Texas Contract & Noncompete Disputes Blog

Texas Contract & Noncompete Disputes Blog

Texas Non-Compete, Trade Secrets and Contract Law

Category Archives: Noncompete Agreements

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Texas Appeals Court Reverses Denial of Temporary Injunction in Noncompete Case

Posted in Noncompete Agreements
Once again, a Texas appellate court sides with a company suing to enforce a noncompete agreement.  This time, the employer sued a former employee for violating a covenant prohibiting the employee for competing for three years following the termination of his employment.  Significantly, the noncompete covenant contained no geographic restriction.  It did not, for example, … Continue Reading

Unreasonable Noncompete Agreement Can Subject Employer to Potentially Huge Liability in Texas

Posted in Noncompete Agreements
Several Texas courts have held that a victorious employer in a noncompete case cannot recover its attorneys’ fees against the losing employee.  This is based upon the fact that the Texas noncompete statute does not explicitly authorize an award of attorneys’ fees to a winning employer. However, a recent case out of the Houston Court … Continue Reading

Narrowly-tailored restrictive covenants can be most effective

Posted in Noncompete Agreements
              A preliminary injunction granted by the United States District Court for the Southern District of New York enforcing restrictive covenants against a former executive illustrates how narrowly tailored employment agreements are effective because of the willingness of courts to find them reasonable.  In DeWitt Stern Group, Inc. v. Eisenberg, … Continue Reading

Requirements for Physician Noncompetes Strictly Enforced

Posted in Noncompete Agreements
 An opinion by the Dallas Court of Appeals shows how the courts apply the Texas Noncompete statute to covenants involving physicians.   In the opinion, a surgery center was registered as a limited partnership. The general partner was a corporation, and the limited partners were physicians. The partnership agreement prohibited the limited partners from owning an … Continue Reading

Texas Temporary Injunction Law: Fact-Specific Inquiries

Posted in Noncompete Agreements
Whether an injunction should issue in a particular case involves a fact-intensive analysis.  A recent opinion by the Dallas Court of Appeals demonstrates how the courts may conduct this analysis in cases involving claims for misappropriation of trade secrets and violations of the Texas Theft Liability Act.   A broker/dealer investment services company hired an employee … Continue Reading

Texas Noncompete Agreements: Not Always Enforceable, Even After Marsh USA

Posted in Noncompete Agreements
Even after the Marsh USA case, some noncompete agreements are still unenforceable in Texas.  In a recent opinion by the Texarkana Court of Appeals, the noncompete agreement stated as follows:  I agree not to seek employment on a temporary, contract or permanent basis at any company where introduced by Hiring Partners, Inc. for a period … Continue Reading

Do Texas Courts Blue Pencil Noncompete Agreements?

Posted in Noncompete Agreements
Frequently in cases involving noncompete agreements, the issue arises as to whether an overly broad covenant not to compete will be held to be completely unenforceable, or whether it will be modified to make it enforceable.  In some states, if a noncompetition agreement is overly broad, the entire agreement will be unenforceable.  In other states, … Continue Reading

Economic Costs of Noncompete Agreements

Posted in Noncompete Agreements
In his excellent concurrence in the Marsh USA case, Texas Supreme Court Justice Don Willett observed something that practitioners and trial court judges often forget or gloss over, namely, the adverse effect that unfair noncompete agreements can have on society at large.   Justice Willett noted: “Restrictive covenants are not costless, and even a mutually … Continue Reading

Texas Covenants Not to Compete: Trial Courts Must Strike Proper Balance

Posted in Noncompete Agreements
Justice Don Willett’s concurrence in the Marsh USA contains a lot of economic theory and literary allusions that one typically does not see in a court opinion. For example, Justice Willett has this advice for trial court judges who handle disputes involving restrictive covenants in Texas: “Restrictions on employee mobility that exist only to squelch … Continue Reading

Free Market Capitalism in Texas and Marsh USA

Posted in Noncompete Agreements
I re-read (again) the Marsh USA case this morning, including the concurring and dissenting opinions. The concurring opinion by Justice Willett is one of the most articulate and thoughtful opinions I have read in a long time. He tries to strike a balance between the pro-enforcement majority opinion and the dissenting opinion which fears that … Continue Reading

No Industry-Wide Texas Non-Compete Agreements

Posted in Noncompete Agreements
Texas cases dealing with the enforceability of noncompete agreements have long held that “industry-wide” restrictions are overly broad. In a recent case from the Waco Court of Appeals, the court applied that rule to a concrete situation. The covenant not to compete applied to the “pet supply manufacturing and distribution industry.” The employee contended that … Continue Reading

Texas’ Pro-Enforcement Trend Continues

Posted in Noncompete Agreements
 The Marsh USA case was perhaps the most important non-compete case coming out of the Texas Supreme Court since the Light case in 1994. And that’s saying a lot, given the Sheshunoff (2006) and Mann Frankfort (2009) opinions which made non-competes more enforceable in Texas. After Marsh USA, Texas restrictive covenant attorneys will have to … Continue Reading

Reformation of Texas Noncompete Agreements

Posted in Noncompete Agreements
Often in litigation involving noncompete agreeents, an employee bound by a noncompete agreement will contend that the scope of the restrictions contained in the agreement are overly broad. The employee may, for example, argue that an agreement prohibiting customer solicitation is too broad. Or, an employee may argue that a covenant not to compete is … Continue Reading

Marsh USA: Texas Noncompete Agreements More Enforceable

Posted in Noncompete Agreements
The Marsh USA decision, which was handed down by the Texas Supreme Court earlier this month, sent shock waves through the community of lawyers who handle matters involving noncompete agreements.  The decision creates danger for employees bound by noncompete agreements here.  Hopefully, the word about this and other pro-enforcement decisions will get out, so that … Continue Reading

Texas Non-Compete Contract: Non-Compete Agreements in Texas More Enforceable

Posted in Noncompete Agreements
 The Texas Supreme Court’s long-awaited opinion in the Marsh USA case was released on June 24, 2011. As readers of this blog know, in recent years, Texas has gone from being a very anti-noncompete-agreement state to a relatively pro-enforcement state. In the Sheshunoff and Mann Frankfort cases, the court had eliminated arguments that employees had … Continue Reading