Preview
FILED
12/30/2022 10:50 AM
FELICIA PITRE
DISTRICT CLERK
DALLAS CO., TEXAS
Lafonda Sims DEPUTY
Case No. DC-22-02879
DALLAS COUNTY HOSPITAL DISTRICT, § IN THE DISTRICT COURT
§
Plaintiff, §
§
v. § 44th JUDICIAL DISTRICT
§
DIANA GARCIA, et al., §
§
Defendants. § DALLAS COUNTY, TEXAS
DEFENDANT DIANA GARCIA’S MOTION
FOR TRADITIONAL SUMMARY JUDGMENT
Pursuant to Texas Rule of Civil Procedure 166a, Defendant Diana Garcia files the
following Traditional Motion for Summary Judgment. She requests that the Court enter judgment
in her favor: (1) as to the breach of contract claim asserted against her by Parkland; and (2) as to
Parkland’s claim for attorney’s fees.
Def. Mot. Summ. J. Page 1 of 30
TABLE OF CONTENTS PAGE
I. INTRODUCTION 3
II. SUMMARY JUDGMENT EVIDENCE 4
III. STATEMENT OF FACTS 5
IV. LEGAL STANDARDS 6
V. ARGUMENT 6
A) The Nurse Agreement is an unlawful restraint of trade. 6
1.) Parkland’s Contract operates as a Restraint of Trade, and therefore 7
must be analyzed under Tex. Bus. Comm. Code § 15.50 et seq.
2.) The liquidated damage clause is not “Ancillary to or Part of” 11
another, otherwise enforceable agreement.
i. Parkland makes no promises in the Agreement. 11
ii. Parkland’s offer of at-will employment is illusory, 13
and is not sufficient to support the anti-competitive
“liquidated damages.”
iii. Parkland has made no other non-illusory promises. 14
iv. Garcia has made no other non-illusory promises. 15
v. Texas courts have held that in some circumstances, 16
a promise to provide specialized training can
suffice to form an “otherwise enforceable agreement.”
But those circumstances are not present in this case.
a. To matter under the reasoning in Sheshunoff, a 18
promise to provide specialized training must be
given in exchange for a promise by the employee
other than the anti-competitive promise.
b. An anti-competitive clause is only 20
enforceable if it is designed to enforce
the promises made by the employee in
the “otherwise enforceable agreement.”
3.) Parkland’s Contract contains NO limitations as to geography or scope. 21
B) Parkland’s claim for attorney’s fees is preempted by Tex. Bus. 22
Comm. Code §15.50 et seq., and therefore must be dismissed.
C) The liquidated damages clause is also an unenforceable penalty. 23
.
1.) Parkland’s penalty clause is facially invalid, because it 25
does not vary according to the severity of the breach,
and permits draconian penalties for even minor breaches.
2.) It does not matter whether the Parties “agreed” to the penalty. 26
3.) The harm caused by a breach is not incapable of estimation, 27
and Parkland has in fact prepared just such an estimate.
Def. Mot. Summ. J. Page 2 of 30
I. INTRODUCTION
For years, Parkland Hospital has been forcing its new nurses to sign employment
documents that bind them to multi-year “terms” with Parkland. If their employment with Parkland
ends for any reason before their “term” is up -- including if Parkland fires them, with or without
cause -- they are bound to pay Parkland tens of thousands of dollars.
One intended purpose of these contracts is to deter nurses from leaving Parkland. So in
addition to harming the hard-working nurses it employs, Parkland is harming the community. Its
anti-competitive behavior limits the mobility of skilled nurses, which prevents other Texas
communities in need from being able to freely access their nursing services.
Over the years, Parkland has bullied untold numbers of its former nurses into forking over
their hard-earned pay, under threats of litigation. Because it typically costs these nurses more
money to defend Parkland’s lawsuits than it does to just give up and pay the fee, there has never
been a Court ruling on the legality of these contracts. As a result, Parkland has been allowed to
continue its unlawful practices, unchecked, for many years.
Defendant Diana Garcia files this Motion for Summary Judgment because Parkland’s
“liquidated damage” agreements are unlawful on two fronts: (1) they are unlawful restraints of
trade; and (2) they are unlawful penalty clauses.
Def. Mot. Summ. J. Page 3 of 30
II. SUMMARY JUDGMENT EVIDENCE
In support of her Motion for Summary Judgment, Garcia offers the following evidence:
● Ex. A [Appx. 1-5]: “Nurse Resident Agreement” (the contract upon which Parkland has
sued);
● Ex. B [Appx. 6-20]: 09/20/2019 Deposition Testimony of Parkland (via its corporate
representative, Casaundra Henderson);
● Ex. C [Appx. 21-26]: 02/12/2019 Sworn Affidavit of Teresa Taylor, Unit Manager for
Parkland, prepared and submitted by Parkland in Parkland v. Aziz, et al, Case No.
DC-17-17224 (Dallas County Dist. Ct.,193rd Dist. Ct.);
● Ex. D [Appx. 27]: Parkland’s estimation of costs for the Nurse Residency Program
(exhibit to the 02/12/2019 Sworn Affidavit of Teresa Taylor);
● Ex. E [Appx. 28-37]: 09/20/2019 Deposition Testimony of Parkland (via its corporate
representative, Monica Wolfe);
● Ex. F [Appx. 38-56]: Parkland’s Motion for Traditional Summary Judgment, filed on
02/13/2019 in Parkland v. Aziz, et al, Case No. DC-17-17224 (Dallas County Dist.
Ct.,193rd Dist. Ct.);1 and
● Ex. G [Appx. 57-60]: Corporate Representative Deposition Notice, served to Parkland on
08/28/2019.
1
Pemberton v. Lloyds Register Drilling Integrity Servs., Inc., No. 4:16-CV-01732, 2016 WL 6820389, at *3 (S.D.
Tex. Nov. 16, 2016) (employer’s position statement was not hearsay - “it is an admission – a party opponent’s
statement offered against an opposing party ... made by the party's agent or employee on a matter within the scope of
that relationship and while it existed.” Defense counsel wrote it, and because the “attorney is the agent of his client,”
the Position Statement is a statement made by Defendants' agent. (citing Rogers v. The Marshal, 68 U.S. 644, 651
(1863); Fed. R. Evid. 801(d)(2)(D)).
Def. Mot. Summ. J. Page 4 of 30
III. STATEMENT OF FACTS
The basic facts of this case are straightforward and undisputed. Diana Garcia began
working for Parkland in 2015. She began as a participant in the “Critical Care Resident/Graduate
Nurse program” in the Emergency Services unit and Intensive Care unit, and was required to sign
a “Resident Graduate Nurse Employment Agreement” as part of that program. That document
stated:
Liquidated Damages. In the event that the Employee is terminated, or leaves the
employment of the Employer on or before November 20, 2015, there shall be no
reimbursement to the Employer. However, in the event that the Employee is
terminated, or leaves the employment of the Employer subsequent to November
20, 2015, the parties hereby agree that the Employee shall pay to the Employer the
sums set forth below as liquidated damages to compensate Employer for injury
by reason of said breach. It being impossible to ascertain or estimate the entire exact
cost, damage, or injury which Employer may sustain by reason of the breach, such sum
is reasonably agreed upon as compensation to the Employer and not as a penalty, and
is due on the date of termination. Payment arrangement must be made with the
Comptroller.
September 25, 2015 to November 20, 2015 No Reimbursement
November 21, 2015 to February 2, 2019 $20,000
Ex. A [Appx.3]. Ms. Garcia resigned from her position at Parkland on March 31, 2018.
On March 14, 2022, Parkland sued Ms. Garcia, and several others, alleging Ms. Garcia
breached her contract with Parkland by ending her employment before February 2, 2019, and by
failing to pay Parkland $20,000.00. Parkland also seeks to recover its attorneys’ fees.
In response, Ms. Garcia challenges (1) the lawfulness and enforceability of Parkland’s
Nurse Agreement alleging it is an unlawful restraint of trade; and (2) liquidated damages clause
Def. Mot. Summ. J. Page 5 of 30
contained within the Nurse Agreement as it is an unenforceable penalty. Ms. Garcia also argues
Parkland’s claim for attorney’s fees is preempted by Tex. Bus Comm. Code § 15.50.
IV. LEGAL STANDARDS
Under Tex. R. Civ. P. 166a(b), a defendant may, at any time, move for a summary judgment
in his favor. Traditional summary judgment is warranted if the movant proves that: (1) “there is
no genuine issue as to any material fact,” and (2) it “is entitled to judgment as a matter of law.”
Tex. R. Civ. P. 166a(c). In a traditional motion for summary judgment under Rule 166a(c), the
movant is entitled to judgement if he “either disprove[s] at least one element of the plaintiff's claim
as a matter of law, or conclusively establish all elements of an affirmative defense.” Cathey v.
Booth, 900 S.W.2d 339, 341 (Tex. 1995). A movant need not disprove all elements of the
Plaintiff’s claim, but must only disprove one to be entitled to traditional summary judgment. Doe
v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472, 481-82 (Tex. 1995).
V. ARGUMENT
A) The Nurse Agreement is an unlawful restraint of trade.
Under the Texas Free Enterprise and Antitrust Act, “Every contract...in restraint of trade
or commerce is unlawful.” Tex. Bus. Comm. Code § 15.05(a). The statute contains one exception
to this rule: even though they are contracts in restraint of trade, covenants not to compete are
permitted, as long as they meet certain requirements. Tex. Bus. Comm. Code § 15.50. Those
requirements are:
● The covenant not to compete must be “ancillary to or part of an otherwise enforceable
agreement at the time the agreement is made;” and
● It must contain “limitations as to time, geographical area, and scope of activity to be
restrained” that are “reasonable,” and that “do not impose a greater restraint than is
necessary to protect the goodwill or other business interest of the promisee.” Id.
Def. Mot. Summ. J. Page 6 of 30
If the primary purpose of an agreement is to obligate an employee to render personal
services, for a term or at will, the employer has the burden of establishing that the covenant meets
the above criteria. Tex. Bus. Comm. Code § 15.51(b). Parkland cannot do this, as explained more
fully below.
If the agreement fails to meet both of these criteria, it must be declared unlawful under
Tex. Bus. Comm. Code § 15.05. If the agreement meets the first criterion, but not the second (i.e.,
if it is part of another enforceable agreement, but does not contain reasonable limitations or
imposes a greater restraint than is necessary), the Court may reform the agreement. But in the case
of reformation, the employer may not collect damages for breaches that occurred prior to the
reformation, and the relief granted to the employer must be limited to injunctive relief only. Tex.
Bus. Comm. Code § 15.51(c).
Parkland’s Nurse Agreement is a clear restraint of trade, as explained more fully below.
That means it is unlawful, unless Parkland can establish that it meets the requirements of a
“covenant not-to-compete” under Tex. Bus. Comm. Code § 15.50. Parkland cannot do this,
because its anti-competitive liquidated damage clause: (1) is not “part of an otherwise enforceable
agreement;” (2) does not contain any limitations as to time, geography, or scope - let alone
“reasonable” limitations; and (3) is not designed to enforce any other non-illusory promises made
by Garcia in the Nurse Agreement.
1) Parkland’s Contract operates as a Restraint of Trade, and therefore must be
analyzed under Tex. Bus. Comm. Code § 15.50 et seq.
The Nurse Agreement at issue in this case requires Parkland’s nurses to serve out a three
year term at Parkland. If they fail to do so for any reason (including if they are fired by Parkland)2,
2
See Ex. A [Appx. 3] - Contract (“in the event the employee is terminated...the Employee shall
pay to the Employer the sums set forth below”); and Ex. B [Appx. 10] - Parkland Corp. Rep.
Def. Mot. Summ. J. Page 7 of 30
they are required to pay Parkland a substantial sum of money. Parkland admits that one purpose
of this “liquidated damage” clause is to discourage nurses from leaving Parkland:
Q: ….is another purpose to make sure that the nurses think
seriously before they quit halfway through their term?
A. Correct.
*****
Q: ...is one of the purposes of the liquidated damages fee,
to prevent or discourage these resident nurses from leaving
Parkland prior to the end of their term?
[MR. TUREK: Objection, form.]
A. This agreement could be, in part, to get an employee to
stay with Parkland.
(Ex. B [Appx. 9, 17] - Parkland Corp. Rep. Depo. at 14:9-12; 76:3-9). Parkland’s
“liquidated damage” clause is plainly designed as a restraint of trade.
Parkland may argue that because its Nurse Agreement is not an explicit “non-compete,” it
is not subject to the requirements of Tex. Bus. Comm. Code § 15.50. But Texas courts have
repeatedly confirmed that the statute applies “not only to provisions that expressly limit a former
employee's professional mobility, but also to damages provisions that impose a severe economic
penalty on a departing employee.” Rieves v. Buc-ee’s Ltd., 532 S.W.3d 845, 851 (2017) (citing
Peat Marwick Main & Co. v. Haass, 818 S.W.2d 381, 388 (Tex. 1991) (holding that "provisions
clearly intended to restrict the right to render personal services are in restraint of trade and must
be analyzed for the same standards of reasonableness as covenants not to compete to be
enforceable," and applying those standards to conclude that requiring employee to pay liquidated
damages was unreasonable); Frankiewicz v. Nat'l Comp Assocs., 633 S.W.2d 505, 507 (Tex. 1982)
(agreement that departing employee would forfeit vested commissions in event of competition was
unenforceable)).
Depo., 25:7-26:20 (affirming “Parkland's position that it can bring on a new nurse into this
residency program, and then make the unilateral decision to terminate that nurse, and the nurse
will still have to pay Parkland.”).
Def. Mot. Summ. J. Page 8 of 30
This is because "The practical and economic reality" of such clauses is that they inhibit
employee mobility in "virtually the same [manner] as a covenant not to compete." Haass, 818
S.W.2d at 385-86. The Texas Supreme Court in Haass noted that it has “expressly rejected” the
argument that a liquidated damages provision like Parkland’s “is not a covenant not to compete”
just because the former employee is not explicitly prohibited from competing. Haass, 818 S.W.2d
at 386 (citing Frankiewicz, 633 S.W.2d at 507).
The Rieves case is instructive on this point. In that case, Buc-ee’s required its employee
Kelley Rieves to sign a contract that required her to pay Buc-ee’s a large sum of money if she did
not remain employed by Buc-ee’s for at least four years. The sum was equal to the amount of
certain “bonus” and “retention” payments she had been paid while employed there. When she
resigned prior to the end of her four-year term, Buc-ee’s sent her a letter demanding payment under
that contract. Rieves responded by filing a lawsuit, seeking a declaration that the contract was an
unenforceable restraint of trade.
Buc-ee’s argued that the contract was merely a loyalty incentive program, not a restraint
of trade. The appellate court disagreed, holding: “Because the [repayment] provisions impose a
severe economic penalty on Rieves if she exercises her right as an at-will employee to quit her
employment with Buc-ee's, we conclude they are unlawful unless they meet the reasonableness
standards applicable to covenants not to compete.” Rieves at 851.
The Rieves Court also explained how a punitive repayment clause like this is different from
legal loyalty or incentive based compensation plans:
● A legal loyalty-based compensation plan involves the cancellation of future
payments, such as unvested stock options under a non-contributory profit-sharing
plan - not the return of compensation that had already vested or been paid.
● Legal forfeiture provisions conditioned on loyalty do not restrict or prohibit the
employees' future employment opportunities. Instead, they reward employees for
Def. Mot. Summ. J. Page 9 of 30
continued employment and loyalty. Their purpose is unrelated to restraining
competition. A non-compete, on the other hand, attempts to protect the investments
an employer has made in an employee, ensuring that the costs incurred to develop
human capital are protected against competitors who, having not made such
expenditures, might appropriate the employer's investment.
● A former employer does not need to take legal action to trigger the terms of a loyalty
program, because the profit-sharing or other similar plan belongs to the employer.
Whereas with a non-compete, the former employer must bring a breach of contract
suit to enforce the clause.
The repayment clause in this case is remarkably similar to the clause at issue in Rieves. It
requires the nurse to “repay” Parkland for its purported investment in them if they leave Parkland’s
employ before a given date.3 Like the Buc-ee’s clause, the Parkland clause requires this repayment
regardless of the reason for an employee’s departure.4 Parkland’s clause does not have any of the
hallmarks of a legal employee incentive or loyalty plan. And it unquestionably “imposes a severe
economic penalty” on the Parkland nurses if they exercise their right as at-will employees to quit
their employment. As a result, the Parkland clause - like the clause in Rieves - must be analyzed
under Tex. Bus. Comm. Code § 15.50 et seq.
3
See Ex. B [Appx. 8] - Parkland Corp. Rep. Depo., 11:3-17 (stating: “if they don't stay the whole
three years, that's where they have to pay the monetary, based upon the investment that Parkland
has put into the employee”); Ex. C [Appx. 22] - Taylor Aff., at p. 2, ¶ 7 (stating that a purpose of
the nurse agreements is “to ensure that Parkland receives staffing and employee services from the
nurse for an adequate amount of time to recover its investment into the nurses”); Ex. F [Appx. 49]
- Parkland Mot. Summ. J. in Aziz case, Pg. 12 (stating that a nurse’s “premature departure” harms
Parkland because it does “not get a return on its investment” in “the time and money that Parkland
invested in training, educating, and mentoring” the nurse).
4
See Ex. A [Appx. 3] - Contract (“in the event the employee is terminated...the Employee shall
pay to the Employer the sums set forth below”); and Ex. B [Appx. 10] - Parkland Corp. Rep. Depo.,
25:7-26:20 (affirming “Parkland's position that it can bring on a new nurse into this residency
program, and then make the unilateral decision to terminate that nurse, and the nurse will still have
to pay Parkland.”).
Def. Mot. Summ. J. Page 10 of 30
2) The liquidated damage clause is not “Ancillary to or Part of” another, otherwise
enforceable agreement.
For an anti-competitive clause like Parkland’s to be enforceable, it must be “ancillary to or
part of” another separate set of mutually-binding, non-illusory promises - a set of promises that is
enforceable on its own, separate from the anti-competitive clause. See, e.g. Light v. Cental
Cellular Co., 883 S.W.2d 642 (Tex. 1994). In Light, the Texas Supreme Court explained that
when determining if a noncompete is “ancillary to or part of” another enforceable agreement,
courts must examine what, if any, non-illusory promises have been made by the parties other than
the non-compete promise itself. Id. at 645-46 (observing that separate from the covenant not to
compete, the contract contained three non-illusory promises).
The Nurse Agreement (Ex. A [Appx. 1-5]) at issue in this case requires Parkland’s nurses
to serve out a three year term, or else pay a hefty fee. That is the anti-competitive clause in the
Agreement (as explained above). Looking beyond that clause, the Court must determine: (1) what
other promises exist in Parkland’s Nurse Agreement, if any; and (2) whether those other promises
(if any) are non-illusory. If there are no other non-illusory, mutually-binding promises in the Nurse
Agreement, then the anti-competitive clause is not “ancillary to or part of” another, otherwise
enforceable agreement - and it fails under Texas law.
i) Parkland makes no promises in the Agreement.
Parkland does not expressly agree to anything in its Agreement. It makes a few
representations that appear to promise something, but each of them is belied by subsequent
disclaimers that relieve Parkland of any actual obligation to perform:
Def. Mot. Summ. J. Page 11 of 30
Initial language suggesting a promise or Subsequent disclaimer:
commitment from Parkland:
“Employer has accepted Employee for “The Employer reserves the right to cancel the
participation in the Critical Care Services Resident/Graduate Nurse Program at any time
Resident/Graduate Nurse Program” Ex. A prior to September 25, 2015.” Ex. A, Sec. II
[Appx. 1] [Appx. 1].
“Critical Care Resident/Graduate Nurse “...unless terminated as provided herein, or
Program will provide valuable training to unless Employee’s employment is terminated
assist employee” Ex. A [Appx. 1] pursuant to the personnel policies, procedures,
and directives of Employer, including a
“Employer hereby agrees that Employee will reduction in the workforce.” Ex. A, Sec. III
be a participant in the Critical Care Services [Appx. 2]
Resident/Graduate Nurse Program for the
period of September 25, 2015 through “If the Employee does not demonstrate such
February 2, 2016.” Ex. A, Sec. II [Appx. 1] skills and qualifications, the Employee may
be terminated at sole discretion of Employer.”
“During the program, Employee will be paid Ex. A, Sec. III [Appx. 2]
at then-current in-hire rate for a Nurse
Resident….” Exhibit A, Sec. IV [Appx. 2] “At all times during the performance of this
Agreement, the Employee...may be terminated
according to the personnel policies,
procedures, and directives of the Dallas
County Hospital District.” Ex. A, Sec. V
[Appx. 2]
“Employer reserves the right to terminate any
Employee during the nurse residency/graduate
period for unsatisfactory clinical or academic
performance.” Ex. A, Sec. VIII [Appx. 3]
“Employer hereby agrees that Employee will “...unless terminated as provided herein, or
be...subject to the conditions set forth unless Employee’s employment is terminated
herein… a member of the nursing staff of pursuant to the personnel policies, procedures,
Parkland Health & Hospital System from and directives of Employer, including a
February 3, 2016 to February 2, 2019.” Ex. A reduction in the workforce.” Ex. A, Sec. III
1, Sec. II [Appx. 1] [Appx. 2]
“...Employee shall be compensated at the “At all times during the performance of this
prevailing rate for a Registered Nurse I…” Agreement, the Employee...may be terminated
Ex. A, Sec. IV [Appx. 2] according to the personnel policies,
procedures, and directives of the Dallas
Def. Mot. Summ. J. Page 12 of 30
“Employment of the Employee shall begin on County Hospital District.” Ex. A, Sec. V
the 25th day of September 2015, and shall be [Appx. 2]
for a period until February 2, 2016 ….” Ex. A,
Sec. III [Appx. 2] “...at the option of Employer, and in its sole
discretion, the Employer may terminate the
Employee immediately and the Employer
shall be under no obligation to the Employee
except to pay such compensation as the
Employee may have been entitled to receive
under this Agreement to the date of
termination.” Ex. A, Sec. VI [Appx. 3]
ii) Parkland’s offer of at-will employment is illusory, and is not sufficient to support
the anti-competitive “liquidated damages” clause.
Parkland has confirmed that the “job offer” contained in these types of agreements are only
for at-will employment.5 This is reflected in the Agreement, which explicitly states in multiple
places that the Employee can be terminated at any time (see chart above).
Nor could the Agreement be interpreted any other way, because it does not explicitly limit
Parkland’s ability to terminate the nurse to specific, limited circumstances. See, e.g. Talford v.
Columbia Med. Ctr. At Lancaster Subsidiary, L.P., 198 S.W.3d 462 (Tex.App.-Dallas 2006, no
pet.) (to overcome the presumption of at-will employment, the employer must unequivocally
indicate a definite intent to be bound not to terminate the employee); Massey v. Houston Baptist
University, 902 S.W.2d 81 (Tex. App-Houston [1st Dist], 1995) (written employment contract did
not alter at-will employment relationship because it contained no terms expressly limiting
employer's ability to terminate the employee).
5
Ex. B [Appx. 9] - Parkland Corp. Rep. Depo. 15:7-16:3 (confirming that “in exchange for that
commitment,” Parkland offers the nurses “a job,” and “That job that we're talking about is at
will”)
Def. Mot. Summ. J. Page 13 of 30
This is important, because under Texas law, a promise of at-will employment is no promise
at all. It is illusory because it does not bind the promisor, who retains the option to discontinue
performance at any time. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844,
849 (Tex. 2009). When illusory promises are all that support a purported bilateral contract, there
is no mutuality of obligation, and therefore, no contract. Vanegas v. Am. Energy Servs., 302 S.W.3d
299, 301–02 (Tex. 2009). For this reason, an at-will employment relationship alone cannot
constitute an “otherwise enforceable agreement.” Light v. Centel Cellular Co., 883 S.W.2d 642,
645 (Tex. 1994).
iii) Parkland has made no other non-illusory promises.
Recognizing that at-will employment alone cannot support a noncompete, Parkland may
argue that it also gave its nurses specialized training, through their participation in the Critical Care
Graduate/Resident Nurse Program. This is the argument it previously made to the Court in another
Nurse Agreement lawsuit, under the heading “Consideration”:
“The promises and covenants set forth in the contract include Parkland’s promise
to allow [the nurse] to participate in Parkland’s Medical-Surgical
Graduate/Resident Nurse program and to compensate [the nurse] during her time
with the program and during her subsequent employment with Parkland. In return,
[the nurse] agreed to remain in the employment of Parkland for a specific period
of time...”
Ex. F [Appx. 46-47]: Parkland v. Aziz, et al, Case No. DC-17-17224 (Dallas County Dist.
Ct.,193rd) (Parkland’s Mtn. for Trad. Summ. J., filed 02/13/2019).
As an initial matter, both of these “promises” are illusory, because they depend on
continued employment. Parkland provides the training only for so long as the nurse remains
employed. See Vanegas at 549 (“Consideration...cannot be dependent on a period of continued
Def. Mot. Summ. J. Page 14 of 30
employment. Such a promise would be illusory because it fails to bind the promisor who always
retains the option of discontinuing employment in lieu of performance.”).
Furthermore, merely paying an employee for their work is not sufficient consideration to
support an anti-competitive restriction. In Texas, the payment of money alone cannot serve as
consideration for a noncompete. See e.g. Trilogy Software, Inc v. Callidus Software, Inc. 143 SW
3d 452, 457 (Tex.App.-Austin 2004) (a payment does not provide consideration for a noncompete
under Tex. Bus. Comm. Code § 15.50, since “financial benefits do not give rise to an ‘interest
worthy of protection’ by the covenant not to compete.”).
And contrary to Parkland’s representations in previously-filed legal briefs, the Nurse
Agreement does not actually “promise” to allow [the nurse] to participate” in the
Graduate/Resident Nurse program. It states only that the Parkland has “accepted” the Employee
for participation in the Program, and that it “will provide valuable training,” but “reserves the right
to cancel the...Program,” and states that the Employee can be “terminated” from that program at
any time. Thus, Parkland reserved the right to unilaterally refuse to perform without consequence,
which means it made no promise at all. Fielding, at 849; Vanegas, at 301–02.
iv) Garcia has made no other non-illusory promises.
Other than the promise to remain at Parkland for three years (the anticompetitive clause
itself), Garcia only made the following commitments:
● “...perform such duties required of her...as a member of the nursing staff of the Employer”
(Ex. A [Appx. 1], Pg. 1, Sec. II)
● “...adhere to all rules, regulations, and personnel policies and directives...” (Ex. A [Appx.
2], Pg. 2, Sec. V)
● “...to successfully sit for Examination for Licensure given by the Board of Nurse
Examiners in the State of Texas . . . or to become licensed by reciprocity or endorsement
from another state…” (Ex. A [Appx. 3], Pg. 3, Sec. IX).
Def. Mot. Summ. J. Page 15 of 30
Each of these commitments are premised on an ongoing employment relationship between
Parkland and Garcia. Obviously, Parkland would not expect Garcia to continue to follow
Parkland’s personnel rules or meet its licensing requirements if she is no longer employed with
Parkland. That stands in contrast to say, an employee’s promise never to disclose an employer’s
confidential information. That promise could be, and would be expected by the employer to be,
fulfilled regardless whether the employee continues working for the employer. Garcia made no
promises of that sort in his Nurse Agreement.
Because Garcia’s only commitments in the agreement (other than the anti-competitive
clause itself) all depend on an ongoing at-will employment, they are necessarily illusory. See
Vanegas at 549 (“Consideration...cannot be dependent on a period of continued employment. Such
a promise would be illusory because it fails to bind the promisor who always retains the option of
discontinuing employment in lieu of performance.”).
v) Texas courts have held that in some circumstances, a promise to provide
specialized training can suffice to form an “otherwise enforceable agreement.”
But those circumstances are not present in this case.
Parkland may try to rely on Alex Sheshunoff v. Johnson, 209 S.W.3d 644 (Tex. 2006) to
support its position. In Sheshunoff, the Court held that a promise to provide an employee with
confidential information and specialized training, even though it was illusory at the time it is made,
could become non-illusory if & when the employer actually performs by providing that training.
As a result, that promise was sufficient to form the employer’s half of “an otherwise enforceable
agreement.” The employee’s half of that “otherwise enforceable agreement” was his promise not
to disclose the employer’s confidential information. The non-compete at issue in the case was
“ancillary to or a part of” this separate, standalone exchange of promises between the employee
and employer.
Def. Mot. Summ. J. Page 16 of 30
There are two key points about Sheshunoff (and its progeny) that differentiate it from this
case in important ways: (1) that promise was made in exchange for an explicit, non-illusory
promise from the employee other than his promise not to compete - specifically, his promise not
to disclose confidential information; and (2) the non-compete was designed to enforce this separate
promise from the employee.
(a) To matter under the reasoning in Sheshunoff, a promise to provide
specialized training must be given in exchange for a promise by the
employee other than the anti-competitive promise.
The employer’s promise to provide confidential information and training in Sheshunoff
formed the employer’s half of “an otherwise enforceable agreement.” The employee’s half of that
“otherwise enforceable agreement” was his promise not to disclose that confidential information.
The non-compete at issue in the case was “ancillary to or a part of” this separate, standalone
exchange of mutually-binding promises. In other words, the promise to provide confidential
information training was not consideration for the non-compete itself. Rather, it was consideration
for a separate, enforceable promise from the employee: the promise not to disclose the employer’s
confidential information.
That independent exchange of promises formed a separate, standalone “enforceable
agreement,” which the non-compete was “ancillary to or part of.” Sheshhunoff, at 650 (“ASM
promised to disclose confidential information and to provide specialized training under the
Agreement, and Johnson promised not to disclose confidential information. The covenant [not to
compete] was ancillary to or part of the agreement”).
In this case, however, there is no separate, standalone exchange of promises. The only
promises that Garcia made (other than the anti-competitive promise itself - i.e., the promise not to
leave before three years) are to abide by Parkland’s personnel policies and directives, and maintain
Def. Mot. Summ. J. Page 17 of 30
her nursing license. As explained above, those promises are illusory. And Parkland explicitly
promises nothing in return.
The Beaumont Court of Appeals has considered, and struck down, a similar agreement. In
Polimera v. Chemtex Envtl. Lab., Inc., the employee signed an agreement stating that she "will not
voluntarily leave employment with [Chemtex], or be discharged by [Chemtex] for cause, for a
period of two (2) years from the later of the date of this agreement or the date [Polimera] receives
[her] green card[.]" Polimera, No. 09-10-00361-CV, 2011 Tex. App. LEXIS 3886, at *10 (Tex.
App. May 19, 2011). This promise was given "[i]n consideration of the continued employment of
[Polimera] by [Chemtex], and processing immigration by [Chemtex]." Id. The Court noted:
Because Polimera remained an at-will employee, Chemtex retained the option to
terminate her at any time. Likewise, Polimera retained the option to leave. Because
the covenant that forms the basis of the agreement is dependent on the continued
employment of Polimera, it is illusory.
Id. (citing Light, 883 S.W.2d at 645; J.M. Davidson, 128 S.W.3d at 228).
But even if it could be inferred that Parkland was promising to provide some form of
specialized training, Parkland has conceded that any promise to provide training is made “in
return” for the anti-competitive promise itself (i.e., the nurse’s promise to stay with Parkland for
two or three years). See Ex. F [Appx. 46-47]: Parkland v. Aziz, et al, Case No. DC-17-17224
(Dallas County Dist. Ct.,193rd) (Plaintiff’s Mtn. for Trad. Summ. J., filed 02/13/2019) (stating
that “In return” for “Parkland’s promise to allow [the nurse] to participate in Parkland’s Medical-
Surgical Graduate/Resident Nurse program,” the nurse “agreed to remain in the employment of
Parkland for a specific period of time...”).
In short, there is no standalone exchange of non-illusory promises in the Nurse Agreement,
separate from the anti-competitive promise itself. That is not the type of exchange permitted under
Sheshnuhoff, or otherwise under Texas law.
Def. Mot. Summ. J. Page 18 of 30
(b) An anti-competitive clause is only enforceable if it is designed to enforce
the promises made by the employee in the “otherwise enforceable
agreement.”
Even in cases where a non-compete clause is found to be “ancillary to or part of” a separate,
standalone exchange of non-illusory promises, it can only be enforced if it is “designed to enforce
the employee's...return promise in the otherwise enforceable agreement.” Sheshhunoff, at 649
(citing Light, at 647).
For example, in Light, the underlying agreement contained the following non-illusory
exchange of promises: (1) the employer agreed to provide specialized training and confidential
information; and (2) the employee agreed to give 14-days’ advance notice before leaving the
company, and to provide an inventory upon her exit. This mutual exchange of promises, which
stood on its own, apart from the noncompete, counted as an “otherwise enforceable agreement.”
But the Court still declined to enforce the non-compete clause, because it was not “designed to
enforce the employee's...return promise” to provide notice and an inventory. The Court noted that
if there had been a reciprocal promise by the employee not to disclose confidential information,
that could meet the “designed to enforce” requirement, since a non-compete would naturally
enforce such a promise. But the employee in Light made no such agreement in the contract, so the
employer’s suit failed.
Similarly, the only “return promise” made by Garcia in this case (other than the anti-
competitive clause itself) is to abide by Parkland’s personnel policies and directives, and maintain
her nursing license while there. Those are not non-illusory promises, because they are tied to the
continuation of at-will employment. But even if they were non-illusory, the anti-competitive
Def. Mot. Summ. J. Page 19 of 30
clause in this case (i.e., the nurse must stay for three years) is not designed to, and does not, enforce
those particular promises.
In this case, there is no “otherwise enforceable agreement,” because there are no
standalone, mutually-binding, non-illusory promises between the parties. But even if there were,
Parkland’s anti-competitive clause is not “designed to enforce the employee's return promise” to
abide by Parkland’s personnel policies and directives. That means it fails under Light, Sheshunoff,
and their progeny.
3) Parkland’s Contract does not contain reasonable limitations as to geography or
scope, and imposes a greater restraint than necessary.
Like the contract at issue in Rieves, the Parkland contracts “impose no limits on [the
employee’s] repayment obligation based on whether her new employment involves certain
competitive activities or is located within certain areas,” and require an employee to pay up “even
if (1) [the employer] chooses to terminate her through no fault of her own on the last day of the
period she is "required to work," or (2) she quits to take a non-competing job — or no job at all.”
Rieves, 532 S.W.3d at 851.
Parkland demands payment of the penalty regardless of whether the employee quits, or is
fired by Parkland.6 Also like the contract in Rieves, Parkland demands 100% of the fee, regardless
of whether the nurse has served 1% or 99% of his “term” with Parkland.7 And again like the
contract in Rieves, Parkland’s punitive payment clause is triggered regardless of where,
6
See Ex. A [Appx. 3] - Contract (“in the event the employee is terminated...the Employee shall
pay to the Employer the sums set forth below”); and Ex. B [Appx.10] - Parkland Corp. Rep.
Depo. 25:7-26:20 (affirming “Parkland's position that it can bring on a new nurse into this
residency program, and then make the unilateral decision to terminate that nurse, and the nurse
will still have to pay Parkland.”).
7
Ex. B [Appx. 15] - Parkland Corp. Rep. Depo. 59:15-60.
Def. Mot. Summ. J. Page 20 of 30
geographically, the nurse goes to work after Parkland (or whether they continue working at all),
or what they choose to do after Parkland (i.e., whether they continue nursing or go into an entirely
different field, or drop out of the workforce altogether). In other words, the contract does not
contain any geographical or scope-based limitations.
As the Court in Rieves concluded, provisions like this “go far beyond protecting any
legitimate competitive interest” of the employer. Rieves, 532 S.W.3d at 851-852. Further, they
“injure the public by limiting choice and mobility of skilled employees.” Id. If that was true in
Rieves, a case concerning a gas station manager, it is doubly true in this case. Parkland’s contracts
restrict the mobility of, and public access to, skilled nurses - a group that is already in short supply,
as Parkland acknowledges:
Q: Would you agree with me that there is a nurse shortage
right now?
A. I am no longer in management, but consistently since I
have been a nurse, there has been a nurse shortage.
(Ex. E [Appx. 30] - Parkland Corp. Rep. Depo. 36:22-37:1).
Because the Contract is a restraint of trade under Tex. Bus. Comm. Code § 15.05, and
because Parkland cannot carry its burden to show that it meets the requirements of Tex. Bus.
Comm. Code § 15.50 (an element on which it would have the burden of proof at trial),8 summary
judgment should be granted in Garcia’s favor under Tex. R. Civ. P. 166a(c) and 166a(i).
B) Parkland’s claim for attorney’s fees is preempted by Tex. Bus. Comm. Code
§ 15.50 et seq., and therefore must be dismissed.
In its Petition, Parkland seeks attorney’s fees under Tex. Civ. Prac. & Rem. Code § 38.001.
That section permits the recovery of attorneys’ fees on claims for breach of a written contract. It
8
See Tex. Bus. Comm. Code § 15.51(b); Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d
21, 24 (Tex. App.-Houston [14th Dist.] 2005, no pet.) ("To prove an action for breach of contract,
a plaintiff must establish the existence of an enforceable contract.").
Def. Mot. Summ. J. Page 21 of 30
is explicitly preempted, however, by Tex. Bus. Comm. Code § 15.50 et seq. Tex. Bus. Comm.
Code § 15.52 (“the procedures and remedies in an action to enforce a covenant not to compete
provided by Section 15.51 of this code are exclusive and preempt any other...procedures and
remedies in an action to enforce a covenant not to compete under common law or otherwise”).
That statute limits the type of relief that a Court can award to a promisee (i.e., Parkland)
suing to enforce an anti-competitive covenant. It may only recover damages, injunctive relief, or
both. Tex. Bus. Comm. Code § 15.51; Rieves, 532 S.W.3d at 854 (sustaining employee’s
challenge to employer’s request for attorney’s fees, because “section 15.52 preempts Buc-ee's
request for fees based on other statutes or the 2010 Agreement”).
Because Parkland’s Contract is subject to the dictates of Tex. Bus. Comm. Code § 15.05,
as set forth above, it cannot seek attorney’s fees against Mr. Garcia (or any other defendant). Garcia
is therefore entitled to summary judgment as a matter of law on Parkland’s claim for attorney’s
fees under Tex. R. Civ. P. 166a(c).
C) The liquidated damages clause is also an unenforceable penalty.
If a liquidated damages provision is nothing more than a penalty intended to secure
performance of the contract, it is unenforceable. Stewart v. Basey, 245 S.W.2d 484, 486 (Tex.
1952). A liquidated damage clause is an unenforceable penalty unless it meets two requirements:
(1) the harm caused by the breach is incapable or difficult of estimation, and (2) the amount of
liquidated damages called for is a reasonable forecast of just compensation. Phillips v. Phillips,
820 S.W.2d 786, 788 (Tex. 1991).
And, a liquidated damage provision may be shown to be unreasonable on the face of the
contract without proof of actual damages. Bunker v. Strandhagen, Case No. 03–14–00510–CV,
2017 WL 876374 (Tex.App.-Austin, March 3, 2017). When it is plain from the face of a contract
Def. Mot. Summ. J. Page 22 of 30
that a provision may operate as a penalty instead of a reasonable forecast of los