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To get an injunction restraining former employees from competing, an employer needs a valid non-compete agreement or a misappropriation of trade secrets claim, right? Wrong. A breach of fiduciary duty (duty of loyalty) can also warrant injunctive relief. In a case decided several years ago, two employees worked for a company (“the Corporation”) that was involved in the institutional...
Continue ReadingAnother quick hit on the ramifications of Sheshenoff. In recent years, employers have not infrequently added to their non-compete agreements a promise to convey confidential information to the employee, even if the employee no longer worked for the employer when the information was conveyed. The purpose of this was to address the employee’s argument that, "Because I’m an at-will...
Continue ReadingThe elements for misappropriation of trade secrets under Texas law are well known. A plaintiff must establish that: (a) a trade secret existed; (b) the trade secret was acquired through a breach of a confidential relationship or was discovered by improper means; (c) the defendant used the trade secret without the plaintiff’s authorization; and (d) the plaintiff suffered damages...
Continue ReadingIn tortious interference with contract (or prospective business relations) cases, plaintiffs often contend that their contracts with customers—or employees—have been unlawfully interfered with. In many situations, the contract alleged to have been interfered with is an “at-will” contract (i.e., it is a contract that can be canceled by either party at any time, for any reason). An at-will employment...
Continue ReadingAn employee may be liable for breach of fiduciary duty to his employer—even if his employer suffers no actual damages as a result of the offending conduct. So learned an employee in a recent case. In that case, the employee, a Project Manager for a general construction contractor, was responsible for locating potential subcontractors for the project, soliciting bids...
Continue ReadingIn a recent case, the employer’s consideration in exchange for the employee’s promise not to compete was set forth in the following provision: Employer hereby agrees to provide to Employee any specialized training necessary, in the opinion of Employer, to allow Employee to conduct the duties of employment with Employer. Employer further agrees to provide to Employee any...
Continue ReadingOne of the most frequently-litigated issues involving noncompete agreements is whether the consideration given by the employer was adequate. There are generally two parts to the inquiry: one, whether the consideration given was real (i.e., not “illusory”); and two, whether the consideration given justified the noncompete agreement in question. Giving a definite term of employment satisfies the first requirement,...
Continue ReadingIn our free market economy, it’s a given that competition is a good thing, right? Theoretically, yes, but courts have made it clear that competition, to be lawful, must also be “fair.” A Texas case shed some light on the difference between fair and unlawful competition. Renew Data Corporation ("Renew") provided computer forensic services for corporations. Renew would search...
Continue ReadingIn situations in which an employee leaves one company and goes to work for another, a tortious interference claim may be asserted against the departing employee or the new employer. Tortious interference claims come in two types: tortious interference with (an existing) contract, and tortious interference with prospective business relations. A tortious interference with contract claim has the following...
Continue ReadingA provision prohibiting an employee from soliciting his former employer’s remaining employees must meet the requirements applicable to noncompete agreements. Trying to attract workers constitutes fair competition (unless it is unfair, as it might be if an employee raiding provision prohibits it, or if doing so constitutes tortious interference).
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