*1 670
of law and that to com- respects the covenant not covenant m all render void judgment nothing. pete agree- is not an that CPA take otherwise enforceable ment.
A exe compete, covenant not cuted on date than other the date underlying agreement which the is exe cuted, if it only supported is enforceable is by independent valuable consideration. Corp.,
See DeSantis Wackenhut DeSANTIS, al., Petitioners, Edward et 681; Hill, S.W.2d at 171. at S.W.2d Assuming inception of Martin’s relationship employment-at-will in 1980 con WACKENHUT agreement,” “underlying stitutes CORPORATION, Respondent. supported compete covenant not to was not by independent valuable consideration. No. C-6617. employment-at-will relationship Since an Supreme Texas. Court of binding upon employee not either the employer may either the re terminate June 1990. any time, lationship at continuation of an relationship employment-at-will does not independent
constitute valuable considera support Special tion to train covenant. ing knowledge employee acquired
during employment may inde constitute Hill, pendent consideration.2 valuable court S.W.2d at 171. The trial found (1) secrets, CPA had no had trade sufficiently important interest in its cus re justify tomer information to reasonable However, strictions. “customer informa special training tion” neither nor knowle result, dge.3 find cove As a we that the compete not supported nant not to independent valuable consideration. Since ancillary compete is not
the covenant agreement or to an otherwise enforceable supported independent consid valuable eration, hold the covenant not we against Martin. is not enforceable herein, re- explained
For the reasons we appeals, judgment of the court of verse the injunction, dissolve hold the restrictive Peters, P.C., Although Henry is neither Contrary & 3. "customer information” 2. to Bland v. denied), training knowledge may special con (Tex.App. Tyler nor which S.W.2d 5 writ — consideration, special training knowledge only independent busi "the stitute valuable secrets, goodwill, support a ness trade and other confiden consideration that covenant will (including compete ancillary employ- proprietary “cus to ment_" tial or information to a contract of information") legitimate (emphasis original). See tomer are interests Id. at 8 McKelvey, protected en generally Postemployment in an otherwise Noncom- Texas, compete. petition forceable covenant not to See DeSan Restrictive Covenants in Corp., S.W.2d tis v. Wackenhut S.TEX.L.J. *5 Mercer, Flick, Houston, C.
Jon Theodore petitioners. for Caya- Bruckner, H. Roxella T. William Sadler, Davidow, zos, Sylvia Judith Batson Houston, respondent. for ON MOTION FOR REHEARING HECHT, Justice. rehearing, opinion for our
On motions 13, 1988, judgment July are with- drawn, following opinion is now the Court. noncompetition involving a This case agreement employer an em- between principal issues: ployee presents three first, of the state chosen whether agreement parties govern by second, applied; whether the should be enforceable; agreement noncompetition enforceable, third, agreement if is not attempted en- damages for its whether under the Texas forcement are recoverable Act of Enterprise and Antitrust Free fraud, or wrongful injunction, tor- or
contract. tious interference with applied law of the
The trial court Florida, parties to chosen state noncompetition agreement, govern the overly broad agreement hold the valid geographical territory request, to the At Wackenhut’s DeSantis competition signed was restricted. Based a
jury finding inception agree- his employee employment. breached that it “made and agreement, the trial recites was entered enjoined any court Florida, August 13, into” on al- further violation of the within a though signed in DeSantis it Texas. also It territory, smaller employ- and denied the “including recites lim- consideration but not damages. ee’s claims for The court of employment Employee’s ited to the appeals affirmed. 732 S.W.2d We hold Employer”. In the DeSantis law, law, applies that Texas not Florida long as em- covenanted that as he was case, law, this and that under Texas ployed by years and for Wackenhut two noncompetition agreement is unenforcea- thereafter, any he would ble. employee We further hold that the way area forty-county damages entitled to recover for his expressly south Texas. DeSantis ac- employer’s wrongfully obtaining injunc- knowledged that Wackenhut’s client list “is him, against employee tion and that the valuable, special unique asset fraud, interference, failed to show tortious agreed business” and never [Wackenhut’s] or a Enterprise violation of the Texas Free anyone. disclose it to also DeSantis entitling and Antitrust Act him dam- agreed divulge any never confidential ages. accordingly judg- We reverse acquired through proprietary information appeals ment of the court of and render employment Finally, his with Wackenhut. judgment in opinion. accordance with this agreed DeSantis and Wackenhut “that questions concerning interpretation en- I gov- forcement contract shall be
erned Florida law.” A manager remained of Wacken- Edward DeSantis has providing been in- nearly hut’s office for years, Houston three corporate services, ternational and security resigned until March he when under in the private both CIA sector for threat of termination. DeSantis contends his entire career. In June while em- quit that he forced to dis- because of *6 ployed by Reynolds R.J. Industries agreements with Wackehut’s senior Carolina, North DeSantis for management interviewed a profitability over the position with Corporation. Wackenhut At Houston office. Wackenhut that contends time, Wackenhut, that resign which was chartered DeSantis was asked to because headquartered Florida, and his the third unethical solicitation of business. was largest company in the nation specializing Following resignation, his in- DeSantis furnishing security guards for business- company vested in a which marketed secur- throughout es country. DeSantis met ity He electronics. also formed a new com- president, founder, with Wackenhut’s and Deterrence, (“RDI”), pany, pro- Risk Inc. to stockholder, Wackenhut, majority George security consulting and vide services secur- Florida, company’s at the offices in and the ity guards a The to limited clientele. agreed two that DeSantis would immediate- following month employ- termination his ly position assume of Wackenhut’s Wackenhut, ment with DeSantis sent out manager. According Houston area to De- announcing letters his new ventures to Santis, George promised him Wackenhut businesses, twenty thirty about half manager’s position only that the area was which were Wackenhut clients. He added temporary, he and that would soon be postscript a to letters to clients Wackenhut top position. moved into a executive any in which he disclaimed intent to inter- George Wackenhut denies he that made existing fere with their contracts with any promises DeSantis, such admitting however, months, Wackenhut. Within six only clients, that he mentioned advancement to an one of Oil Wackenhut’s Marathon position possible opportuni- executive Company, as a its had terminated contract with ty. signed five-year Wackenhut and contract RDI, client, granted and a The court
with second Wackenhut trial Wackenhut’s Drilling Products, con- summary judgment TRW-Mission motion for on DeSantis doing interference, sidering the same. Wackenhut RDI’s for tortious and claim its acquiring claims that DeSantis was against and a verdict them their directed noncompetition clients in violation of the trial, At withdrew fraud claim. agreement. claims these DeSantis jury claim. A its tortious interference began considering security clients other found that DeSantis breached noncom- providers only quality service after petition competing with declined, following Wackenhut’s services Wackenhut, failed find that Wacken- but departure. DeSantis’ if irreparably hut would harmed DeSan- prohibited tis were not from further B breaching agreement.1 jury also RDI in Wackenhut sued DeSantis and ever failed find Wackenhut had violating enjoin October 1984 to them from unfair, decep unjust, misleading or been to re- noncompetition agreement, and so as cause him tive DeSantis agree- damages cover of the for breach injury. jury found that Wackenhut’s ment with and tortious interference noncompetition agree enforcement of alleged business relations. Wackenhut damages, ment had caused DeSantis no soliciting its that DeSantis and RDI were profits to lose from Mara had caused RDI using client clients’ confidential business in the amount thon’s TRW’s business pricing ob- information which DeSantis $9,000 past like in the and a amount through employment tained his with Wack- the future. parte issued ex enhut. The trial court irreparable The trial court concluded that De- temporary restraining against order presumed either harm Wackenhut was RDI, fixed the amount Santis and from breach of the DeSantis’ filed requisite bond which Wackenhut law, or established a mat- under Florida $5,000. Following hearing, the trial of the absence of an ter of because injunction upon a temporary court issued adequate legal remedy for breach $75,000 bond, filed. which Wackenhut also Accordingly, agreement under Texas law. against RDI counterclaimed DeSantis and enjoined De- permanently trial court Wackenhut, had alleging that Wackenhut Wackenhut, competing from with Santis sign the fraudulently induced DeSantis to employing DeSantis to com- and RDI from agree- agreement, Wackenhut, years for two from pete with laws, antitrust violated state in an date left Wackenhut tempo- agreement by enforcement court from the by the trial area reduced rary wrongful tortious- injunction was forty counties stated con- ly RDI’s interfered DeSantis and *7 counties found the trial the thirteen RDI relationships. tract and business necessary protect reasonably to be court damages loss of the Marathon claimed for interest. The trial court also Wackenhut’s contract, terminated after which Marathon di- enjoined DeSantis from permanently issued, TRW for loss of the injunction proprie- or vulging client list Wackenhut’s business, reputation. injury to its information, using any and RDI from tary salary, damages for lost DeSantis claimed ac- proprietary information Wackenhut’s anguish. impaired reputation, and mental through DeSantis. The trial court quired sought statutory RDI both DeSantis and requested by DeSantis and denied all relief Enterprise damages under the Texas Free RDI, jury’s finding Act, based Texas Business Antitrust breached his with sections 15.01- DeSantis had Commerce Code Annotated The court awarded (Vernon Supp.1990), and Wackenhut. trial 15.51 1987 and attorney’s fees and costs. damages. exemplary See, State Texas irrepara- be. party that determination 1. Whether a has been will be Foods, (Tex. issue, Inc., although 803-804 bly jury 591 S.W.2d factual Pet harmed is not a 1979). making by the court in issues to be considered The appeals court of judg- affirmed the They ment cannot be unlimited. cannot ment of the trial court in respects. require governed all that their contract be jurisdiction
the law of a
which has no rela-
II
agreement.
tion whatever to them or their
they
by agreement
And
cannot
thwart
We first consider
ap-
what
law to
public policy
offend the
of the state the law
plied in determining whether the noncom-
ought
apply.
of which
otherwise to
So
petition agreement in this case is enforce-
limited, party autonomy furthers the basic
able. Wackenhut contends that Florida
policy
deep
of contract
roots
law. With
applies,
law
as expressly agreed by the
jurisprudence,
two centuries of American
parties.
argues
that Texas law
party autonomy
grown
limited
has
to be
applies, despite
parties’ agreement.
modern rule
contracts conflict of
supra
632-652;
laws. See
at
Scoles,
A
Wein-
supra 269-275;
traub,
Restatement
This
previously
Court has not
addressed
(Second) of Conflict
of Laws
Re-
[“the
given
what effect should be
to contractual
(1971).
§
statement”]
provisions.
choice of law
begin
We
what Chief Justice Marshall referred to as
party
autonomy rule has been
principle
that,
of “universal law ...
in recognized
Legislature
in this state. The
forum,
every
governed by
a contract is
provided
in the Uniform Commercial
law with a view to which it was made.” Code:
Southard,
Wayman
(10 Wheat.)
23 U.S.
a transaction bears a reasonable
[W]hen
1, 48,
(1825).
traub, on the Conflict of (1971) (1) Laws How by The law of the state chosen the [“Weintraub”]. ever, parties’ the freedom parties govern rights to choose what to their contractual jurisdiction’s law apply agree- will to their applied particu- and duties will be if the Thus,
lar parties George issue one the could Wackenhut occurred there. by explicit provision 187(2) have resolved an in ap- under section Florida law should their to that ply directed issue. in this case unless it falls within the exception 187(2)(b). in (2) stated section by The law of the state chosen the exception applies depends Whether parties govern rights to their contractual first, upon three applied, and duties will if determinations: whether be even the particular parties there is a the of which issue is one which the state would apply by explicit could not have resolved an under section 188 of the Restatement provision in by their absent an effective choice of law the directed issue, parties, words, in unless either or state other whether a relationship significant has a more the with
(a) the chosen state has no substantial parties and their than the transaction state relationship parties the the trans- chose; second, they has whether state action and there is no other reasonable materially greater choice, interest than the cho- parties’ basis for the deciding sen state in this whether noncom- (b) application the the of law of chosen petition agreement enforced; and should be contrary state would to a funda- be third, pol- whether that state’s fundamental mental policy of state which has a icy by application be the would contravened materially greater than interest the of of in the law the chosen state this case. chosen in the state determination of particularly, More we must determine: which, particular the issue and under first, significant whether Texas has a more of the rule would be the state of § relationship parties to these and their applicable the law in the absence of an second, Florida; transaction than whether by parties. effective choice of law the materially greater has a Texas interest (3) contrary In the absence of a indica- deciding enforceability than Florida in the intention, tion of the the reference noncompetition agreement of in this the of of local law the state the chosen law. case; third, application whether the of The issue before us—whether the noncom- contrary case Florida law in this would be petition agreement in this case enforce- policy fundamental of Texas. parties able—is not “one which the could explicit by provision have resolved an in See agreement”. (Sec- Restatement 187 comment d ond) § Conflict of Laws of pro of the Section 188 Restatement 187(2). apply We therefore section governed by that a contract is to be vides “has most parties this case chose the law of the law the state that the govern significant relationship Florida to their contract. Florida to the transaction taking parties parties”, account relationship substantial to the and the into vari light contacts in of the basic conflict of the transaction because Wackenhut’s ous corporate there, principles are and some of of section 6 of the Restatem offices laws case, negotiations In state is Texas. the between DeSantis and ent.2 (c) place performance, 2. Section the Restatement states in full: (d) subject matter of location Governing Law in Absence of Effective Choice contract, the Parties domicil, residence, (e) nationality, place (1) rights parties and duties of the with incorporation place of business of respect to an are determined issue contract which, parties. the local law of state with issue, according significant respect to that has the most These contacts are to be evaluated parties importance respect relationship to the transaction and the to their relative principles particular stated issue. § under the (3)If negotiating place the contract In the absence of an effective choice of (see parties place performance are the same § law the the contacts 187), state, usually applying princi- will into the local law of this state taken account provided ples applicable applied, except 6 to the law otherwise determine issue 189-199 and 203. §§ include: (a) place contracting, 6 of states: Section Restatement contract, (b) Principles place negotiation Choice-of-Law *9 state, manage employee Wackenhut hired DeSantis to its in Wackenhut as in this Although in business the Houston area. this employer doing a in national business negotiations the some of between DeSantis state, competitive in RDI as a new business Florida, and Wackenhut occurred in the state, being in the and in consum- formed noncompetition agreement finally was exe the in ers of services furnished Texas in place cuted DeSantis Houston.3 The performed by and De- Wackenhut and RDI performance Texas, of parties for both with a Santis. Texas also shares Florida subject where the matter of the contract general protecting justifiable the interest in was located. Wackenhut also be con in expectations doing entities of business in performed obligations sidered have its in several states. Florida’s direct interest Florida, part supervised in from it where noncompetition of the enforcement the operations, including its various its Hous protect- in case is limited to this Still, gist ton office. the of the headquartered in ing national a business performance in person this case was the of Although always proble- that state. it is rule, al in As services Texas. that factor matic for its inter- one state balance own determining in alone is conclusive what state, fairly against ests those of another apply. state’s law is to See Restatement the of little circumstances this case leave (1971);4 also see Schulke Radio § doubt, if any, materially that Texas has Broadcasting Prod. Ltd. v. Midwestern deciding greater than in interest Florida Co., 6 Ohio St.3d 453 N.E.2d in whether the (1983); Homes, Wood Bros. Inc. be this case should enforced. Bureau, Adjustment Walker 198 Colo. 1369, 1373(1979); 601 P.2d Graham v. Wilkins, 145 Conn. 138 A.2d case, In relationship this the Having concluded that Texas law would parties transaction and to Texas was clear enforceability the of the control issue of ly significant more relationship than their noncompetition agreement in this but case to Florida. parties’ law, and for the choice of Florida deciding Texas’ in in interest issue materially greater this case is than Flor- ida’s, finally we must determine under sec- materially greater
Texas has a interest 187(2)(b) tion the determining than does Florida of Restatement whether whether noncompetition agreement application the of Florida to decide this law this case contrary enforceable. issue would At stake here whether a to fundamental policy Texas resident can leave of job one Texas Texas. offers Restatement Thus, competing start a guidance making Texas business. little this determina- directly Texas is only interested in DeSantis as tion. Comment states that a “fun- g court, subject A it constitutional restric- 3. The covenant itself states that was executed tions, statutory Florida, will follow directive its testimony parties for both estab- state own (2) on choice of law. signed that DeSantis it last in Houston. lished directive, When there no such the applicable the factors relevant to choice Section states: rule of law include Contracts for the Rendition Services (a) the needs interstate and interna- validity of a contract for rendition systems, tional rights thereby are services determined, created (b) policies forum, relevant of an absence effective (c) policies the relevant of other interested parties, by choice of law the the local states the relative of those interests states issue, requires that state the contract where particular in the determination of the services, major portion of or a the servic- (d) protection justified expectations, rendered, unless, es, respect (e) policies underlying partic- the basic issue, particular law, some state has a more other ular field of relationship principles (f) significant certainty, predictability uniformity under result, par- and the stated in 6 to transaction ties, (g) applica- ease law of the in the which event the local other determination applied. applied. tion the law to be state will be *10 680 op one, policy damental” is a “substantial” (Second) Restatement ContRacts apply (1981);
and that its forum will own 186-188 14 “[t]he §§ Á S. Williston. op legal principles determining whether a Treatise on the Law ContRacts given is policy (3d 1972). a fundamental one within 1633-1635 ed. What noncom- §§ meaning present the rule....” petition agreements are reasonable re- state, upon employees straints in this there- g sug Comment to section 187 does fore, public policy. is a matter of More- gest application of the law of another over, policy is fundamental in that it contrary is state the fundamental a ensures uniform rule for enforcement of policy of it merely the forum because leads noncompetition agreements in this state. to a different than result would obtain un g 187 See Restatement comment agree der the forum’s law. We that the (“a policy may fundamental be embodied result one case determine cannot wheth a one or more kinds statute which makes of er is the issue a matter of fundamental illegal designed contracts or which is resolving policy purposes state of protect person against oppressive the use Moreover, of conflict laws. the fact that bargaining superior power”). of Absent materially the law of another state dif agreements involving policy, such a resi- ferent from the of does not law this state dents of other states would be controlled application itself establish that the other policy of those states. An law state’s law would offend fundamental employer employee of one out-of-state policy analyzing In fun Texas. whether might competing job escape take a policy damental is offended under section compete enforcement of a covenant not to 187(2)(b), the focus is the law in whether state, because of the law of another while a question part policy is a so state funda neighbor suffered enforcement an identi- mental that courts of state will law a third cal covenant because agreement contrary refuse to enforce an resulting disruption orderly state. The law, parties’ despite original inten relations, employer-employee as well tions, though agreement even competition marketplace, would be would enforceable another state con unacceptable. Employers would be encour- nected with transaction.5 favor- aged attempt to invoke the most Neither the nor the cases Restatement govern law their able state available section have un have followed relationship employees Texas general dertaken a definition of “funda or other states. policy”, mental and we make need not and others These same considerations case; attempt its pa in this for whatever virtually every has led court that ad- have rameters, noncompetition enforcement of question of enforce- dressed the whether agreements falls them. This well within agreements is agreement Court held not to that “[a]n important state of fundamental matter inis restraint of trade and will not affirmatively. many Not policy to answer enforced unless is reasonable.” it considered the matter of these courts have Assoc., v. Comp Frankiewicz National 187 of specifically in the context of section 505, (Tex.1982); 633 S.W.2d accord yet, rather remarka- Restatement, Campbell, Oil Tool v. Co. Weatherford expressed sim- many (1960). bly, have nevertheless 161 Tex. 340 S.W.2d Indus., Inc. conclusions. Dresser rule, ilar See general restraints As a unreasonable (10th Sandvick, trade, v. 732 F.2d including unreasonable covenants Cir.1984) (“the tendency of the courts public policy. compete, [is] contravene state when Roth, apply policy of the forum Denny See to com- ref’d); parties litigating covenants not (Tex.Civ.App. are writ — Galveston De- is enforceable under Texas law. apparently 5. The that this whether it trial court concluded noncompetition agreement appears to concede that under Santis enforceable under' Florida enforceable ap law. Wackenhut both Texas and Florida law. The court peals strongly argues is enforce that the concluded is enforce Texas did consider able under law. able under Florida Plasschaert, Corp. Nordson pete”); of another apply and that the law state *11 1371, (11th Cir.1982); Merrill F.2d 1375 enforceability to of such an determine Pierce, Smith, Lynch, v. Fenner & Inc. agreement in the of a case circumstances Stidham, 1098, (5th 5 658 F.2d 1100 n. contrary policy. like would be to that this Cir.1981); Davis v. Jointless Fire Brick enforceability We therefore hold that Co., v. 1, (9th Cir.1924); 300 F. Muma 3-4 agreement in case must be this Guardian, Inc., Financial F.Supp. 551 judged by law, Florida Texas not law. 119, (E.D.Mich.1982); Walling 121-123 Hart, 338, Chem. Co. v. F.Supp. 508 340 III (D.Neb.1981); Paper Fort Smith Co. v. the noncom- Co., 482 355, We now consider whether Paper
Sadler
F.Supp.
357
petition agreement
(E.D.Ok.1979);
DeSantis and
Blalock v.
Sub
between
Perfect
Co.,
(S.D.Ala.1978),
scription
123,
F.Supp.
458
Wackenhut is
Texas
127
enforceable under
law.
curiam,
per
hut after he left its
was
and bids could
be obtained
keep
trading
no
DeSantis from
on Wacken-
the customers themselves. There is
evi-
advantage
goodwill,
any
much less
dence that DeSantis ever took
hut’s business
showing
hardship
agree-
any knowledge
he had of
Wackenhut’s cost
by
outweighed
trying
ment on
to outbid Wackenhut or
factors
protect any
away
need to
such interest.
its customers. Wackenhut sim-
woo
protect
need
ply has not demonstrated a
possessed
Wackenhut also claims
it
limiting
confidential
information
protectable by
confidential
information
an
right
compete.
DeSantis’
agreement
compete. Specifically,
not
Having
during his
determined that Wackenhut has
Wackenhut contends that
em-
agreement
identity
shown that DeSantis’
ploy, DeSantis
learned
customers,
any legit-
special
necessary
protect
Wackenhut’s
needs
interest,
pricing
or that the
requirements, and Wackenhut’s
imate business
necessi-
protection outweighs
bidding strategies.
ty of such
the hard-
policies, cost factors and
DeSantis,
Again,
ship of that
while confidential
information
we
protected
not to com-
conclude that
unreason-
be
it
and therefore unenforceable.
pete, Wackenhut
failed
show that
able
protection
needed such
in this case. Wack-
C
its customers
enhut
failed to show
readily
identified
someone
pending
could not
While this case has been
knowledge
employ,
its
that such
Court,
Legislature
outside
before this
has add
advantage,
competitive
carried some
E
subchapter
ed
to the Texas Business and
expressly
ap
customers’ needs could
it
its
Code and
made
Commerce
by inquiry
before,
simply
plicable
ascertained
addressed
a covenant entered into
“to
Also,
on,
themselves.
Wack-
the effective date
this Act.”
those customers
after
*14
16, 1989,
pricing policies
enhut
to show
its
Act of June
ch.
failed
(effective
Aug.
bidding strategies
uniquely devel- Tex.Gen.Laws 4852
and
were
1989).7 Thus,
prices
purports
apply
Act
to
to
its
this
oped, or that
information about
establishing
subchapter
by
provides:
promisee
that the
has the burden of
New
E added
this Act
by
specified
meets the criteria
Subdivi-
covenant
NOT TO
SUBCHAPTER E. COVENANTS
(2)
this
If the
sion
of Section 15.50 of
code.
COMPETE
agreement
primary purpose,
a
the
Sec. 15.50. CRITERIA FOR ENFORCEABILI
has different
establishing
TY OF
NOT TO COMPETE. Not
promisor
COVENANTS
that the
has the burden of
code,
withstanding
this
a
Section 15.05 of
cove
For the
does not meet those criteria.
covenant
compete
to
is
to the extent
nant not
enforceable
subsection,
of
purposes
this
the "burden
es-
of
that it:
persuad-
tablishing” a fact means the burden of
(1)
ancillary to an
enforceable
is
otherwise
ing
of
that the existence
the
the triers
fact
but,
agreement
compete
to
if the covenant not
probable than its nonexistence.
fact is more
is executed on a date other than the date
(c)
specified
If
covenant meets the criteria
the
executed,
underlying agreement is
which the
(1)
by
of Section 15.50 of this code
Subdivision
by
supported
indepen
such covenant must
by
specified
Sub-
but does not meet the criteria
consideration; and
dent valuable
15.50,
court,
(2)
at the
of Section
the
division
(2)
to
contains reasonable limitations as
promisee,
request
reform the cove-
of the
shall
time,
area,
activity
geographical
scope of
necessary to cause the cove-
nant to the extent
greater
impose
not
a
to be restrained that do
specified by
the
Subdivi-
nant to meet
criteria
protect
good
necessary
the
restraint than is
to
(2)
cove-
Section 15.50 and enforce the
sion
promisee.
the
will or other business interest of
reformed,
may
except
the court
nant as
damages
promisee
a
of the
award the
for breach
AND
Sec. 15.51. PROCEDURES
REMEDIES
and the relief
covenant before its reformation
IN ACTIONSTO ENFORCE COVENANTSNOT
promisee
to in-
granted
the
shall be limited
COMPETE,
(a)
provided
Except
TO
as
Sub-
primary purpose of the
junctive
the
relief.
If
section,
(c)
may
a
award
section
this
court
ancillary
agreement
is
is
to which the covenant
promisee
compete
the
under a covenant not to
personal
obligate
promisor to
ser-
the
render
to
vices,
relief,
injunctive
damages
damages,
or both
promisee
promisor
that the
the
establishes
promisor
injunctive
the
relief for breach
agree-
time of the execution
knew the
the covenant.
did not meet the criteria
(b)
the covenant
primary
agreement
ment that
purpose of
If the
specified by
of Section 15.50
ancillary
obligate
Subdivision
is
is to
covenant
services,
sought
promisee
enforce the cove-
promisor
personal
render
compete
not to
before us in
A
this case.
DeSantis and
claim that
RDI
Wackenhut
prosecuted
against
this action
them
threshold
obvious
issue which this
maliciously,
procured
temporary
that it
legislation presents
recent
is whether it
restraining
temporary injunction
order
litigation
rights
regarding
affect
against
wrongfully,
they
them
parties
compete
damages
suffered
have
as
result. De-
which commenced before the statute was
alleged
Santis and RDI each
actual dam-
however,
find unnecessary,
enacted. We
it
ages greatly
$5,000
tempo-
excess
to resolve
issue in
this
this case because we
$75,000
rary restraining order bond and the
conclude that the result in this case would
temporary injunction bond which Wacken-
not be affected
the statute. Under sec-
hut filed.
15.50(2),
tion
“a
compete
covenant not to
is
to the
enforceable
extent that it
con-
...
A person
injunc
who obtains an
tains reasonable limitations ...
that do not
wrongfully
tion
damages
liable for
impose
greater
restraint
than
neces-
caused
injunction.
issuance
sary
protect
goodwill
or other busi-
O'Connor,
Parks
Tex.
8 S.W.
ness
promisee.”
interest
Section
(1888).
separate
There are two
15.51(b) obliges
promisee,
causes of
wrongful injunction,
action for
case,
protectable
this
to establish a
busi-
one
the bond ordinarily filed to obtain
ness interest when the matter involves ren-
injunction,
and the other for malicious
personal services,
dition of
one does.
prosecution.
Annot.,
Apart
See
Liability
Because we have held that Wackenhut has
Bond and in Absence Elements
from
failed
required
to make this
showing, we
Wrongfully
Malicious Prosecution for
cannot reform the
to meet ei-
Suing
Injunction,
Out
than it would be under the above-stated liability establish and in the amount of re principles common governing such covery. The few Texas cases which have *15 agreements. addressed these differences not have been Accordingly, we leave for day another entirely clear or consistent. the issues of legislation whether this recent affects all covenants not to en- upon injunc A cause of action an tered into before the effective date of the predicated tion upon bond breach Act, and it how alters the common law condition, the condition bond. That principles governing such covenants. 684, prescribed by as Rule Texas Rules Procedure, applicant Civil is “that the will
IV may abide the decision which made in be cause, We turn to now con- pay DeSantis RDI’s and that he will all sums they money tentions are entitled to on may adjudged recover costs against wrong- against their claims restraining Wackenhut for him if order tem fully relief, securing temporary injunctive porary injunction shall be dissolved laws, violating fraud, state antitrust part.” prevail and whole or in To this upon tortiously interfering action, prove with contract and cause of the claimant must relationships. temporary business We each restraining consider order or of these claims in temporary injunction turn. perpet- was issued or fees, greater necessary actually reasonably nant to extent than was incurred
protect goodwill or other promisor business interest defending the to enforce action promisee, may prom- of the the court award the covenant. costs, including attorney's isor the reasonable 686 actual been, prosecution, all not action for malicious it have
uated when should damages recovered. Under either may be later dissolved. See Craddock that it was prove 607, the claimant must Overstreet, 608-609 cause of action 435 S.W.2d v. him 1968, injunction of the caused ref’d n.r. that issuance (Tex.Civ.App. Tyler writ — having for damages. cannot recover e.). prove that the He The claimant need not something doing from temporary prohibited temporary restraining order been Parks, 8 right do. S.W. maliciously or which had no obtained he injunction was having for Nor can he recover probable at 107. cause. See Johnson without something (Tex.Civ. doing 920, from McMahan, prohibited been S.W.2d ref’d). do, if the even pur agreed The which he App. writ — Amarillo unenforceable. Wissman protect is to the defendant pose of the bond Boucher, Tex. S.W.2d as result from the harm he sustain re granted upon temporary relief injunction showing required of the duced restraining or temporary all full pending consideration plaintiff, against De- injunction temporary der and injunction plaintiff need not issues. An dissolved. Con and RDI were never Santis of his claim to correctness establish the 684, Texas Rules of under Rule sequently, relief, must show temporary obtain Procedure, and RDI are DeSantis Civil merits. only a likelihood success against the bond Wack- to recover entitled defendant injunction an Correspondingly, De- of these orders. posted enhut for each right his a lesser burden to establish request jury find and RDI did Santis would injunction bond than recover on an prosecution claim ings on their malicious ordinary for mali action required Moreover, it. there waived and therefore prosecution. cious record that Wacken- is no evidence for only other cause of action probable maliciously and without acted hut prose for malicious wrongful injunction suit, bringing especially inasmuch cause “ weight appeals is established cution. ‘It both and court of the trial court Thus, of elements authority that in absence claim. merit in Wackenhut’s found prosecution no for malicious an action entitled to recov RDI are not injunc in an prosecution. will lie the defendant action of malicious er on their claim suit, or under independently a bond tion RDI have failed Accordingly, DeSantis and suing wrongful damages damages for for the taking, right to recover to establish ” Camp injunc v. Atlantic injunction.’ wrongful out against (Tex.Civ. Co., Refining tion. ref’d). pre To App. writ — Texarkana the claimant of action vail this cause B injunction suit was prove must the noncom- RDI claim that DeSantis and proba maliciously and without prosecuted DeSantis and agreement between petition *16 cause, his favor. terminated ble and was Texas Free Enter- violates Wackenhut 914, Brown, 918 v. See James 1983, of Texas Antitrust Act prise and plaintiff (Tex.1982). injunction Once the Code Annotated Commerce Business and of is hearing all after full prevailed (Vernon and 1987 15.01-15.51 sections sues, result not damages the defendant therefore en- they are Supp.1990), and required to ob showing from the reduced against damages recover treble titled to full from the temporary relief but tain spe- statute. More under merits, necessary on the to succeed proof that the RDI assert cifically, DeSantis dam recover those cannot and defendant un- agreement is unlawful prose proof of malicious ages full without 15.05(a), declares der section cution. of trade in restraint contract ... “[ejvery DeSantis and commerce unlawful.” in an or damages The recoverable 15.21(a), that, section course, under are, contend RDI injunction on an bond (cid:127)action damages from to recover they are entitled In an of the bond. limited to the amount
687
persons
(1977);
Wackenhut as
“whose business or
Soc’y
L.Ed.2d 568
National
Pro
property
injured by
has been
reason of
Eng’rs
States,
v. United
435 U.S.
fessional
679, 688,
1355,
conduct declared unlawful”
section 15.-
1363,
98 S.Ct.
55 L.Ed.2d
05(a), and that because
(1978).
restraints,
Wackenhut’s con- 637
Some
because
flagrant”,
duct was “willful or
they are
inherently pernicious
upon
effect
com
damages
entitled
have those
trebled.
petition,
per
unreasonable,
are
se
oth
while
analyzed
ers are not and must be
under the
Although
previously
we have not
rule of
2
reason. See
J. von
Kalinowski,
apply
had occasion to
state antitrust stat
Regulation
Laws
ANTITRUST
TRADE
noncompetition agreements
utes to
be
(1989).
important
factors
§ 3.02[6]
employers
employees,
tween
do not
we
analysis vary
a rule of reason
from case to
write on a clean slate.
in
Section 15.04
Chicago
Trade,
case. See
Bd.
246 U.S.
structs:
Aspelund
238,
243;
at
38
at
S.Ct.
D.
& C.
purpose of this
Act is to maintain
Employee Noncompetition
Eriksen,
Law
promote
competition
economic
(1987)
7.01
[“Aspelund”]; W.
Lifland,
§
occurring wholly
trade
commerce
(1987)
4.02
§
State Antitrust
Law
[“Lif
partly within the State of
Texas and
land”]; E.
Rockefeller,
Antitrust
Ques
provide
competition
the benefits of that
(1974).
16-20
tions and
Answers
to consumers in
provi-
the state. The
sions
this Act shall
be construed
recently,
Until
there were few
accomplish
purpose
and shall be con- attempts
apply
post-em
antitrust law to
in harmony
judicial
strued
with federal
ployment noncompetition agreements. See
interpretations
comparable
federal an- Aspelund,
7-4;
7.01,
supra
at 7-1 to
§
titrust statutes to the extent consistent Blake, Employee Agreements
toNot Com
purpose.
with this
pete,
625,
(1960)
73
628
8
n.
Harv.L.Rev.
15.05(a)
comparable to,
Section
and in-
White,
[“Blake”];
‘‘Common Callings”
from,
deed taken
section 1 of the Sherman
Postemployment
and the Enforcement of
Act,
(1988).8
Antitrust
15 U.S.C.
1
Ac-
Mary’s
§
Texas, 19
Covenants in
L.J.
St.
cordingly, we look
judicial
to federal
inter-
589,
(1988); Note,
599
The Antitrust
Im
pretations of
1
section of the Sherman Act plications
Employee Noncompete
applying
15.05(a)
section
of our state Agreements:
Analysis,
A Labor Market
antitrust
law.
519,
66 Minn.L.Rev.
520
[“Note”].
There can be little doubt
Sherman
above,
As we have noted
agree
applies
agreements.
Act
to such
See Con
ment not to
is a
restraint
trade.
Designers,
&
v.
However,
sultants
Inc. Butler Serv.
every
contract
restraint
Inc.,
Group,
1553,
(11th
720 F.2d
1564
prohibited
Cir.
trade is
1
by section of the Sher
1983);
Act,
Aydin Corp.
Corp.,
v. Loral
718
man
only
those contracts which
897,
(9th Cir.1983);
F.2d
901-903
unreasonably
Newbur
restrain
E.g.,
trade.
Stan
Gross,
1057,
ger,
563
States,
1,
Loeb & Co.
F.2d
dard Oil Co. v. United
221 U.S.
(2d
Cir.1977),
denied,
502, 515,
(1911); 1082
434
31
55
cert.
U.S.
S.Ct.
L.Ed. 619
(1978);
Co.,
98 S.Ct.
54
782
United States v.
L.Ed.2d
American Tobacco
Floors,
106, 179,
Inc.,
632, 648,
U.S.
Golden v. Kentile
F.2d
S.Ct.
(5th Cir.1975);
L.Ed. 663
The focus of
this “rule
Bradford
Co.,
(2nd
reason” test
F.2d
whether the
New York Times
restraint
promotes competition
Cir.1974);
7-8;
or suppresses
supra
de
7.01
Aspelund,
Compete:
stroys competition. Chicago
A.
Bd.
Trade
Valiulus,
Covenants
Not
*17
States,
231, 238,
(1985)
246
United
U.S.
38
Law 37
Forms, Tactics,
242, 243,
(1918);
However,
S.Ct.
F.2d
301
the antitrust
laws.
1158,
D
DeSantis and RDI claim that
MAUZY, J.,
concurring opinion
files
Wackenhut’s enforcement of the noncom-
J.,
SPEARS,
joins.
petition agreement
tortiously interfered
with their contract and business relation
MAUZY, Justice, concurring.
ships.
summary
Wackenhut moved for
judgment
claim,
on this
based
an affi
pains
The Court takes
to avoid overrul
davit which
included in the record
Trim, Inc.,
ing Hill v. Mobile Auto
appeal.
granted
The trial court
Wack-
(Tex.1987),
Bergman
S.W.2d 168
appeal
enhut’s
ruling,
motion. To
De-
Houston,
(Tex.
Norris
tive is enforceable to the nant limi- extent that it ... contains reasonable area, time, geographical as to tations scope activity to be restrained.” The view, my
“scope activity” language, in adequate continued room for the leaves calling vitality doctrine. In of the common case, question is not a Court this today. needs to decide re I comments Finally, must make two complaint that we have garding the Court’s comprehensive previously provided a First, calling”. rea definition of “common for sonably precise definitions have been Ray M. McKel e.g., C.L. & mulated. See Noncompeti vey, Drafting Enforceable Texas, 20 Tex.Tech Agreements tion White, (1989); W. Common L.Rev. Postem Callings and the Enforcement Texas, 19 St. ployment Covenants Second, it Mary’s L.J. genius common law that it light slowly reason evolves com I to allow the experience. am content calling concept out on a to be worked mon case-by-case basis.
SPEARS, J., opin- concurring joins ion. HAVENS, Appellant,
Connie HOSPITAL, COMMUNITY TOMBALL Kelley, Nursing, Indi Director Carol Rodriguez, vidually, Michael A. and Dr. Individually, Appellees.
No. 01-89-00936-CV. Texas, Appeals Court (1st Dist.). Houston May 1990. Aug. Rehearing Denied