Opinion ID: 2391841
Heading Depth: 1
Heading Rank: 7

Heading: The Common Calling Test.

Text: After finding that the covenant not to compete fails to pass the reasonableness test, the court proceeds to adopt a broad new standard to determine the validity of a covenant not to compete. The court implicitly holds that a former franchisee or employee who is engaged in a common calling is free to divert the customers of a former franchisor or employer in disregard of a prior contractual agreement not to do so. If this is what the court means, the practical effect of this is to void most, if not all, covenants not to compete in franchise agreements and/or to generate extensive and costly litigation until the court adopts a definition of common calling and/or litigants test the limits of this opinion. What about employees engaged in a common calling that also have knowledge of the employer's trade secrets? Are they free to divulge the trade secrets in violation of an agreement to the contrary? If courts fail to protect employers from the competition of departing employees, employers will be reluctant to allow any employee to handle too many customers. Additionally, employers will be reluctant to invest significant resources in developing goodwill. See generally R. Posner, Economic Analysis of Law § 3.1, at 30 (2d ed. 1977). See also Shakey's Inc. v. Martin, 430 P.2d at 508 (no one would risk the purchase of a business without the protection of an enforceable covenant not to compete); Rubin & Shedd, Human Capital and Covenants not to Compete, 10 J. Legal Stud. 93, 102-04 (1981) (to allow departing employee to use employer information discourages development of such information). This new standard only serves to discourage growth and investment of employers and franchisors in Texas. Furthermore, the court is remiss in not providing guidance to the bench and bar by failing to define common calling. Of necessity, litigants will turn to Utah case law which the court relied upon in fashioning this new test. Unfortunately, litigants will discover that the Utah Supreme Court cited no authority in Robbins v. Finlay, 645 P.2d at 627, for the proposition quoted by the court. Moreover, the Utah Supreme Court has subsequently enforced a covenant not to compete in order to protect employer goodwill. System Concepts, Inc. v. Dixon, 669 P.2d at 426. Thus, the confusion as to the meaning of the common calling test becomes apparent. I believe that the better rule is that which heretofore has been followed by Texas courts.