Articles Posted in Restrictive Covenants

Covenants not to compete and similar contractual agreements are becoming more common in Texas and elsewhere in the nation. Generally speaking, these agreements are enforceable so long as they are reasonable in scope and duration. However, a Dallas employment covenant lawsuit seeking to enforce such an agreement may involve multiple issues as to the enforceability of the agreement and the parties’ respective rights and responsibilities thereunder.

Facts of the Case

In a recent appellate case arising in the 95th Judicial District Court of Dallas County, Texas, the plaintiff was a business that hired the defendant coach to provide training for athletes. The parties’ relationship was put into writing in the form of an employment contract, which included a non-compete agreement. About three years later, the defendant voluntarily terminated his relationship with the plaintiff but continued in the same line of work. A few months after that, the plaintiff filed suit against the plaintiff, asserting a claim for breach of contract and seeking an injunction preventing the defendant from competing with the defendant or attempting to solicit business from the defendant’s customers.

Thereafter, the plaintiff filed a notice of nonsuit pursuant to Texas Rule of Civil Procedure 162, and the district court dismissed the plaintiff’s claims without prejudice. The defendant, who had asked for attorney fees in his answer, filed a motion asking the trial court to vacate its judgment dismissing “all claims.” According to the defendant, the court had been overly broad in dismissing his pending claim for attorney fees under the Texas Non-Compete Act and/or the Declaratory Judgment Act. The trial court denied the relief sought by the defendant, and he appealed.

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In today’s competitive business environment, it pays to take every possible precaution when it comes to protecting intellectual property, client lists, trade secrets, and the like. One way to do this is with a restrictive covenant such as a non-compete agreement, non-disclosure agreement, or non-solicitation agreement.

However, it is important that such agreements be properly drafted (without being overreaching) and executed in an appropriate fashion, or else a reviewing court may side with the employee if the agreement is breached and litigation ensues.

Facts of the Case

In a case recently considered by the Texas Court of Appeals, the plaintiff was a company that fabricates and services equipment used in the oil and gas industry. It filed suit against the defendants, a competitor and a former employee, seeking injunctive relief and monetary damages because the employee had gone to work for the competitor and was allegedly violating certain non-competition, non-disclosure, and non-solicitation agreements. Continue reading

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