Temporary Injunction Denied in Texas Noncompete Case

Posted on November 9, 2010 by Robert Wood

A recent case from the Beaumont Court of Appeals highlighted the difficulty that employers sometimes face in enforcing noncompete agreements in Texas.  In this case, a physician practice group sued one of its former physicians for violating a noncompete agreement.  The physician had left the practice and started his own practice within the proscribed 22-mile radius.  The trial court denied the practice's request for a temporary injunction.

The court of appeals affirmed.  In doing so, the court emphasized that when the noncompete was signed, and the 22-mile radius agreed to, the population of the city in question was roughly half what it was years later when the practice sought to enforce the covenant.  The court also noted that the practice had failed to prove that the physician had disseminated any of the practice's confidential information, or that the practice had suffered a loss of revenue due to the physician's actions.  In short, the practice had failed to prove irreparable harm--which is a prerequisite to obtaining a temporary injunction in Texas.

OBSERVATION:

The court also noted that the result at the final trial might be very different.  At the permanent injunction stage, the employer need not prove irreparable harm.

Tags:

Scope of Noncompete Agreements. Texas Noncompete Lawyer

Posted on November 8, 2010 by Robert Wood

The Fort Worth Court of Appeals recently issued a very interesting opinion on the geographic scope of noncompete agreements in Texas.  In this case, a publishing company did business in Johnson County, Texas.  The company hired the defendant to sell advertising for it.  The defendant's job duties were performed in Johnson County.

The defendant resigned and began competing in nearby Parker County.  The company sued him for violating his noncompete agreement.  The company contended, "We were planning on expanding into Parker County, and you knew that.  Thus, you should not be allowed to compete with us there."

The Fort Worth Court of Appeals rejected the company's argument.  In doing so, the court noted Texas' long-standing rule that the proper scope of a noncompete agreement is the territory in which the employee worked.  The court noted, "The parties have not cited, and we have not found, a case in which a geographical limitation including areas where an employer does not currently operated but has targeted for futur expansion, standing alone, is reasonable."

The court of appeals reversed the trial court's ruling in favor of the company.

OBSERVATION:

When analyzing the proper scope of a noncompete agreement, Texas courts usually focus primarily upon the activites of the person bound by the covenant.  In this case, the company tried to expand the scope of the covenant to counties in which it planned to do business.  But the court of appeals held that this went too far.

Tags: