Texas Non Compete Agreements: More Thoughts On How Definite Promise to Provide Confidential Information Must Be in Texas

May 18, 2007 / By Robert Wood

 

As we noted last week, how strongly an employer must promise to provide confidential information to have an enforceable non-compete agreement remains unclear, even after Sheshunoff.  Interestingly, though, there appears to be some divergence on the issue between the Dallas and Houston courts of appeal.  And the Austin court seems to be sympathetic to the Dallas court’s position.

Before Sheshunoff, the Dallas court, in three cases (C.S.C.S., Strickland, and Tom James), appeared skeptical that language such as “may reveal,” “Employee will become familiar with,” and “this Agreement is intended to recognize that Employer provides Employee with confidential information,” obligated the employer to provide such information.  However, in two of the cases, the fact that the alleged promises depended upon continued at-will employment were key factors in the decisions.  And the third case—C.S.C.S.—involved the weakest language (“may reveal”). 
 

However, the Houston court—or, at least, the First District of that court—held that an employee’s acknowledgement that she would get confidential information constituted an implied promise by the employer to give the information.

In the well-known Trilogy case out of the Austin Court of Appeals, the court seemed skeptical of the employee’s contention that his “acknowledgement” that he’d get information meant that the employer had impliedly promised to give it.  But the decision there hinged on the gap in time between the employee’s signing the agreement and receipt of the information.

Now that Sheshunoff has decided that a basis upon which several Texas courts had earlier voided non-compete agreements was–i.e., that a gap in time existed between  the employee’s signing of the agreement and receipt of the information–was invalid, we can expect  further clarification on other disputed points, including how definite the employer’s promise to provide the information must be.
 

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About the Author

Robert Wood has been a Texas trial lawyer since 1993. During that time, he has represented small, mid-sized, and Fortune 100 companies in business and employment litigation matters all over Texas and the United States. He has also advised and represented hundreds of individuals in employment litigation matters. Read more about Robert Wood