Texas 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 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 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,...
Continue ReadingIn a recent Texas case involving a restrictive covenant, the plaintiff contended that the duration of the non-compete covenant should be judicially extended beyond the agreement’s normal expiration date. In that case, the seller of a dance studio entered into an agreement in which she promised not to compete with the buyer. As is true in most states, non-compete covenants contained...
Continue ReadingWhat happens if an employer seeking to enforce a non-compete agreement is itself in breach of the agreement. Does the employer’s previous breach adversely affect its ability to enforce the non-compete? Maybe. It’s "hornbook" law in Texas that one party to a contract is precluded from enforcing a contract if that party itself is in “material” breach. In DeSantis v....
Continue ReadingTexas courts routinely hold that at-will employment is "illusory" consideration. Because the employer is free to terminate the employee at any time, the courts reason, giving an at-will job to someone is, legally speaking, meaningless. Thus, non-compete agreements in Texas based upon that consideration are unenforceable. Not all states agree. While researching a noncompete matter in Illinois the other...
Continue ReadingTexas courts have long held that Texas law should determine whether non-compete agreements affecting Texas residents are enforceable. As a result, Texas courts generally will not enforce out-of-state choice of law provisions. However, as a recent Texas Supreme Court case illustrates, contractual forum selection provisions can alter that result. In Re AutoNation, Inc. involved a suit filed in Broward...
Continue ReadingNon-compete agreements routinely provide for the employer to get injunctive relief in the event the employee engages in post-employment competition. In a recent case, the agreement in question subjected the employee to potentially harsher penalties. The non-compete in question contained the following provisions: 14. Restrictive Covenant. In consideration of the benefits being provided to the Employee pursuant to this Agreement as...
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