267 F. Supp. 3d 841
W.D. Tex.2016Background
- McKissock, a national continuing-education provider, employed Martin from 2011–2016 as a salaried Senior Appraisal Instructor and had previously contracted with her; on hire Martin signed a Non‑Compete, Confidentiality, and Work‑Product agreement.
- The Non‑Compete barred Martin from working for any competitor nationwide for two years after termination; the Confidentiality agreement prohibited disclosure of trade secrets and customer data.
- Martin’s employment ended in May–June 2016 (disputed whether she resigned or was fired). She began working for Cannon, a competitor, around the same time and retained a company laptop containing McKissock data, which she later reformatted.
- McKissock produced spreadsheets from the laptop showing pricing, revenue, client lists, and project information and sought a preliminary injunction to enforce the Non‑Compete and related agreements.
- The court held a hearing and granted a preliminary injunction, but reformed the non‑compete to limit the prohibited activities to those similar to Martin’s McKissock duties (developing/teaching insurance‑appraiser qualifying and continuing‑education courses; supervisory roles) for two years nationwide.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for the non‑compete | Enforce contractual Pennsylvania choice‑of‑law provision | Provision unenforceable because Texas has stronger contacts and policy interest | Texas law governs (Court applied Restatement §187/§188 analysis; Texas has the most significant relationship and materially greater interest; applying Pennsylvania law would conflict with Texas public policy) |
| Whether the non‑compete is ancillary/otherwise enforceable under Tex. Bus. & Com. Code §15.50(a) | Agreement is ancillary because McKissock provided confidential information and Martin promised nondisclosure | Martin: she received only public information; thus no enforceable ancillary agreement | Ancillary requirement satisfied—McKissock provided confidential information (supported by Martin’s own email and recovered spreadsheets) |
| Reasonableness of scope, duration, and geography of the covenant | Nationwide, two‑year covenant reasonable given McKissock’s national business and Martin’s role; scope should bar instructor/developer roles | Covenant overbroad (unlimited scope); nationwide two years is excessive | Court reformed scope: covenant limited to instructor/developer/supervisory roles in insurance‑appraiser qualifying/CE for two years nationwide; duration and geography reasonable as reformed |
| Preliminary injunction factors (irreparable harm, balance of harms, public interest) | Irreparable harm likely from misuse of confidential information and loss of goodwill; injunction protects contractual expectations and public interest | Martin: little or no lost revenue to McKissock; injunction would cause severe hardship to Martin (age, finances) | All four factors met: likelihood of success, irreparable injury shown, balance favors McKissock, and injunction serves public interest in enforcing reasonable non‑competes; injunction granted as reformed |
Key Cases Cited
- Google v. Hood, 822 F.3d 212 (5th Cir. 2016) (preliminary injunction standard)
- Cardoni v. Prosperity Bank, 805 F.3d 573 (5th Cir. 2015) (choice‑of‑law contractual provisions and limits)
- DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) (fundamental Texas policy regarding noncompetition agreements)
- Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006) (illusory employer promises can be cured by performance; ancillary agreement analysis)
- Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009) (employer’s implied promise to furnish confidential information makes covenant ancillary)
- Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) (courts should not decide ancillary status on overly technical grounds)
- Vais Arms, Inc. v. Vais, 383 F.3d 287 (5th Cir. 2004) (nationwide geographic restrictions can be reasonable for national businesses)
- TransPerfect Translations, Inc. v. Leslie, 594 F. Supp. 2d 742 (S.D. Tex. 2009) (irreparable harm where former employee with confidential information joins competitor)