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A Houston court recently ruled for an employer in a non-compete agreement case. Gallagher Healthcare Ins. Servs. v. Vogelsang, No. 01-07-00478-CV (Tex. App—Houston [1st Dist.] August 21, 2009, available at http://www.1stcoa.Courts.state.tx.us/opinions/ PDFOpinion.asp?OpinionId=86957. Gallagher employee Vogelsang agreed not to compete with the company upon leaving. She later began working for a direct competitor and Gallagher sued. The trial court granted summary judgment for Vogelsang, finding the non-compete agreement unenforceable. Gallagher appealed.
The Court first found that Vogelsang’s promise not to compete was made in consideration of Gallagher’s implied promise to provide her with confidential information and, thus, as required by law, the non-compete agreement was ancillary to an otherwise enforceable agreement. It then addressed the non-compete agreement’s limitations, noting that Texas law requires limitations as to time, geographical area, and scope of activity to be restrained to be reasonable. Here, the non-compete provision prevented Vogelsang from working with clients with whom she had worked in the past two years for a two-year time period. It contained no geographical limit. The Court, however, found that a non-compete agreement that is limited to an employee’s former clients provides a reasonable alternative to a geographical limit. Thus, the Court found the restrictions reasonable and the non-compete agreement enforceable.
To discuss a non-compete agreement with an employment lawyer, please contact the employment lawyers at Clouse Dunn Khoshbin LLP at info@cdklawyers.com.
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