The Fort Worth Court of Appeals recently examined an accelerated interlocutory appeal under the previous version of the Texas Citizens Participation Act (TCPA), ultimately determining that an allegation of misappropriation of trade secrets must be specifically proven. In Phuong Nguyen v. ABLe Communications, Inc., 02-19-00069-CV, 2020 WL 2071757 (Tex. App.—Fort Worth Apr. 30, 2020, no pet.), the plaintiff ABLe Communications (ABLe) sued the three defendants, Phuong Nguyen (Nguyen), E2 Optics, LLC (E2), and Southwest Networks, Inc. (Southwest), after Nguyen left ABLe to work for Southwest.
Specifically, ABLe secured a contract with the DFW Airport in 2014 to provide fiber installation services. The contract expired in 2017. ABLe ultimately lost the contract to E2 on March 8, 2018 after DFW Airport again solicited bids from the public to provide fiber installation services. Because DFW Airport had certain minority subcontractor requirements, E2 hired Southwest as a subcontractor on three of the four contracts that E2 won.
Nguyen worked for ABLe for seventeen years, including working on the 2014 DFW Airport fiber contracts. After ABLe became concerned with Nguyen’s job performance, ABLe made Nguyen sign a noncompetition, nonsolicitation, and nondisclosure agreement on May 2, 2017. In November 2017, Nguyen applied for an A/V position with E2 but was not offered a job. In January 2018, Nguyen was hired by Southwest after his supervisor at ABLe suggested he apply.
In February 2018, ABLe’s attorney sent Nguyen a cease and desist letter alleging that Nguyen had violated his noncompete by working for Southwest and E2. Additionally, around March 2018, several other ABLe employees began working for E2, and E2’s recruiter sometimes asked Nguyen for his opinion on their work. When Nguyen would not leave his job with Southwest, ABLe sued Nguyen, E2, and Southwest for, among other things, misappropriation of trade secrets. The trial court failed to grant the defendants’ motions to dismiss, and this appeal followed.
In its complaint, ABLe referenced four categories of trade secrets allegedly misappropriated by Nguyen:
- Confidential information, which the court assumed was proprietary pricing information, special vendor relationships, and strategies that helped E2 and Southwest win the DFW Airport contracts;
- Employee names, contact details, certifications, training, previous experience, and examples of their work;
- Nguyen’s working knowledge of DFW Airport and his professional goodwill; and
- ABLe’s delivery order template that contained ABLe’s sample pricing used in ABLe’s bid for the DFW Airport proposal in 2017.
The court held that the TCPA applied and determined that ABLe provided no factual basis or evidence to support each allegation. Specifically, on the first allegation, ABLe provided no evidence that Nguyen provided this information to E2 or Southwest or that either relied on such information in submitting their bid. On the second allegation, ABLe provided no evidence why employee details were not generally known or ascertainable by proper means. Regarding the third allegation, ABLe could not show how either Nguyen’s working knowledge or his goodwill could constitute a trade secret. Finally, ABLe failed to provide any evidence or factual detail as to what Nguyen did with the delivery order template, which at best created only a suspicion of misappropriation.
Based on this analysis, the court reversed the trial courts decision not to grant the defendants’ original motions to dismiss the misappropriation of trade secrets claim. The takeaway here is that bare-bones assertions of misappropriation of trade secrets will be insufficient to survive a motion to dismiss under the TCPA if applies. Instead, a claimant must provide detailed factual circumstances or other evidence to show (1) why the information was a trade secret and (2) how the information was used by the other party.
*Special thanks to summer clerk Kyle Markwardt for his assistance drafting this blog post.
**Brackett & Ellis represented Southwest in this matter.