Wright v. Sport Supply Group, Inc

In Wright v. Sport Supply Group, Inc., 137 S.W.3d 289 (Tex. App.--Beaumont 2004, no pet.), the court addressed an agreement that contained a provision that remedies at law for any breach or attempted breach of the agreement would be inadequate and waived as a defense that either party had an adequate remedy at law. Id. at 293-94. The court noted it was "unaware of any Texas case holding that such agreements alone establish, for injunction purposes, that remedies at law will be inadequate, but the Texas Supreme Court long has recognized 'a strong public policy in favor of preserving the freedom of contract.'" Id. at 294. The court considered the language of the agreement together with other evidence established by the record, including testimony that the plaintiff's damages would have been difficult to calculate. Id. at 293-94. The court concluded, after viewing the evidence in the light most favorable to the trial court's grant of the temporary injunction, that the trial court did not abuse its discretion in determining the plaintiff had no adequate remedy at law. See id. at 294. The Court considered whether the trial court abused its discretion in entering a temporary injunction to enforce a covenant, which like the restrictive covenant in the present case, contained an industry-wide exclusion, prohibiting the former employee from engaging in any sales activities in any related business across several counties. See id. Specifically, the agreement prohibited Wright, a former salesman for Sport Supply Group, Inc. ("SSG") from, "either directly or indirectly, conducting any sales related activities for a business related to the promotion, marketing, distribution, manufacturing, sourcing, importing and/or sale of sports related equipment and/or supplies to institutional customers" in twenty-nine counties. Wright, 137 S.W.3d at 291, 298. The agreement further prohibited Wright from doing business with the "customers, suppliers, clients, licensors, licensees, distributors, dealers, or independent salespersons of SSG, or any of its affiliates" that conducted business in Wright's sales district. Id. at 298. In Wright the Court stated that "a restrictive covenant is unreasonable unless it bears some relation to the activities of the employee." Id. Additionally, the Court recognized that "a covenant not to compete that contains an industry-wide exclusion from subsequent employment is unenforceable." Id. Further, we stated, "a covenant not to compete that extends to clients with whom a salesman had no dealings during his employment is unenforceable." Id. The Court held the covenants at issue were unreasonable restraints of trade because they did not limit the prohibitions to customers with whom Wright had dealings while he was employed by SSG. Id. Consequently, the Court held that the trial court abused its discretion by granting the temporary injunction. Id.