In recent years, Texas courts have shown support for the employer’s use of non-compete agreements. The courts have done so by finding certain requirements of enforceability implied in non-compete agreements in some circumstances. Despite this trend, in June 2015, the federal appellate court that covers Texas ruled that a duty to keep information confidential cannot be assumed into a...
Continue ReadingA Texas appellate court recently addressed the question of whether money is sufficient to support a non-compete agreement. The court ruled that money was not enough and that the non-compete’s purpose must be to protect a legitimate business interest. The contract at issue was for a company (“Company A”) to provide hospitalist services and to coordinate the hiring of...
Continue ReadingChoice 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...
Continue ReadingAs readers of this blog know, noncompete agreements are increasingly enforceable in Texas. However, even in Texas, not all noncompete agreements comply with the statutory requirements. In a case decided a few months ago, the United States Court of Appeals for the Fifth Circuit, applying Texas law, held that a particular noncompete agreement was unenforceable. In that case, the...
Continue ReadingEmployees seeking to avoid a non-compete agreement when ending an employment relationship should ensure that their former employer explicitly releases them from the agreement. Such was the case in Try Hours, Inc. v. Douville, 2013 WL 139584 (Ohio App. 2013). In Try Hours, Inc., the Sixth Appellate District of the Ohio Court of Appeals held that an integration clause...
Continue ReadingIn Texas, non-compete agreements that arise from the sale of a business are relatively more enforceable than those that are contained in an employment agreement. For example, Texas courts have held that covenants not to compete may be significantly broader in scope if they arise from the sale of a business. However, as a recent case demonstrates, from the...
Continue ReadingHiring 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 important for both employers...
Continue ReadingWhen 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. In legalese, choosing a...
Continue ReadingAn 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 my new company, Best...
Continue ReadingOnce 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, prohibit the employee from...
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