Monday, August 15, 2011
Everything You Know about Light v. Centel Cellular of Texas Is Wrong
Audio comedians the Firesign Theatre had an album called "Everything You Know Is Wrong!" Well, Proctor and Bergman had nothing on those jolly jumpbucks at the Texas Supreme Court. A guy named Rex Cook was working for the famous insurance agency Marsh and McLennan Companies. They gave him stock options and had him sign a noncompete agreement. He thought he knew, though, that a company can't just buy a noncompete agreement from a person. Cook quit and, well, proceeded to compete with Marsh and McLennan. They sued him. The judge of the 68th District Court in Dallas, Martin Hoffman, thought that he knew that in such a case, the employee wins. After all, you just couldn't buy a noncompete agreement from a person. The Dallas Appeals Court-- that bastion of antibusiness sentiment-- thought that it knew that in such a case the employee wins. At the Texas Supreme Court, the Chief Justice and Justices Green and Lehrmann thought that they knew that in such a case the employee wins. Even though it's not quite so clear for Justice Willett, a reader of his opinion might be forgiven for thinking that his understanding of the rules is generally the same as every other jurist who has passed on the case (He said that the trial record wasn't developed, which is why he would send the case back to the trial court.).That leaves Justices Wainwright, Hecht, Medina, Johnson and Guzman who teach all the others that everything they know is wrong. OK. maybe not everything, just Light v. Centel Cellular Co. of Texas, 883 S.W.2d 643 (Tex. 1994). It holds that for a covenant not to compete to be enforceable when a company offers an incentive and the employee accepts it, the incentive would have to give rise to the employer's interest in restraining the employee from competing. For example, a covenant not to compete might be enforceable when an employer gives an employee trade secrets or confidential information. That which is given "gives rise" to the justification for allowing enforcement of a covenant not to compete. Forget it. It's old news. That statement is inoperative. With five votes, you can do anything around there. I think we're all bozos on this bus.