Texas tutorial: Case offers reminder about noncompetes, nonsolicits

The increasingly competitive business environment in Texas makes noncompetition agreements and other restrictive covenants an important topic. A new case out of Dallas instructs you on language to avoid in drafting these provisions.

Double cross

Revive RX is a compounding pharmacy company specializing in weight loss medications. Reed Hoelscher was its sales director. As such, he had access to confidential company knowledge ranging from information on customers to the creation of these drugs. 

Revive RX discovered he was allegedly diverting business from it to companies that he owned. A lawsuit followed.

Invalid noncompete/nonsolicit

Revive sued Hoelscher for, among other claims, breach of contract. And a breach of contract needs, you guessed it, underlying valid agreements that were breached. Here are two, according to Revive:

Noncompete clause. The company’s noncompete clause stated an employee cannot “work or provide services, in any capacity, anywhere in the Restricted [geographic] Area, whether as an employee, independent contractor or otherwise, with or without compensation, to any competitor of [Revive] regarding all or any portion of the business of [Revive].”

Nonsolicit clause. According to the company’s nonsolicit clause, an employee cannot “solicit . . . any client, customer, prospective customer, vendor, contractor, supplier or other business of [Revive].”