It’s every employer’s nightmare. Your star salesperson has left the company and started working for a competitor. It gets worse; your IT department confirms that the sales person took the company’s confidential information with them. Employers enforcing a non-compete agreement that is compliant with Texas Business and Commerce Code, section 15.50 has several tools at its disposal to take action to enforce its non-compete against the salesperson. Here, I discuss three of the more popular options available to an employer. The employer may: (a) take a pre-lawsuit deposition; (b) file a traditional lawsuit; and/or (c) file application for temporary restraining order. Each of these options has merit and all three could be employed in succession as the facts develop and as they are warranted.
Option One: Pre-suit Deposition: Consider this a discovery tool and a warning to the employee. Under Texas Rule of Civil Procedure 202, the employer could ask a court to order a deposition of the former employee to investigate whether she is violating the non-compete agreement or her common law obligations to maintain the employer’s confidential information. This option is ideal if the employer believes that it will deter the former employee and bring about a speedy resolution. If the type and amount of confidential information taken by the former employee is unknown, difficult to prove, outdated, or of limited or no real value, then the pre-suit deposition may obtain facts that allow the employer to file a lawsuit or application for temporary restraining order.
Option Two: Traditional Lawsuit: Consider this a formal declaration of war. An employer may sue the former employee without a pre-suit deposition. This strategy gives the employer time to obtain discovery to determine the extent of the former employee’s possible breaches as well as determine the level of involvement and benefit she provided to her new employer. Beginning a lawsuit also triggers various preservative obligations as well as the employee from continuing her unlawful conduct. The lawsuit, without a temporary restraining order application, may still seek an injunction. However, it will proceed at the regular speed of a lawsuit and the employee may continue to act in violation of the agreement while the suit is pending.
Option Three: Application for Temporary Restraining Order: Consider this the nuclear option. An employer with ample evidence that its former employee took trade secrets and is planning to use those secrets at her new job should strongly consider this option. A successful application for temporary restraining order likely results in the former employee having to stop her unlawful conduct until a temporary injunction hearing occurs. A temporary injunction hearing usually occurs within two to four weeks and is basically a mini-trial on the issue of whether the employee should stop acting in violation of her non-compete.
This option is the most aggressive and compressed approach to enforcing the non-compete agreement. If the employer values its trade secrets and there is an immediate threat to the employer’s business, this option is a must. The employer should be ready to commit time and resources to this effort. This approach has the most immediate effect on the former employee and her new employer.