It's Not Only the Formula to Coke ...
Posted
12:02 PM
by Michael Fox
For years any speech I have heard on trade secrets inevitably talks about the formula for coke. For those wanting to show a little variety, try Thomas English Muffins. According to a lawsuit that has been filed in district court in Pennsylvania, Chris Botticella is one of the fewer than 10 people in the world "with full knowledge of how to produce them." He does know the recipe, but not clear that is such an exclusive club. The artful wording that I quoted makes me think that number could be a little larger. You can see a copy of the complaint here. Bimbo Bakeries Trade Secret Complaint and TRO Request.
When Botticella was just retiring it was one thing, but when it was learned he was going to Bimbo's competitor, Hostess, that's when the complaint was filed.
Besides perhaps helping change the example used in CLE speeches, it might also be a very good case to test the contours of the inevitable disclosure doctrine. That doctrine has not fared well in all courts. I don't know what Pennsylvania or 3rd Circuit law is on that particular issue, but my guess is -- quite favorable.
Hat tip to the folks at Employment Law 360, English Muffin Maker Slaps VP With Trade Secrets Suit ($).
Labels: competing employees
Texas Law of Covenant Not to Compete Takes Another Step Forward
We hold that if the nature of the employment for which the employee is hired will reasonably require the employer to provide confidential information to the employee for the employee to accomplish the contemplated job duties, then the employer impliedly promises to provide confidential information and the covenant is enforceable so long as the other requirements of the Covenant Not to Compete Act are satisfied. Labels: competing employees
The Unloyal Employee - May End Up Owing a Tidy Sum
Interestingly even though the employees in question had non-competes, it was the broad Texas law on breach of a fiduciary obligation that was the basis for the recovery. The trial court had eliminated damages for misappropriation of trade secrets finding it duplicative of the breach of fiduciary claim. One of the "bad acts" was negotiating and signing a 4 year lease and then using the lease as "leverage" against their employer in attempting to force a sale of the business to them. An additional "bad act" was that they had been negotiating with several buyers to sell the business that they were hoping to acquire. Navigant Consulting is a good overview of the law in an area where I think we are going to see more litigation. Labels: competing employees
Mixed Results on 43 Million Dollar Raiding Case
the Court assumed the conduct was intentional and felt only two of the other factors merited further discussion since the conduct was economic not physical, and the health or safety of others was not in danger. The Court gave little weight to financial vulnerability, in large part because of Chicago Title's own claim that notwithstanding the defections they remained the number one company in the contested markets. The Court also limited the review of repeated actions to actions against other parties (of which there were none), as opposed to repeated actions against Chicago Title, distinguishing State Farm's teaching that damages (as opposed to liability) can not be based on conduct against third parties. The bottom line, no punitive damage award available. Labels: competing employees, damages
Dueling Dictionaries, Defamation and a Do-Over in the 5th Circuit
Exhibit 61, sent by FSI’s attorneys to the DSCC, stated that AOS “misappropriated and stole FSI’s trade secrets,” and that FSI’s trade secrets were “unlawfully distributed” .... Further, Exhibit 74, an e-mail from Michael Roehrs to the DSCC, accused AOS and OCS of “provid[ing] stolen proprietary information” to the DSCC, and stated that these acts were done to “launder [FSI’s] proprietary information and trade secrets.” Texas law criminalizes the knowing and unconsented “communication] or transmi[ssion of] a trade secret,” TEX. PEN. CODE ANN. § 31.05(b), and despite the district court’s belief that the e-mail was merely intended to update the DSCC as to the litigation at issue here, the statements alleging transmission of stolen trade secrets went beyond such a purpose. Labels: competing employees
Major Change in Texas Non-compete Law
In this case we revisit the Court’s 1994 decision in Light v. Centel Cellular Co. and again consider the enforceability of covenants not to compete in the context of at-will employment. The question today is whether an at-will employee who signs a non-compete covenant is bound by that greement if, at the time the agreement is made, the employer has no corresponding enforceable obligation. Under Light, the answer to that question was always “no.” Today we modify our holding in Light and hold that an at-will employee’s non-compete covenant becomes enforceable when the employer performs the promises it made in exchange for the covenant. In so holding, we disagree with language in Light stating that the Covenants Not to Compete Act requires the agreement containing the covenant to be enforceable the instant the agreement is made. Labels: competing employees
Covenants Not to Compete, Texas Style and the Supreme Court Selection
Some Courts construe this timing requirement very strictly. See C.S.C.S., (agreement stating that employer "may reveal" confidential information to employee is insufficient); Sheshunoff, ("The fact that [the employer] gave new confidential information and training to [the employee] some time after entering into the agreement will not suffice.") Tom James of Dallas, Inc. v. Cobb (agreement stating that employee "has received" confidential information is insufficient). Other courts do not construe the timing requirement so strictly. See Beasley v. Hub City Texas, L.P., (agreement stating that employee "will be" granted access to confidential information is sufficient where employee later was provided with such information); Guy Carpenter & Co., Inc. v. Provenzale (refusing to read the timing requirement strictly because doing so "pin[s] the enforceability of non-solicitation agreements on whether an employer discloses confidential information at the time the employee signs an employment contract, [which] is not what [Tex. Bus. & Com. Code Ann.] §15.50 intends or requires.") Unfortunately, these disparate readings of the timing requirement are leading to factually indistinguishable results, and confusing Texas' statutory law governing restrictive covenants. [all cites omitted, emphasis added] Although admittedly confusing, Judge Clement's opinion got to what many thought was a common sense reading of the statute and arguably what the pro-covenant legislature had intended. In fact, the Texas Supreme Court is currently considering a case which gives it another opportunity to bring some clarity to this area of the law. But my biggest hope -- that no Senator bothers to ask Judge Clement about this opinion. No one should be forced to defend having to sort out the post-Light jumble of decisions and the current state of Texas law on the enforceability of covenants not to compete. The process will be painful enough without that added burden. One final irony -- the author of the initial opinion in Light v. Centel Cellular that started us down this path? None other than one of the likely shepherds of Judge Clement's nomination, then Texas Supreme Court Justice, now United States Senator, John Cornyn, a member of the Judiciary Committee before whom Judge Clement will first appear. Updated: Almost two years after it was argued the Texas Supreme Court finally issued its opinion in Sheshunoff, see Major Change in Texas Non-compete Law. Labels: competing employees
Don't Lose Your Favorite TV Anchor To A Non-Compete
Labels: competing employees
Employer v. Competing Employee - The Personal Side of the Story
Labels: competing employees
Austin Court Holds Covenant Not To Compete Invalid For Reasons That Make Me Look Like Carnack
Labels: competing employees
Centel Cellular v. Light - Once More Around the Track - Court Upholds Covenant Not To Compete
Labels: competing employees
11th Cir. Applies Georgia Law to Non-Compete
Labels: competing employees
Even Low Level Employees Have Duty to Employer
Labels: competing employees
Employee's Duties While Preparing To Compete With His Employer
Labels: competing employees
Retreat By First Court of Appeals - Movant for Temporary Injunction in Non-Compete Case Must Show Probable Harm
Labels: competing employees
Temporary Injunction for Covenant Not To Compete - Irreparable Harm Required or Not?
Labels: competing employees
Divided San Antonio Court Finds Breach of Covenant Not To Compete To Be "Illegal Activity" for Purposes of Libel
Labels: competing employees
No Damages for Covenant Not To Compete, No Attorneys' Fees
Labels: attorneys fees, competing employees
Covenants Not To Compete - At the Highest Level
Labels: competing employees
Non-Compete Covenant Not Up to Light v. Centel Cellular Standard
Labels: competing employees
Posted
11:11 AM
by Michael Fox
Anyone who has dealt with the law of non-compete agreements in Texas is aware of a tangled history that grew out of a battle between the legislature and the Supreme Court and culminated in the now infamous decision of Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642 (Tex. 1994). It was a dozen years later before the Supreme Court in its Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006), untangled some of the issues caused by Light and took a step in refocusing the debate in covenants not to compete onto the reasonability of covenants as opposed to what it referred to as "overly technical disputes".
Today, the Supreme Court takes another wording dispute and removes it from the mix. In Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding (Tex.. 4/17/09) the Court dealt with a covenant in an at-will contract where the employee promised not to disclose confidential information, but there was no explicit promise to provide confidential information by the employer. In short, enforceable:
The Court ducked another issue -- whether or not the covenant not to compete statute pre-empts attorneys fees under the Declaratory Judgment Act. Here, the employee filed a declaratory judgment action, got a favorable ruling that the covenant was not enforceable, and was awarded his attorneys fees. Since the Court reversed the underlying favorable ruling, the basis for the attorneys fee award went away, and the Supreme Court did not provide any indication of how it would rule when the case is presented.
Posted
3:17 PM
by Michael Fox
That's the lesson to be learned from the 5th Circuit's affirmation of a $3 million dollar jury verdict in a case where two employees were found guilty of breaching their fiduciary duty when they negotiated behind their employer's back to sell the portion of the business in which they were engaged. Navigant Consulting, Inc. v. Wilkinson (5th Cir. 11/15/07).
Posted
9:49 AM
by Michael Fox
Although the case turned strictly on interpretations related to a covenant not to compete and a related tortious interference with contract claim, the dispute between two title companies that resulted in a $43 million dollar judgment is really a "raiding" case, where 30 employees switched from one title company to another.
Raiding cases are unusual in that they are a form of behavior that is quite problematic, but one where there is no clear cut cause of action specifically designed to fit it. There are a number of causes of action that are brought to bear in these situations but no "silver bullet" even though as can seen by the lower court judgment reviewed in Chicago Title Insurance v. Magnuson (6th Cir. 5/21/07) [pdf], it is apparent that in the right circumstances a jury can be considerably offended. $32 million of the judgment was for punitive damages.
The Court of Appeals affirmed liability, reversed the punitive damage award and sent the case back to the lower court for a re-trial on the compensatory damages.
While the discussion of liability and compensatory damages may shed some light on covenant not to compete law in Ohio, the ruling on punitive damages carries a broader message and continues to show how such damages are currently in disfavor.
Ultimately the Court found the award could not pass constitutional muster under the U.S. Supreme Court precedent contained in State Farm and BMW of North America. Focusing on the 5 factor test for reprehensibility derived from those cases:
Posted
10:17 AM
by Michael Fox
That sums up some, but not all of last week's decision by the 5th Circuit in Fiber Systems International, Inc. v. Roehrs (5th Cir. 11/22/06)[pdf]. Based on this decision, my guess is that there was not a harmonious gathering of the Roehrs family clan over Thanksgiving.
Instead, brothers Michael and Daniel who ended up on opposite sides of a corporate breakup and subsequent lawsuit were probably trying to sort out the various meanings of the court's 40 page decision. Basically, the short hand version seems to be that there was a dispute over ownership of a company (Fiber Systems)which was resolved by an agreement where one of the brothers and a number of other former owners left the employ of the company. But as with many employee partings, all was not over.
Instead, Fiber Systems accused the departing employees of violating the Computer Fraud and Abuse Act (which according to the 5th Circuit's decision they did) and accused them of being thieves which according to the 5th Circuit's decision was defamatory.
The defamation aspect of the case involved a "battle of dictionary definitions" as those accused of calling the others thieves relied on the definitions of that term in the Oxford Dictionary as a “kind of wild bee said to rob hives” and an “excrescence in the snuff of a candle” to show that the words were not per se defamatory. Unfortunately, those "arcane, nondefamatory definitions," were not what the words meant taken in the context that they were said, so the Court upheld the jury verdict that the departing individuals had been defamed.
It also upheld the jury's finding that the same employees had violated the CFAA. The underlying allegation was that they had:“knowingly and intentionally accessed, deleted, downloaded, copied, took, and stole FSI’s confidential business and proprietary information and trade secrets, without authorization, from FSI’s computers,” misappropriated and stole FSI’s computer equipment, and used and disseminated the wrongfully obtained information through the new companies that they formed."
FSI sued for the cost of data recovery and for the use of their trade secrets. The jury awarded $36,000, finding a violation of § 1030(4) — "knowingly and with intent to defraud, access[ing] a protected computer without authorization, or exceed[ing] authorized access, and by means of such conduct further[ing] the intended fraud and obtain[ing] anything of value." However, the district court refused to enter judgment, finding that there was not a private cause of action under § 1030(4), only of § 1030(5). The 5th Circuit, joining every other circuit to consider the question, disagreed, not only finding a cause of action but that the jury instruction though perhaps flawed did not constitute fundamental error.
The do-over was a reversal of the lower court's dismissal of defamation claims against the corporate entitites, based on statements that the Court found were "almost identical to the defamatory statements that the district court ultimately submitted to the jury [on the individuals' defamation claims]." Those claims:
were enough to justify a trial, although the 5th Circuit did note that the trial court had raised the possibility that the statements were privileged, an issue on which it expresses no opinion.
It is not all that unusual in a competitive environment for departing and then competing employees to result in hard feelings. It is also not unusual for litigation to follow. It is much less frequent to have that litigation played out in full, through a jury trial and the ensuing appellate process. That makes the Fiber Systems opinion somewhat rare, but also a good lesson on how actions taken and words spoken in the heat of battle can have real world and long term consequences.
Posted
10:58 AM
by Michael Fox
In a long awaited decision, the Texas Supreme Court today drastically alters the landscape for the enforcement of covenants not to compete. In Sheshunoff Management Services, Inc. v. Kenneth Johnson and Strunk & Associates, (Tx. 10/20/06) [pdf] , the Court modifies its earlier holding in Light v. Centel Cellular, to now permit a unilateral contract to support a covenant not to compete. This means employers who promise to provide confidential information in return for a covenant not to compete can enforce the agreement so long as they provide the confidential information to the employee before he departs.
Judge Don Willett in his opening paragraph lays out the change:
There will be tons of ink written about the decision (including more by me), but cutting to the chase -- the central question about non-compete covenants in Texas law is no longer whether it is enforceable, but whether it is reasonable.
Hiring employers and departing employees are now in a whole new ballgame.
Posted
2:58 PM
by Michael Fox
I know next to nothing about Judge Edith Brown Clement, the media predicted nominee to replace Justice O'Connor. But in the next ten to twelve weeks I am quite sure I will be told more than I want to know about her by people who know next to nothing as well. (Actually that probably can be said of the last six hours.)
The only decision of Judge Clement's that I do know anything about is of significance only to those who have ever tried to determine the enforceability of a covenant not to compete under Texas law.
As some background, it helps to know that in the late 1980's and early 1990's there was a contest of wills between the Texas legislature and the Texas Supreme Court that could basically be summarized as the legislature favored covenants not to compete and the Supreme Court opposed them. After bouncing back and forth with each trying to outdo the other, the matter was finally "settled" by a Supreme Court decision, Light v. Centel Cellular which has puzzled practitioners and courts for a number of years. My view has always been Light ended the debate between the legislature and the Supreme Court because it took years for anyone to understand it.
Just as lawyers were beginning to feel they had some handle on how Light was going to be interpreted by the courts, the 5th Circuit handed down Guy Carpenter & Company, Inc. v. Provenzale, 334 F.3d 459 (5th Cir. 2003) authored by Judge Clement. (There was some irony in that the 3 judge panel interpreting a highly confusing Texas body of law consisted entirely of Louisiana judges.) Although any opinion which waded into the murky waters of Light was potentially difficult to understand, Guy Carpenter was at best confusing, particularly given the way Texas courts had begun to interpret Light.
Commentators agreed. From the Texas Labor and Employment Law Section's newsletter:The Fifth Circuit also appears to hold that the seminal Texas case on covenants not to compete, Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642 (Tex. 1994), has been misinterpreted by most of the intermediate Texas courts of appeals. In a nutshell, the Fifth Circuit's decision indicates that when an employee's access to trade secrets is the reason for a noncompetition agreement, the noncompetition agreement will not fail merely because the promise of such access may be "illusory" to an employee at will. [emphasis added]
Or Cameron J. Shilling, in his article Restrictive Covenants: A Multi-State Survey Of Judicial Decisions From January 2003 Through January 2004:
One law firm's comment on the decision was that, "The safest route for an employer is to promise in the agreement to provide at least some of the confidential information the moment the employee begins working. Many of the Texas cases have required this, and it is far from clear that the Fifth Circuit's opinion in Provenzale represents the law in Texas.[emphasis added]
And finally, in a written paper at an employment and labor law seminar this spring, two commentators note, "The Fifth Circuit's 2003 opinion in Guy Carpenter & Company, Inc. v. Provenzale ... demonstrates the confusing nature of the unusual non-compete law in Texas. ... The Fifth Circuit, in a confusing opinion, reversed the trial court." [emphasis added]
Posted
11:46 AM
by Michael Fox
That would seem to be the idea behind a bill working its way through the Kentucky legislature. The Lexington Herald Leader story reports on HB 677, which would preclude covenants not to compete for broadcast employees. The bill passed the committee and now goes onto the full house. Interesting approach to single out one particular profession. Texas of course has done that with its non-compete statute, where non-competes for physicians are not banned, but must contain a buy-out clause.
Posted
9:41 PM
by Michael Fox
Covenants not to compete and employee loyalty litigation seems to be an ever more present part of the business world these days. But there is a personal side, really on both sides. The Milwaukee Journal Sentinel has the story of a shoot out in an unlikely business, the printing of church bulletins. It is a good picture of what I call the soft dollar cost of litigation.
Posted
2:11 PM
by Michael Fox
Well maybe not as good at predicting as Johnny Carson's Carnack, but when I reported yesterday on Beasley v. Hub City, Inc. , I noted the outcome would likely have been different if the employer had not been been able to show that the type of confidential information provided after signing a non-compete upon becoming president, truly was different from what he had access to before. Sure enough that is the holding of Alex Sheshunoff Management Services, L.P. v. Johnson (Tex. App. - Austin 10/2/03). Since the employee was given no new confidential information after he signed the covenant, it did not meet the tests of Light. The Court also held that mere daily changes in the information in the daily course of business was not sufficient, and that the promise of 2 weeks notice was not sufficient, since it was highly unlikely the employer would have actually imparted any confidential information to the employee after giving the notice.
Updated: Almost two years after it was argued the Texas Supreme Court finally issued its opinion in Sheshunoff, see Major Change in Texas Non-compete Law.
Posted
8:12 PM
by Michael Fox
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.
Posted
4:52 PM
by Michael Fox
Stepping gingerly into the world of conflicts of law as applied to covenants not to compete, the 11th Circuit wisely asked the Supreme Court of Georgia for clarification. Having received it, the Court had no problem finding that Georgia would apply its own law to a former employee's non-competition agreement, and find it unenforceable. The employee's victory was not unmitigated however, as the Court struck down the lower court's permanent injunction against enforcing the covenant not to compete in any other jurisdiction. The reach of Georgia's power to enforce its view of whether the non-compete was enforcible extended only to its boundries and the injunction needed to be revised accordingly. Keener v. Convergys, Inc., No. 02-11324 (11th Cir. 8/21/03).
Posted
11:19 AM
by Michael Fox
All was not harmony on the island paradise of Hawaii as two lower level employees prepared to compete with their employer before leaving their employment. Mere preparation was not a problem, but actually submitting a competing bid for a government contract and winning while still employed was. At least that is how the 9th Circuit thought the Supreme Court of Hawaii would rule. In Eckard Brandes, Inc. v. Riley et al ((th Cir. 8/11/03) [pdf] the court found that the violation of the duty of loyalty would create a cause of action, that it would be governed by the six year statute of limitations and that disgorgement of the profits on the government contract was a proper remedy. What is interesting is not only the 9th Circuit's enforcement of the duty of loyalty against lower level employees, but the irony that it was the employees' lawsuit for wage and hour violations that led to a counterclaim for the breach of the duty of loyalty. A good example of why one should think twice of one's own conduct before initiating litigation.
Posted
11:12 AM
by Michael Fox
The First Court of Appeals gives a good overview of the law on an employee's obligations when preparing to compete with his employer. In Abetter Trucking Company v. Arizpe (Ct. App. - Houston [1st] 7/3/03) it upholds a jury verdict that the employee did not breach his fiduciary duty to his employer, even though he resigned and a dozen of the company's drivers went to work for him at his new company the next day.
Posted
1:57 PM
by Michael Fox
Resolving a dispute it created with the Beaumont Court of Appeals reported here last month, the First Court of Appeals has re-examined its holding in Norlyn Enterprises and reversed its opinion on the impact of Section 15.51 of the Texas Business & Commerce Code on traditional equitable principles for a temporary injunction. In Cardinal Health Staffing Network, Inc. v. Bowen (Tx. Ct. App. - Houston [1st Dist.] 4/3/03], it now holds that in order to obtain a temporary injunction in a non-compete case, a court must find that there will be irreparable harm. Interestingly in doing so, it points to two contrary decisions by the Dallas Court of Appeals in 1990 and 1993 and now respectfully disagrees with them. It also declines the invitation of Cardinal Staffing to adopt the 'inevitable disclosure' rule, saying it would not matter in this case even if adopted, but raising doubts about whether it should be. The opinion notes that Court voted to consider it en banc, presumably necessary since it was overruling a prior decision of the court.
Posted
1:13 PM
by Michael Fox
The Texas law on covenants not to compete, has unusually strong language on the pre-emption of the common law. This was a result of a 1990's feud between the Texas Supreme Court and the legislature. The Court took a generally restrictive view of covenants not to compete, while the legislature favored enforceability. The pre-emption language is now the center of an important question: does it abolish the traditional requirements for a temporary injunction, such as showing irreparable harm? It is no exaggeration to say in many cases, that will be determinative of whether or not a party can obtain a temporary injunction. Within the last three months the question has been answered definitively by two separate courts of appeal. Unfortunately, for those who like predictability, it has been answered differently. In Norlyn Enterprises, Inc. v. APDP (Tex. App. - Houston [1st Dist.] 12/12/2002), the Court found irreparable harm was no longer required in light of the statute, reversing a district judge who had refused to enter a temporary injunction, sending the matter back for further proceedings in conformity with their ruling. However, this week, while noting the Norlyn Enterprises decision, reported here on 12/16/02, another court held that the traditional rules for temporary injunction were not displaced by the covenant not to compete statute, and upheld the denial of a temporary injunction because there was no showing of irreparable harm. NMTC, Corp. dba Matco Tools v. Conarroe.
Given the frequency of temporary injunction proceedings on covenant not to compete cases, and the importance of this issue, it seems likely it will end up in the hands of the Supreme Court. Hopefully soon.
Posted
12:20 PM
by Michael Fox
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.
Posted
12:53 PM
by Michael Fox
After being told by the Supreme Court to review whether an employer who prevailed in enforcing a covenant not to compete, but did not recover damages, was entitled to attorneys fees under the Civil Practice and Remedies Code, the San Antonio Court of Appeals, hold no. Perez v. Texas Disposal System, Inc. (Ct. App. - San Antonio, 2/5/03). The Court also reaffirmed its earlier ruling that the employer doesn't recover them under 15.51 of the Texas Business & Commerce Code either.
Posted
1:37 PM
by Michael Fox
BellSouth took to the offensive to block Vice Chair Gary Forsee's move back to Sprint. See the story here. Although not clear, sounds like an ex parte TRO by a Georgia state court judge. Maybe a little home court advantage? Will be interesting to see how long it sticks, if it does.
Posted
12:18 PM
by Michael Fox
Although recognized by every court as the standard for determining the validity of a covenant not to compete, the application of Light v. Centel Cellular [pdf] is not always that easy to follow. In Strickland v. Medtronic, Inc. (Ct. App. - Dallas 1/29/03) decided yesterday, the Dallas Court of Appeals makes the standard clear.
Importantly, it also rules on a question that comes up repeatedly, holding that general language about providing confidential information will not be enough to constitute a non-illusory promise (and therefore is not enough to support a covenant not to compete). Even if such general language were an implied promise (which the court finds it is not), it would still not be sufficient because it would require that the employee work for a certain period of time. Since the court found the employee relationship to be at will, any promise conditioned on a period of employment would be illusory.
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