The Supreme Court extended protections to employers who have employees with covenants not to compete in Mann Frankfort Stein & Lipp Advisors, Inc. et al. v. Fielding, No. 07-0490, 52 Tex.S.Ct.J. 616 (Tex. 2009).

Covenants not to compete are regulated by Texas Business and Commerce Code § 15.50.

SUBCHAPTER E. COVENANTS NOT TO COMPETE

Sec. 15.50. CRITERIA FOR ENFORCEABILITY OF COVENANTS NOT TO COMPETE. (a) Notwithstanding Section 15.05 of this code, and subject to any applicable provision of Subsection (b), a covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made 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 is necessary to protect the goodwill or other business interest of the promisee.

Section 15.50 was adopted in 1989.Acts 1989, 71st Leg., ch. 1193, § 1, eff. Aug. 28, 1989

The current language adopted in 1993, Acts 1993, 73rd Leg., ch. 965, § 1, eff. Sept. 1, 1993

Section 15.50 was adopted in response to Hill v. Mobile Auto Trim, Inc., 725 S.W.2d 168 (Tex.1987). After holding the agreement not to compete in that case unreasonable and unenforceable, the Supreme Court added that agreements "which are primarily designed to limit competition or restrain the right to engage in a common calling are not enforceable."

The leading case for over a decade interpreting § 15.50 was Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642, 644 (Tex. 1994).

However, in 2006, the Supreme Court changed its interpretation of Section § 15.50 in Alex Sheshunoff Management Services, L.P. v. Johnson, 209 S.W.3d 644, 655-656 (Tex. 2006).

We also take this opportunity to observe that section 15.50(a) does not ground the enforceability of a covenant not to compete on the overly technical disputes that our opinion in Light seems to have engendered over whether a covenant is ancillary to an otherwise enforceable agreement. Rather, the statute's core inquiry is whether the covenant "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 is necessary to protect the goodwill or other business interest of the promisee." Tex. Bus. & Com.Code § 15.50(a). Concerns that have driven disputes over whether a covenant is ancillary to an otherwise enforceable agreement--such as the amount of information an employee has received, its importance, its true degree of confidentiality, and the time period over which it is received--are better addressed in determining whether and to what extent a restraint on competition is justified. We did not intend in Light to divert attention from the central focus of section 15.50(a). To the extent our opinion caused such a diversion, we correct it today.

The "diversion" of course tracked the language chosen by the legislature.  Section 15.50 was not amended after the Light decision, for over 12 years before Sheshunoff. Given the legislative acquiescence in Light, there seems to be no warrant for Sheshunoff to dismiss the Light reading of Section 15.50 as a “diversion.” In fact, under traditional legal principals, the Supreme Court should have made no changes in its approach to covenants not to compete unless the legislature acted first. Moss v. Gibbs, 370 S.W.2d 452, 459-450 (Tex. 1963).

This matter of construction was before this Court in 1937 in the Strickland case and a strict and literal interpretation of the statute was adopted. In the field of statutory construction the doctrine of stare decisis may be of most compelling force. Some twenty-six years have passed and some thirteen regular legislative sessions have taken place since Article 4616 was construed by this Court in the Strickland case. Seemingly no legislative dissatisfaction with the Strickland construction has been manifested, despite the fact that a comparatively simple amendment would have rendered respondents' theory as to the nature, qualities and exemptions of the special community fully operative. This indicates either that the Legislature approved of the Strickland construction or that the general dissatisfaction therewith was not of sufficient strength to impel legislative action. It may not be considered desirable to effect a statutory enlargement of the special community exemption over that recognized by the Strickland case. This is now a policy matter for the Legislature.

While the effect which should be given to legislative inaction varies with circumstances, we think that the statement of Mr. Justice Jackson in United States v. South Buffalo Ry. Co., 333 U.S. 771, 68 S.Ct. 868, 92 L.Ed. 1077, has application here:

‘It is the Government's contention that the Elgin decision misconstrued the Act, misunderstood its legislative history and misapplied the Court's own prior decisions. It is not necessary in the view we take of the case to decide to what extent, if any, these contentions are correct. It is enough to say that if the Elgin case were before us as a case of first impression, its doctrine might not now be approved. But we do not write on a clean slate. What the Court has written before is but one of a series of events, which convinces us that its overruling or modification should be left to Congress. As the Court held on our last decision day, when the questions are of statutory construction, not of constitutional import, Congress can rectify our mistake, if such it was, or change its policy at any time, and in these circumstances reversal is not readily to be made.

Massachusetts v. United States, 333 U.S. 611, 68 S.Ct. 747 (92 L.Ed. 968). * * *‘

The Supreme Court in Mann Frankfort states as follows:

We hold that if the nature of the employment for which the employee is hired will reasonably require the employer to provide confidential information to the employee for the employee to accomplish
the contemplated job duties, then the employer impliedly promises to provide confidential information and the covenant is enforceable so long as the other requirements of the Covenant Not to Compete Act are satisfied.

Mann Frankfurt, 52 Tex.S.Ct.J. at 616. The Supreme Court admits that the covenant not to compete before it is silent on any duty of the employer to provide confidential information to the employee. Id., at 619. Such consideration is necessary to have an enforceable agreement under Sheshunoff. So, the Supreme Court just reads the provision into and amends the express contract, creating the very obligation on the employer necessary to make the covenant not to compete enforceable. Id., at 620. However, it is entirely plausible that an employer may want to make all employees agree to not divulge confidential information, even if an employee is not going to get such information in the regular course of employment. It does not follow that just because an employee agrees not to spread trade secrets, that the employee will be given trade secrets. Moreover, the black letter law on express contracts should prohibit the Supreme Court from “fixing” the covenant not to compete by filling in a missing term.

Where there exists a valid express contract covering the subject matter, there can be no implied contract.

Woodard v. Southwest States, Inc., 384 S.W.2d 674, 675 (Tex. 1964). The rule in Woodard is still the law.

That is, “[w]hen a valid agreement already addresses the matter, recovery under an equitable theory is generally inconsistent with the express agreement.” Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex.2000). Here, the insurance policies spell out the parties' respective obligations in great detail. As set out above, the excess underwriters were not liable under the policy until the primary coverage was exhausted, Frank's Casing had provided timely notice, and Frank's Casing had become liable for a judgment either as the result of a trial or a settlement to which the excess underwriters had agreed. To recognize an equitable right to reimbursement would require us to “rewrite the parties' contract [or] add to its language,” Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex.2003), which we decline to do.

Excess Underwriters at Lloyd's, London v. Frank's Casing Crew & & Rental Tools, Inc., 246 S.W.3d 42, 50 (Tex. 2008).  The Supreme Court does not give real guidance on when it will rewrite a contact and when it will not do so.

Without discussion, the Supreme Court further stated:

In order for Fielding to perform his duties, Mann Frankfort gave him access to its client database, which contains clients’ names, billing information, and pertinent tax and financial information. This was confidential information which Mann Frankfort was interested in keeping confidential. See DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 684 (Tex. 1990) (stating that client lists are confidential information that may be protected by an agreement not to compete).

Mann Frankfurt, 52 Tex.S.Ct.J. at 620. But, customer lists have never been per se confidential. What Desantis actually said was:

Wackenhut also claims that it possessed confidential information protectable by an agreement not to compete. Specifically, Wackenhut contends that during his employ, DeSantis learned the identity of Wackenhut's customers, their special needs and requirements, and Wackenhut's pricing policies, cost factors and bidding strategies. Again, while confidential information may be protected by an agreement not to compete, Wackenhut has failed to show that it needed such protection in this case. Wackenhut failed to show that its customers could not readily be identified by someone outside its employ, that such knowledge carried some competitive advantage, or that its customers' needs could not be ascertained simply by inquiry addressed to those customers themselves. Also, Wackenhut failed to show that its pricing policies and bidding strategies were uniquely developed, or that information about its prices and bids could not, again, be obtained from the customers themselves. There is no evidence that DeSantis ever took advantage of any knowledge he had of Wackenhut's cost factors in trying to outbid Wackenhut or woo away its customers. Wackenhut simply has not demonstrated a need to protect any confidential information by limiting DeSantis' right to compete.

DeSantis, 793 S.W.2d at 684. An employer has a specific burden of proof with respect to customer lists.

a. Customer Lists

A customer list may be a trade secret, Hyde Corp., 314 S.W.2d at 766, but not all customer lists are trade secrets under Texas law. The broader rule of trade secrets, that they must be secret, applies to customer lists. A customer list of readily ascertainable names and addresses will not be protected as a trade secret. See Gaal v. BASF Wyandotte Corp., 533 S.W.2d 152, 155 (Tex.App.1976). Thus, Texas courts consistently consider three factors when determining whether a customer list is a trade secret: (1) what steps, if any, an employer has taken to maintain the confidentiality of a customer list; (2) whether a departing employee acknowledges that the customer list is confidential; and (3) whether the content of the list is readily ascertainable. Compare Flake v. EGL Eagle Global Logistics, 2002 WL 31008136, at *4, 2002 Tex.App. LEXIS 6593 at *10-*11 (Tex.App.2002) (finding trade secret where departing employee admitted information was confidential); Center for Economic Justice v. Am. Ins. Assoc., 39 S.W.3d 337, 346 (Tex.App.2001) (affirming trade secret status of a quasi-customer list that insurance companies are required to submit to a Texas regulatory agency, even though the insurance companies only took measures to protect the confidentiality of the lists once they became aware of an “open-records request” to disclose the lists); Gibson, et al. v. Canfield, 2001 WL 21491, at *1, 2001 Tex.App. LEXIS 133 at *3-*4 (Tex.App.2001) (finding district court did not abuse its discretion in granting an injunction in the face of conflicting testimony about whether an employer kept the list confidential-parties disputed whether two entities that received employer's customer list were employer's subcontractors or employer's competitors); Sautter, et al. v. The Comp Solutions Network, Inc., 1998 WL 802481, at *4-*5, 1998 Tex.App. LEXIS 7248 at *13 (Tex.App.1998) (finding a trade secret where employer testified a new entrant in this niche insurance market would initially book no, or almost no, policies within the first couple of weeks of business because the new entrant would have to determine which insurance agents participate in niche market, and where employer testified it took 30 years to compile a list of 1,200 agents); Keystone Life Ins. Co. v. Marketing Mgmt. Inc., 687 S.W.2d 89, 91 (Tex.App.1985) (finding that a list of 900 names and addresses that were not generally available to persons in the business of selling group life insurance was a trade secret); with Bandit Messenger of Austin, Inc. v. Contreras, 2000-2 Trade Cas. (CCH) 73,109, 2000 WL 1587664 (Tex.App.2000) (finding no trade secret where employer did not show what specific steps were taken to maintain the confidentiality of the customer list); Numed, Inc. v. McNutt, 724 S.W.2d 432, 435 (Tex.App.1987) (finding no trade secret where customer list can be compiled by calling hospitals and doctors and asking the identity of their supplier); Keystone Life, 687 S.W.2d 89, 94 (Guillot, J. dissenting) (arguing that a list of 900 names and addresses that was not generally available to persons in the business of selling group life insurance was not a trade secret because there was no evidence of the confidential nature of the customer list, no evidence that it was treated confidentially by the partners, and no evidence that the employer told the employee to keep the list confidential).

Whether customer lists are trade secrets is a question of law reviewed de novo. Kern River Gas Transmission, Co. v. Coastal Corp., 899 F.2d 1458, 1462.

Guy Carpenter & Co., Inc. v. Provenzale, 334 F.3d 459, 467-468 (5th Cir. 2003). No such showing was made by, or even required of, the employer in Mann Frankfurt.  The result in Mann Frankfurt may just be due to poor scholarship and not a partisan agenda.  If so, the Supreme Court should take pains to make its decisions consistent with prior law and especially its own prior pronouncements.