OPINION
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Marsh USA, Inc. v. Cook (Tex. 2011)(Opinion by Justice Wainwright on rehearing)
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FULL TEXT OF OPINION [ forthcoming ]
Opinions are available in pdf from the Court's website. Follow docket-number hotlink or click the case-style
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OPINION OF THE COURT OF APPEALS BELOW: Court of Appeals
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Also see: Texas Causes of Action | 2011 Texas Supreme Court Opinions | 2011 Tex Sup Ct Per Curiams
Marsh USA, Inc. v. Cook, No. 09-0558 (Tex. Dec. 16, 2011)(Opinion by Wainwright) (noncompetes, consideration,
enforceability)
EXCERPT FROM TEXAS SUPREME COURT'S OPINION
We deny Rex Cook’s motion for rehearing. We withdraw our opinion of June 24, 2011 and substitute
the following in its place.
In this case, we decide whether a covenant not to compete signed by a valued employee in
consideration for stock options, designed to give the employee a greater stake in the company’s
performance, is unenforceable as a matter of law because the stock options did not give rise to an
interest in restraining competition. We hold that, under the terms of the Covenants Not to Compete Act
(Act), the consideration for the noncompete agreement (stock options) is reasonably related to the
company’s interest in protecting its goodwill, a business interest the Act recognizes as worthy of
protection. The noncompete is thus not unenforceable on that basis. We reverse the court of appeals’
judgment and remand to the trial court for further proceedings.
CONCLUSION: In this case, the covenant not to compete is “ancillary to or part of” an otherwise
enforceable agreement because the business interest being protected (goodwill) is reasonably
related to the consideration given (stock options). Section 15.50 requires that there be a nexus
between the covenant not to compete and the interest being protected. TEX.BUS.&COM.CODE §
15.50(a). This requirement is satisfied by the relationship that exists here. We reverse the judgment of
the court of appeals and remand to the trial court for further proceedings consistent with this opinion.
MARSH USA INC. AND MARSH & MCLENNAN COMPANIES, INC. v. REX COOK; from Dallas County; 5th district (05-08-00685-
CV, 287 SW3d 378, 05-26-09)
The Court's opinion of June 24, 2011 is withdrawn and the opinion of this date is substituted. The concurring opinion by Justice
Willet, the dissenting opinion by Justice Paul Green, and the judgment issued June 24, 2011, remain in place.
Link to Electronic Briefs in this case including motion for rehearing and response: 09-0558 MARSH USA INC. v. COOK