The Texas Supreme Court recently upheld a non-compete provision in a contract that contained no express promise by the employer to provide confidential information. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, __ S.W.3d __ (Tex. April 17, 2009).
Fielding worked as an accountant at Mann Frankfort. In his employment agreement, Fielding promised not to use or to disclose confidential information obtained during his employment; Mann Frankfort did not expressly promise to provide such information. The agreement also required Fielding to purchase Mann Frankfort’s business if he performed accounting services for firm clients after leaving the firm. Fielding resigned, and the parties litigated the enforceability of the contract.
The Court held that Mann Frankfort’s failure to expressly promise to provide confidential information did not affect the agreement’s enforceability. Instead, the Court determined that (1) if an employer must provide confidential information to enable an employee to perform his job, the employer implicitly promises to provide such information and (2) if a party makes an express promise that cannot reasonably be performed absent performance by the other party, a return promise may be implied. Here, because Fielding could not perform accounting services without accessing confidential information and because Fielding’s promise meant nothing without a return promise, Mann Frankfort implicitly promised to provide such information. While this implied promise was illusory because of Fielding’s at-will status, once Mann Frankfort furnished the confidential information, the parties formed an “otherwise enforceable agreement” as required by the Texas non-compete statute.
If you wish to speak to an employment law attorney about a non-compete agreement, contact the employment lawyers at Clouse Dunn LLP at [email protected].
