Enforcing a Non-Compete Injunction Could Require Disclosing Your Customer List

Texas Rule of Civil Procedure 683 requires that "[e]very order granting an injunction . . . shall set forth the reasons for its issuance; shall be specific in terms; shall describe in reasonable detail and not by reference to the complaint or other document, the act or acts sought to be restrained."[1] But, what happens when a plaintiff is granted an injunction that prohibits a former employee and its new employer from soliciting or contacting the plaintiff's customers; yet, the injunction does not specifically identify those off-limit customers nor does it reference a list identifying those off-limit clients?[2] The answer: it may be subject to dissolution on appeal.

Most recently, in McCaskill v. Nat'l Circuit Assembly, 05-17-01289-CV, 2018 WL 3154616, at *4 (Tex. App.—Dallas June 28, 2018, no pet. h.) (memo op.), the Dallas Court of Appeals dissolved, in part, a temporary injunction that prohibited a former employee and her new employer from soliciting or contacting "any client or customer" that the former employee interacted with over a five-year period or from whom the former employee obtained confidential information while employed by the plaintiff, when the injunction failed to sufficiently identify the off-limit customers or clients and required the defendants to make inferences or conclusions about who the off-limit customers or clients were.

In McCaskill, the Defendants argued, among other things, that the injunction violated Rule 683 because it prohibited various activities relating to the plaintiff's "clients or customers" without naming, identifying, or referencing a list of Appellee's off-limit clients.[3] In advancing this argument, the Defendants relied on Computek Computer & Office Supplies, Inc. v. Walton, 156 S.W.3d 217 (Tex. App.—Dallas 2005, no pet.), where the same court held that an injunction that prohibited a defendant from doing business or authorizing anyone else to do business with any client not listed on an attachment to the injunction failed to comply with Rule 683 because although the clients that the defendants could contact were identified, the clients it could not contact were not named or otherwise identified. Ultimately, the Computek court determined that the injunction itself did not provide the specific information as to the off-limits clients, without inferences or conclusions; thus, the injunction lacked Rule 683's required specificity.[4]

In reaching a similar conclusion in McCaskill, the court disagreed with the plaintiff's argument that the injunction was sufficiently specific because the language used in the injunction—"any client or customer" that the former employee interacted with over a five-year period or from whom the former employee obtained confidential information while employed by the plaintiff—put Appellants on notice of its off-limit clients.[5] The court determined that the language required "inferences or conclusions to be drawn in order to determine whom [defendants] may not contact[,]" and "[a]s in Computek, the injunction itself [did] not provide the specific information about who the off-limits clients and customers [were]."[6] Consequently, the injunction was reversed, in part, and remanded to the trial court for further proceedings consistent with the court's findings.

It is unclear whether the court would have reached the same conclusion had the injunction prohibited only the former employee from soliciting or contacting the Appellee's off-limit clients, as the Court pointed out that the cases relied upon by the Appellee,[7] were factually distinguishable from McCaskill, in that the only party enjoined from contacting customers in those cases was the former employee, not the former employee's new employer. By contrast, the McCaskill injunction enjoined not only the former employee but her new employer who could not have been presumed to know who the former employee interacted with while employed by the Appellee.[8] Arguably the only way for the new employer to know who the off-limit clients were, was to ask the former employee which ones she remembered, which could have elicited an allegation of misappropriation.

Thus, although you may think a former employer knows who your off-limit customers or clients are, the new employer may not. If you are pursuing an injunction that prohibits a former employee and its new employer from soliciting or contacting your customers or clients, make sure the injunction names, identifies, or references a list identifying those off-limit clients to ensure you are in compliance with Rule 683.

[1] Tex. R. Civ. P. 683.

[2] Note that customer lists may constitute a trade secret and Texas courts have routinely acknowledged that they need not be placed in the public record or incorporated into an injunction. See Safeguard Bus. Sys., Inc. v. Schaffer, 822 S.W.2d 640, 644 (Tex. App.—Dallas 1991, no writ). Rather, reference to a customer list may be permitted without violating Rule 683. See Rugen v. Interactive Bus. Sys., Inc., 864 S.W.2d 548, 553 (Tex. App.—Dallas 1993, no writ) (injunction that referenced customers listed in sealed exhibits admitted into evidence at injunction hearing did not violate rule 683).

[3] McCaskill v. Nat'l Circuit Assembly, 05-17-01289-CV, 2018 WL 3154616, at *4 (Tex. App.—Dallas June 28, 2018, no pet. h.).

[4] Id. (citing Computek Computer & Office Supplies, Inc. v. Walton, 156 S.W.3d 217, 222–23 (Tex. App.—Dallas 2005, no pet.)).

[5] Id.

[6] Id.

[7] See Lockhart v. McCurley, No. 10-09-00240-CV, 2010 WL 966029, at *4 (Tex. App.—Waco Mar. 10, 2010, no pet.) (mem. op.) (inunction was not required to identify the clients by name because it was reasonable to presume the employee was sufficiently familiar with the customers' identities to avoid violating the injunction); Safeguard, 822 S.W.2d at 644.

[8] McCaskill, 05-17-01289-CV, 2018 WL 3154616, at *4.