Court Opinion

ID: 4656194
Source: CourtListenerOpinion
Date Created: 2021-02-01 08:17:46.604615+00
Date Added: 2024-06-11T08:00:41.527554
License: Public Domain

Affirmed and Memorandum Opinion filed January 28, 2021.

                                        In The

                      Fourteenth Court of Appeals

                                NO. 14-19-00054-CV

       CASSIDY DANIELS; MICHAEL CHASE DANIELS; NEWTEX
                    STAFFING, LLC, Appellant
                                           V.

                      RADLEY STAFFING, LLC, Appellee

                     On Appeal from the 400th District Court
                             Fort Bend County, Texas
                      Trial Court Cause No. 18-DCV-253396

                           MEMORANDUM OPINION

      Appellants Cassidy Daniels, Michael “Chase” Daniels, and NewTex
Staffing, LLC appeal the trial court’s order granting a temporary injunction in
favor of appellee Radley Staffing, LLC. In seven issues1 appellants challenge the
temporary injunction entered against them. We affirm.

      1
         Appellants state that they present six issues for review. As explained below, we
construe appellants’ second issue as two separate issues on appeal.
                              I.     BACKGROUND

      Appellants Cassidy Daniels and Michael Chase Daniels are siblings that
were formerly employed by appellee Radley Staffing, LLC. Appellee terminated
Chase’s employment in late 2017. Chase formed NewTex Staffing, LLC shortly
after his departure from appellee’s employ. Cassidy resigned her position as a
business development manager on May 31, 2018.                Shortly after Cassidy’s
departure, appellee learned that some of its clients began using NewTex to fill
staffing needs instead of appellee. Appellee discovered that Chase and Cassidy
were working for NewTex and that while they were still employed by appellee,
both Chase and Cassidy transferred appellee’s documents to their personal email
accounts.

      Appellee filed suit against Cassidy, Chase, and NewTex alleging
misappropriation of trade secrets, breach of fiduciary duty, unfair competition, and
tortious interference with business relationships and requested injunctive relief.
The trial court conducted an evidentiary hearing on appellee’s application for
temporary injunction. At the conclusion of the hearing, the trial court entered an
order granting the application and prohibiting appellants from using or disclosing
any of appellee’s documents or information. This accelerated interlocutory appeal
followed.

                              II.    VERIFICATION

      Appellants argue that the verification to the application for temporary
injunction was defective because portions of it were made upon appellee’s
“information and belief.” The trial court granted the temporary injunction after a
full evidentiary hearing on the merits of the application with the participation of all
of the parties. “A verified petition is not essential to the granting of a temporary
injunction granted after a full hearing on the evidence independent of the petition.”
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Ohlhausen v. Thompson, 704 S.W.2d 434, 437 (Tex. App.—Houston [14th Dist.]
1986, no writ); Georgiades v. Di Ferrante, 871 S.W.2d 878, 882 (Tex. App.—
Houston [14th Dist.] 1994, writ denied) (verified petition for injunctive relief not
required to grant temporary injunction after trial court conducted a three-day
hearing on the application). Appellants’ sixth point is overruled.

            III.   MISSAPPROPRIATION OF TRADE SECRETS

      Appellants argue that the trial court abused its discretion in granting the
temporary injunction against them on appellee’s misappropriation of trade secrets
claim because: (1) “[t]he information from [appellee] that Appellants retained after
their employment ended was acquired through proper means while employed”; (2)
no reasonable measures were taken by appellee to ensure that its alleged trade
secrets were kept secret; (3) there was no evidence presented as to the economic
value of the alleged trade secrets; and (4) there was no evidence showing that “the
information at issue was used to Appellee’s detriment or disclosed to third parties.”

      A. Legal Principles

      To obtain a temporary injunction, the applicant must plead and prove three
specific elements: (1) a cause of action against the defendant; (2) a probable right
to the relief sought; and (3) a probable, imminent, and irreparable injury in the
interim. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). We review
an order granting a temporary injunction under an abuse of discretion standard. Id.
We “cannot overrule the trial court’s decision unless the trial court acted
unreasonably or in an arbitrary manner, without reference to guiding rules or
principles.” Id. at 211. We cannot substitute our judgment for the judgment of the
trial court. Id. “The trial court does not abuse its discretion if some evidence
reasonably supports the trial court’s decision.” Id.

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      We view the evidence in the light most favorable to the trial court’s order,
indulging every reasonable inference in favor of the ruling. LasikPlus of Tex., P.C.
v. Mattioli, 418 S.W.3d 210, 216 (Tex. App.—Houston [14th Dist.] 2013, no pet.).
“An abuse of discretion does not occur when a trial court bases its decision on
conflicting evidence.”   Id.   An irreparable injury is when a party cannot be
adequately compensated in damages or if the damages cannot be measured by any
certain pecuniary standard. Id. At a temporary injunction hearing the applicant is
not required to present the underlying merits of the controversy or establish the
applicant will ultimately prevail. Id. Thus, the ultimate merits of the lawsuit are
not before the trial or appellate court. See EMS USA, Inc. v. Shary, 309 S.W.3d
653, 658 (Tex. App.—Houston [14th Dist.] 2010, no pet.). The sole issue before a
trial court in a temporary injunction hearing is whether the applicant may preserve
the status quo, pending trial on the merits. T-N-T Motorsports, Inc. v. Hennessey
Motorsports, Inc., 965 S.W.2d 18, 21 (Tex. App.—Houston [1st Dist.] 1998, pet.
dism’d).

      The Texas Uniform Trade Secrets Act (TUTSA) defines “misappropriation”
as:

      (A) acquisition of a trade secret of another by a person who knows or
      has reason to know that the trade secret was acquired by improper
      means; or
      (B) disclosure or use of a trade secret of another without express or
      implied consent by a person who:
            (i) used improper means to acquire knowledge of the trade
            secret;
            (ii) at the time of disclosure or use, knew or had reason to know
            that the person's knowledge of the trade secret was:
                   (a) derived from or through a person who used improper
                   means to acquire the trade secret;

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                   (b) acquired under circumstances giving rise to a duty to
                   maintain the secrecy of or limit the use of the trade
                   secret; or
                   (c) derived from or through a person who owed a duty to
                   the person seeking relief to maintain the secrecy of or
                   limit the use of the trade secret; or
            (iii) before a material change of the position of the person,
            knew or had reason to know that the trade secret was a trade
            secret and that knowledge of the trade secret had been acquired
            by accident or mistake.

Tex. Civ. Prac. & Rem. Code § 134A.002(3).            Generally, employees owe a
fiduciary duty to maintain the confidentiality of their employer’s information. See
Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 202 (Tex. 2002) (citing
Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 565 N.E.2d 415, 419–20 (1991)); T-N-T
Motorsports, Inc., 965 S.W.2d at 21–22 (“Certain duties, apart from any written
contract, arise upon the formation of an employment relationship. One of those
duties forbids an employee from using confidential or proprietary information
acquired during the relationship in a manner adverse to the employer.” (citation
omitted)); General Insulation Co. v. King, No. 14-08-00633-CV, 2010 WL
307952, *4 (Tex. App.—Houston [14th Dist.] Jan. 26, 2010, no pet.). This duty
survives termination of the employment. T-N-T Motorsports, Inc., 965 S.W.2d at
22.

      A “trade secret” is defined as:

      [A]ll forms and types of information, including a . . . compilation, . . .
      method, technique, process, procedure, financial data, or list of actual
      or potential customers or suppliers, . . . if:
            (A) the owner of the trade secret has taken reasonable measures
            under the circumstances to keep the information secret; and
            (B) the information derives independent economic value, actual
            or potential, from not being generally known to, and not being

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               readily ascertainable through proper means by, another person
               who can obtain economic value from its disclosure or use of the
               information.
Tex. Civ. Prac. & Rem. Code §134A.002(6).

      “The fact that a temporary injunction order was issued granting trade secret
protection does not mean the protected information is a trade secret.” Sharma v.
Vinmar Intern., Ltd., 231 S.W.3d 405, 424 (Tex. App.—Houston [14th Dist.] no
pet.). “That issue will be decided upon a trial on the merits.” Id.

      B. Background

      At the temporary injunction hearing, appellee testified that all its information
is entitled to trade secret protection. Appellee keeps its “electronic information on
internal servers, internal drives that are allocated to certain employees who would
need the documents within those drives.” Employees are not permitted to use
private email accounts to disseminate appellee’s confidential information.
Appellee’s employee handbook required Cassidy and Chase to keep appellee’s
information confidential.     Every employee signs an employee handbook that
details appellee’s policies with regard to its confidential information stating that
“confidential information must not be disclosed to anyone without an authorized
business need for access” and “all confidential information must reside in protected
directories while stored on any hardware device.” The policy further indicates that
any emails containing confidential information should be encrypted or password
protected.     Some of the information defined as confidential in the handbook
includes pricing, client contract information, business plans, and personnel
information.

      Cassidy acquired appellee’s alleged trade secret and confidential information
during her employment with appellee.          After Cassidy’s resignation, appellee

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discovered that Cassidy had sent appellee’s policies and procedures, handbooks,
training manuals, business development manager packet “contain[ing] a ton of
confidential information on every client,” job sign-up processes, and agreements to
her personal email account. Appellee also discovered that Chase had sent himself
a client list and time sheets containing employees’ names and hours worked.

      The “sign-up process” document that Cassidy sent to her personal email was
something that appellee worked “very hard on to streamline bringing clients
onboard.” The document is not shared with clients and is not intended to be shared
outside of appellee’s company. Appellee spent nine-years refining the “sign-up
process” document. A document entitled “XYZ Construction” was attached to the
sign-up process document and contained a form that provides detailed information
that appellee’s back office and account managers needed to ensure compliance
with federal law. Cassidy emailed the “sign-up process” document and “XYZ
Construction” document from her work email to her personal email along with
appellee’s “Placement Personnel Training Guidelines” document.

      Cassidy also sent her “business development manager” packet to her
personal email from her work email. This packet contained Cassidy’s commission
and sales information for a period of six months, client information including
information regarding how much each client has spent on each job with appellee,
how much appellee has profited on the client, and how much money appellee has
spent on the client. Appellee testified that this packet shows competitors “exactly
which clients are our ideal clients, which clients are prone to spending a lot of
money . . . on temporary labor and then, vice versa, which clients not so much.”

      Cassidy testified that during her employment with appellee she sent an excel
spreadsheet entitled “Prospects” to Chase and Brooke from her personal email
account and told them “[w]e need to start hitting these jobs.” She testified that she

                                         7
did not remember where the spreadsheet came from but that some of the clients
listed on it were clients she was responsible for developing while she was
employed by appellee. Cassidy admitted that she sent the spreadsheet to Chase
and Brooke so that they would have information needed to develop business for
NewTex.

      NewTex is in the same business as appellee. At the time of the injunction
hearing, NewTex had three employees: Chase, Cassidy, and an intern. Brooke,
Chase, and Cassidy’s sister also helped out in the back office with invoicing and
accounts receivable.

      C. Analysis

      Appellants first argue that none of them took any of appellee’s alleged trade
secret or confidential information by “improper means,” and thus, appellee cannot
establish a cause of action for misappropriation. Breach of a duty to maintain
secrecy is one way “improper means” is defined under TUTSA. See Tex. Civ.
Prac. & Rem. Code § 134A.002(2).         However, possession, disclosure, or use
through “improper means” is not the only way a trade secret may be
misappropriated under TUTSA. Misappropriation can occur when the alleged
trade secret was “acquired under circumstances giving rise to a duty to maintain its
secrecy or limit its use.” Tex. Civ. Prac. & Rem. Code § 134A.002(3)(B)(ii)(b);
see also Hughes v. Age Industries, Ltd., No. 04-16-00693-CV, 2017 WL 943423,
*4 (Tex. App.—San Antonio Mar. 8, 2017, no pet.) (mem. op.) (“In addition to the
provisions of the employee handbook which required [defendant] to keep this
information confidential, [defendant] had a fiduciary duty arising from his
employment relationship to maintain the confidentiality of the information.”).
Trade secrets may also be misappropriated when at the time of disclosure or use
the person knew or had reason to know that the person’s knowledge of the trade

                                         8
secret was derived from or through a person who owed a duty to maintain the
secrecy   of   the   trade   secret.   See       Tex.   Civ.   Prac.   &   Rem.   Code
§ 134A.002(3)(B)(ii)(c).

      It is undisputed that both Cassidy and Chase were appellee’s employees,
used the alleged trade secrets and confidential information as part of their
employment, and had reviewed and signed appellee’s employee handbook that
contained a provision regarding maintaining the confidentiality of appellee’s
information. Thus, the trial court could have concluded that this is some evidence
that the alleged trade secrets were acquired under circumstances giving rise to a
duty to maintain their secrecy or limit their use. See Johnson, 73 S.W.3d at 202; T-
N-T Motorsports, Inc., 965 S.W.2d at 21–22; General Insulation Co., 2010 WL
307952 at *4. With respect to Chase and NewTex, there is some evidence that
they knew or should have known that Cassidy had a duty to maintain the secrecy of
appellee’s trade secrets and confidential information because Chase had been
placed under the same such agreement while he was appellee’s employee.

      Next, Cassidy argues that for appellee to maintain its action against her,
appellee must prove that its information qualifies as a trade secret, has independent
economic value, and was disclosed or used. NewTex also argues that appellee
cannot show that NewTex used any of appellee’s alleged trade secrets. However,
at the temporary injunction stage, a trial court does not decide whether the
information to be protected is a trade secret or whether appellants are using the
information. Instead, appellee has only to establish that the information is entitled
to trade secret protection until a trial on the merits and that appellants are in
possession of the information and in a position to use it.             Fox v. Tropical
Warehouses, Inc., 121 S.W.3d 853, 860 (Tex. App.—Fort Worth 2003, no pet.); T-

                                             9
N-T Motorsports, Inc., 965 S.W.2d at 24. We first examine whether appellee’s
documents are entitled to trade secret protection until a trial on the merits.

      Appellee’s “sign-up process” document is something that appellee worked
“very hard on to streamline bringing clients onboard,” has not shared outside of
appellee’s company, and spent years refining.         The document entitled “XYZ
Construction” provides “detailed information” that appellee’s back office and
account managers needed to ensure compliance with federal law and provides a
“competitive edge” over appellee’s competitors.                Appellee’s “business
development management” packet contains information regarding commissions
and sales, client information including information regarding how much each client
has spent on each job with appellee, how much appellee has profited on the client,
and how much money appellee has spent on the client. Appellee testified that this
packet shows competitors “exactly which clients are our ideal clients, which clients
are prone to spending a lot of money . . . on temporary labor and then, vice versa,
which clients not so much.”

      The other documents at issue at the hearing were a “time sheet” spreadsheet,
appellee’s form agreement that it uses with its clients, and its training safety
manual. Appellee testified that it creates a form time sheet spreadsheet for their
clients. The time sheet spreadsheet contains the employees’ names, hours worked,
job name, and client name. Appellee testified that, as far as it knows, appellee is
the only company that uses this type of method for its time sheets and ultimately it
makes invoicing easier and more efficient for its clients, giving appellee a
competitive advantage.        Appellee admitted that it sends the time sheet
spreadsheets, its agreement, and training safety manual to its clients when
requested. Appellee also indicated that it does not ask its clients to sign a non-
disclosure agreement regarding any information or documentation that appellee

                                          10
provides to its clients. However, there is no indication of the number of times
these documents have been sent to appellee’s clients. Viewing this evidence in the
light most favorable to the order and indulging every reasonable inference in favor
of the ruling, limited disclosures are not necessarily enough to extinguish a claim
of trade secret status. See Leonard v. State, 767 S.W.2d 171, 175 (Tex. App.—
Dallas 1988, writ denied); Lamont v. Vaquillas Energy Lopeno, Ltd., LLP, 421
S.W.3d 198, 212 (Tex. App.—San Antonio 2013, no pet.) (“Trade secret status is
not destroyed simply by showing the protected item to prospective buyers,
customers, or licensees.”); Metallurgical Indus. Inc. v. Fourtek, Inc., 790 F.2d
1185, 1200 (5th Cir. 1986) (holding limited disclosure of trade secret to customers
not enough to extinguish secrecy element); see also Snowhite Textile &
Furnishings, Inc. v. Innvision Hospitality, Inc., No. 05-18-01447-CV, 2020 WL
7332677, *5 (Tex. App.—Dallas Dec. 14, 2020, no pet. h.) (mem. op.) (trade secret
protection not lost where trade secret owner disclosed trade secret to third party
client and expected client to treat disclosed materials as confidential).

      Appellee testified that the documents are a critical part of the business, in
that they are “everything [appellee] has created for the last ten years. . . . every
client [appellee has] created in the last two decades of being in this business.”
Appellee would never allow its trade secret or confidential information to be sent
to a competitor because “this is what we do to stand out, to be different from our
competition” and that it gives appellee a competitive advantage.

      Considering all of the above, we hold that this is some evidence that
appellee’s documents are entitled to trade secret protection until a trial on the
merits. See Fox, 121 S.W.2d at 859 (holding pricing information, customer lists,
sales and payroll data entitled to trade secret protection until trial where plaintiff
showed that it did not intend to share the information outside of its company,

                                          11
limited access to the information, and testified that a competitor could use the
information to gain advantage over plaintiff); Rugen v. Interactive Bus. Sys., Inc.,
864 S.W.2d 548, 552 (Tex. App.—Dallas 1993, no writ) (upholding temporary
injunction when record contained evidence from which trial court could have
determined that information about pricing, customers, and consultants company
sought to protect deserved trade secret protection until trial on the merits).

      We next examine whether appellants are in possession and in a position to
use appellee’s alleged trade secret and confidential information. Appellee also
provided evidence that Cassidy emailed each of these documents to her personal
email account and offered a list of “file name matches” on Cassidy’s personal
computer. It is undisputed that at the time of the temporary injunction hearing
Cassidy was employed by NewTex, a company in the same field as appellee.
NewTex had, at most, one other employee aside from Chase and Cassidy. From
this evidence the trial court could have concluded that Cassidy, Chase, and
NewTex were in possession of and in a position to use appellee’s alleged trade
secret information. See Fox, 121 S.W.3d at 860; Rugen, 864 S.W.2d at 552
(rejecting defendant’s argument that there was no evidence of use of former
employer’s confidential information where there was evidence that defendant
possessed confidential information from her former employer and operated a firm
in direct competition with it).

      Cassidy next argues that “all of [appellee’s] manuals were taken from other
sources on the Internet and therefore are known and readily accessible through
proper means.” Cassidy testified that she knew that “some of the information that
[appellee] had was copied off the Internet,” and thus, she did not believe it was a
“big deal” to copy them. This testimony is not conclusive evidence, and the trial

                                          12
court does not abuse its discretion when it bases its decision on conflicting
evidence. See LasikPlus of Tex., P.C., 418 S.W.3d at 216.

      Appellants final argument is that appellee was aware that Cassidy was using
her personal computer and personal email account to conduct appellee’s business
and allowed it, and thus, appellee failed to safeguard its trade secret and
confidential information. Appellee testified that it allowed Cassidy to use her
personal computer because she was a trusted employee. Appellee denies that
Cassidy was permitted to use her personal email account to conduct business.
Even assuming appellee allowed Cassidy to use her personal computer and
personal email account, appellee presented evidence that Cassidy agreed to
safeguard appellee’s information while it was in her possession.           Appellee’s
employee handbook requires that its confidential information “must reside in
protected directories while stored on any hardware device” and the use of other
safeguarding measures, such as passwords, to protect appellee’s confidential
information. There is some evidence that appellee took measures to safeguard its
information.

      We conclude that appellee has stated a claim against appellants for
misappropriation of trade secrets. Based on the evidence presented, we cannot
conclude that the trial court abused its discretion by entering the temporary
injunction order. We overrule appellants’ first issue.

                                IV.    ISSUE TWO

      In appellants’ “Issues Presented” section of their brief, issue two is identified
as whether “the trial court abused its discretion by granting injunctive relief that
essentially prevents Appellants from competing with Appellee even though
Appellee did not file suit for breach of a non-competition agreement.” Issue two in
the body of the brief argues that to the extent that appellee brought a claim for
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breach of the employment contract, the contract is not enforceable because it
contains a disclaimer “indicating that it is not a contract.” We construe these as
two separate arguments—one argument regarding whether there was an
enforceable employment contract upon which the temporary injunction may be
upheld, and one argument regarding whether the temporary injunction prevents
competition. We address appellants’ second issue within their “Issues Presented”
section first.

       Within the body of the brief, appellants state that TUTSA was not enacted to
prevent competition and that the trial court’s order “essentially” prevents
competition. In another portion of the brief, appellants state that the trial court’s
order prohibits appellants from doing business with appellee’s customers. These
statements are the extent, within the body of the brief, that appellants arguably
support their second issue within the “Issues Presented” section of their brief. The
temporary injunction prohibits appellants from “[d]oing business with any person
that was one of [appellee’s] actual customers during [Appellants’] time of
employment with [appellee],” but excepts three of appellee’s former customers
who were already doing business with appellants at the time of the injunction
hearing.

       Appellants fail to argue how the temporary injunction essentially prevents
competition and fails to point to any case law to analyze this issue or support their
contention.      To the extent that appellants raise an issue regarding how the
temporary injunction entered “essentially” prevents competition, appellants have
not cited to any legal authority to support this argument. Thus, to the extent that it
is raised, this issue is inadequately briefed and waived. See Tex. R. App. P.
38.1(i); In re Commitment of C.H., 606 S.W.3d 570, 576 (Tex. App.—Houston
[14th Dist.] 2020, no pet.) (“A party’s brief must contain a succinct, clear, and

                                         14
accurate statement of the argument in the argument portion of the brief, and the
parties must provide a discussion of the fact and authorities relied upon as may be
requisite to maintain the issue.”).

                               V. REMAINING ISSUES

       Appellants raise four additional issues, arguing that appellee did not meet its
burden to obtain the temporary injunction under its other claims for breach of
fiduciary duty, unfair competition, tortious interference, and “to the extent it was
raised,” breach of an employment contract. However, because we conclude that
the trial court did not abuse its discretion in granting the temporary injunction
based on appellee’s misappropriation of trade secrets claim, and that claim is
enough to support the entry of the order, we need not address the remaining issues
on appeal. See Tex. R. App. P. 47.1; State v. Ninety Thousand Two Hundred
Thirty-Five and no cents in U.S. Currency ($90,235.00), 390 S.W.3d 289, 294
(Tex. 2013) (appellate court does not need to address alternative grounds for
summary judgment after upholding summary judgment on meritorious ground);
Fuentes v. Union de Pasteurizadores de Juarez Sociedad Anonima de Capital
Variable, 527 S.W.3d 492, 503 (Tex. App.—El Paso 2017, no pet.) (“This Court
does not need to address every alternative ground stated in an order if one
meritorious ground would uphold the entire order.”).

                                 VI.   CONCLUSION

      We affirm the trial court’s temporary injunction order.

                                       /s/    Ken Wise
                                              Justice

Panel consists of Chief Justice Christopher and Justices Wise and Zimmerer.

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