Jottings By An Employer's Lawyer

Saturday, March 01, 2003

Divided San Antonio Court Finds Breach of Covenant Not To Compete To Be "Illegal Activity" for Purposes of Libel

Parker, a former employee of Cram Roofing, with a valid covenant not to compete, sued his former employer for libel based on a letter sent to 12 companies that were prospective customers of Parker's new, and competing, business. In that letter, the former employer said: "Cram Roofing will seek to recover all profits obtained by your company as a result of ....Parker's illegal activities." Holding the covenant had the force of law, the majority opinion of Justice Duncan found the statement made by the employer was "substantially true", and could not be the basis for a libel claim. The Court rejected Parker's argument that "illegal activities" implied a violation of a penal statute. Cram Roofing Co., Inc. v. Parker (Tex. App. - San Antonio 2/26/03).

Justice Stone in her dissent noted that two business men had testified that to them the phrase implied engaging in criminal type activities. She would have affirmed the judgment.


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