Texas: Court Upholds Injunction Protecting Confidential Information

By SHRM Online Staff Nov 21, 2014
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A Texas appeals court upheld a temporary injunction prohibiting an employee from using or disseminating confidential business information and trade secrets but overturned an injunction enforcing a two-year non-solicitation clause because the two-year period had already ended.

Robert Lasser started working for ACS, Industries LP in 2002. When Lasser was hired he signed an employment agreement that prohibited him from copying or using for his personal benefit ACS's confidential information. The agreement also included a non-solicitation provision that forbade Lasser from selling competing products to ACS customers for two years from the contract's termination. On Dec. 21, 2011, ACS sold certain of its assets to Amistco Separation Products Inc, including Lasser's employment agreement with ACS. Lasser remained an ACS employee during a “leasing period.”

During the leasing period, on Feb. 6, 2012, ACS sent Lasser a letter stating, "This letter serves as notice of termination of your Employment Agreement, effective as of March 1, 2012." Amistco sent Lasser a written offer of employment to be effective March 1, 2012. The letter stated that Lasser's employment with ACS will cease effective Feb. 29, 2012. The letter also made clear that it was "not an employment agreement." Lasser became Amistco’s employee on March 1, 2012, working as a manager of the company's product sales, until his resignation on June 3, 2013. He then went to work for Woven Metal Products, Inc..

On July 2, 2013, Amistco sued Lasser for breaching the non-solicitation and confidentiality clauses contained in the ACS employment contract by taking company confidential information and trade secrets to use in his new position with Woven, a direct competitor. Amistco sought a temporary injunction and a permanent injunction against Lasser. A trial court granted a temporary injunctive order, directing Lasser to stop using and return Amistco’s confidential information. It also prohibited him from disclosing, copying or reproducing it. Finally, the temporary injunction upheld the non-solicitation provision, stating the two-year period began running on June 3, 2013, the date of Lasser’s resignation from Amistco.

Lasser appealed, claiming the provisions of the temporary injunction, which prohibited Lasser from using or disseminating the company’s trade secrets and confidential information were not sufficiently specific. The appellate court disagreed and upheld these provisions. In particular, it state that the order makes clear the prohibited conduct by listing and describing specific categories and examples of information that comprise "trade secrets" and "confidential information."

Lasser also alleged that the injunction was too broad in its temporal scope and prohibited him from engaging in the lawful activity of soliciting customers for a period longer than that required by his employment agreement. Specifically, Lasser argued that the two-year non-solicitation period began to run when his employment with ACS was terminated at the end of February 2012 before he became an Amistco employee on March 1, 2012, and not when he resigned from Amistco on June 3, 2013.

The court agreed with Lasser. It noted that according to ACS's Feb. 6, 2012, letter to Lasser, the employment agreement was terminated by March 1, 2012. The court concluded that the two-year non-solicitation period began to run no later than March 1, 2012, and ended no later than March 1, 2014. The court overturned the portion of the injunction enforcing the non-solictitation provisions as impermissibly broad, because it restrained Lasser from engaging in the lawful activity of soliciting customers beyond the end of the non-solicitation period.

Lasser v. Amistco Separation Products, Inc., Texas Ct. App., No. 01-14-00432-CV (Oct. 2, 2014).

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