A Temporary Injunction Order Enforcing a Non-Compete Agreement in Texas Must Pass the Muster of Rule 683 or Face Dissolution
February 18, 2014 Leave a comment
All temporary injunctions in Texas must comply with Rule 683 of Texas Rules of Civil Procedure, which requires every injunctive order to “set forth the reasons for its issuance;  be specific in terms; [and] describe in reasonable detail and not by reference to the complaint or other document, the act or acts sought to be restrained.” A temporary injunction order that fails to meet these requirements is subject to being dissolved.
Within the last four months, at least three Texas Courts of Appeals dissolved temporary injunctions seeking to enforce non-competition agreements because they failed to comply with Rule 683. Most recently, the First Court of Appeals in Lasser v. Amistco Separation Products, Inc. dissolved a temporary injunction order that sought to enforce contractual non-compete and non-solicitation obligations because the order was both not specific enough and overbroad. This opinion, along with Ramirez, et al. v. Ignite Holdings Ltd., et al. (see my prior post here), provide a good example of what language falls short of meeting Rule 683 requirements.
In Lasser, ACS Industries, LP hired Robert Lasser to work in sales. His employment contract contained a confidentiality and non-solicitation clause, which prohibited Lasser from copying or using for his personal benefit ACS’s “confidential information,” as defined in the employment contract. It also forbade Lasser from “directly or indirectly, or by action in concert with others, engage in the solicitation of sales of competing goods to customers of ACS” for a period of two years from the contract’s termination. ACS later sold its assets, including Lasser’s employment contract, to plaintiff, Amistco Separation Products. Lasser worked for Amistco for a year before leaving to work for a competitor.
A month after Lasser resigned, Amistco sued him for conversion (of confidential information), civil theft, and misappropriation of trade secrets. The company requested the trial court to issue a temporary and permanent injunction against Lasser ordering him to return the confidential information that he had downloaded prior to his departure, enjoining him from disclosing and using such information, and preventing him from soliciting customers.
The trial court granted Amistco’s application for temporary injunction and issued the following order:
It is . . . ORDERED Defendant Robert Lasser desist and refrain from the following:
a) [Lasser] is ordered to return to [Amistco], and to cease and desist from using, any of [Amistco’s] confidential information and trade secrets within 14 days or as otherwise agreed by counsel.
b) [Lasser] is restrained from directly or indirectly disclosing, copying or otherwise reproducing, or giving others access to any of [Amistco] confidential information and trade secrets.
c) [Lasser] is restrained from deleting any emails, texts, voice messages, instant messaging communications (to include without limitation, instant messages using Google Talk, AOL Instant Messenger, Yahoo Messenger, or any other instant messaging platform), or any other electronic files or communications from his personal or work computers, laptops, phones, electronic storage devices and/or any other electronic device, or from, damaging, selling or otherwise discarding his personal or work computers, laptops, phones, electronic storage devices and/or any other electronic device in [Lasser]’s possession.
d) [Lasser] is restrained from directly or indirectly soliciting any of [Amistco’s] customers.
In analyzing the trial court’s order, the Court of Appeals reiterated that a temporary injunction order must do two things to comply with Rule 683‘s specificity requirements: (1) it should inform the defendant of the acts he is restrained from doing, without calling on him for inferences or conclusions about which persons might well differ and without leaving anything for further hearing; and (2) it may not prohibit lawful activities. The injunctive order in question failed to meet both of these mandates.
First, parts (a) and (b) of the order failed to “identify, define, explain, or otherwise describe” what constituted “confidential information” that Lasser was prohibited from disclosing. Thus, these provisions did not provide adequate notice to Lasser as to what conduct he was restrained from performing and left him to speculate what conduct might satisfy or violate the order. Therefore, the Court of Appeals declared Parts (a) and (b) void.
The Court also found that Part (c) was impermissibly ovebroad under Rule 683 because it enjoined activities that Lasser had a legal right to perform, such as deleting electronic records and files unrelated to the subject of the lawsuit. Therefore, it vacated this provision.
Finally, the Court of Appeals ruled that Part (d) of the order, which restrained Lasser “from directly or indirectly soliciting any of [Amistco’s] customers” was also overbroad. Whereas the non-solicitation clause in Lassiter’s contract prohibited him from engaging in solicitation of sales of competing goods to Amistco’s customers, the temporary injunction order enjoined Lasser from soliciting any sales to Amistco’s customers. Thus, the order precluded Lasser from engaging in lawful business of selling non-competing goods to Amistco’s customers. The Court declared this provision void as well and ordered the entire temporary injunction dissolved.
CONCLUSION: When preparing for a temporary injunction hearing, the party seeking an injunction and its attorneys should make sure that the proposed order that they would like the judge to sign is specific enough to give the other side a clear notice of what they can and cannot do once the order is entered. At the very least, the order should define what constitutes “confidential information” or “trade secrets” that the party is seeking to protect. Sloppy and generic language can result in the injunction being void.
Furthermore, a temporary injunction order cannot prohibit lawful activities. In that regard, it should trail the language of the non-competition and non-solicitation agreement closely. While it is tempting to overreach and ask for more restrictions that the original agreement allowed (especially if the judge is willing to grant it), including such language in the order can result in its dissolution on appeal.
For more information regarding protection of trade secrets and enforcement of non-compete agreements in Texas, contact Leiza Dolghih.