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Labor & Employment Law

Texas Non-Compete Law Blog

Non-compete agreements and related topics.
By Robert Wood, David Ellis, and James Landon

Post Frequency: 0.4/day

Last Entry: April 02, 2013 at 09:45:00

Requirements for Physician Noncompetes Strictly Enforced

Posted on April 02, 2013
An 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...

Texas Tortious Interference Law: Explicit Threat Not Required

Posted on December 20, 2012
An opinion by the San Antonio Court of Appeals demonstrates that in order prevail on a claim for tortious interference of contract, the claimant need not prove an outright threat. Certain statements and requests may be sufficient. A salesman was recruited to work for a company by a general manager and a sales manager...

Texas Temporary Injunction Law: Fact-Specific Inquiries

Posted on December 20, 2012
Whether an injunction should issue in a particular case involves a fact-intensive analysis. A recent opinion by the Dallas Court of Appeals demonstrates how the courts may conduct this analysis in cases involving claims for misappropriation of trade secrets and violations of the Texas Theft Liability Act...

Usurpation of Corporate Opportunity in Texas

Posted on December 18, 2012
What constitutes 'usurpation of corporate opportunity'? There is no clear answer. However, an opinion by the Texarkana Court of Appeals is instructive. During merger negotiations, the company's Chief Financial Officer (who was also a director and stockholder in the company) and another director/stockholder agreed that the CFO would waive an important provision in his employment contract in exchange for a promise by the other director/stockholder to provide the CFO with an interest in three new stock offerings...

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Tortious Interference and Breach of Contract in Texas

Posted on December 17, 2012
A recent opinion by the Dallas Court of Appeals demonstrates that conduct in violation of an employment agreement may also constitute tortious interference. In that case, two companies provided in-home nursing care for seriously ill pediatric patients...

Under Texas law, how secret must trade secret be?

Posted on November 26, 2012
A recent opinion by the Dallas Court of Appeals explains what constitutes a trade secret and gives an example of information acquired through unfair means. The court defines a trade secret as 'any formula, pattern, device, or compilation of information that is used in one's business and presents an opportunity to obtain an advantage over competitors who do not know or use it...

Who is a fiduciary under Texas law?

Posted on November 26, 2012
As a recent opinion by the Fifth Circuit indicates, an employment agreement that provides that all work product created by the employee becomes the property of the employer may give rise to a fiduciary relationship between the employee and employer. In that opinion, a company entered into an employment agreement with a chemist...

What is tortious interference under Texas law?

Posted on November 26, 2012
A recent opinion by the Dallas Court of Appeals demonstrates that merely inducing a party to a contract to do something that it is permitted to do under the contract generally cannot, standing alone, constitute tortious interference. In that case, a bank held a piece of real property in trust...

Texas Noncompete Agreements: Not Always Enforceable, Even After Marsh USA

Posted on November 09, 2012
Even 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...

Texas Courts Enforce Sale of Business Noncompetes

Posted on August 24, 2012
Noncompete 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...

Attorneys' Fees in Texas for Breach of Noncompete Agreement?

Posted on May 21, 2012
It 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 to compete or procedures and remedies in an action to enforce a covenant not to compete under common law or otherwise...

Loss of Company Stock Due to Noncompete Violation

Posted on March 27, 2012
The 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 was defined as activity which might "create a material conflict of interest...

What if employee is forced to sign noncompete agreement?

Posted on January 27, 2012
I am frequently asked by employees about whether their covenants not to compete are enforceable, given that they had no choice but to sign them. Often, an employer will say to a newly-hired employee, "You need to sign this covenant not to compete if you want to continue working here...

Is Texas a Right to Work State?

Posted on January 27, 2012
Not infrequently, an employee who has signed a covenant not to compete will confidently explain to me that, "Noncompete agreements are not enforceable in Texas, because Texas is a 'right to work' state." Often, the employee's conviction has been confirmed by a family member or friend, and sometimes even by a lawyer who should know better...

Do Texas Courts Blue Pencil Noncompete Agreements?

Posted on January 27, 2012
Frequently in cases involving noncompete agreements, the issue arises as to whether an overly broad covenant not to compete will be held to be completely unenforceable, or whether it will be modified to make it enforceable. In some states, if a noncompetition agreement is overly broad, the entire agreement will be unenforceable...

Other employees did not sign noncompete agreements. Legal effect in Texas?

Posted on January 27, 2012
"Others in the company were not is required to sign covenants not to compete. Does that mean that my covenant is not valid?" I get this question a lot. The short answer is, No, the fact that the employer did not require all of its employees to sign noncompete agreements does not, by itself, mean that the restrictive covenant signed by a particular Texas employee is unenforceable...

Economic Costs of Noncompete Agreements

Posted on January 07, 2012
In his excellent concurrence in the Marsh USA case, Texas Supreme Court Justice Don Willett observed something that practitioners and trial court judges often forget or gloss over, namely, the adverse effect that unfair noncompete agreements can have on society at large...

Texas Covenants Not to Compete: Trial Courts Must Strike Proper Balance

Posted on January 07, 2012
Justice Don Willett's concurrence in the Marsh USA contains a lot of economic theory and literary allusions that one typically does not see in a court opinion. For example, Justice Willett has this advice for trial court judges who handle disputes involving restrictive covenants in Texas: 'Restrictions on employee mobility that exist only to squelch competition are per se illegal in Texas, and for good reason...

Free Market Capitalism in Texas and Marsh USA

Posted on January 07, 2012
I re-read (again) the Marsh USA case this morning, including the concurring and dissenting opinions. The concurring opinion by Justice Willett is one of the most articulate and thoughtful opinions I have read in a long time. He tries to strike a balance between the pro-enforcement majority opinion and the dissenting opinion which fears that the majority has gone too far in stifling competition...

No Industry-Wide Texas Non-Compete Agreements

Posted on December 13, 2011
Texas cases dealing with the enforceability of noncompete agreements have long held that 'industry-wide' restrictions are overly broad. In a recent case from the Waco Court of Appeals, the court applied that rule to a concrete situation. The covenant not to compete applied to the 'pet supply manufacturing and distribution industry...

Texas' Pro-Enforcement Trend Continues

Posted on December 13, 2011
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...

Reformation of Texas Noncompete Agreements

Posted on August 29, 2011
Often 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...

Marsh USA: Texas Noncompete Agreements More Enforceable

Posted on August 01, 2011
The 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...

Texas Non-Compete Contract: Non-Compete Agreements in Texas More Enforceable

Posted on July 13, 2011
The Texas Supreme Court's long-awaited opinion in the Marsh USA case was released on June 24, 2011. As readers of this blog know, in recent years, Texas has gone from being a very anti-noncompete-agreement state to a relatively pro-enforcement state...

Tortious Interference Dallas Lawyer: Texas Unfair Competition Claims Can Be Asserted Even Without Enforceable Noncompete Agreement

Posted on April 01, 2011
Earlier 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...

Texas Law Noncompete Agreements: Right to Work Myth

Posted on February 11, 2011
Texas 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...

Temporary Injunction Denied in Texas Noncompete Case

Posted on November 09, 2010
A 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...

No Attorneys' Fees in Texas Noncompete Cases

Posted on November 09, 2010
According to the Houston Court of Appeals, a successful employer in a lawsuit brought to enforce a noncompete agreement in Texas may not recover attorneys' fees. Texas law generally permits the prevailing plaintiff in a breach of contract case to recover its attorneys' fees...

Scope of Noncompete Agreements. Texas Noncompete Lawyer

Posted on November 08, 2010
The 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...

Labor Lawyer Dallas Texas. Tortious Interference and Prior Restraint.

Posted on August 19, 2010
In Texas, when can a court enjoin speech in order to prevent tortious interference from occurring? There is no easy answer to this question. However, courts generaly disfavor "prior restraint"--i.e., forbidding speech even before it occurs...

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