X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Glenn Atkinson owned Automatic Insect Control Enterprises (AICE), a Houston-area company that sold time-released mosquito-control systems under the name of Champions Mosquito Control. Richard Gray began working as an at-will marketing consultant for AICE in June 2001. Gray signed a confidentiality agreement that stated that Gray would receive confidential information about AICE’s products and businesses. The agreement also contained a covenant not to compete. Gray claims he was not given a work until a year later. Gray stopped working for AICE in October 2002, though he was never officially fired or deliberately quit. John Fleming contacted Atkinson from Corpus Christi about getting a system from Champions. A Champions consultant, Don Carlson, met with Fleming on two occasions starting in November 2002. On the second trip, Carlson was accompanied by Gray. Carlson told Fleming that they were “branching off” to start their own business to compete with Atkinson. They gave Fleming a bid to undercut the Champions’ bid under the name Affordable Automatic Mosquito Control (AAMC). Fleming took the AAMC offer, though he declined Gray’s offer to become a distributor for AAMC. In January 2003, Fleming started his own mosquito-control business called TMC Worldwide. A few months later, Fleming learned that Gray had a Champions’ customer service list of approximately 3000 nationwide names but that Gray would not let Fleming see it. In 2003, Fleming bought Champion’s assets, including a customer list of about 3000 nationwide names. The next year, one of Fleming’s customers told Fleming about a letter she had received from Gray, generically addressed to “Resident,” offering to provide service to her for less than what Fleming was charging her. Fleming persuaded the customer to stay with him for a discounted price. At least 16 other of Fleming’s customers, however, switched to Gray’s services. TMC sued Gray for breaching the confidentiality agreement by using the TMC customer list and by actively soliciting TMC customers. Gray responded that the non-compete clause to his confidentiality agreement was unenforceable. The trial court denied TMC’s request for a temporary injunction, and after TMC filed its appellate brief on the matter, the trial court then issued 28 combined findings of fact and conclusions of law, none of which TMC disputes on appeal. HOLDING:Affirmed. The court sets out the factors necessary to make a covenant not to compete enforceable, including the factor that the covenant must be ancillary to an otherwise enforceable agreement. The court explains that an otherwise enforceable agreement can emanate from an at-will employment situation, but only if there is consideration besides a promise to work for a continued period. Examining the confidentiality agreement Gray signed with AICE, the court points out that a mere promise to give confidential information is not sufficient. The employer must actually give the confidential information in return for the employee’s promise not to disclose it. Accordingly, a promise to provide confidential information is illusory and cannot be the basis of an otherwise enforceable agreement unless the employer promises to deliver the confidential information to the employee, and the employer actually delivers the confidential information at or near the time the employee makes the promise to keep the information confidential. The court thus concludes that the trial court did not abuse its discretion in denying TMC’s request for a temporary injunction related to the covenant not to compete. The court then determines that the trial court was also correct in denying a temporary injunction related to the trade secrets. There was conflicting testimony about Gray’s conduct and whether the customer list was used to get the 16 customers that were common to both Fleming’s and Gray’s customer lists. OPINION:Hanks, J.; Nuchia, Hanks and Higley, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.