Recently, the First District Court of Appeals, Houston affirmed a take-nothing judgment against all parties. Malone v. PLH Group, Inc., 01-19-00016-CV, 2020 WL 1680058, at *1 (Tex. App.—Houston [1st Dist.] Apr. 7, 2020, pet. denied). The defendant in Malone Power Line Services, Inc. (PLS) constructed electrical transmission lines, built distribution systems, and provided construction services. The plaintiff Thomas Malone (Malone) entered into a three-year employment agreement with PLS in 2014 to serve as its Vice President of Operations. The employment agreement prohibited Malone from competing against PLS, soliciting PLS’s employees, and disclosing confidential information through restrictive covenants.

Malone ran a pre-existing company called MMT, Inc. (MMT) prior to entering into the employment agreement with PLS. MMT provided building maintenance services on federal government properties. Malone continued to run MMT from his PLS office. PLS knew about this arrangement and did not object as long as Malone’s role with the two businesses did not conflict with each other or violate the restrictive covenants in the employment agreement.

In 2015, PLS fired Malone without cause. Following the employment agreement, PLS presented Malone with a waiver and release which, if signed, would allow him to collect severance payments. Malone signed the release but included amendments to the language that PLS had already rejected. PLS refused to pay Malone because he did not sign the agreement in PLS’s customary form.

Malone then sued PLS and its parent company PLH Group for breach of contract, among other causes of action. PLS counterclaimed for breach of contract and misappropriation of trade secrets. At a bench trial, the trial court entered a take-nothing judgment against all parties, and both parties appealed. On appeal, both parties asserted points of error regarding the misappropriation of trade secrets claim. Ultimately, the appellate court affirmed the trial court.

Regarding PLS’s misappropriation of trade secrets claim, Malone asserted that he had a statutory right to attorney’s fees. Specifically, Malone argued that the absence of evidence to support PLS’s Texas Uniform Trade Secrets Act (TUTSA) claim “suggests bad faith,” which was within the discretion of the trial court to award. But Malone made no substantive argument as to why the trial court’s decision to deny attorney’s fees was an abuse of discretion. Therefore, the appellate court overruled this point of error.

Conversely, PLS asserted that it was entitled to injunctive relief because Malone forwarded PLS trade secrets to his MMT email address. The trial court found that Malone sent PLS’s bid log report from his PLS email to his MMT email. But Malone testified that he only did so because he was having trouble printing from his PLS computer; he sent the information to his MMT computer via email and printed from that device for an imminent PLS meeting. Regardless, the report was used in the same way as it would have been if Malone could have printed from his PLS computer. PLS did not refute this factual account, and consequently, the appellate court determined that PLS failed to meet the “use” element of its TUSA claim because forwarding the report “did not injure PLS or enrich Malone.”

In this case, neither party provided sufficient facts to entitle them to the relief that they sought. The takeaway here is that proving improper “use” in a trade secrets case will require evidence that the use injured the defendant or enriched the plaintiff for it to be improper.

Special thanks to Kyle Markwardt for his assistance with this blog post.