Daniels v. Radley Staffing, LLC

CASSIDY DANIELS; MICHAEL CHASE DANIELS;NEWTEX STAFFING, LLC, Appellant v. RADLEY STAFFING, LLC, Appellee

NO. 14-19-00054-CV

State of Texas in the Fourteenth Court of Appeals

January 28, 2021

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.

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."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. MISAPPROPRIATION 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.

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;(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 beingreadily 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, appelleediscovered 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...