Case Law Update: Texas; Legislative Update: Pennsylvania; Regulatory Update: More on ATS Decision
Case Law Update
Thompson Safety LLC v. Jones and Jackson, 4:24-cv-2483 (S.D. Tex. July 23, 2024).
Read the full opinion here.
Categories: TRO
Tags: Texas law applied; TRO granted
Types of restrictions in case: Non-Compete; Customer Non-Solicitation; Employee Non-Solicitation; Non-Disclosure
Summary:
The plaintiff (“Thompson”) moved for a temporary restraining order against its former employees (“Jones” and “Jackson”) after Jones and Jackson allegedly violated their non-compete, non-solicitation, and non-disclosure covenants by forming a competing fire safety business (“Jones Fire”), and diverting Thompson customers and using Thompson pricing information.
The Court ordered Jones and Jackson to respond to Thompson’s motion within 9 days, but the former employees never filed a response.
The covenants at issue prohibit Jones and Jackson from soliciting Thompson’s customers or engaging in any competitive business within a 200-mile radius for a period of two years following termination of employment.
After reviewing Thompson’s motion and supporting factual declaration, the Court determined that Thompson demonstrated a substantial likelihood of success on its breach of contract claims and that Thompson risked imminently losing goodwill and the protection of its trade secrets and other confidential information as a consequence of Jones’ and Jackson’s competing enterprise.
The Court granted Thompson’s request for a temporary restraining order, enjoining Jones and Jackson from, inter alia, continuing to be employed by Jones Fire, and from soliciting or taking away any customers of Thompson about whom Jones or Jackson received confidential information or with whom they had contact in last 24 months.
The Court set a preliminary injunction hearing for August 9, 2024.
Legislative Update
Pennsylvania - HB1633
Bill Name: “Fair Contracting for Health Care Practitioners Act”; Prohibiting the enforcement of certain noncompete covenants entered into by health care practitioners and employers and providing for a study by the Health Care Cost Containment
Action: Signed by Governor, Effective January 1, 2025
BPB Summary: (1) Effective January 1, 2025, imposes various requirements on restrictive covenants with medical doctors, doctors of osteopathy, certified registered nurse anesthetists, certified registered nurse practitioners, and physician assistants ("Health Care Practitioner"). (2) Defines "noncompete covenant" as "an agreement that is entered into between an employer and a Health Care Practitioner in this Commonwealth which has the effect of impeding the ability of the Health Care Practitioner to continue treating patients or accepting new patients, either practicing independently or in the employment of a competing employer after the term of employment." (3) Non-competes with Health Care Practitioners must be no more than one year, provided that the Health Care Practitioner was not dismissed by the employer. (4) Allows employers to recover reasonable expenses from a Health Care Practitioner through a contract provision, if the expenses relate to relocation, training and establishment of a patient bas and meet other timing criteria. (5) Permits longer non-competes if the Health Care Practitioner is a party to an agreement in the context of the sale of or purchase of an ownership interest in a business. (6) Requires employers to give a notice to certain of the Health Care Practitioner's patients within 90 days of departure explaining how the patient may transfer health records and that the patient may be assigned to a different Health Care Practitioner of the employer if they choose to continue receiving care from the employer.
Regulatory Update
More on the Opinion and Order Denying ATS’s Motion for Stay of Effective Date and Preliminary Injunction
As we noted yesterday, the court in ATS v. FTC has denied ATS’s motion for a preliminary injunction and stay of the effective date of the FTC’s non-compete ban. Read more on the decision and what comes next in this article.
