998 F. Supp. 2d 553
S.D. Tex.2014Background
- Daily Instruments (Daily) is a small Houston company specializing in reactor thermometry (CatTracker) and provided confidential trade-secret access to senior sales manager Eric Heidt under written confidentiality and 24‑month non‑competition obligations.
- Heidt was promoted in 2010, given global sales involvement and access to pricing, bids, customer lists, marketing strategy, and confidential project information.
- In late 2012–early 2013, WIKA Group (which acquired Gayesco, maker of competing Flex‑R) and its subsidiaries recruited Heidt; Heidt accepted an appointment with WIKA Singapore and obtained an indemnity from WIKA for legal exposure under his agreements with Daily.
- Immediately before and after resigning (Feb 15, 2013), Heidt downloaded and then disclosed numerous Daily confidential items and trade secrets to Gayesco/WIKA employees and advised them how to undercut Daily on bids and pursue Daily customers worldwide.
- Daily sued for breach of contract, breach of confidentiality, misappropriation of trade secrets, conversion, and tortious interference; after expedited discovery and an evidentiary preliminary‑injunction hearing, the court granted injunctive relief and required a $25,000 bond.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of non‑compete | Non‑compete is ancillary, reasonable in duration (2 yrs), scope (reactor thermometry) and territory (U.S. + countries Daily does business in) to protect trade secrets/goodwill | Overbroad restraint on trade and global in scope; unreasonable under Texas law | Court: Non‑compete likely enforceable — ancillary, reasonable duration/scope/territory given narrow global market and Heidt’s role |
| Breach of contracts (non‑compete/confidentiality) by Heidt | Heidt accepted competing employment and disclosed confidential info to WIKA/Gayesco, breaching agreements | Heidt claimed he didn’t retain confidential files and sought WIKA indemnity to assume risk | Court: Daily showed clear breaches of both agreements by Heidt |
| Misappropriation of trade secrets by WIKA/Gayesco | WIKA/Gayesco acquired and used Daily trade secrets (customer lists, pricing, bid strategies) obtained from Heidt | Defendants contested scope/appropriateness of discovery and removal; argued lack of misuse | Court: Substantial likelihood defendants misappropriated trade secrets and used them to pursue opportunities against Daily |
| Preliminary injunction (irreparable harm, balance of equities, public interest) | Disclosure and use of trade secrets and breach of non‑compete cause irreparable harm to goodwill and customers; injunction needed | Defendants pointed to Plaintiff’s delay and argued prejudice and burden of injunction | Court: Irreparable harm shown, equities and public interest favor Daily; injunction granted with $25,000 bond |
Key Cases Cited
- Bluefield Water Ass’n, Inc. v. City of Starkville, Miss., 577 F.3d 250 (5th Cir. 2009) (preliminary injunction factors)
- Lake Charles Diesel, Inc. v. Gen. Motors Corp., 328 F.3d 192 (5th Cir. 2003) (preliminary injunction standard)
- DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) (reasonableness required for covenant not to compete)
- Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006) (non‑compete becomes enforceable where employer performs promised consideration such as confidential access)
- CQ, Inc. v. TXU Min. Co., L.P., 565 F.3d 268 (5th Cir. 2009) (elements of trade‑secret misappropriation)
- In re Bank One, N.A., 216 S.W.3d 825 (Tex. 2007) (presumption party knows terms of signed contract)
- In re McKinney, 167 S.W.3d 833 (Tex. 2005) (signatory bound absent fraud/deceit)