News

El Paso Court of Appeals Affirms Dismissal of Trade Secrets Case

By Heath Coffman

El Paso Court of Appeals Affirms Dismissal of Trade Secrets Case | The Fort Worth Business & Employment Law Reporter

In EJ Madison, LLC v. Pro-Tech Diesel, Inc., No. 08-17-00229-CV, 2019 WL 6242301, at *1 (Tex. App.–El Paso Nov. 22, 2019, no pet. h.), plaintiff Madison operated a trucking company and defendant Pro-Tech provided maintenance services to the trucks.  The parties entered into a non-disclosure agreement so they could work together on diesel-to-natural gas conversion kits for the trucks.  Additionally, Pro-Tech continued to provide general maintenance work for the trucks.

Madison eventually entered into an agreement with EL Hollingsworth for EL Hollingsworth to operate its trucks.  After the agreement, Pro-Tech continued to do the general maintenance work for EL Hollingsworth.  Meanwhile, Madison formed a separate entity to work with Pro-Tech on the conversion kit maintenance.

Eventually, the business relationship between Madison and Pro-Tech soured, and Madison sued Pro-Tech for breach of contract, breach of fiduciary, and violations of the Texas Uniform Trade Secret Act (TUTSA).  Madison argued that Pro-Tech used its confidential information to enter into a business relationship with EL Hollingsworth.

The trial court disagreed, and the El Paso Court of Appeals affirmed.  Specifically, the court held that the parties’ non-disclosure agreement did not include the general maintenance work Pro-Tech had always performed.  Additionally, there was no TUTSA violation because Madison never kept the existence of EL Hollingsworth a secret from Pro-Tech, and Pro-Tech could have easily discovered EL Hollingsworth through trade journals.  Also, the court held that Madison’s evidence of damages–that it did not make introductions “for free”–was insufficient because there was no evidence that either EL Hollingsworth or Pro-Tech would have paid for the introduction.