Opinion ID: 894789
Heading Depth: 1
Heading Rank: 5

Heading: Response to the Court

Text: Undeterred by a contrary pronouncement in Light, the Court holds that the phrase at the time the agreement is made modifies not otherwise enforceable agreement, which it directly precedes, but ancillary to or part of. A plain reading of the statute, however, establishes that the phrase at the time the agreement is made either refers solely to otherwise enforceable agreement or to both otherwise enforceable agreement and ancillary to or part of  but in no event to ancillary to or part of alone. Under the Court's reasoning, however, an employer's illusory promise satisfies the Act's requirements as long as the employer opts to perform at some indefinite time in the future. There are two problems with this approach: First, it is contradicted by the Act's grammatical structure. See Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580-81 (Tex.2000) (stating that, under the doctrine of last antecedent, a qualifying phrase in a statute or the Constitution must be confined to the words and phrases immediately preceding it to which it may, without impairing the meaning of the sentence, be applied). Second, and more importantly, it would permit an employer's illusory promise to bind its employee to the covenant even if, at the time the covenant is signed, the employer never intended to perform, and even when the employer's performance is deferred so long that one cannot say the enforceable agreement and covenant are part of the same transaction. After today, an employer may easily refrain from sharing trade secrets or other specialized technical knowledge with an employee for a substantial period of time after the covenant is signed, only to quickly perform once the employee indicates an intention to leave his current job for the employer's competitor. See Light, 883 S.W.2d at 645 & n. 5 (discussing the example of an employer's promise to raise wages). Thus, an employer may now legitimately restrain trade merely by performing a previously illusory promise, thereby converting an unenforceable unilateral contract into a binding commitment at the last minute. We should not encourage such one-sided gamesmanship. If the employer's performance is not part of the same transaction but instead comes much later in time, the resulting unilateral contract does not satisfy the Act's requirements because it was not an otherwise enforceable agreement when the parties formed the covenant. TEX. BUS. & COM.CODE § 15.50(a); Light, 883 S.W.2d at 645 n. 6; see, e.g., TMC Worldwide, L.P. v. Gray, 178 S.W.3d 29, 38-39 (Tex.App.-Houston [1st Dist.] 2005, no pet.)(holding covenant not to compete unenforceable because at-will marketing consultant received customer lists one year after signing employment agreement). I would hold that at the time requires both that the employer's promise be tied to the covenant as part of the same transaction, and that the employer tender consideration within a reasonable time after the covenant is signed. In a footnote, the Court says that only an irrational employer would trigger the covenant as a means of subverting an employee's subsequent mobility in the marketplace. 209 S.W.3d at 653. The Court underestimates the competitive nature of business. But the point is larger than that. Under the Court's interpretation, the employer need not even intend to perform its side of the bargain when it compels the employee to sign covenant. If the employer has no incentive to perform, these covenants  once viewed as impermissible restraints on trade  will become not only ubiquitous in at-will employment contracts, but enforceable at the employer's whim. Because the Court would not require the employer to prove an intent to fulfill its side of the bargain (an intent that would be implicit if the employer had to perform within a reasonable time), the employee is potentially left with none of the benefits typically conferred by an exchange of consideration. See DeSantis 793 S.W.2d at 682 (holding that covenant can permissibly accomplish a salutary purpose that encourages an employer to share confidential, proprietary information with an employee in furtherance of their common purpose, but may not take unfair advantage of its employee, thereby impairing the employee's personal freedom and economic mobility). Moreover, the circumstances behind the covenant's formation are not, as the Court suggests, subject to equitable review. Nor should they be if, as the Court holds, the contract is enforceable as a covenant the moment it is signed. By statute a court in equity reviews not the covenant's formation, but its reasonableness in respect to time, geographical area, and scope of activity. TEX. BUS. & COM.CODE § 15.50(a). III