The Texas Supreme Court held that a forfeiture clause in ExxonMobil's non-contributory profit sharing plan that allowed forfeiture of stock awards if an employee worked for a competitor was not an unenforceable non-compete agreement under Texas law. The court conducted a conflict-of-law analysis and determined that New York law, as chosen in the plan, should apply. Under New York law, the forfeiture clause was enforceable because the employee, Drennen, voluntarily left ExxonMobil to work for a competitor and forfeited his stock awards by doing so. However, the court reserved judgment on whether such forfeiture clauses would be enforceable restraints of trade under Texas law.
Contractual Provisions: What Do They Really Mean and How Can They Work for You?BoyarMiller
Andrew Pearce and David Stockel, shareholders in BoyarMiller’s litigation group, discussed what you need to know around contractual provisions – interpretation and legal support behind forum/venue selection clauses, merger clauses, arbitration provisions, prevailing party clauses, jury waivers, and others.
BoyarMiller - Review of Boilerplate Contract Provisions: Say What You Mean an...BoyarMiller
Review of Boilerplate Contract Provisions: Say What You Mean and Mean What You Say
Presented by: Chris James & Jon Goch
to HYLA - Houston Young Lawyers Association on
March 4, 2015
The Rules Have Changed: Developments that Impact the Landscape of Texas Litig...BoyarMiller
Presented by: Chris James & Kasi Chadwick
to Houston Bar Association on
June 12, 2015
“The Rules Have Changed: Developments that Impact the Landscape of Texas Litigation”
The Cost of Litigation: A Case Study, Business Law, Plymouth State University...Kevin O'Shea
In 2009, I presented to Professor Forgues’ Business Law Class at Plymouth State University addressing the high cost of business litigation and using Real Estate Bar Ass'n for Mass., Inc. v. Nat'l Real Estate Info. Servs. 642 F. Supp. 2d 58 (D. Mass. 2009) as a case study.
Contractual Provisions: What Do They Really Mean and How Can They Work for You?BoyarMiller
Andrew Pearce and David Stockel, shareholders in BoyarMiller’s litigation group, discussed what you need to know around contractual provisions – interpretation and legal support behind forum/venue selection clauses, merger clauses, arbitration provisions, prevailing party clauses, jury waivers, and others.
BoyarMiller - Review of Boilerplate Contract Provisions: Say What You Mean an...BoyarMiller
Review of Boilerplate Contract Provisions: Say What You Mean and Mean What You Say
Presented by: Chris James & Jon Goch
to HYLA - Houston Young Lawyers Association on
March 4, 2015
The Rules Have Changed: Developments that Impact the Landscape of Texas Litig...BoyarMiller
Presented by: Chris James & Kasi Chadwick
to Houston Bar Association on
June 12, 2015
“The Rules Have Changed: Developments that Impact the Landscape of Texas Litigation”
The Cost of Litigation: A Case Study, Business Law, Plymouth State University...Kevin O'Shea
In 2009, I presented to Professor Forgues’ Business Law Class at Plymouth State University addressing the high cost of business litigation and using Real Estate Bar Ass'n for Mass., Inc. v. Nat'l Real Estate Info. Servs. 642 F. Supp. 2d 58 (D. Mass. 2009) as a case study.
Action to Recover Solicitor's Fees - Locus Standi and Privity Hurdle: The cas...Acas Media
Under Nigerian law, one who practices a profession and renders his professional services to another at his request is entitled to receive remuneration or professional fees from the beneficiary of such services unless he voluntarily waives the payment . In the case of a legal practitioner, one of the options open to recover fees or costs due to him in his professional capacity is a right of action in court to recover such fees .
When Is The Surety Liable For Attorneys Feesmcarruthers
This paper examines both attorneys’-fees and interest awards against sureties on Miller Act payment-bond claims. It also suggests several policy arguments against imposing attorneys’ fees and interest awards on sureties.
By: Daniel R. Hansen and William H. Sturges
Action to Recover Solicitor's Fees - Locus Standi and Privity Hurdle: The cas...Acas Media
Under Nigerian law, one who practices a profession and renders his professional services to another at his request is entitled to receive remuneration or professional fees from the beneficiary of such services unless he voluntarily waives the payment . In the case of a legal practitioner, one of the options open to recover fees or costs due to him in his professional capacity is a right of action in court to recover such fees .
When Is The Surety Liable For Attorneys Feesmcarruthers
This paper examines both attorneys’-fees and interest awards against sureties on Miller Act payment-bond claims. It also suggests several policy arguments against imposing attorneys’ fees and interest awards on sureties.
By: Daniel R. Hansen and William H. Sturges
The Consumer Financial Protection Bureau (CFPB) recently celebrated its second birthday. During its first two years of existence, the CFPB has shown itself to be an aggressive consumer-protection agency. It is particularly noteworthy because its broad jurisdictional mandate could impact virtually any business that makes a loan to any consumer. Consumer lenders need to be alert to the sweeping implications this agency will have for their future business activities.
Focus on analysis and planning that companies need to do in dealing with Health Care Reform. The purpose is to go beyond simply telling you what the law requires.
Page 1 1 of 1 DOCUMENT DCS Sanitation Management.docxgerardkortney
Page 1
1 of 1 DOCUMENT
DCS Sanitation Management, Inc., Appellant, v. Eloy Castillo; Efren George Cas-
tillo; Adolfo Martinez, Appellees.
No. 05-1201
UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT
435 F.3d 892; 2006 U.S. App. LEXIS 1758; 152 Lab. Cas. (CCH) P60,135; 23 I.E.R.
Cas. (BNA) 1772
October 14, 2005, Submitted
January 25, 2006, Filed
SUBSEQUENT HISTORY: Rehearing denied by, Rehearing, en banc, denied by DCS Sanitation Mgmt. v. Castillo,
2006 U.S. App. LEXIS 8154 (8th Cir., Apr. 4, 2006)
US Supreme Court certiorari denied by DCS Sanitation Management, Inc. v. Castillo, 2006 U.S. LEXIS 7161 (U.S.,
Oct. 2, 2006)
PRIOR HISTORY: [**1] Appeal from the United States District Court for the District of Nebraska.
CASE SUMMARY:
PROCEDURAL POSTURE: Appellant former employer challenged a decision from the United States District Court
for the District of Nebraska, which denied its motion for a preliminary injunction and granted summary judgment to
appellee former employees in a case alleging a violation of a noncompete agreement.
OVERVIEW: As a condition of employment, the employees each signed employment agreements containing a non-
compete clause. The contract also contained a choice of law provision. After the employees were hired by another
company, the employer filed an action for breach of contract. The district court denied the employer injunctive relief,
and it granted the employees summary judgment. Thereafter, the employer sought review. In affirming, the court deter-
mined that, although the one-year time frame in the agreement had expired, the claim for money damages was not moot.
However, the request for injunctive relief was moot. Next, Nebraska law applied, notwithstanding the fact that the
agreement provided for the application of Ohio law. Because the laws of each state with regard to noncompete agree-
ments were so diverse, the district court properly found that the application of Ohio law would violate the public policy
of Nebraska. Moreover, Nebraska had a greater material interest in the agreements. Finally, the agreements were invalid
under Nebraska law because they were overly broad; the employees were prohibited from working for any cleaning
service within 100 miles for one year.
OUTCOME: The decision was affirmed.
CORE TERMS: former employees, noncompete agreements, cleaning, overly broad, plant, former employer's, funda-
mental policy, choice-of-law, materially, moot, choice of law, personal contact, noncompete, soliciting, preliminary
injunction, summary judgment, sanitation, place of business, substantial relationship, injunctive relief, particular issue,
unenforceable, injunction, correctly, customer, covenant, miles, staffing, enjoin, crew
LexisNexis(R) Headnotes
Civil Procedure > Justiciability > Mootness > Real Controversy Requirement
Civil Procedure > Remedies > Injunctions > Preliminary & Temporary Injunctions
.
When Is a Contract Over By Charles Stephen TreatTwo r.docxalanfhall8953
When Is a Contract Over?
By Charles Stephen Treat
Two recent decisions from the California courts have addressed whether, when, and how California law will identify and honor provisions in a contract concerning how long the contract will last and when it may be terminated. The two decisions do not cite each other and do not overlap very noticeably in their analyses. Nevertheless, if you have a case presenting contract-duration issues, it is important to read both cases and to recognize that the second decision establishes two major exceptions to the broad rule upheld in the first decision.
The first case is the First District Court of Appeal's decision in Zee Medical Distributor Ass'n, Inc. v Zee Medical,Inc. (2000) 80 CA4th 1. This case, following a lengthy line of precedents, held that the California courts must strive to identify the parties' intentions concerning duration, either by express agreement or by implication. If such an intention is identified, it will be honored, even if it measures duration by contingent events. It thus rejects an argument that courts should be hostile to or skeptical of so-called perpetual contracts.
A few weeks after the court of appeal decided Zee, the California Supreme Court handed down its decision in Asmus v Pacific Bell (2000) 23 C4th 1. Asmus has gotten attention principally as an employment-law decision. Its content, however, is almost pure contract law, applicable to ordinary commercial contracts. And although the case makes only brief mention of the principles developed in Zee and its precedents, Asmus is nevertheless a central case for analysis of contract-duration issues. Its holdings establish two key limitations on the Zee methodology: a "void for vagueness" principle for durational agreements, and a virtual negation of such clauses when they appear in unilateral contracts.
The Zee Case
At issue in Zee (in which I represented one of the parties) was the duration of the distribution contracts that Zee Medical Inc. had with its distributors. The legal principles at issue, however, were not specific to distribution contracts but were a matter of general contract law. After collecting and summarizing the legal principles inherent in prior California case law, including the seminal decision in Consolidated Theatres, Inc. v Theatrical Stage Employees Union (1968) 69 C2d 713, the Zee court distilled its holdings into a useful three-step methodology for analyzing contract-duration issues. (1) The court first seeks an express term. (2) If one is absent, the court determines whether one can be implied from the nature and circumstances of the contract. Courts will imply an ascertainable term of duration when reasonably possible. (3) If neither an express nor an implied term can be found, the court will generally construe the contract as terminable at will after a reasonable time of duration has elapsed. 80 CA4th at 10. Step three is really more a matter of a court-made gap-filler rule, to be resorted.
TO The Vice PresidentFROM Danielle BalsonDATE 25th July, 20.docxturveycharlyn
TO: The Vice President
FROM: Danielle Balson
DATE: 25th July, 2017
SUBJECT: The Big Brain
Solution
General procedures or rules governing a typical arbitration proceeding
A contract encompassing an agreement for arbitration of disputes usually outlines some of the fundamental aspects relating to any possible future arbitration. The procedures and rules that would be utilized in a given arbitration are usually part of the agreement (Smit & Thacher, 2013). In case an outside or third party service would be utilized for handling arbitration, the contract may provide specifications of whether the service’s already-established procedures and rules would be utilized (Smit & Thacher, 2013). As a result of the different kinds of arbitration services, and the flexibility that is usually provided to participants to draw up their preferred rules, there is no single set of procedures and rules applicable to all arbitrations (Smit & Thacher, 2013). Nevertheless, regardless of the rules or procedures used, below are some of the fundamental issues or general procedures and rules governing a typical arbitration proceeding:
Number of arbitrators. The parties involved in an arbitration proceeding usually outline in the contract whether one, a panel comprised of three, or more arbitrators would rule or make decisions on their dispute (Smit & Thacher, 2013). As a general procedure or rule, the more significant and complicated an issue is, the higher the number of arbitrators would be involved.
The number of arbitrators to be selected. Parties can make the decision to appoint arbitrators in various ways, including through the process of elimination, selection from a list of different arbitrators or through an agreement (Smit & Thacher, 2013).
Timeliness for arbitration. Rules and procedures can establish timelines for making resolutions in a dispute, including when notices are issued, and how long the arbitration hearings last (Smit & Thacher, 2013).
Evidence. Rules and procedures of evidence can be complicated in ordinary litigation processes. They are usually more relaxed in arbitration proceedings thus allowing more evidence to be put into consideration, even though there can be inadequate time for presenting and discovering the evidence (Smit & Thacher, 2013).
Awards. Rules and procedures often dictate the form that can be presumed by an award, as well as any possible deadlines for decision-making (Smit & Thacher, 2013).
Records and confidentiality. Rules and procedures may allow parties to receive and keep records of the arbitration proceedings and to ensure such records are kept confidential.
Use of arbitration as opposed to a lawsuit in settling employment-related dispute
An employer may for an employee to use arbitration as opposed to a lawsuit in settling employment-related dispute (Mathis, Jackson, Valentine, & Meglich, 2016). Many employers usually ask their workers to sign arbitration agreements, which ensures the employees give up their legal ri ...
BoyarMiller – Navigating Your Company through Spoliation Claims and Strategie...BoyarMiller
A Penny Saved is a Penny Earned:
Navigating Your Company through Spoliation Claims and Strategies to Maximize Recovering Attorneys’ Fees
presented by:
Chris Hanslik, Craig Dillard & Matt Veech
TO The Vice PresidentFROM Danielle BalsonDATE 24 Oct 2017.docxturveycharlyn
TO: The Vice President
FROM: Danielle Balson
DATE: 24 Oct 2017
SUBJECT: Arbitration
General procedures or rules governing a typical arbitration proceeding
A contract encompassing an agreement for arbitration of disputes usually outlines some of the fundamental aspects relating to any possible future arbitration. The procedures and rules that would be utilized in a given arbitration are usually part of the agreement (Smit & Thacher, 2013). In case an outside or third party service would be utilized for handling an arbitration, the contract may provide specifications of whether the service’s already-established procedures and rules would be utilized (Smit & Thacher, 2013). As a result of the different kinds of arbitration services, and the flexibility that is usually provided to participants to draw up their preferred rules, there is no single set of procedures and rules applicable to all arbitrations (Smit & Thacher, 2013). Nevertheless, regardless of the rules or procedures used, below are some of the fundamental issues or general procedures and rules governing a typical arbitration proceeding:
Number of arbitrators. The parties involved in an arbitration proceeding usually outline in the contract whether one, a panel comprised of three, or more arbitrators would rule or make decisions on their dispute (Smit & Thacher, 2013). As a general procedure or rule, the more significant and complicated an issue is, the higher the number of arbitrators would be involved.
The number of arbitrators to be selected. Parties can make the decision to appoint arbitrators in various ways, including through the process of elimination, selection from a list of different arbitrators or through an agreement (Smit & Thacher, 2013).
Timeliness for arbitration. Rules and procedures can establish timelines for making resolutions in a dispute, including when notices are issued, and how long the arbitration hearings last (Smit & Thacher, 2013).
Evidence. Rules and procedures of evidence can be complicated in ordinary litigation processes. They are usually more relaxed in arbitration proceedings thus allowing more evidence to be put into consideration, even though there can be inadequate time for presenting and discovering the evidence (Smit & Thacher, 2013).
Awards. Rules and procedures often dictate the form that can be presumed by an award, as well as any possible deadlines for decision-making (Smit & Thacher, 2013).
Records and confidentiality. Rules and procedures may allow parties to receive and keep records of the arbitration proceedings and to ensure such records are kept confidential.
Use of arbitration as opposed to a lawsuit in settling employment-related dispute
An employer may for an employee to use arbitration as opposed to a lawsuit in settling employment-related dispute (Mathis, Jackson, Valentine, & Meglich, 2016). Many employers usually ask their workers to sign arbitration agreements, which ensures the employees give up their legal right to sue t ...
Class Actions: Insurance Related Claims
by Thomas F. Segalla
Whether prosecuting or opposing a motion for class certification, within the context of insurance related claims, there are certain principles that are critical to determining the allegations that are necessary to successfully assert such claims and the nature of any challenge to a motion to certify the punitive class. As the court noted, in the case of Deborah Mahon v. Chicago Title Insurance Co.:[1]
A penny saved is a penny earned: Navigating your company through spoliation claims and strategies to maximize recovering attorneys' fees. Presented at the Association of Corporate Counsel.
Effects on Securities Arbitration of Dodd Frank and Supreme Court CasesStephen Ware
This presentation discusses the effects on securities arbitration of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Supreme Court cases including Rent-A-Center v. Jackson and Stolt-Nielsen v. AnimalFeeds Int’l Corp.
Dee J. Kelly. Honored to Support His Community. By Amile Wilson. Photography by Shirley Che. Kelly Hart & Hallman is a law firm rooted in the belief that it serves the community in which its lawyers work...
When Sharon S. Millians made the SMU Law Review during her first semester at Southern Methodist University, she attended a reception held by one of the big local law firms.
“One lawyer asked me what I was going to do after law school,” Millians explained last from her corner office on the 28th floor of the Wells Fargo Tower in downtown Fort Worth...
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
A "File Trademark" is a legal term referring to the registration of a unique symbol, logo, or name used to identify and distinguish products or services. This process provides legal protection, granting exclusive rights to the trademark owner, and helps prevent unauthorized use by competitors.
Visit Now: https://www.tumblr.com/trademark-quick/751620857551634432/ensure-legal-protection-file-your-trademark-with?source=share
Car Accident Injury Do I Have a Case....Knowyourright
Every year, thousands of Minnesotans are injured in car accidents. These injuries can be severe – even life-changing. Under Minnesota law, you can pursue compensation through a personal injury lawsuit.
NATURE, ORIGIN AND DEVELOPMENT OF INTERNATIONAL LAW.pptxanvithaav
These slides helps the student of international law to understand what is the nature of international law? and how international law was originated and developed?.
The slides was well structured along with the highlighted points for better understanding .
WINDING UP of COMPANY, Modes of DissolutionKHURRAMWALI
Winding up, also known as liquidation, refers to the legal and financial process of dissolving a company. It involves ceasing operations, selling assets, settling debts, and ultimately removing the company from the official business registry.
Here's a breakdown of the key aspects of winding up:
Reasons for Winding Up:
Insolvency: This is the most common reason, where the company cannot pay its debts. Creditors may initiate a compulsory winding up to recover their dues.
Voluntary Closure: The owners may decide to close the company due to reasons like reaching business goals, facing losses, or merging with another company.
Deadlock: If shareholders or directors cannot agree on how to run the company, a court may order a winding up.
Types of Winding Up:
Voluntary Winding Up: This is initiated by the company's shareholders through a resolution passed by a majority vote. There are two main types:
Members' Voluntary Winding Up: The company is solvent (has enough assets to pay off its debts) and shareholders will receive any remaining assets after debts are settled.
Creditors' Voluntary Winding Up: The company is insolvent and creditors will be prioritized in receiving payment from the sale of assets.
Compulsory Winding Up: This is initiated by a court order, typically at the request of creditors, government agencies, or even by the company itself if it's insolvent.
Process of Winding Up:
Appointment of Liquidator: A qualified professional is appointed to oversee the winding-up process. They are responsible for selling assets, paying off debts, and distributing any remaining funds.
Cease Trading: The company stops its regular business operations.
Notification of Creditors: Creditors are informed about the winding up and invited to submit their claims.
Sale of Assets: The company's assets are sold to generate cash to pay off creditors.
Payment of Debts: Creditors are paid according to a set order of priority, with secured creditors receiving payment before unsecured creditors.
Distribution to Shareholders: If there are any remaining funds after all debts are settled, they are distributed to shareholders according to their ownership stake.
Dissolution: Once all claims are settled and distributions made, the company is officially dissolved and removed from the business register.
Impact of Winding Up:
Employees: Employees will likely lose their jobs during the winding-up process.
Creditors: Creditors may not recover their debts in full, especially if the company is insolvent.
Shareholders: Shareholders may not receive any payout if the company's debts exceed its assets.
Winding up is a complex legal and financial process that can have significant consequences for all parties involved. It's important to seek professional legal and financial advice when considering winding up a company.
Responsibilities of the office bearers while registering multi-state cooperat...Finlaw Consultancy Pvt Ltd
Introduction-
The process of register multi-state cooperative society in India is governed by the Multi-State Co-operative Societies Act, 2002. This process requires the office bearers to undertake several crucial responsibilities to ensure compliance with legal and regulatory frameworks. The key office bearers typically include the President, Secretary, and Treasurer, along with other elected members of the managing committee. Their responsibilities encompass administrative, legal, and financial duties essential for the successful registration and operation of the society.
How to Obtain Permanent Residency in the NetherlandsBridgeWest.eu
You can rely on our assistance if you are ready to apply for permanent residency. Find out more at: https://immigration-netherlands.com/obtain-a-permanent-residence-permit-in-the-netherlands/.
Military Commissions details LtCol Thomas Jasper as Detailed Defense CounselThomas (Tom) Jasper
Military Commissions Trial Judiciary, Guantanamo Bay, Cuba. Notice of the Chief Defense Counsel's detailing of LtCol Thomas F. Jasper, Jr. USMC, as Detailed Defense Counsel for Abd Al Hadi Al-Iraqi on 6 August 2014 in the case of United States v. Hadi al Iraqi (10026)
1. EXXON MOBIL CORP. V. DRENNEN
Russell D. Cawyer and Ezra R. Kuenzi1
The Texas Supreme Court recently held that a forfeiture clause of an employee retention award
contained in a large, multi-state employer’s non-contributory profit sharing plan (i.e., a plan to which the
employee contributes nothing) did not constitute a covenant not to compete under Texas law.2 In doing
so, the Court placed its stamp of approval (albeit in limited circumstances) on using employee incentive
plans as an alternative method of employee retention and discouraging competition or, as the Court
stated, to “reward loyalty” without requiring those agreements to comply with all of the technical
provisions of the Texas Covenant not to Compete Act.3
In Exxon Mobil Corp. v. Drennen, the plaintiff, Drennen, worked for ExxonMobil for 31 years.4 During his
employment, Drennen participated in ExxonMobil’s Incentive Program (“Program”) that awarded restricted
stock grants and bonuses to high-performing employees.5 At the time of his retirement, Drennen had
accumulated 73,900 shares of ExxonMobil stock through the Program valued at approximately six million
dollars.6 Drennen had already received 16,700 shares, but 57,200 shares were still in the restricted
period.7 Importantly, the Program was a non-contributory program where Drennen contributed nothing for
the incentive awards.
The Program provided that New York law would govern the Program and allowed ExxonMobil to cancel
an employee’s awards if he engaged in “detrimental activity.”8 Detrimental activity was defined, in relevant
part, as the employee’s acceptance of duties to a third party that creates or appears to create a material
conflict of interest and includes becoming “employed or otherwise engaged by an entity that regulates,
deals with, or competes with” ExxonMobil.9 The Program did not contain any restrictions as to time,
geographic area or scope of activity that might constitute detrimental activity as one would expect to see
in a covenant not to compete governed by Texas law.10
Around the time Drennen retired,11 he interviewed for a position with Hess Corporation.12 Drennen
informed ExxonMobil that he was considering taking a position with Hess, and ExxonMobil warned
Drennen that he risked forfeiture of his incentive awards if he accepted the position.13 Nonetheless,
Drennen accepted the job with Hess, and ExxonMobil notified Drennen that his 57,200 outstanding
restricted shares of ExxonMobil were forfeited and canceled by the plan administrator.14
Drennen sued ExxonMobil to recover the restricted stock based on a number of legal theories.15
ExxonMobil won following a jury trial, but Drennen asked the trial court to enter judgment notwithstanding
the jury verdict claiming that the Program was a noncompete that was unenforceable under Texas law.16
The trial court denied Drennen’s motion.
Drennen appealed to the Fourteenth District Court of Appeals in Houston arguing that the “detrimental
activity” clause of the Program was tantamount to a non-compete and that because it lacked reasonable
limitations as to time, geographic areas, and scope of activity limitations, was unenforceable under Texas
law.17 The court of appeals reversed and ordered the trial court to render a declaratory judgment in favor
of Drennen.18 The court of appeals concluded using traditional conflict of law analysis that (1) Texas had a
more significant relationship with the parties and their transaction than New York; (2) Texas had a
materially greater interest in the dispute between the parties; and (3) the forfeiture provisions were
contrary to Texas fundamental public policy and constituted an over broad, unreasonable, covenant not to
compete.19
On further appeal, the Texas Supreme Court reversed the case and rendered judgment for ExxonMobil.20
The Supreme Court first conducted an extensive conflict-of-law analysis and determined that the New
York choice-of-law provision in the Program was enforceable.21 The Court applied the Restatement
(Second) of Conflict of Laws § 187(2) which provides that the law of a state chosen by the parties to
govern their contracts will be applied unless: “(a) the chosen state has no substantial relationship to the
2. parties or the transaction and there is no other reasonable basis for the parties’ choice; or (b) application
of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially
greater interest than the chosen state in the determination of the particular issue and which . . . would be
the state of applicable law in the absence of an effective choice of law by the parties.”22
Requiring only a minimal rather than a substantial relationship, the Court concluded that there was a
“reasonable basis” for the choice of New York law because:
(1) ExxonMobil provides incentive awards to large numbers of employees in many states and countries . .
. so consistency is required to administer the Incentive Programs; (2) New York has a well-developed and
clearly defined body of law regarding employee stock and incentive programs; and (3) ExxonMobil is
listed on the New York Stock Exchange, and New York . . . has a well-developed and predictable body of
law.23
Although the Court determined that Texas had a materially greater interest in the determination of
whether the forfeiture provision was enforceable, it also found that applying New York law would not be
contrary to fundamental public policy of Texas because the forfeiture provision was not a covenant not to
compete under Texas law.24 The Court reasoned that “there is a distinction between a covenant not to
compete and a forfeiture provision in a non-contributory profit-sharing plan because such plans do not
restrict the employee’s right to future employment; rather, these plans force the employee to choose
between competing with the former employer without restraint from the former employer and accepting
benefits of the retirement plan to which the employee contributed nothing.”25 The Court recognized that
“[t]here is a difference, although a narrow one, between an employer's desire to protect an investment
and an employer's desire to reward loyalty.”26
The Court also acknowledged the interest that multi-national corporations headquartered in Texas have in
maintaining uniformity and consistency in the application and interpretation of their employment
agreements. As the Court said, [T]he policy concerns regarding uniformity of law raised in DeSantis have
changed in the past twenty-four years. With Texas now hosting many of the world’s largest corporations,
our public policy has shifted from a patriarchal one in which we valued uniform treatment of Texas
employees from one employer to the next above all else, to one in which we also value the ability of a
company to maintain uniformity in its employment contracts across all employees, whether the individual
employees reside in Texas or New York. This prevents the “disruption of orderly employeremployee
relations” within those multistate companies and avoids disruption to “competition in the marketplace.”27
Because the forfeiture provision was not a covenant not to compete, the public policy of the state of
Texas was not implicated, and the Court held that the parties’ choice of law provision must be honored.28
Applying New York law and its “employee choice” doctrine, a restrictive covenant will be enforced without
regard to reasonableness if the employee voluntarily left his or her employment or was terminated for
cause.29 The rationale for New York’s rule is that “the employee is given the choice to either preserve his
rights under the contract by refraining from competition or forfeit such rights by exercising the right to
compete.”30 As the Court further explained, One essential element to the employee choice doctrine is the
employer’s ‘continued willingness to employ’ the employee. Should the employer terminate the
employment relationship without cause, enforcement of the restrictive covenant is no longer reasonable.
If the employee left his employer voluntarily or engaged in conduct for which he was terminated for cause,
a restrictive covenant will be enforceable without regard to reasonableness under the employee choice
doctrine.31
The Court noted that Drennen was told in his latest performance review that his performance was
unsatisfactory but that another position would be found for him within the Company.32 Because Drennen
voluntarily left his position with ExxonMobil four months later, the Court concluded that the employee
choice doctrine applied and Drennen elected to forfeit his incentive awards by working for a competitor.33
4. reh'g denied (June 19, 2012), rev'd (Aug. 29, 2014)), rev'd, 12-0621, 2014 WL 4782974 (Tex. Aug. 29,
2014).
20 Drennen, 12-0621, 2014 WL 4782974 at *1.
21 Id. at *3-6.
22 Id. at *4 (quoting Restatement (Second) of Conflict of Laws § 187 (1971).
23 Id.
24 Id. at *5-8.
25 Id. at *8.
26 Id. at *7.
27 Id. (internal citations omitted) (emphasis added).
28 Id. at *11.
29 Id at *10.
30 Id.
31 Id. (internal citations omitted).
32 The Court did not address the fact that while Drennen was told ExxonMobil was trying to find him a new
position, it had been unsuccessful in doing so. Cf id. at *2 with *10.
33 Id. at *10.
34 Id. at *8.
35 See DeSantis v. Wackenhut, 793 S.W.2d 670 (Tex. 1990).
Russell D. Cawyer is a partner in the Labor and Employment group at Kelly Hart & Hallman LLP
Ezra R. Kuenzi is an associate in the Labor and Employment group at Kelly Hart & Hallman LLP