The Effect Of Contractual Stipulations Of Irreparable Harm In Texas Non-Compete Cases

We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.

Non-compete agreements often contain recitations that the employer will suffer irreparable harm if the agreement is breached. Most courts hold that such clauses are not dispositive and do not do away with the need to present independent evidence of irreparable harm in order to obtain an injunction. See W.R. Grace & Co.–Conn, 2007 WL 1438544, at * 2 n. 7 (“such stipulations have been held insufficient to support a finding of irreparable harm for injunctive relief”) (citing Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256, 1266 (10th Cir. 2004); Smith, Bucklin & Assocs., Inc. v. Sonntag, 83 F.3d 476, 481 (D.C. Cir. 1996); Baker’s Aid, Inc. v. Hussmann Foodservice Co., 830 F.2d 13, 16 (2nd Cir. 1987); Traders Int’l, Ltd. v. Scheuermann, No. H-06-1632, 2006 WL 2521336, at *8 (S.D. Tex. Aug. 30, 2006) (not designated for publication); Sec. Telecom Corp. v. Meziere, No. 05-95-01360-CV, 1996 WL 87212, at *2 (Tex. App.–Dallas Feb. 28, 1996, no writ.) (not designated for publication)); see also Shoreline Gas, Inc., 2008 WL 1747624, at *11 (“Shoreline has pointed us to no Texas case holding that an agreement such as this establishes, for injunction purposes, that remedies at law will be inadequate or that irreparable injury will necessarily be suffered.”). However, one Texas court found that such contractual clauses are themselves at least some evidence of irreparable harm. See Wright, 137 S.W.3d at 293-94 (relying on such a clause to conclude that some evidence supported the trial court’s finding of irreparable harm).

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