Jottings By An Employer's Lawyer

Wednesday, October 01, 2003

Centel Cellular v. Light - Once More Around the Track - Court Upholds Covenant Not To Compete

Texas courts, and parties are beginning to show increased understanding of drafting, arguing and deciding cases to conform with the peculiarities of Texas covenant not to compete law as interpreted by the Texas Supreme Court in Centel Cellular v. Light. (One of the legacies of then Justice, now Senator, John Cornyn). It seems clear that a promise by the employer to provide confidential information to an employee in return for a covenant will meet the 'otherwise ancillary to an enforceable agreement" standard of Light. In Beasley v. Hub City Texas, Inc. (Tex. App. - Houston [1st. Dist.] 9/29/03), the facts were not that straightforward. Here, an employee was promoted to President. While the contract provided that he would be provided access to confidential information, the employee argued that he already had the information before, so there was no consideration. If proven, that would have probably defeated the covenant. Unfortunately for him, his employer had proven to the trial court's satisfaction that it had provided confidential information to him that he did not have access to as Vice President. Indeed, the Court had so found in one of its findings of fact. Under those circumstances, the Court found that it fell within the parameters laid out by the Supreme Court in Light and upheld the Court's entry of a temporary injunction enforcing the covenant not to compete.


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