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First Court of Appeals Sides with Jay Bowen in Breach of Covenant Not to Compete Lawsuit

In an en banc decision, the First Court of Appeals affirmed Judge Martha Hill Jamison’s denial of Cardinal Health Staffing Network’s application for a temporary injunction against Jay Bowen. Reversing its 2002 decision in Norlyn Enterprises, Inc. v. APDP, Inc., the court held that a party seeking to obtain temporary injunctive relief must demonstrate irreparable harm for which a legal remedy is inadequate, and that Cardinal had failed to make such a showing.

In 2002, Jay Bowen left Cardinal, his former employer, and went to work for CompleteRx. Cardinal sued Mr. Bowen, for violation of his covenant not to compete with Cardinal’s predecessor, Professional Health-Care Resources, Inc. (PhR), and for unfair competition and trade secret misappropriation.

At the temporary injunction hearing, Mr. Bowen put on evidence that his noncompete agreement with PhR was unenforceable under the Texas Covenants Not To Compete Act, and the Texas Supreme Court’s holding in Light v. Centel Cellular Co. of Tex. Mr. Bowen also demonstrated that Cardinal had not been irreparably harmed because Mr. Bowen had not taken confidential information with him when he left Cardinal, he did not solicit Cardinal’s customers, and Cardinal had not lost business since Mr. Bowen’s departure.

Judge Jamison denied Cardinal’s request for a temporary injunction and Cardinal appealed. Citing the First Court of Appeal’s decision in Norlyn, Cardinal argued that it did not need to prove irreparable injury to the extent that it sought a temporary injunction to enforce the non-compete agreement. In Norlyn, the court held that an applicant did not need to show irreparable harm for which it had no adequate remedy at law to be entitled to a temporary injunction in a suit to enforce a covenant not to compete.

The court of appeals found that the Texas Covenants Not to Compete Act governs only final remedies and not preliminary relief, such as temporary injunctions. The court concluded that it does not preempt the law that generally applies to preliminary relief, including the equitable rules that apply to temporary injunctions.

Accordingly, the court of appeals held that the trial court properly denied Cardinal’s request for a temporary injunction because Cardinal failed to show irreparable harm.

Team: Tony Rosenstein, Shelley Bennett and Amy Maddux, all of Houston, represented Jay Bowen. Senior Legal Assistant Deborah Avery, also of Houston, provided assistance.

 

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