Are noncompete agreements enforceable in Texas? You bet they are—more than ever. You know it’s bad news for the employee who is being sued when a court opinion starts with: “Texas law presumes a party has read and knows the terms of the contract that he has signed.” Ever since the Marsh USA decision, Texas courts have increasingly had...
Continue ReadingSeveral Texas courts have held that a victorious employer in a noncompete case cannot recover its attorneys’ fees against the losing employee. This is based upon the fact that the Texas noncompete statute does not explicitly authorize an award of attorneys’ fees to a winning employer. However, a recent case out of the Houston Court of Appeals shows that...
Continue ReadingWhile an employer may draft an enforceable non-compete covenant, it does not automatically follow that courts will enforce it with injunctive relief. Such was the case in Welsco, Inc. v. Brace, 2012 WL 4087224 (E.D. Ark. 2012). There, although the employment agreement was considered reasonable in both scope and duration, the...
Continue ReadingA recent decision from the Sixth Circuit upholding a district court’s preliminary injunction in litigation involving a non-compete clause demonstrates why an employee should sometimes be wary of legal advice from a new employer. In Firstenergy Solutions Corp. v. Flerick, 2013 WL 1500452 (6th Cir. 2013), Paul Flerick (“Flerick”) was employed as a salesman in the electric energy and...
Continue ReadingA preliminary injunction granted by the United States District Court for the Southern District of New York enforcing restrictive covenants against a former executive illustrates how narrowly tailored employment agreements are effective because of the willingness of courts to find them reasonable. In DeWitt Stern Group, Inc. v. Eisenberg, 2013 WL 2420835 (S.D.N.Y...
Continue ReadingAn opinion by the Dallas Court of Appeals shows how the courts apply the Texas Noncompete statute to covenants involving physicians. In the opinion, a surgery center was registered as a limited partnership. The general partner was a corporation, and the limited partners were physicians. The partnership agreement prohibited the limited partners from owning an interest in a competing...
Continue ReadingEven after the Marsh USA case, some noncompete agreements are still unenforceable in Texas. In a recent opinion by the Texarkana Court of Appeals, the noncompete agreement stated as follows: I agree not to seek employment on a temporary, contract or permanent basis at any company where introduced by Hiring Partners, Inc. for a period of ninety (90) days....
Continue ReadingNoncompete agreements in the context of a sale of a business have long held to be more enforceable than restrictive covenants in an employer/employee context. This was recently reaffirmed in a case handed down by the Fort Worth Court of Appeals. There, the owners of Company A sold their shares to Company B. As part of the sale, Company...
Continue ReadingIt has long been believed by some Texas lawyers that attorneys’ fees are not recoverable under a claim for breach of a noncompete agreement. This assumption has been based upon the language of the Texas noncompete statute, which states that the remedies provided by the statute “are exclusive and preempt any other criteria for enforceability of the covenant not...
Continue ReadingThe Houston Court of Appeals recently decided a case in which a former employee lost his company stock because he competed with his former employer. In the case, the employee had been awarded several thousand shares of restricted stock. The stock award document stated that the company could recover the stock if the employee engaged in "detrimental activity," which...
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