Although it’s a problem most of us will probably never face, a battle currently being fought in Texas state court demonstrates why you may not want to sign away rights to your identity if you’re a celebrity chef. Kent Rathbun, a high-profile Dallas chef best known for his signature Abacus restaurant, is fighting for the right to use his own name and likeness in new business ventures while his former partner and financer claim exclusive ownership of them.
There is more drama than anything to be seen on a Master Chef episode.
It all goes back to an agreement which Rathbun now claims he signed under financial duress, allowing H2R Restaurant Holdings, the company majority-owned by his investor William H., to use his identity. Rathbun partnered with William in 2007 to form H2R Holdings in order to finance his restaurant ventures.
According to Rathbun’s complaint for declaratory relief, two years later William presented him with a document entitled “Assignment of Rights to Use of Name and Likeness.” William told him it needed to be “immediately executed as a condition to moving forward with company business.” At issue in the litigation is whether the agreement amounts to a covenant not to compete and is thus subject to state laws governing such covenants.
Rathbun later resigned from Abacus following a “fundamental disagreement over the handling of the business.” Under what he said were threats by H2R to enforce the pact, he sought a declaratory judgment in order to pursue new ventures using his identity. For a time he was working under the moniker of “The Chef With No Name.”
Rathbun claims there was no consideration given in exchange for signing over his name and image “in perpetuity,” nor a meeting of the minds. He argues the pact is illegal and unenforceable as a covenant not to compete because it is impermissibly broad in scope and geographic territory. Rathbun accuses William of depriving him of the ability to make a living in his field.
The state trial court in May denied H2R an injunction preventing Rathbun from using his personal identity in competing enterprises, after holding the name assignment limited Rathbun’s professional mobility and is subject to the state’s Covenants Not to Compete Act.
H2R appealed, arguing that the agreement is an “unambiguous” right-of-publicity contract rather than a non-compete. But a skeptical appeals court noted that under state case precedent, noncompetes are defined as agreements that put limits on former employees’ professional mobility or restrict their solicitation of former customers and employees, which appeared to be the case at hand.
H2R countered that Rathbun is still free to work as a chef and solicit customers—he just can’t put his name on another establishment. It said it would suffer irreparable harm if unable to have exclusive rights to Rathbun’s name.
Rathbun’s counsel argued the publicity assignment conflicts with an “intensely negotiated” agreement signed a year before that provides the members of the company are free to compete and operate other restaurants.
Rathbun’s counsel characterized him as part of an elite circle of Dallas chefs whose names open doors and attract investors. Though Rathbun can technically work at another restaurant, it was argued, he can’t operate in the same class of establishments that he did before partnering with William and H2R.
However, one of the appellate judges suggested that Rathbun should have considered these issues when he signed away the future rights to his name without demanding compensation.
A trial on the merits is set for December 4.
The case is H2R Restaurant Holdings LLC et al. v. Rathbun, 05-17-00614-CV, Texas Court of Appeals for the Fifth District.
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