885 F.3d 318
5th Cir.2018Background
- Moffitt‑Johnston, GE Betz’s longtime employee, led GE’s distressed fuels (cargo treatment) team and signed an employment agreement with an 18‑month non‑solicitation covenant limited to GE "Customers" and "Prospective Customers" with whom she had contact or engaged in solicitation while at GE.
- After resigning in September 2012, Moffitt‑Johnston accepted a role at AmSpec, a new competitor in cargo treatments; she did not disclose to GE that she would be competing and remained at GE for about a month after resigning.
- GE’s data‑loss prevention (DLP) report showed a massive download (~27,000 files) from Moffitt‑Johnston’s computer and emails she sent to outside accounts shortly before departure; GE argued these contained customer/confidential information that enabled solicitation.
- Shortly after Moffitt‑Johnston joined AmSpec, AmSpec obtained business from several customers that had been GE customers; Moffitt‑Johnston was seen speaking with GE customers at an industry event after leaving GE.
- GE sued Moffitt‑Johnston and AmSpec on multiple theories (breach of non‑solicitation, trade‑secret misappropriation, tortious interference, breach of fiduciary duty, fraud, etc.). District court struck the DLP report for summary‑judgment purposes, granted summary judgment for defendants on most claims, a jury found liability on remaining claims but no damages, and the court awarded Moffitt‑Johnston attorneys’ fees for defense of the non‑solicit claim.
- On appeal, the Fifth Circuit affirmed summary judgment for defendants on the non‑solicit, trade‑secret, and tortious‑interference claims but vacated the attorneys’‑fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of non‑solicitation covenant | GE: circumstantial mosaic (file downloads, industry contacts, AmSpec sales) shows Moffitt‑Johnston solicited GE customers in violation of the covenant | Moffitt‑Johnston/AmSpec: no direct evidence of solicitation; interactions were social/administrative or lawful; downloads disputed; no proof of directed solicitation or subterfuge | No breach: evidence was speculative and insufficient to create a triable issue |
| Trade‑secret misappropriation | GE: DLP evidence + emails + business plan + AmSpec’s post‑hire success permit inference that GE secrets were used | Defendants: no proof of actual use; circumstantial facts do not show exploitation of secrets; AmSpec’s prior relationships explain sales | No misappropriation: GE failed to show actual use or resulting injury |
| Tortious interference with prospective business relations | GE: defendants prevented GE from securing customers by illicit solicitation/use of confidential info | Defendants: no independently tortious act (non‑solicit not shown); no proof AmSpec participated in any wrongdoing | Fails: because no breach/non‑solicit shown, interference element unmet |
| Attorneys’ fees under Tex. Bus. & Com. Code § 15.51(c) | Moffitt‑Johnston: covenant unenforceable (overbroad) and GE knew it when agreement was signed; thus fees warranted | GE: no evidence it knew at signing the covenant was unreasonable; absence of geographic term not dispositive; prior court decisions supported enforceability | Vacated fee award: plaintiff failed to prove GE knew at execution the covenant was unreasonable; fee recovery denied |
Key Cases Cited
- Am. Family Life Assur. Co. of Columbus v. Biles, 714 F.3d 887 (5th Cir. 2013) (summary judgment standard de novo review)
- Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444 (5th Cir. 2007) (trade‑secret misappropriation "use" accrual principle)
- Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867 (5th Cir. 2013) (definition of ‘‘use’’ in trade‑secret context)
- CQ, Inc. v. TXU Min. Co., 565 F.3d 268 (5th Cir. 2009) (trade‑secret elements and standards)
- Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006) (Texas covenant‑not‑to‑compete reasonableness and geographic scope principles)