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
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