The enforcement of employment noncompete agreements in Texas is governed by the Texas Covenants Not to Compete Act (“Act”).  Under that Act, “a covenant not to compete is enforceable . . . to the extent that it contains limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than necessary to protect the goodwill or other business interest of the [employer].”  Tex. Bus. & Com. Code § 15.50(a). Under the Act, if a non-compete covenant is found to be overbroad, “the court shall reform the covenant to the extent necessary to cause” the covenant to be reasonable. Tex. Bus. & Com. Code § 15.51(c). The Texas Supreme Court has yet to address when reformation of an overbroad noncompete restriction should occur and, specifically, whether reformation is appropriate at the temporary injunction stage of a case or whether reformation is only available as a final remedy after a full trial on the merits. In a recent published opinion, the Fifth Circuit squarely examined this issue. Calhoun v. Jack Doheny Cos. Inc., No. 20-20068, — F.3d —, 2020 U.S. App. LEXIS 25001 (5th Cir. Aug. 7, 2020).

Background of the Case