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 Noncompete Agreements Must Be Reasonable in Scope

Posted in Noncompete Agreements
Hiring employees, training them, and granting them access to industry secrets or client lists exposes employers to the possibility that employees will utilize this valued information against them.  In order to protect themselves, employers will often include a covenant not to compete provision in an employment contract, commonly known as a “non-compete.”  However, it is… Continue Reading

Oral Promises Enforceable in Texas

Posted in Noncompete Agreements
“An oral contract is as good as the paper it is written on”—this is simply not true.  In fact, a Texas jury awarded $11 billion dollars in damages to Pennzoil when Texaco interfered with an oral contract for the sale of Getty Oil to Pennzoil, one of the largest jury verdicts in U.S. history.  While… Continue Reading

Choice of Law in Texas Noncompete Litigation

Posted in Noncompete Agreements
When contracting with another party, it is essential to understand which state law will govern your contract in the event you find yourself in a contractual dispute.  What might seem to be a reasonable provision, agreed upon by all parties, can be interpreted radically different depending upon the state law that will govern your contract. … Continue Reading

A Rare Anti-Noncompete Case in Texas

Posted in Noncompete Agreements
An employee of a small manufacturing company (“Acme Company”) leaves and starts his own competing company (“Best Company”). Acme Company sues the employee for doing so—because the employee signed a noncompete agreement stating that, if he left Acme Company, he would not start a competing business. In the lawsuit, the employee argues, “The existence of… Continue Reading

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