The Marsh USA case was perhaps the most important non-compete case coming out of the Texas Supreme Court since the Light case in 1994. And that’s saying a lot, given the Sheshunoff (2006) and Mann Frankfort (2009) opinions which made non-competes more enforceable in Texas. After Marsh USA, Texas restrictive covenant attorneys will have to monitor decisions coming from...
Continue ReadingOften in litigation involving noncompete agreeents, an employee bound by a noncompete agreement will contend that the scope of the restrictions contained in the agreement are overly broad. The employee may, for example, argue that an agreement prohibiting customer solicitation is too broad. Or, an employee may argue that a covenant not to compete is too restrictive; e.g., the...
Continue ReadingThe Marsh USA decision, which was handed down by the Texas Supreme Court earlier this month, sent shock waves through the community of lawyers who handle matters involving noncompete agreements. The decision creates danger for employees bound by noncompete agreements here. Hopefully, the word about this and other pro-enforcement decisions will get out, so that laypeople can stop referring...
Continue ReadingEarlier this year, the Austin Court of Appeals handed down a very interesting opinion in a Texas misappropriation of trade secrets case. This case demonstrates that even without an enforceable noncompete agreement, a Texas employer may be able to inhibit a former employee’s ability to unfairly compete or use or disclose the employer’s trade secrets. In this case, a...
Continue ReadingTexas courts continue to confirm the enforceability of some noncompete agreements here. I routinely here from people that "Texas is a right to work state, and noncompete agreements are not enforceable here." Five years ago, Texas courts were extremely unsympathetic to noncompete agreements. But ever since the Sheshunoff and Mann Frankfort cases were decided, Texas courts have been more willing to...
Continue ReadingA recent case from the Beaumont Court of Appeals highlighted the difficulty that employers sometimes face in enforcing noncompete agreements in Texas. In this case, a physician practice group sued one of its former physicians for violating a noncompete agreement. The physician had left the practice and started his own practice within the proscribed 22-mile radius. The trial court...
Continue ReadingThe Fort Worth Court of Appeals recently issued a very interesting opinion on the geographic scope of noncompete agreements in Texas. In this case, a publishing company did business in Johnson County, Texas. The company hired the defendant to sell advertising for it. The defendant’s job duties were performed in Johnson County. The defendant resigned and began competing in...
Continue ReadingIn a recent case in Houston, a state trial court’s denial of an application for a temporary injunction was overturned. In denying the requested temporary injunction, the court had failed to receive any testimony that might have supported the issuing of an injunction. The court of appeals held that failing to receive testimnony necessitated reversal of the trial court’s ruling, for the following reasons: First, the trial court...
Continue ReadingIn a recent case in a federal district court in Texas, the defendants–individuals who had signed non-compete agreements with their previous employer–contended that their agreements should not be enforceable because they were "constructively discharged" (i.e., forced to resign). The federal district court rejected this contention. In doing so, the court noted that "termination of at-will employment does not invalidate a restrictive covenant...
Continue ReadingWhat happens when an employer gives an employee stock in exchange for a non-compete agreement, but the non-compete agreement is held to be unenforceable. Does the employee still get to keep the stock? This question was raised in a case in which the employer gave a ten percent ownership interest in the company to one of its employees. The...
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