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A recurring issue in Texas law is whether financial compensation can constitute sufficient consideration for a non-compete agreement. This issue came up recently in a case from the Dallas Court of Appeals. In that case, a company that provided insurance brokerage services granted some stock options to one of its managing directors. The options were conveyed in an Employee...
Continue ReadingTexas courts have long held that an employer’s providing of confidential information can constitute sufficient consideration for a non-compete agreement. But it can be difficult to apply this widely accepted premise, as was demonstrated in a recent case. In the case, an insurance broker signed an employment agreement in which he acknowledged that he would receive confidential information: This...
Continue ReadingIn determining whether a non-compete agreement is enforceable, a Texas court will assess whether the consideration given by the employer justifies the non-compete agreement. Texas courts have held on multiple occasions that an employer’s providing of confidential information is sufficient consideration for a non-compete agreement. Even without an enforceable non-compete agreement, a Texas employer has legal rights and remedies...
Continue ReadingNot infrequently, non-solicitation agreements that employers require their employees to sign are extremely broad. These provisions often preclude the employee from soliciting all of her former employer’s customers. Sometimes, the provisions also preclude the employee from soliciting her former employer’s potential customers. A recent case involved the following non-solicitation provision: Accordingly, the Executive understands and agrees that for a...
Continue ReadingA recurring issue in employee mobility cases is the extent to which a non-solicitation provision in an employment contract is enforceable. Typically, an employment agreement will contain a provision prohibiting post-employment competition, provisions prohibiting post-employment solicitation of customers and/or employees, or both. It’s not uncommon for a provision prohibiting solicitation of employees to apply to all of the employers...
Continue ReadingA recurring issue in non-compete cases involves how definite the employer’s promise to provide confidential information must be for the agreement to be enforceable. Historically, disputes have focused on whether an explicit promise to provide the information was required, or whether an implied promise (e.g., language in which the employee "acknowledged" that he would receive information) was sufficient. In...
Continue ReadingA recent case from the federal court in Dallas sheds some light on various issues involving the enforceability of non-compete agreements. In Staples, Inc. v. Sandler, No. 3:07-CV-0928-K, 2008 WL 4107656 (N.D. Tex. Aug. 29, 2008), the employee, Sandler, upon joining Staples, Inc., signed a “Proprietary and Confidential Information Agreement” and a separate “Non-Compete and Non-Solicitation Agreement” (“Non-Compete Agreement”)....
Continue ReadingAlmost two years ago, in the Sheshunoff case, the Texas Supreme Court rejected the notion that an employer must provide the employee with confidential information at the precise moment the non-compete agreement is signed for the agreement to be enforceable. According to the court, it is not fatal to the agreement’s enforceability if the information is actually provided sometime later....
Continue ReadingA recent case from the Dallas Court of Appeals explains several concepts that frequently come up in trade secret theft cases. In Global Water Group, Inc. v. Atchley, No. 05-06-00709-CV, 2008 WL 384436 (Tex. App.–Dallas 2008, no pet. h.), the plaintiff had created a water purification system. When the plaintiff’s president resigned and formed a competing company, the plaintiff...
Continue ReadingA recent opinion issued by the federal Southern District of Texas sheds a little light on the question of how definite a promise to provide confidential information must be for a noncompete agreement to be enforceable. In Teel v. Hospital Partners of America Inc., No. H-06-3991, 2008 WL 346377 (S.D. Tex. Feb. 6, 2008), the court, quoting the Light case,...
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