its conclusions that harm to a state public policy would count as irreparable harm. Nonetheless, it predicted that if such a case were ever to reach the Nebraska Supreme Court, that is the decision that it would reach. The court here found two errors in the district court’s analysis.

Federal standard. As to the first error, the court explained that a federal district court should apply a federal standard, not a state standard, when considering whether to grant a preliminary injunction.

“Although the federal standard for preliminary injunctive relief often requires a federal court to examine state law—for example, when the court considers a state-law claim’s likelihood of success on the merits—the standard itself remains federal,” explained the court. Thus, any determination as to whether irreparable harm exists is not a prediction about what a state court would decide.

Harm to movants. With regard to the second error, the district court’s orders misconstrued the meaning of “irreparable harm” under federal law.

The proper inquiry was not whether enforcement of the covenants would irreparably harm Nebraska public policy, but whether enforcement of the covenants would irreparably harm the individual movants, said the court. Once the district court determined that the employees’ potential harms were purely economic, compensable by NavSav, and therefore not irreparable, preliminary injunctive relief was foreclosed. Any consideration of potential harm to Nebraska public policy was an abuse of discretion.

Declaratory judgment. Although preliminary injunctive relief was not an option in this instance, the court observed that this did not necessarily forestall all judicial relief. In the first employee’s initial filing in Nebraska state court, he had prayed for declaratory relief. The district court did not address this prayer. On remand, the court retains its discretion to consider this prayer in the first instance.

Forum selection. Finally, NavSav argued that venue was improper and that, pursuant to the covenants’ forum-selection clauses, the district court should have dismissed all three cases or else transferred them to a federal district court in Texas. On this point, the court explained that motions seeking the enforcement of contractual forum-selection clauses, such as a motion to dismiss or a motion to transfer, are not appealable on an interlocutory basis. Accordingly, the court dismissed this portion of NavSav’s appeal for want of jurisdiction.

The case is Nos. 23-2965, 23-2966, and 23-2967.

Judge: Smith, L.

Attorneys: Emily M. Coffey (Koley Jessen) for Austin Michael Beber. Matthew G. Dunning (Goosmann Law Firm) for NavSav Holdings, LLC.

Companies: NavSav Holdings, LLC

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