A popular Austin hair stylist recently retained Pete Reid Law after he was sued by his former Salon for allegedly breaching a Confidentiality and Non-competition Agreement.
The Stylist had been required to sign the Agreement before he began working with the Salon in 2009.
The Agreement stated that upon conclusion of his employment, the Stylist could not use any of the Salon’s proprietary information or client lists, and also that the Stylist was not allowed to work in any other hair salon for a period of 12 months within a 5-mile radius of the Salon.
In November 2012, after working with the Salon for 3 years, the Stylist moved to a new location less than two miles from his former employer. The Salon filed a lawsuit against the Stylist and sought an immediate hearing for a Temporary Restraining Order and Injunctive Relief to stop the Stylist from working at all. The Salon also sought damages for breach of contract and reimbursement for its litigation expenses and attorneys fees.
The Stylist hired Pete Reid to defend him on December 28, 2012, just 5 days before the hearing on the Restraining Order!
However, when the day of the hearing arrived Pete Reid was fully prepared as always, armed with memoranda of law, case studies, statutes, and statements from the Stylist’s clients. The importance of the client statements was to demonstrate that the Stylist had not attempted to solicit the Salon’s clients for his new space, and that in fact, the Salon had actually told some of the clients where the Stylist was now working.
At the hearing, Pete Reid cross-examined the owner of the Salon and provoked testimony from the owner that the Salon had at times directed their customers to the Stylist at his new location. The Salon owner was also unable to provide any evidence to show that the Stylist had used any of its client lists or confidential information.
Mr. Reid also showed the Court a map of Austin with the restrained area highlighted. It was very noticeable that the restricted area almost covered the entire city.
In closing, Mr. Reid cited to the recent case of Marsh USA Inc. v. Cook, 354 S.W.3d 764, 780-81 (Tex. 2011), to support the proposition that as the Salon could not prove any breach in confidentiality, the Salon’s only motivation in seeking to stop the Stylist from working was to restrain competition, and that
“Restrictions on employee mobility that exist only to squelch competition are per se illegal in Texas, and for good reason.”
Pete Reid added from the same case that:
“Naked restraints of trade are particularly onerous because, besides stifling beneficial competition, they also meddle with people’s right to earn an honest living. Sixty-five years ago, we declared the right to use one’s “own labor in any lawful employment … one of the first and highest of civil rights”. (id at 785).
Mr. Reid also made the legal argument that the consideration given by the Salon for entering in the Agreement must “give rise to” the Salon’s interest in restraining the Stylist, and that this was another reason why the Agreement was unenforceable.
Presiding Judge Darleen Byrne agreed with Mr. Reid, and after considering the evidence and arguments presented in the hearing and reviewing the relevant case law tendered to the Court, Judge Byrne stated that:
- The Salon had not demonstrated proof of a probable imminent and irreparable injury in the absence of the issuance of a temporary restraining order or temporary injunction, in part by the Salon directing customers to the Stylist and his new employer in response to inquiries by customers;
- The Salon’s efforts to restrict the mobility of the Stylist, a former employee, were primarily designed to restrain competition; and
- Restrictions on employee mobility which are designed primarily to restrain competition were unlawful.
It was therefore ordered, adjudged and decreed that the Salon’s request for a Temporary Restraining Order and Temporary Injunction to stop the Stylist working was in all things DENIED.
As a result, the Stylist was able to continue to work on his clients.
Pete Reid wishes to acknowledge the assistance of his wife Farah Reid, an award-winning hair stylist at I Love You Pink, in preparing for the hearing.