More Thoughts on Marsh USA v. Cook: Fundamental Changes in Texas Noncompete Law
I've had a chance to reread and digest the Marsh USA opinions over the weekend. For those looking for easy ways to set aside or void noncompetition agreements in Texas, Marsh USA is strike three. (Strike 1, Strike 2). The Texas Supreme Court has, in the past five years, taken Texas from one of the more difficult states to enforce a noncompete to one of the easiest (so long as its reasonably limited).
Important Takeaways from the Opinions:
- Confirms that goodwill is a protectable interest worthy of protection through noncompetition agreement.
- Identifies contact with employer's "key customers" as a component of goodwill worthy of protection.
- Personal relationships and contact between customers and employees is goodwill of the employer that is protectable.
- Newly holds that nonsolicitation of employee provisions are subject to the Texas Covenant not to Compete Act.
- No requirement that employee receive the consideration for the noncompete prior to the time the employer's interest in protecting goodwill arises.
- Suggests that other financial incentives such as raises, bonuses or even a salary might be adequate consideration to support a noncompete if it can be established that such incentives enhance or protect employer goodwill.
- Recommends that trial courts conduct searching inquiries to determine whether the purpose of the agreement is improper protectionism or protection of goodwill (concurring opinion).
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