law-noncompetes covenant not to compete, nonsolicitaion agreements | temporary injunctions |
nondisclosure agreement | trade secrets |
A non-compete covenant is unenforceable unless it satisfies Texas Business and
Commerce Code section 15.50(a):
[A] covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable
agreement at the time the agreement is made to the extent that it contains limitations as to time,
geographical area, and scope of activity to be restrained that are reasonable and do not
impose a greater restraint than is necessary to protect the goodwill or other business interest of
the promisee.
Tex. Bus. & Com. Code Ann. § 15.50(a).
NONCOMPETE AGREEMENTS - WHEN ARE THEY ENFORCEABLE?
Gallagher Healthcare Ins. Service, Inc. v. Vogelsang (Tex.App.- Houston [1st Dist.] Aug. 21, 2009)
(Keyes) (enforceability of covenant-not-to-compete provision in employment agreement; noncompete
held enforceable)
REVERSE TC JUDGMENT AND RENDER JUDGMENT: Opinion by Justice Evelyn Keyes
Before Justices Jennings, Keyes and Higley
01-07-00478-CV Gallagher Healthcare Insurance Services, Inc. v. Page M. Vogelsang, Michelle Friede,
Patti Philippone, Trisha Birdsong, and Lockton Companies, Inc.
Appeal from 133rd District Court of Harris County
Trial Court Judge: Hon. Lamar McCorkle
Dissenting Opinion by Justice Jennings in Gallagher Healthcare Insurance Services, Inc. v. Vogelsang
A. Enforceability of the Non-Solicitation Agreements
The Folicure defendants contend that, since the trial court found that the non-compete agreements
were unenforceable for lack of consideration, it was likewise compelled to find the non-solicitation
covenants unenforceable because those require similar consideration. In fact, although the trial court
struck through paragraphs in the proposed order relating to the non-compete provision, it made no
affirmative finding that any non-compete agreement was unenforceable, and we will not imply such a
finding on the merits so as to nullify the findings it did make—that the Folicure defendants conspired to
violate the non-solicitation and non-disclosure provisions of the agreements. Instead, we address
whether Hair Club proved a probable right to relief based on the non-solicitation agreements.
Folicure, Inc. v Hair Club for Men, LLC (Tex.App.- Houston [1st Dist.] Jun. 25, 2009)(Opinion by Bland)
(noncompete nonsolicitation agreement enforced by temporary injunction)(We conclude that the trial
court did not abuse its discretion in granting a temporary injunction against York, Reynolds, Daniels and
Folicure to prohibit solicitation of Hair Club’s clients. We therefore affirm the order of the trial court.)
AFFIRM TRIAL COURTJUDGMENT: Opinion by Justice Bland
Panel members: Justices Keyes, Hanks and Bland
01-09-00024-CV Folicure, Inc., Mallory York, Bennetta Reynolds, Hamilton Daniels, and ALNA Holdings,
L.L.C., d/b/a Folicure v. Hair Club for Men, LLC d/b/a for Men and Women
Appeal from 215th District Court of Harris County
Trial Court Judge: Hon. Levi J. Benton
Non-solicitation agreements, like non-compete agreements, are governed by Section 15.50 of the Texas
Business and Commerce Code. That section provides that an agreement is enforceable
[I]f it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made to
the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained
that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or
other business interest of the promisee.
Tex. Bus. & Com. Code Ann. § 15.50(a) (Vernon 2002). The Texas Supreme Court recently addressed
the enforceability of non-compete agreements in Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
No. 07-0490, 2009 WL 1028051 (Tex. April 17, 2009). There, the Court concluded that a non-compete
agreement is enforceable if the nature of the contemplated employment will reasonably require the
employer to furnish the employee with confidential information because, in such an instance, an
employer impliedly promises to provide confidential information. Id. at *3. As is the case here, Mann
Frankfort required its employees to sign an agreement, upon beginning employment, promising not to
disclose any confidential information the employee obtained during his employment. Id. at *1. Mann
Frankfort’s employees had access to its client database, containing clients’ names, billing information,
and tax and financial information, which constitute confidential information, and thus Mann Frankfort
provided sufficient consideration to support a non-disclosure agreement. Id. at *6 (citing DeSantis v.
Wackenhut Corp., 793 S.W.2d 670, 684 (Tex. 1990)). Similarly, here Hair Club provided client names
and limited client information to York and Reynolds, as it was necessary for their work as stylists. The
testimony of Hair Club’s CEO, Darryll Porter, established that Hair Club invested significant amounts of
money in generating clients, thus supporting the trial court’s finding that Hair Club had an interest in
keeping its client information confidential. York and Reynolds could not have acted on their promises
not to disclose confidential information unless Hair Club actually provided them with it, sufficient to find
that an implied promise existed. See id.
Under Section 15.50(a), the non-compete agreement must be “ancillary to or part of” an otherwise
enforceable agreement, meaning that (1) the consideration given by the employer in the otherwise
enforceable agreement must give rise to the employer’s interest in restraining the employee from
competing, and (2) the covenant must be designed to enforce the employee’s consideration or return
promise in the otherwise enforceable agreement. Id. at *7 (quoting Tex. Bus. & Com. Code Ann. § 15.50
(a)). Under Mann Frankfort, an employer’s implied promise of access to confidential information
satisfies the first requirement because the promise and provision of confidential information generates
the employer’s interest in preventing the later disclosure of such information. Id. The employee’s
promise not to disclose confidential information satisfies the second requirement. Id. York’s and
Reynolds’s agreements present similar promises. We hold that the non-solicitation and non-disclosure
agreements here are enforceable, and thus Hair Club has a probable right to relief under them. The
trial court therefore did not abuse its discretion in granting a temporary injunction on this ground.
Folicure, Inc. v Hair Club for Men, LLC (Tex.App.- Houston [1st Dist.] Jun. 25, 2009)(Opinion by Bland)
(noncompete nonsolicitation agreement enforced by temporary injunction)(We conclude that the trial
court did not abuse its discretion in granting a temporary injunction against York, Reynolds, Daniels and
Folicure to prohibit solicitation of Hair Club’s clients. We therefore affirm the order of the trial court.)
AFFIRM TRIAL COURTJUDGMENT: Opinion by Justice Jane Bland
Panel members: Justices Keyes, Hanks and Bland
01-09-00024-CV Folicure, Inc., Mallory York, Bennetta Reynolds, Hamilton Daniels, and ALNA Holdings,
L.L.C., d/b/a Folicure v. Hair Club for Men, LLC d/b/a for Men and Women
Appeal from 215th District Court of Harris County
Trial Court Judge: Hon. Levi J. Benton
Noncompete Clauses: No need for injunction found
W.R. Grace & Co v. Taylor (Tex.App.- Houston [14th Dist.] May 17, 2007)(Edelman)(noncompete)
(employment law, noncompete agreements, termination, enforceability)
AFFIRMED: Opinion by Justice Edelman
Before Justices Anderson, Fowler and Edelman
14-06-01056-CV W.R. Grace & Co.-Conn v. James R. Taylor
Appeal from 10th District Court of Galveston County (Judge David Edward Garner)
W.R. Grace & Co. - Conn. (WRG) appeals the denial of its request for a temporary injunction against
James R. Taylor on the grounds that: (1) after ending his employment with WRG, Taylor used WRG's
proprietary information; and (2) the trial court's decision not to enjoin Taylor from soliciting WRG
customers after leaving WRG's employment was based on an incorrect determination that the non-
solicitation obligation in Taylor's employment agreement is unenforceable. We affirm.
Sheshunoff Management Services v. Johnson, No. 03-1050 (Tex. Oct. 22, 2006)(Justice Don R. Willet)
(enforceability of covenant not to compete, noncompete agreements, employment at will, consideration)
Chief Justice Jefferson delivered a concurring opinion in Sheshunoff v. Johnson
Justice Wainwright delivered a concurring opinion in Sheshunoff v. Johnson
TEXAS CAUSES OF ACTION ELEMENTS | HOUSTON CASE LAW | HOUSTON COURTS OF APPEALS |
TEXAS COURT OF APPEALS OPINIONS
HOUSTON OPINIONS HOME PAGE