Electronic Data Systems Corp. v. Powell
| Decision Date | 28 February 1974 |
| Docket Number | No. 18267,18267 |
| Parties | ELECTRONIC DATA SYSTEMS CORPORATION, Appellant, v. Douglas W. POWELL, Appellee. |
| Court | Texas Court of Appeals |
E. Eldridge Goins, Jr., Coke & Coke, Dallas, for appellant.
Royal H. Brin, Jr., Strasburger, Price, Kelton, Martin & Unis, Dallas, for appellee.
This is an action by appellant to enforce by injunction certain restrictive covenants in an employment contract against its former employee. The employer prevailed below in the hearing for a temporary injunction but, being dissatisfied with the limited scope of the temporary injunction, has perfected this appeal.
Appellee Douglas W. Powell worked for appellant (herein referred to as EDS) from May 1970 until August 1972, after which he went to work for Systems Resources, Inc., (herein called SRI), a competitor of EDS. EDS employs systems engineers who write computer programs for its customers. There are five industry groups which EDS serves, the two which are material here being the health care and public utilities industries. Powell worked in the health care area for EDS as a systems engineer on a team which developed a 'system,' or series of computer programs for processing health care claims involving private or non-governmental contracts. The health care industry group was subdivided into the private and governmental sectors. The EDS system which Powell helped to develop, referred to as 'Prepayment Utilization Review' or 'PPUR,' competes with the 'Model System,' which was developed by a governmental agency, and which is employed by Powell's present employer, SRI. However, at the time of trial, Powell was working in the public utilities area for SRI, an area in which EDS did not even have a data processing system which Powell was employed by it.
The restrictive covenant in Powell's contract with EDS included the following limitations: its computer systems and related data were to remain confidential; EDS retained a proprietary interest in its systems and information; the employee was not to participate in recruiting other EDS employees or in the solicitation of customers of EDS, and was not to compete with EDS or any subsidiary within 200 miles of any city in which it does business until three years after the contract term; and the employee was not to use any method, information or system developed by EDS in competition with EDS, within the same 200 mile radius and for the same period of time.
The temporary injunction entered by the trial court restrained Powell from recruiting other EDS employees, and from soliciting past, present and prospective customers of EDS, in substantially the same language as the restrictive covenant. It also restrained Powell from competing with EDS within the 200 miles redius and for the same time period mentioned in the contract, but the court defined the word 'competing' as:
. . . conduct by Douglas W. Powell involving the design or use, or providing further information to others concerning the design or use of electronic data processing programs or systems for performing, in whole or in part, the function known as prepayment utilization review in processing health care claims as that function was designed to be performed by the EDS National Regular Business program on August 15, 1972, where such function designed to be performed by the EDS Regular Business program exceed (sic) that which is generally accepted and known in the data processing industry for prepayment utilization review programs.
In effect, the trial court enjoined Powell from competing with the EDS system which he had helped EDS to develop. It is this limitation of the scope of the temporary injunction which appellant complains of on this appeal.
Restrictive covenants in employment contracts by which employees agree not to compete with the former employer after termination of the contract have traditionally been viewed as being in restraint of trade and not enforceable unless the terms are reasonable. The test of reasonableness is whether the covenant imposes upon the former employee an undue hardship or any greater restraint than is reasonably necessary to protect the former employer's business and good will. Weatherford Oil Tool Co. v. Campbell, 161 Tex. 310, 340 S.W.2d 950, 951 (1960). The reasonableness of the covenant is generally recognized to be a question of law for the court's determination. Orkin Exterminating Company, Inc., Co. v. Wilson, 501 S.W.2d 408, 411 (Tex.Civ.App.--Tyler 1973, no writ); Toch v. Eric Schuster Corp., 490 S.W.2d 618, 621 (Tex.Civ.App.--Dallas 1972, writ ref'd n.r.e.).
The granting or denial of an injunction,...
To continue reading
Request your trial
-
Merritt Hawkins & Assocs., LLC v. Gresham
...; Arevalo v. Velvet Door, Inc., 508 S.W.2d 184, 186 (Tex.App.-El Paso 1974, writ ref'd n.r.e.) ; Elec. Data Sys. Corp. v. Powell, 508 S.W.2d 137, 139 (Tex.App.-Dallas 1974, writ ref'd n.r.e.) ; Weber v. Hesse Envelope Co., 342 S.W.2d 652, 656 (Tex.App.-Dallas 1960, no writ) ; Chandler v. Ma......
-
Salas v. Chris Christensen Sys. Inc.
...v. Velvet Door, Inc., 508 S.W.2d 184, 186 (Tex. Civ. App.—El Paso 1974, writ ref'd n.r.e.); Elec. Data Sys. Corp. v. Powell, 508 S.W.2d 137, 139 (Tex. Civ. App.—Dallas 1974, writ ref'd n.r.e.); Weber v. Hesse Envelope Co., 342 S.W.2d 652, 656 (Tex. Civ. App.— Dallas 1960, no writ)); see als......
-
Butnaru v. Ford Motor Co.
...the litigation's subject matter pending a trial on the merits. Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex.1993); Electronic Data Sys. Corp. v. Powell, 508 S.W.2d 137, 139 (Tex. Civ.App.-Dallas 1974, no writ). A temporary injunction is an extraordinary remedy and does not issue as a matter ......
-
Kaplan v. Tiffany Development Corp.
...that are the subject of pending litigation until a decision on the merits is reached. Walling, 863 S.W.2d at 57; Electronic Data Sys. Corp. v. Powell, 508 S.W.2d 137, 139 (Tex.App.-Dallas 1974, no writ). At a hearing on an application for a temporary injunction, the only question before the......