Background: Mineral Broker Seeks to Enforce Non-Competes Against Former Employees

ES3 Minerals, LLC, a mineral-rights brokerage founded by Edward Stanton III, sued former employees Nicholas Kreines and David Ryan, along with related entities Liberty Mineral Partners LLC, NAK Resources Inc., and CGR Oil and Gas, LLC. ES3 operates as a brokerage that purchases mineral rights from sellers and resells them to buyers using a simultaneous closing process. To maintain its competitive advantage, ES3 requires employees to sign confidentiality agreements and organizes its workforce into three departmental "silos"—analysts, mineral acquisition producers, and business development—with employees prohibited from sharing information across departments.

Both Kreines and Ryan signed Confidentiality, Noncompetition, and Non-Solicitation Agreements upon employment. Ryan was hired in 2018 as a producer in the acquisitions department, while Kreines was hired in 2019 to work with Stanton in the business-development department. A Travis County district court issued a temporary injunction against the appellants. After the case was removed to Business Court Division 3B, appellants moved to dissolve the injunction for failure to comply with Rules 683 and 684 and for an insufficient bond. The Business Court modified the temporary injunction, and appellants appealed to the Fifteenth Court of Appeals.

The Appellate Court's Fractured Ruling

The Fifteenth Court of Appeals issued a mixed ruling, reversing on two grounds while affirming on one and declining to reach others. First, the court held that the modified temporary injunction order lacked adequate specificity in its reference to the "known subsidiaries" of ES3's buyers. The court found the subsidiary language insufficiently definite under Rule 683's requirement that an injunction "describe in reasonable detail . . . the act or acts sought to be restrained."

Second, and most significantly for practitioners, the court reversed on the bond amount. The appellate court held that the bond "does not adequately protect Appellants' interests as required by Rule 684." This holding underscores the importance of carefully considering bond amounts in temporary injunction cases, particularly where the enjoined party faces substantial business restrictions.

The court did affirm one aspect of the Business Court's order, holding that it "clearly sets forth the reasons for its issuance" as required by Rule 683. However, the court declined to address appellants' remaining challenges to the temporary injunction, holding that those challenges concerned portions of the injunction that were imposed by the original district court and were not reviewed or reimposed by the Business Court. The court concluded that these portions were therefore not properly before it on appeal.

Practical Implications

The decision provides important guidance on two procedural requirements for temporary injunctions in Texas. On specificity, courts must ensure that injunction orders clearly define the scope of prohibited conduct, particularly when referencing related entities or subsidiaries. Generic references to "known subsidiaries" without adequate definition may fail Rule 683's specificity requirement.

On bond amounts, the decision reinforces that Rule 684 requires more than a nominal bond. Courts must set bond amounts that adequately protect the interests of the enjoined party, taking into account the nature and scope of the restrictions imposed. The Fifteenth Court of Appeals remanded the case for further proceedings consistent with its opinion, leaving the Business Court to address the deficiencies identified in the temporary injunction order.