* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-50832

NOVA CONSULTING GROUP, INC.

Plaintiff-Appellee

v.

ENGINEERING CONSULTING SERVICES, LTD.

Defendant-Appellant

Appeal from the United States District Court

for the Western District of Texas

USDC No. 5:03-CV-305

Before JONES, Chief Judge, and BARKSDALE and STEWART, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:*

At trial, claims for misappropriation of trade secrets and tortious

interference with contractual relations remained in this diversity action by Nova

Consulting Group against Engineering Consulting Services (ECS). A jury

returned a verdict for Nova on both claims and awarded actual (past and future

lost profits) and exemplary damages. The district court reduced substantially

the future-lost-profits award. 

United States Court of Appeals

Fifth Circuit

F I L E D

August 22, 2008

Charles R. Fulbruge III

Clerk
No. 07-50832

2

Nova does not appeal that reduction. At issue for ECS’ appeal are: the

admission of Nova’s expert witness’testimony on damages;the sufficiency ofthe

evidence for liability and damages; and two ECS-proposed jury instructions

being refused. AFFIRMED.

I.

Nova and ECS are competing, nationwide, environmental consulting firms.

Their work involves, among other things, evaluating soil conditions for architects

and engineers, as well as testing air quality, construction materials, and for

asbestos. 

Nova opened an office in San Antonio, Texas, in September 1998. All its

employees signed employment agreements, with prohibitions against ever

disclosing confidential information, and,for one year after leaving Nova, against

competing with Nova or soliciting its employees. 

By 2001, Nova’s San Antonio office had over $2 million in revenue. That

same year, ECS entered the San Antonio market. Mike Harwood was hired to

establish the ECS San Antonio office by hiring top talent from other firms.

Harwood had not worked for Nova; but, he had worked with several of its

employees. 

From February through April 2002, ECS hired top managers, project

managers, and key technicians away from Nova. Included in this group were

four former Nova managers: McIntosh, Burge, Hernandez, and Hunter. (Named

in this action as individual defendants, they were voluntarily dismissed during

trial.) 

By 2002, revenues for ECS’ San Antonio office were nearly $2.5 million;

for 2003, $2.3 million. During this same period, Nova’s San Antonio-office

revenue dropped to $1.5 million the first year; $578,000, the second.

In filing this Texas diversity action against ECS and the four former Nova

managers, Nova alleged: ECS ignored Nova confidentiality agreements, by
No. 07-50832

3

requiring the Nova employees hired away by ECS to load into its database client

information taken from Nova; ECS allowed former Nova employees hired away

by ECS to solicit employees still at Nova to also join ECS; ECS employees, who

were former Nova employees, solicited and hired employees still at Nova; ECS’

conduct damaged Nova through loss of client base and loss of key employees; and

ECS intended to harm Nova, because evidence shows a plan to dominate the

market by decreasing other firms’ ability to compete. 

ECS responded: Nova employees moved to ECS because Nova was losing

its place as a leader in the industry, not because of improper solicitation; the

changing nature ofthe environmental consulting practice caused Nova revenues

to drop because it did not adapt to changes as well as ECS; and there was no

misappropriation of protected or confidential information by ECS because there

is a reasonable explanation for everything alleged to have been taken.

Nova also alleged the four former Nova managers breached the following

prohibitions in their employment agreements: non-disclosure of confidential

information, non-solicitation of Nova employees, and non-competition. Prior to

trial, the district court ruled by summary judgment that the covenants not to

compete were overbroad and unenforceable. On the other hand, the employment

agreements’ non-disclosure-of-confidential-information and non-solicitation-ofNova-employee provisions remained in issue. As noted, the four former Nova

managers were voluntarily dismissed during trial. 

Following four days of testimony, including by an expert witness on

damages for each party, the jury was instructed, inter alia,to determine whether

ECS unfairly competed with Nova by misappropriating trade secrets, or

tortiously interfering with employment agreements, or both. After deliberating

approximately two and one-half hours, the jury found ECS had engaged in both

practices and awarded $1.5 million in past, and $1 million in future, lost profits,

and $500,000 in exemplary damages. 
No. 07-50832

4

In ruling on ECS’ post-verdict motions, the district court reduced the

future lost profits to $144,260. (ECS asserts this reduced amount was based on

the district court’s misunderstanding of ECS’ expert’s damages-calculation.)

Otherwise, the district court denied ECS’ motions for judgment as a matter of

law (requested at the close of Nova’s case, at the close of all the evidence, and

post-verdict), and for new trial. ECS’ motion for remittitur was granted to the

extent the court had already reduced future lost profits. 

II.

The Seventh Amendment preserves the right of trial by jury for civil

actions. U.S. CONST. amend. VII. For the unfair-competition verdict at hand,

this appeal, concerning expert witness expertise, conflicting evidence, and two

proposed jury instructions, is a classic example why trial must take place in

district court, not here. The below-discussed standards of review for the issues

presented amply demonstrate this.

It is undisputed that Texas law applies in this diversity action. ECS

asserts: Nova’s expert witness’ testimony was inadmissible; judgment as a

matter of law should have been granted for ECS because there was not sufficient

evidence for the jury to find either liability or damages; and the district court

erred by refusing two ECS-proposed jury instructions. Again, Nova does not

appeal the district court’s reducing the future-lost-profits award. 

A.

Judgment as a matter of law is proper when “a party has been fully heard

on an issue during a jury trial and the court finds that a reasonable jury would

not have a legally sufficient evidentiary basis to find for the party on that issue

. . . .” FED. R. CIV. P. 50(a) (emphasis added); see also FED. R. CIV.P. 50(b) (posttrial motion for judgment as a matter of law). In deciding whether judgment as

a matter of law should have been granted, an appellate court must first excise

inadmissible evidence; such evidence “contributes nothing to a legally sufficient
No. 07-50832

5

evidentiary basis”. Weisgram v. Marley Co., 528 U.S. 440, 454 (2000) (internal

quotation marks omitted). Therefore, addressed first is the contested admission

of Nova’s expert witness’ testimony on damages. See Hodges v. Mack Trucks,

Inc., 474 F.3d 188, 193 (5th Cir. 2006).

The Federal Rules of Evidence require the district court to act as

“gatekeeper”, to ensure expert testimony is relevant and reliable. FED. R. EVID.

702; Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589-95 & n.7 (1993).

“The focus, of course, must be solely on principles and methodology, not on the

conclusions that they generate.” Daubert, 509 U.S. at 595 (emphasis added).

The admissibility of expert testimony is reviewed for abuse of discretion.

E.g., Pipitone v. Biomatrix, Inc., 288 F.3d 239, 243 (5th Cir. 2002). In that

regard, the admissibility ruling is not reversed unless it is “manifestly

erroneous”. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 142 (1997). 

In contending the district court abused its discretion by admitting the

expert’s (Malek’s) testimony, ECS challenges his expertise and the reliability of

his opinions. ECS maintains: Malek “was not qualified to render opinions

regarding the inner-workings of an environmental consulting business”; and,

“his methodology was fundamentally flawed and lacked the reliability required

under the exacting standards of Daubert”. For the reasons that follow, there was

no abuse of discretion, especially in the light ofthe untimeliness of ECS’ pre-trial

motion to exclude his testimony.

ECS waited until 25 September 2006, only six days before trial, to first

move to exclude the testimony by Malek—Nova’s only expert witness on

damages. As it does now, it contended: Malek was unqualified to render

opinions regarding the inner-workings and resiliency of an environmental

consulting firm; and his methodology was flawed because it failed to take into

account the loss of “mold work” in San Antonio, relied on a budget whose

achievability Malek did not analyze or investigate, assumed Nova’s San Antonio
No. 07-50832

6

office was “destroyed”, disregarded the nature ofthe employment agreements at

issue, and used terminal values. ECS’ counsel “ple[d] for mercy” to excuse the

untimeliness of the motion, asserting that they had not become lead counsel

until 31 January 2006, after the scheduling order was entered, and had

inadvertently missed the deadline; they urged Nova would suffer no prejudice.

At a pre-trial conference on 29 September, ECS’ motion was discussed and

denied as untimely. As a result of the discussion, the district court had ample

opportunity to consider ECS’ objections. (As reflected below, after denying ECS’

motion,the district court entertained ECS’ repeated Daubert challenges. In that

regard, Nova’s counsel conceded at the pre-trial conference that ECS could

renew its Daubert challenge at a later date if it had grounds, despite ECS’

motion’s being denied that day as untimely.) 

On 5 October 2006, during ECS’ voir dire of Malek at trial, a Daubert

hearing was held. Malek’s testimony was ruled admissible. In doing so, the

district court stated: “[W]e have invested this much time, and we will proceed

to a jury verdict, unless [Nova] decide[s] that the Supreme Court and the Fifth

Circuit ha[ve] made it untenable to go forward”. 

Subsequently, when Nova tendered Malek at trial as an expert witness on

economic harm and computation of economic damages, ECS’ objections were

renewed and overruled. After Malek’s testimony, ECS reurged its Daubert

motion, contending: “There is absolutely no evidence tying any alleged wrongful

conduct [to the damages]”. The motion was again denied. 

1.

Regarding Malek’s qualifications, ECS contends he should not have been

allowed to testify regarding Nova’s ability to recover from a particular market

shift (the decline of “mold work”), because he is a “financial consultant and

certified public accountant who has no experience in the environmental

consulting field”. On the other hand, during the voir dire of Malek at trial, he
No. 07-50832

7

testified, inter alia, that he is also a “certified insolvency and restructuring

advisor”, who “works with businesses that are failing”, and has “consulted with

[an engineering consulting firm] for methodologies of revitalizing its business

after it came out of bankruptcy”. Accordingly, it was not an abuse of discretion

(“manifestly erroneous”) to rule Malek was qualified to testify on this subject.

See Trugreen Cos. v. Scotts Lawn Serv., 508 F. Supp. 2d 937, 958-59 (D. Utah

2007) (ruling insolvency and reorganization advisor qualified).

2.

As noted, Nova’s employees left to join ECS from February through April

2002. Regarding the reliability of Malek’s testimony, ECS challenges several

assumptions it contends were underlying his calculation of profit loss caused by

ECS: that Nova would have adapted to San Antonio’s loss of environmental

consulting work involving testing for mold, achieved its 2002 budget, and

remained operational with its pre-April-2002 employees for perpetuity; and that

all of Nova’s lost profits were attributable to ECS’ unfair competition, which

Malek did not specifically identify. Those assumptions, however, were fully

explored at trial. 

Malek opined that the 2002 budget was achievable, and testified to the

basis of that belief, including that it was prepared by McIntosh (who also

testified to its achievability), a few months before he joined ECS in April 2002.

(It was approved on 17 January 2002.) Malek recognized the declining

availability of consulting work related to mold, and opined thatit would not have

affected Nova’s budget because of Nova’s ability to adapt. (The nature, extent,

and effect of the decline in “mold work” was a contested issue, on which both

parties presented conflicting accounts.) Malek testified he knew Nova’s

employees were at-will employees; took into account the possibility they would

resign to join other entities; did not identify specific acts of misconduct or
No. 07-50832

8

differentiate between legal or illegal conduct; and projected discounted damages

for hundreds of years into the future.

ECS, however, cites nothing to show any of those assumptions render an

expert’s opinion unreliable in these circumstances. Moreover, “[w]hen, as here,

the parties’ experts rely on conflicting sets of facts, it is not the role of the trial

court to evaluate the correctness of facts underlying one expert’s testimony”.

Micro Chemical, Inc. v. Lextron, Inc., 317 F.3d 1387, 1392 (Fed. Cir. 2003)

(citations omitted). Rather, “‘[v]igorous cross-examination, presentation of

contrary evidence, and careful instruction on the burden of proof are the

traditional and appropriate means of attacking shaky but admissible evidence’”.

Pipitone, 288 F.3d at 250 (quoting Daubert, 509 U.S. at 596). 

There was vigorous cross-examination of Malek, as discussed infra, as well

as the presentation of contrary evidence. Further, although ECS’ expert used

a different approach, he agreed with much of Malek’s underlying methodology.

In addition, the following limiting instruction was given: “[T]he court accepts

[the competing experts on damages] at a threshold level . . . . But ultimately,

then you all as the judges of the facts still make the determination of whether

you want to believe any, all[,] or none of [their] testimony”. (Emphasis added.)

Therefore, the decision to permit Nova’s expert, Malek, to testify was not

“manifestly erroneous”. Accordingly, the district court did not abuse its

discretion by admitting that testimony. 

B.

“A motion for judgment as a matter of law . . . in an action tried by jury is

a challenge to the legal sufficiency of the evidence supporting the jury’s verdict.”

Hiltgen v. Sumrall, 47 F.3d 695, 699 (5th Cir. 1995). ECS contends the evidence

was insufficient to support the verdict for misappropriation of trade secrets, for

tortious interference with Nova’s employment agreements, and for actual and

exemplary damages.
No. 07-50832

9

This court reviews de novo the district court’s ruling on a motion for

judgment as a matter of law, applying the same standard as did the district

court. E.g. Flowers v. S. Reg’l Physician Servs., Inc., 247 F.3d 229, 235 (5th Cir.

2001). “We consider all of the evidence, drawing all reasonable inferences and

resolving all credibility determinations in the light most favorable to the nonmoving party.” Brown v. Bryan County, OK, 219 F.3d 450, 456 (5th Cir. 2000)

(citation omitted). This is because “[c]redibility determinations, the weighing of

the evidence, and the drawing of legitimate inferences from the facts are jury

functions, not those of a judge”. Reeves v. Sanderson Plumbing Prods., Inc., 530

U.S. 133, 150 (2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255

(1986)). Before us is only the cold record.

Therefore, as quoted earlier, the judgment must be upheld unless “a

reasonable jury would not have a legally sufficient evidentiary basis to find” as

the jury found. FED. R. CIV. P. 50(a)(1); see Navigant Consulting, Inc. v.

Wilkinson, 508 F.3d 277, 282 (5th Cir. 2007). Accordingly, although our review

is de novo, this standard of review with respect to a jury verdict is especially

deferential. E.g., Brown, 219 F.3d at 456-57 (citing Snyder v. Trepagnier, 142

F.3d 791, 795 (5th Cir. 1998)). “As such, judgment as a matter of law should not

be granted unless the facts and inferences point so strongly and overwhelmingly

in [ECS’] favor that reasonable jurors could not reach a contrary conclusion.”

Navigant, 508 F.3d at 282 (citation and internal quotation marks omitted). 

Nova’s claims concern unfair competition, “the umbrella for all statutory

and nonstatutory causes of action arising out of business conduct which is

contrary to honest practice in industrial or commercial matters”. United

Sporting Prods., Inc. v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214, 217

(Tex. App.—Waco 1993, writ denied) (quoting Am. Heritage Life Ins. Co. v.

Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974)). Again, Nova’s underlying
No. 07-50832

10

tort claims were for misappropriation of trade secrets and tortious interference

with its employment agreements.

1.

ECS claims the evidence was insufficient to hold it liable for

misappropriating Nova’s trade secrets. “Under Texas law, there are three

elements needed to establish the injury of trade secret misappropriation: (1) a

trade secret exists;(2) [ECS] acquired the trade secret by breach of a confidential

relationship or other improper means; and (3) [ECS] used the trade secret

without authorization.” Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 449

(5th Cir. 2007) (citation and internal quotation marks omitted). ECS contends

Nova failed to adduce competent evidence to support any of those elements.

Each is considered in turn.

a.

Under Texas law, “[a] trade secret is any . . . compilation of information

used in one’s business, and which gives an opportunity to obtain an advantage

over competitors who do not know or use it”. Taco Cabana Int’l, Inc. v. Two

Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir. 1991) (citation omitted); see also

Computer Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex. 1996).

Among other examples of trade secrets, Texas courts have provided the

following: customer lists, client information, customer preferences, and buyer

contacts. Miller Paper Co. v. Roberts Paper Co., 901 S.W.2d 593, 601 (Tex.

App.—Amarillo 1995, no writ); T-N-T Motorsports, Inc. v. Hennessey

Motorsports, Inc., 965 S.W.2d 18, 22 (Tex. App.—Houston [1st Dist.] 1998, pet.

dism’d). 

Texas courts consider six factors when evaluating whether a trade secret

exists. Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 267 (5th Cir. 2007); In re

Bass, 113 S.W.3d 735, 739 (Tex. 2003). Those factors are: 
No. 07-50832

11

(1) the extent to which the information is known outside of [the]

business; (2) the extent to which it is known by employees and

others involved in [the] business; (3) the extent of the measures

taken . . . to guard the secrecy of the information; (4) the value ofthe

information to [the person claiming the trade secret] and to his

competitors; (5) the amount of effort or money expended by [the

person claiming the trade secret] in developing the information;

[and] (6) the ease or difficulty with which the information could be

properly acquired or duplicated by others. 

Triple Tee Golf, 485 F.3d at 267; see also In re Bass, 113 S.W.3d at 740.

On the other hand, Texas law does not require a “party claiming a trade

secret . . . to satisfy all six factors because trade secrets do not fit neatly into

each factor every time”. In re Bass, 113 S.W.3d at 740. There may be other

circumstances relevant to the trade-secret analysis; therefore, Texas courts

“weigh the [six] factors in the context of the surrounding circumstances to

determine whether” a trade secret exists. Id. (As discussed infra in part II.C.,

ECS maintains the district court reversibly erred by refusing ECS’ proposed

instruction that incorporated this six-factor test.)

Nova presented evidence that its client information was confidential and

a trade secret. Nova President Cummings testified that client recruitment, and

hence the protection of client information, is critical to an environmental

consulting firm; this takes an enormous amount of time and resources.

Cummings explained that, while developing clients, Nova inputs confidential

client information into its client-contact database, called Telemagic. This client

information includes names, locations, cell-phone and work-telephone numbers,

and other important information obtained about clients from interactions with

them. Cummings testified that this information, which, again, is entered by

Nova employees into Telemagic, is considered confidential, trade secret, and

proprietary. He also explained that Nova employees are aware this information

is considered a trade secret. 
No. 07-50832

12

Consistent with Cummings’ testimony, ECS employee, and former Nova

manager, McIntosh testified that confidential client information developed by

Nova employees was recorded in Telemagic, and that steps were taken by Nova

and its employees to protect that information. McIntosh explained that the

types of information he recorded in Telemagic included: names; addresses; cellphone, work-telephone, and fax numbers; email addresses; and other key

information to be used to contact customers and satisfy their particular

preferences. 

b.

For the second element for trade-secret misappropriation, ECS must have

acquired a Nova trade secret by breach of a confidential relationship or other

improper means. “One is liable for disclosure of trade secrets if (a) he discovers

the secret by improper means, or (b) his disclosure or use constitutes a breach

of confidence reposed in one who is in a confidential relationship with another

who discloses protected information to him.” Phillips v. Frey, 20 F.3d 623, 630

(5th Cir. 1994) (citations omitted).

The four former Nova managers who left Nova to work for ECS (McIntosh,

Burge, Hernandez, and Hunter) signed employment agreements in which they

agreed not to disclose confidential information. These agreements defined

confidential information as proprietary or trade-secret information, such as

information relating to present and prospective customers. 

ECS Vice President Harwood admitted that, when he opened the ECS

office in San Antonio, he had nothing but a notebook, checkbook, cell phone, and

the ECS goal of becoming the dominant environmental consulting firm in the

city. Harwood confirmed that, to dominate the market, he needed to rapidly

grow the ECS office and increase revenue; and that, to achieve this, he needed

to recruit top-grade professional employees who could bring in client

information, do the work, and produce revenue. Harwood also confirmed the
No. 07-50832

13

ECS strategy for entering the market was to take top talent from other firms,

which it did by hiring out of Nova’s San Antonio office its top managers, project

managers, and key technicians. It was stipulated that all four former Nova

managers (individual defendants until voluntarily dismissed during trial)

resigned during February and April 2002; and three of them (McIntosh,

Hernandez, and Hunter) were solicited by ECS on 2 April before resigning from

Nova on 8 April. 

Brett Gitskin, ECS Illinois President and a member of the ECS board of

directors, admitted he knew the former Nova managers had agreed in

employment agreements not to disclose Nova’s confidential information. This

notwithstanding, ECS’ Harwood admitted that every former Nova employee

hired by ECS was expected immediately to begin entering all of their contact

information into the ECS contact database. Gitskin confirmed ECS failed to

instruct the former Nova managers that ECS did not want Nova’s client-contact

information. 

Burge, a former Nova manager, was hired away by ECS on 4 February

2002. When Nova became aware Burge was contacting his former Nova clients

on behalf of ECS, using client-contact information generated at Nova, Nova

lawyers sent a letter to Burge, to which was attached a copy of his Nova

employment agreement. A copy of that letter was also sent to ECS President

Lucas. This letter reminded Burge, and ECS, his new employer, that the Nova

employment agreement prohibited former Nova employees from using, or

disclosing, any of Nova’s confidential information and prohibited former Nova

employees, for a period of one year after leaving Nova, from soliciting Nova

employees for hire by ECS. ECS’ president and the firm’s general counsel

reviewed the letter and the employment agreement and instructed ECS

supervisors in San Antonio that the Nova employment agreement was not

enforceable and they need not worry about it. 
No. 07-50832

14

c.

For the third, and final, element for trade-secret misappropriation, ECS

must have used a Nova trade secret without authorization. “As a general

matter, any exploitation of the trade secretthatis likely to resultin injury to the

trade secret owner or enrichment to the defendant is a ‘use’. . . . [Therefore]

soliciting customers through the use of information that is a trade secret . . .

constitute[s] ‘use.’” Gen. Universal Sys., Inc., 500 F.3d at 451 (quoting

RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 40).

Burge admitted that he took a business-card collection from Nova when

he moved to ECS. Burge confirmed those business cards contained handwritten

notes with further details gathered about clients through dealings with them,

such as names of contact persons, cell-phone numbers, and other notes. Burge

loaded into ECS’ database the contact details of several clients with whom he

had worked while he was employed at Nova. After moving to ECS, and using

such Nova client-contact information, Burge contacted these Nova clients on

behalf of ECS and generated work from them. 

McIntosh, one of the Nova managers hired away by ECS in April 2002,

also admitted he took a business-card collection from Nova when he moved to

ECS. McIntosh admitted he had used Nova customer-contact information to

develop business for ECS. ECS Illinois President Gitskin confirmed that

McIntosh used this contact information and his relationship with Farmers

Insurance to increase ECS revenues significantly. Along this same line, the jury

heard testimony by Steve Tyson, a corporate recruiter in San Antonio who had

established a relationship with McIntosh while he was with Nova. Tyson

testified that, after McIntosh left Nova for ECS, he informed Tyson that he had

Nova clients, and that he would have taken the copier machine and the vehicle

if he could have gotten away with it.
No. 07-50832

15

In sum, in the light ofthe foregoing evidence,there was sufficient evidence

for a reasonable jury to conclude ECS misappropriated Nova’s trade secrets. A

reasonable jury could have found that the information Nova employees loaded

into Telemagic—items such as names, locations, cell-phone and work-telephone

numbers, and other importantinformation obtained aboutthe client—was trade

secret, confidential, and proprietary. Contrary to ECS’ contentions, the jury was

not obligated to focus on whether the Telemagic software or printouts from the

system were misappropriated. A reasonable jury could consider evidence which

demonstrated that the information loaded into Telemagic was the true trade

secret, rather than the database which served as a repository of that

information.

There was also sufficient evidence for a reasonable jury to find that ECS

acquired the trade-secret client-contact information through breach by its former

Nova employees of their Nova employment agreements. The evidence showed

ECS was aware of the employment agreements; yet, in contravention of them,

continued to require former Nova managers to load their client information into

the ECS database.

A reasonable jury could also find that, after acquiring Nova’s trade-secret

information by hiring former Nova managers and requiring them to load the

protected information into the ECS database, ECS, without authorization, then

used that information to its advantage and Nova’s detriment. The evidence

supported a reasonable jury’s finding that ECS used Nova trade-secret client

information to gain new customers and to increase revenues.

2.

ECS also maintains the evidence was insufficient to hold it liable for

tortious interference with Nova’s employment agreements. Our having held

there was sufficient evidence for a reasonable jury to find ECS misappropriated

Nova’s trade secrets, it is not necessary, for liability purposes, to address this
No. 07-50832

16

claim. It is addressed, however, because the jury’s finding both torts were

committed may have been a factor in its actual and exemplary damages awards.

Under Texas law, the elements of a tortious-interference-with-contract

claim are: “(1) the existence of a contract subject to interference; (2) a willful and

intentional act of interference; (3) the act was a proximate cause of damage; and

(4) actual damage or loss occurred”. Fluorine On Call, Ltd. v. Fluorogas Ltd.,

380 F.3d 849, 864 (5th Cir. 2004) (citation omitted); see also Friendswood Dev.

Co. v. McDade & Co., 926 S.W.2d 280, 282 (Tex. 1996). 

ECS contends that, for Nova to prevail on this claim, Nova was required

to show ECS caused one of the former Nova managers (who were all party to the

Nova employment agreements, discussed supra) to either breach the

confidentiality provision of the employment agreement or to solicit Nova

employees for employment at ECS. ECS confines its challenge on this claim,

however, to ECS’ solicitation of Nova employees, apparently relying on its

earlier-addressed contention thatthere was no misappropriation of Nova’s trade

secrets. In other words, ECS does not again address the sufficiency of the

evidence on ECS’ interfering with the confidentiality provision of the Nova

employment agreements. 

To find ECS tortiously interfered with contractual relations, the jury could

have found either that ECS tortiously interfered with the confidentiality

provisions, or that ECS tortiously interfered with the contractual prohibitions

on solicitation by former Nova employees of current Nova employees for

employment at ECS. The jury was not required to find both. Therefore, we need

address only ECS’tortious interference with the confidentiality provisions ofthe

Nova employment agreements; this one matter provided sufficient basis for a

reasonable jury’s finding such interference. 
No. 07-50832

17

a.

As noted, the first element for the tortious-interference-with-contractualrelations claim is that there must be a contract subject to interference. The

Nova employment agreements were in evidence. As discussed, supra, with

regard to Nova’s misappropriation-of-trade-secrets claim, evidence was

presented about Nova employment agreements signed by former Nova managers

who were later hired away to work for ECS. By signing the employment

agreements, the Nova managers agreed, inter alia, not to disclose or use Nova’s

confidential information, except as required by their duties to Nova. ECS does

not appear to challenge the Nova employment agreement’s being a contract

subject to interference. 

b.

To satisfy the willful-and-intentional-act-of-interference element of this

tortious-interference claim, Nova was not required to prove ECS acted with

intent to injure. Fluorine On Call, 380 F.3d at 864. Nova, however, was

required to prove ECS acted with intent to interfere with the contract. Id.

As discussed, supra, with regard to the second element of Nova’s

misappropriation-of-trade-secrets claim, the jury received evidence from which

a reasonable jury could find ECS willfully and intentionally interfered with Nova

employment agreements. Along this line, as also discussed, supra, ECS’

president and its general counsel reviewed the employment agreement and

declared it was not enforceable and that ECS need not worry about it.

Harwood admitted that, to dominate the San Antonio market, he needed

to rapidly grow the ECS office and increase revenue, which he could achieve

most quickly by recruiting top-grade professional employees who could bring in

client information. Harwood confirmed that, in this regard, the ECS strategy

was to take top talent from other firms, which ECS did by hiring Nova’s top

managers, project managers, and key technicians. 
No. 07-50832

18

Gitskin admitted he knew the former Nova managers were prohibited by

their Nova employment agreements from disclosing Nova’s confidential

information. Nevertheless, as discussed supra, every former Nova employee

hired by ECS was expected immediately to begin entering all of their contact

information into the ECS contact database. 

c.

Tortious-interference elements three and four are, respectively, that there

must be causation and damage. As discussed infra, concerning the sufficiency

of the evidence of actual damages, evidence was presented through which a

reasonable jury could find Nova suffered damage proximately caused by ECS’

tortious interference. “Preexisting profit figures, combined with evidence of

relevant facts and circumstances, are sufficient to establish causation and the

reasonably certain amount of damages.” Univ. Computing Co. v. Mgmt. Sci.

Am., Inc., 810 F.2d 1395, 1398 (5th Cir. 1987) (internal quotation marks

omitted). An established business’ profits before the unfair competition (e.g.

tortious interference), “together with other facts and circumstances, may

indicate with reasonable certainty the amount of profits lost”. Sw. Battery Corp.

v. Owen, 115 S.W.2d 1097, 1098-99 (Tex. 1938). Nova’s evidence of past profits

and profits that would have been made absent the wrongful conduct, in the light

of the facts and circumstances, is sufficient to permit a reasonable finding of

causation. 

Based on the foregoing evidence, there was a sufficient basis for a

reasonable jury to find ECS tortiously interfered with Nova’s employment

agreements. A reasonable jury could have found that those agreements satisfied

the first element of a claim for tortious interference—the existence of a contract

subject to interference. There was also sufficient evidence for a reasonable jury

to find that ECS intentionally interfered with those agreements. The evidence

supports a reasonable jury’s finding that ECS was aware ofthe agreements; yet,
No. 07-50832

19

in contravention of them, and ignoring the warning from Nova lawyers that the

agreements would be enforced through legal action if necessary, continued to

require former Nova managers to load their client information into the ECS

database. Finally, a reasonable jury could also find from the evidence that Nova

suffered damage proximately caused by ECS’ tortious interference.

3.

Next, ECS contends Nova’s evidence of damages, presented by its abovediscussed expert, Malek, is insufficient to support the damages awarded. At

issue is whether Nova adduced competent evidence from which a reasonable jury

could “determine that damage was caused by the breach or interference, and to

assess with reasonable certainty the amount of damage and degree of causation

of the damage by the [unfair competition] relative to other factors”. Univ.

Computing Co., 810 F.2d at 1398.

To recover lost profits under Texas law, the loss amount must be shown

by competent evidence with reasonable certainty. E.g., Sw. Battery Corp.,

115 S.W.2d at 1098.

Where the business is shown to have been already established and

making a profit at the time when the contract was breached or the

tort committed, such pre-existing profit, together with other facts

and circumstances, may indicate with reasonable certainty the

amount of profits lost. It is permissible to show the amount of

business done by the plaintiff in a corresponding period of time not

too remote, and the business during the time for which recovery is

sought. Furthermore, in calculating the plaintiff’s loss, it is proper

to consider the normal increase in business which might have been

expected in the light of past development and existing conditions.

Id. at 1098-99 (citation omitted). “The distinguishing feature between Texas

cases permitting and denying recovery for lost profits is reliance upon routinely

kept business records produced in court to show an evaluation of the business’

decreased profitability based upon objective facts, figures[,] and data . . . .”

Holland v. Hayden, 901 S.W.2d 763, 766 (Tex. App.—Houston [14th Dist.] 1995).
No. 07-50832

20

ECS does not dispute Nova’s expert relied upon routinely kept business

records produced in court, including Nova’s financial statements from 1998

through 2006 and its 2002 budget, which was prepared by McIntosh only months

before he left Nova to join ECS. Nor does ECS dispute Nova’s history of

profitability. Rather, ECS claims numerous “flaws” in Malek’s methodology

rendered his damages calculation unreliable, so that the amount of damages

could not be ascertained with reasonable certainty. (These claimed flaws are

discussed supra: attributing all profits lost to wrongful conduct by ECS;

assuming Nova’s at-will employees would remain at Nova forever; accepting

Nova’s 2002 budget; and using “terminal values” to calculate future profits for

perpetuity.)

On the other hand, the claimed flaws potentially affecting Nova’s expert’s

reliability were presented by ECS to the jury; and an expert’s lost-profits

calculation is “not required to be exact”. Howell Crude Oil Co. v. Donna Refinery

Partners, 928 S.W.2d 100, 108 (Tex. App.—Houston [14th Dist.] 1996) (citation

omitted).

Although an award is speculative and cannot be upheld “where there is no

basis for determining how much of the damages suffered resulted from the

wrongful acts of the defendant”, Univ. Computing Co., 810 F.2d at 1398, Nova’s

evidence of past profits and profits that would have been achieved absent the

wrongful conduct, in the light of the facts and circumstances, is sufficient to

permit a reasonable finding of causation. For instance, Nova president

Cummings testified: “[W]hen the four [individual] defendants [former

managers] and then subsequently the employees thatthey hired left, in addition

to our client base, it basically devastated our office within short order”.

“[A] trier of fact has the discretion to award damages within the range of

the evidence presented at trial”. Howell, 928 S.W.2d at 108 (citation omitted).

Malek opined that Nova had lost profits of $8.1 million resulting from ECS’
No. 07-50832

21

unfair competition. ECS’ expert countered that the most Nova could have lost

was $144,260 during the 15 months following ECS’ conduct beginning in early

2002, or a total of $263,000 over the ten years following that conduct. In the

light of Nova’s expert’s calculations, a reasonable jury could find a lesser amount

was more appropriate, such as that awarded by the jury: $1.5 million for past,

and $1 million for future, profits. See id. (upholding award within the range of

evidence).

Similarly, a reasonable fact-finder could also conclude the district court’s

award of $1.5 million for past, and $144,260 for future, profits was appropriate.

Again, Nova does not appeal the district court’s future-profits reduction. As

testimony showed, because the Nova at-will employees could have resigned from

Nova at any time, which could have affected Nova’s profitability, a reasonable

fact-finder could have found $144,260 more appropriate for future lost profits.

ECS also contends Nova’s counsel’s recalculating damages, differently

than his expert, Malek, during closing argument shows Malek’s calculation was

not made with the requisite certainty. The record reflects, however, that ECS

did not object to this argument, and Nova’s counsel’s statement was merely an

alternative argument that Nova was entitled to “a minimum” of $2,266,269 for

past lost profits, and an equal amount for future lost profits.

Accordingly, a reasonable jury could find with reasonable certainty that,

due to ECS’ conduct, Nova suffered the awarded amount of lost-profits.

Therefore, judgment as a matter of law regarding actual damages was properly

denied.
No. 07-50832

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4.

As it does with actual damages, ECS contends there was insufficient

evidence to support the exemplary-damages of $500,000. (We need not address

ECS’ contending they are unwarranted because the evidence was insufficientfor

a reasonable jury to find a tort or damages, our having ruled sufficient evidence

existed on those points.) 

Exemplary damages may be awarded if clear and convincing evidence

shows Nova’s harm was caused by ECS’ malice, i.e., “specific intent by [ECS] to

cause substantial injury or harm to [Nova]”. TEX. CIV. PRAC. & REM. CODE §§

41.001, 41.003; Marrs & Smith P’ship v. D.K. Boyd Oil & Gas Co., 223 S.W.3d

1, 22 (Tex. App.—El Paso 2005). Specific intent means the defendant “desires

to cause the consequences of his act, or he believes the consequences are

substantially certain to result from it”; and it may be proven by circumstantial

evidence. Marrs & Smith, 223 S.W.3d at 22. At issue, then, is whether there is

substantial evidence from which a reasonable jury could have found, by clear

and convincing evidence, that ECS, through its use of Nova’s confidential

information and tortious interference, desired to substantially injure or harm

Nova, including for Nova to lose profits, or believed that was substantially

certain to result.

Clear and convincing evidence of ECS’ intent to cause specific harm to

Nova could have been found by a reasonable jury from the evidence concerning

ECS’ knowing decisions to: (1) “conquer and dominate” the market; (2) deprive

Nova of its key employees; (3) intentionally ignore the contractual obligations of

the former Nova employees not to disclose Nova’s confidential information; and

(4) compel the former Nova employees to “immediately” input their confidential

Nova client contact information in ECS’ database and begin using it for ECS.

The above-described testimony of a recruiter’s conversation with an ECS

employee, McIntosh, provides further evidence a reasonable jury could consider;
No. 07-50832

23

it reflected his joking about leaving Nova and saying he “got the clients and he

would have taken the copier machine and the vehicle if he could have gotten

away with it”. There was also evidence that future-ECS-employees sought and

did business for ECS with Nova clients while still employed by Nova. In

addition, vulgarity about a Nova officer in an email between a former Nova

manager who joined ECS and the ECS president was evidence a reasonable jury

could consider regarding malice. Accordingly, there was substantial, competent

evidence from which a reasonable jury could have found clear and convincing

evidence of ECS’ malice.

In sum,the jury found that ECS misappropriated Nova’s trade secrets and

tortiously interfered with its employment agreements, resulting in actual and

exemplary damages. Regarding ECS’ seeking judgment as a matter of law on

liability and damages, and considering the evidence in the requisite light most

favorable to Nova, with all reasonable inferences made in its favor, the facts and

inferences do not point so strongly and overwhelmingly in favor of ECS that

reasonable jurors could not arrive at a contrary verdict.

C.

Consistent with its objections at trial, ECS maintains the district court

failed to properly instruct the jury on two points: (1) how to determine whether

information is a trade secret under Texas law; and (2) the parameters of lawful

competition. The district court refused ECS’ proposed instruction in that regard.

Abuse of discretion is the standard for reviewing jury instructions objected to at

trial. E.g., Nat’l Hispanic Circus, Inc. v. Rex Trucking, Inc., 414 F.3d 546, 550

(5th Cir. 2005). 

“A district court does not abuse its discretion if its instructions, as a whole,

state the law correctly and instruct the jury properly on the legal principles to

be applied to the facts that they will decide.” Id. Three requirements must be

met in order to successfully challenge a jury instruction: 
No. 07-50832

24

First, the challenger must demonstrate that the charge as a whole

creates “substantial and ineradicable doubt whether the jury has

been properly guided in its deliberations.” Second, even if the jury

instructions were erroneous, we will not reverse if we determine,

based upon the entire record, that the challenged instruction could

not have affected the outcome ofthe case. Third, the appellant must

show that any proposed instruction it contends should have been

given was offered to the district court and correctly stated the law.

Int’l Ins. Co. v. RSR Corp., 426 F.3d 281, 290-91 (5th Cir. 2005) (citations

omitted).

1.

ECS contends the earlier-discussed six-factor trade-secret test from In re

Bass, 113 S.W.3d at 740, should have been included in the instructions. Texas

courts “weigh the [six] factors in the context of the surrounding circumstances

to determine whether” a trade secret exists. Id. As noted, and contrary to ECS’

contention, this six-factor test was crafted as a tool to be used by courts to

evaluate whether evidence supports the existence of a trade secret. Id.

(explaining the factors are relevant, not dispositive, because it is not possible to

state the precise criteria for determining the existence of a trade secret). 

ECS cites no authority holding juries must be instructed on the test.

Furthermore, the instructions provided Texas substantive law on trade secrets,

including what constitutes such a secret, and properly guided the jury in its

deliberations on this point.

2.

ECS also contends the jury should have been instructed on the parameters

of lawful competition. To this end, ECS proposed an instruction with language

derived from Schoellkopf v. Pledger, 778 S.W.2d 897, 904-05 (Tex. App.–Dallas

1989, writ denied) (explaining it is not unfair competition to appropriate all the

customers a firm can obtain—even if this drives the competition out of
No. 07-50832

25

business—so long as the means used does not violate the law or the competitors’

legal rights).

As previously stated, to successfully challenge a jury instruction, the

challenger must first show the jury instructions, as a whole, create “substantial

and ineradicable doubt whether the jury has been properly guided in its

deliberations”. Int’l Ins. Co., 426 F.3d at 290. ECS attempts to satisfy this

requirement by claiming its proposed instruction was necessary to guide the jury

on the vague tort of unfair competition. The district court instructed the jury,

however, that it was allowed to find unfair competition only if it found ECS had

engaged in either misappropriation of trade secrets, tortious interference, or

both. The district court instructed the jury on the substantive law of both torts.

Pursuant to the submission of the claims in that manner, the jury was properly

guided in its deliberations.

In sum, for these two points, the district court did not abuse its discretion

by declining to instruct the jury in the manner requested by ECS. 

III.

For the foregoing reasons, the judgment is AFFIRMED.