An employee executed an employment agreement which included a two-year covenant not to solicit the employer’s customers.  When the employer sold the company’s assets, the sale included that agreement.  The employee then went to work for the assets purchaser but subsequently resigned.  The Texas Appellate Court held that the two-year period began to run on the date the assets seller ceased to be the signer’s employer.  Lasser v. Amistco Separation Products, Inc., No. 01-14-00432-CV (Tex. App. Court, Oct. 2, 2014).

Summary of the Case

The employment agreement between Lasser and the assets seller, ACS, included a confidentiality provision as well as the non-solicitation covenant.  Lasser worked for the assets purchaser, Amistco, for 15 months and then resigned, accepting a job with its alleged competitor.  Amistco sued and sought a preliminary injunction.  The trial court’s first injunction order was dissolved by the Texas Court of Appeals because of a lack of specificity.  After the lower court issued a more detailed order, the appellate tribunal affirmed as to confidentiality but dissolved the non-solicitation injunction, holding that the covenant expired two years after Lasser left ACS’ employ. 

Chronology

Lasser’s employment with ACS terminated on February 29, 2012.  He went to work for Amistco the next day and remained employed by that company until June 1, 2013.  He immediately went to work for Woven Metal Products which assigned him to head a new division that allegedly competed with Amistco. 

Amistco’s lawsuit and first injunction motion

Amistco promptly sued Lasser, claiming that he was about to violate the confidentiality provision and non-solicitation covenant in his ACS employment agreement.  Amistco moved for entry of a preliminary injunction against Lasser’s (a) solicitation of Amistco’s customers, and (b) use of Amistco’s trade secrets and confidential information.  The trial court entered the injunction, and Lasser appealed. 

Two Appeals

Early in 2014, the appellate court reversed the injunction order on the ground that it was insufficiently specific (Lasser I).  Amistco then moved for entry of a more detailed preliminary injunction which the trial court entered.  Lasser appealed again.  Last week, the appellate court affirmed the injunction order insofar as it related to confidentiality but reversed the remainder of the order, holding that the non-solicitation clause lapsed on March 1, 2014 (Lasser II).

The holdings in Lasser II.  

  1. The holding regarding the non-solicitation clause.  The appeals court held that Lasser covenanted with ACS not to solicit its customers for two years after termination of his employment.  By the time Lasser II was decided in October 2014, the non-solicitation prohibition had expired and no longer was enforceable.
  2. The holding regarding the confidentiality clause.  After Lasser left Amistco, that company retained a computer forensics expert to analyze Lasser’s company computer to determine whether he had downloaded any of Amistco’s trade secrets.  The expert concluded that Lasser had taken with him more than 1000 confidential Amistco files.  On appeal, Lasser denied that the files contained secret data.  He also challenged the second injunction as insufficiently specific. 

The first injunction restrained Lasser simply from “using, . . . [or] directly or indirectly disclosing, copying or otherwise reproducing, or giving others access to any of [Amisco’s] confidential information and trade secrets.”  Commenting inLasser I that “the order neither defines nor in any manner indicates from its context the meaning of the phrase ‘confidential information,’” the Court of Appeals held that the injunction was “not sufficiently clear to provide Lasser with adequate notice of what acts he is compelled to complete and what conduct he is restrained from performing.  In other words, he is left to speculate what conduct might satisfy or violate the order.  This is impermissible.”

The trial court’s second injunction identified two dozen categories of “confidential information and trade secrets” that were the subject of the order.  In Lasser II, the Court of Appeals held that “The specific examples of the items comprising ‘trade secrets’ and ‘confidential information,’ when read in the context of the suit, provided Lasser with adequate notice of the information that he is prohibited from using or disclosing.”

Takeaways

Assignment of Lasser’s employment agreement provided Amistco (a) a cause of action to prevent his disclosure of confidential information, but (b) no defense against his post-termination solicitation of Amistco’s customers.  In order to protect against such soliciting, apparently, Amistco would have had to obtain its own covenant from Lasser.