Texas Court Enjoins Employees from Working for Competitor Despite Lack of Non-Compete Agreement

As non-compete agreement attorneys, we often write on the topic of restrictive covenants and developments in the area of law across the country. Frequently, we review judicial opinions that involve courts analyzing the specific terms of non-compete agreements in order to determine whether to uphold or invalidate such agreements. In this post, we will examine a recent decision in which a former employer succeeded in obtaining a temporary restraining order (TRO) enjoining several former employees from working for a competitor. The twist in this case is that none of the former employees are accused of violating a non-compete agreement by working for the competitor because none of the former employees had a non-compete agreement.

DistributionNOW (DNOW), the plaintiff in the suit, is a Houston-based distribution company for the energy sector. The defendants in the suit are several former employees who left DNOW to work for a competitor, Permian Valve. According to the former employer’s complaint, the four defendants left DNOW to join a competitor and allegedly took confidential files and documents containing sensitive and proprietary information with them. Additionally, the complaint accuses one of the defendants, Toby Eoff, of poaching at least 20 employees from DNOW to join the competitor.

Eoff was the former majority owner of Odessa Pumps, a company that DNOW purchased for over $170 million. The complaint alleges that Eoff stayed with DNOW until he retired in April 2022 from his position as Executive Vice President. After retiring, the complaint alleges that Eoff took with him multiple files that contained “highly sensitive DNOW business information.” The complaint also alleges that another of the defendants took an employee list with him when he left DNOW.

In its complaint, DNOW accuses Eoff and the other defendants of trade secrets theft, breach of contract, and breach of fiduciary duties and seeks compensatory and punitive damages as well as injunctive relief. The injunctive relief that DNOW seeks is not only an injunction requiring the defendants to return any DNOW confidential or proprietary information or trade secrets and refrain from using such information in the future. DNOW also requests a temporary and permanent injunction enjoining the defendants from working for Permian Valve, DNOW’s competitor.

The Texas trial court granted a TRO to DNOW. Under the terms of the TRO the defendants are not only prohibited from using DNOW’s confidential information and trade secrets, which is typical injunctive relief sought in a trade secrets misappropriation case, but they also are prohibited from working for Permian Valve, which is an uncommon restriction in the absence of a non-compete agreement. With regard to Eoff, the TRO specifically prohibits him from “carrying on or engaging in activities in which Eoff directly or indirectly, owns, manages, operates, controls, funds, invests in, participates in, consults with, or is otherwise connected to, any business, individual, partnership, firm, corporation or other entity which engages in any activity that is in direct competition with DNOW and Odessa Pumps in the business of servicing and supplying pump equipment.”

Whether you are an employee being asked to sign a non-compete agreement or an employer needing a non-compete agreement or needing to see if your existing agreement is still valid, it is important to speak with an experienced restrictive covenant and non-compete agreement law attorney. It is no less important to have a skilled non-compete attorney at your side if you find yourself embroiled in litigation over the enforcement of a covenant not to compete, non-solicitation agreement, or nondisclosure agreement.

Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Business Litigation, Class Action, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience litigating emergency business litigation, non-compete agreement, intellectual property theft, and complex class-action lawsuits. Our Naperville and Clarendon Hills business dispute lawyers handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist Chicago and Oak Brook area businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0333 or our toll-free number (833) 306-4933. You can also contact us online here.

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