Texas Court Enters a Trade Secrets Injunction Against a Healthcare Staffing Company Based on Its Manager’s Actions

Bid Proposal

A Texas federal court recently entered an injunction against a healthcare staffing company that works with federal agencies ordering it to (1) return information brought to it by a new hire from his previous employer and (2) not to use such information in any way to submit bids on any staffing contracts with federal agencies.

Although the staffing company argued that it had no idea that the new hire brought over the documents from his previous employer – the company’s competitor – and that they even instructed him in writing not to bring anything over, the court found that the new hire’s manager knew that certain information that the employee brought over was confidential and instructed him to use it anyway.

Notably, the manager in question at the healthcare staffing company testified that (1) he received information from the new hire while that person was still working for his former employer; (2) they discussed the information that the employee was sending and how it was connected with his former employer’s bid for the same contract on which the manager’s staffing company was bidding; (3) pursuant to the manager’s direction, the employee incorporated some of the information he sent to the manager into a draft proposal that his new employer was going to submit.  Furthermore, the manager admitted that certain information in bid proposals for both companies was proprietary, and he would not want the competitors to have it.

In light of these factors, the court dismissed the healthcare staffing company’s arguments that it did not know that the new hire had a confidentiality agreement and that it asked him to sign an acknowledgement that he was not going to divulge any confidential information or trade secrets of his former employer.  The court underlined that “[o]n balance, the evidence sufficiently shows that [the healthcare staffing company], through its [manager], had reason to know that [the new hire] had acquired and sent to [the manager] the proposal at issue in breach of his duty to [his former employer] to maintain secrecy.”

CONCLUSION:  Although asking new hires to sign an acknowledgement that they will not be bringing or using any third parties’ confidential information is a step in the right direction, companies should also provide training to their employees and managers alike and have policies in place that, among other things, explain the consequences regarding an unauthorized use of confidential information from third parties.

Leiza Dolghih is the founder of Dolghih Law Group PLLC.  She is board certified in labor and employment law and has 16+ years of experience in commercial and employment litigation, including trade secrets and non-compete disputes. You can contact her directly at leiza@dlg-legal.com or (214) 531-2403.

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