BEAUMONT -- An appeals court has ruled that a non-compete clause in an employment agreement is irrational, as it affirmed summary judgment for a woman sued for breach of contract and tortious interference after she quit her job and started working with a direct competitor.
The Texas Court of Appeals for the Ninth District affirmed the ruling from the Montgomery County District Court, which granted summary judgment for Randi M. Hanis in TENS RX Inc.'s lawsuit against her.
TENS first filed the lawsuit Nov. 21, 2016, three years after Hanis began working with the company and then resigned. TENS had filed an amended complaint Oct. 3, 2016, stating that right after she quit, Hanis started working for a competitor, which TENS said violates a violation of a non-compete clause in an employment contract. TENS appealed after the lower court sided with Hanis.
Texas Ninth District Court of Appeals Judge Leanne Johnson
| electjusticeleannejohnson.com
The judges first evaluated the geographic restriction in Hansis’ employment contract with TENS. That limit says Hanis can’t work in the same state that TENS is operating, or has previously performed business in, or even in states that TENS anticipates doing business is in the future.
“TENS cites no authority to support the reasonableness of the restrictions challenged in Hanis’ motion for summary judgment,” wrote justice Leanne Johnson. Chief Justice Steve McKeithen and justice Hollis Horton concurred. “Instead, TENS merely states that Hanis ‘admits’ that they are reasonable because she signed the covenant stating that the restrictions are reasonable.”
The judges determined this wasn’t enough before they ruled that the geographic limits included in the promise to not compete is unnecessarily broad.
Plus, in this case, there’s no specific territory named and no proof that Hanis has worked in any of the areas that TENS operates in at this time. The judges also pointed out that there’s no way Hanis would know where TENS foresees doing business.
“We conclude that the scope of activity contained in the non-competition provision is unreasonable in that it prohibits Hanis from soliciting clients that she had no dealings with when employed by TENS,” Johnson wrote.
Considering this the judges affirmed summary judgment for Hanis.