SAY GOODBYE TO MINORITY SHAREHOLDER OPPRESSION CLAIMS In Ritchie v. Rupe, the Texas Supreme Court faced the question of whether to recognize a common law cause of action for “minority shareholder oppression.” Despite a substantial history of trial courts and lower appellate courts having concluded that this cause of action exists, the Court refused to recognize
Every business needs to protect itself from the risk posed by employees defecting to work for the competition. But what happens if you sue a former employee under a non-compete agreement that is too broad or otherwise unenforceable? They may be able to recover their attorney fees for defending the lawsuit. In the recent case
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Our client, a salesman, was sued by his former employer who claimed that he had violated his non-compete agreement by using confidential information to unfairly compete. The damages sought exceeded $500,000. After a temporary injunction was granted against our client and his new employer, we employed a strategy that focused on attacking the enforceability of
EMPLOYERS WIN ANOTHER NON-COMPETITION BATTLE The Texas Supreme Court has issued another opinion favoring the employer where the issue is the enforceability of an agreement that restricts an employee’s ability to compete after employment has terminated. This opinion is the latest in what appears to be a trend toward finding a rationale to support
MINORITY OWNERS’ RIGHTS CONTINUE TO EXPAND Texas courts recognize that majority owners in private companies must deal fairly with their minority owners or face claims for minority shareholder oppression. Texas courts have approved the following as acts of shareholder oppression: malicious oppression of dividends (starving out the little guys), personal use of corporate funds
The Texas Covenant Not to Compete Act requires that the time, geographic area, and scope of activity limitations of a covenant not to compete be reasonable. By reasonable, it is meant that the restriction must not impose a restraint on the former employee that is greater than is necessary to protect the goodwill or other
Enforcing Covenants Not To Compete: Employers Are On A Winning Streak The Texas Supreme Court just made it easier for employers to stop former employees from competing against them. In Marsh USA, Inc. v. Cook, the Texas Supreme Court held that stock options given to an employee are sufficient consideration for enforcement of a non-compete
General Rule: Every employee owes his/her employer a duty of loyalty. That duty is not violated by an employee making some advance preparations for new employment or for the creation of a new competing business. Likewise, the duty of loyalty is not violated if an employee fails to disclose his plans or preparations to accept new
Opinion: The Texas Supreme Court’s recent opinion in Alex Sheshnoff Management Services, LP v. Johnson continues the trend of cases favoring employers in Texas. Now, covenants not to compete, assuming applicable statutory criteria for reasonableness are met, are enforceable even though the employee is not provided confidential information until well after employment begins. Departure: This
