Opinion ID: 782518
Heading Depth: 4
Heading Rank: 1

Heading: Customer Lists

Text: 40 A customer list may be a trade secret, Hyde Corp., 314 S.W.2d at 766, but not all customer lists are trade secrets under Texas law. The broader rule of trade secrets, that they must be secret, applies to customer lists. A customer list of readily ascertainable names and addresses will not be protected as a trade secret. See Gaal v. BASF Wyandotte Corp., 533 S.W.2d 152, 155 (Tex.App.1976). Thus, Texas courts consistently consider three factors when determining whether a customer list is a trade secret: (1) what steps, if any, an employer has taken to maintain the confidentiality of a customer list; (2) whether a departing employee acknowledges that the customer list is confidential; and (3) whether the content of the list is readily ascertainable. Compare Flake v. EGL Eagle Global Logistics, 2002 WL 31008136, at , 2002 Tex.App. LEXIS 6593 at - (Tex.App.2002) (finding trade secret where departing employee admitted information was confidential); Center for Economic Justice v. Am. Ins. Assoc., 39 S.W.3d 337, 346 (Tex.App.2001) (affirming trade secret status of a quasi-customer list that insurance companies are required to submit to a Texas regulatory agency, even though the insurance companies only took measures to protect the confidentiality of the lists once they became aware of an open-records request to disclose the lists); Gibson, et al. v. Canfield, 2001 WL 21491, at , 2001 Tex. App. LEXIS 133 at - (Tex.App.2001) (finding district court did not abuse its discretion in granting an injunction in the face of conflicting testimony about whether an employer kept the list confidential — parties disputed whether two entities that received employer's customer list were employer's subcontractors or employer's competitors); Sautter, et al. v. The Comp Solutions Network, Inc., 1998 WL 802481, at -, 1998 Tex.App. LEXIS 7248 at  (Tex.App.1998) (finding a trade secret where employer testified a new entrant in this niche insurance market would initially book no, or almost no, policies within the first couple of weeks of business because the new entrant would have to determine which insurance agents participate in niche market, and where employer testified it took 30 years to compile a list of 1,200 agents); Keystone Life Ins. Co. v. Marketing Mgmt. Inc., 687 S.W.2d 89, 91 (Tex.App.1985) (finding that a list of 900 names and addresses that were not generally available to persons in the business of selling group life insurance was a trade secret); with Bandit Messenger of Austin, Inc. v. Contreras, 2000-2 Trade Cas. (CCH) 73,109, 2000 WL 1587664 (Tex.App. 2000) (finding no trade secret where employer did not show what specific steps were taken to maintain the confidentiality of the customer list); Numed, Inc. v. McNutt, 724 S.W.2d 432, 435 (Tex.App. 1987) (finding no trade secret where customer list can be compiled by calling hospitals and doctors and asking the identity of their supplier); Keystone Life, 687 S.W.2d 89, 94 (Guillot, J. dissenting) (arguing that a list of 900 names and addresses that was not generally available to persons in the business of selling group life insurance was not a trade secret because there was no evidence of the confidential nature of the customer list, no evidence that it was treated confidentially by the partners, and no evidence that the employer told the employee to keep the list confidential). 41 Whether customer lists are trade secrets is a question of law reviewed de novo. Kern River Gas Transmission, Co. v. Coastal Corp., 899 F.2d 1458, 1462. The first two factors that a customer list is a trade secret are present in this case. First, the district court found, in reference to customer trade lists and other items, that Guy Carpenter had taken reasonable precautions to prevent the unauthorized disclosure of such information. Second, Provenzale acknowledged the customer lists were confidential when he executed the 1993 Agreement. In regard to the third factor, the district court implicitly found the customer lists were readily ascertainable. We agree. Evidence in the record indicates participants in the reinsurance market freely disclose the identity of their reinsurance broker and the nature of the reinsurance products they regularly consume. See Numed, 724 S.W.2d at 435 (holding a customer list is readily ascertainable when businesses are willing to disclose identity of a supplier when contacted by telephone). We also note that Provenzale's list of customers was relatively short — it included only those companies he personally serviced while at Guy Carpenter. He could easily reconstitute this list even without the aid of a trade publication. Cf. Sautter, 1998 WL 802481, at -, 1998 Tex.App. at  (finding a customer list was not readily ascertainable where customer list excluded non-participants in niche insurance market). Even though Guy Carpenter took steps to protect its customer list and Provenzale signed a contract stating the customer list was confidential, we conclude the customer list was not a trade secret because it was readily ascertainable. 42 Although Provenzale admits he used the customer list to solicit business on behalf of Benfield Blanch, the district court correctly found Guy Carpenter did not have a likelihood of success on the merits of this claim because the customer list is not a trade secret. 43