Choice Of Law in Injunction Hearings
In a prior post on Choice of Law in Texas Noncompete Litigation, we discussed the need for a well-thought-out choice of law provision in noncompete agreements. The courts have again highlighted the importance of this, but this time, it is within the context of temporary injunctions.
Cameron International Corporation v. Guillory, a recent Texas Court of Appeals case, approaches the issue of whether to make a choice of law analysis in an injunction hearing. While working for Cameron International, Guillory entered into a non-compete agreement. However, Guillory “signed” this agreement by means of an online prompt stating that he read and understood the agreement. The agreement also stated that it would be governed by Delaware law. On application for a temporary injunction, the trial court applied Texas law to decline enforcement of the non-compete.
The problem was that Texas law does not favor online “click” agreements like Delaware. On appeal, Cameron International argued that Delaware law should have been applied during the injunction hearing. Conversely, Guillory contended that choice of law is a merits question, so deciding it at the temporary relief stage was premature and improper. The Court of Appeals held that choice of law must be established before addressing the propriety of temporary relief.
The court then applied the standard from Exxon v. Drennen—discussed in the abovementioned blog post. After analyzing the facts in Cameron International, the court determined that the choice of law provision was enforceable, and as a result, it granted the temporary injunction.
A well-drafted choice of law provision can make a big difference when enforcing your non-compete at the critical temporary injunction stage. In Cameron International, it was the primary factor in the granting of a temporary injunction. Not only can a well-drafted choice of law provision prevent potential pitfalls and costly litigation, it can help determine the protections afforded at a very early stage. At Lindquist Wood Edwards LLP, our lawyers take great care when drafting your non-compete agreements to ensure the maximum likelihood of enforceability.