Recruiters: Poach at your peril.

Most placement professionals try to stay away from taking employees from their company clients and in many instances it is prohibited by contract. More importantly, it can be bad business.

In a lawsuit filed in New York, JP Morgan Chase Bank v. IDW Group, Inc., JP Morgan brought suit against a firm that previously provided placement services and allegedly poached JP Morgan employees. It claims this was in violation of its contract with IDW and a breach of fiduciary duty. Here's blogger Kenneth Vanko's take on the case. It seems hard to believe that a business relationship evolved into a fiduciary duty relationship (very difficult to prove in Texas) but nevertheless, it is a claim.

Assuming there is no contractual provision in place, there is little a client can do to prevent a placement professional from soliciting its employees. Nevertheless, do you really want to have a reputation for poaching? Obviously, the facts and circumstances will vary and require individual analysis. Remember, there is little barrier to filing a lawsuit, basically a lawyer and a filing fee, and an irate client may seek legal redress like JP Morgan.

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The Inevitable Disclosure of Trade Secrets Under Texas Law

Commentators have described inevitable disclosure as the following:

There are circumstances in which trade secrets inevitably will be used or disclosed, even if the defendant swears that he or she will keep the information confidential. Courts applying the doctrine have differed over its reach and the circumstances required for its application, but, generally speaking, the doctrine applies when a defendant has had access to trade secrets and then defects to the trade secret owner's competition to perform duties so similar that the court believes that those duties cannot be performed without making use of trade secrets relating to the previous affiliation.

Linda K. Stevens, Trade Secrets & Inevitable Disclosure, 36 TORT & INS. L. J. 917, 929 (Summer 2001).

Some form of an inevitable disclosure argument is usually made when a Plaintiff is attempting to obtain a temporary restraining order or injunction to enforce a non-compete. The Texas Supreme Court has never recognized the doctrine.

In 1999, the Dallas Court of Appeals in an unpublished opinion stated: "this Court has recognized that a former employee may be enjoined from using or disclosing the former employer's confidential or proprietary information if the employee is in a situation where use or disclosure is probable." Conley v. DSC Communs. Corp., No. 05-98-01051-CV, 1999 Tex. App. LEXIS 1321 (Tex. App. Dallas --- 1999, no pet.)(not published).

That opinion stated the Dallas court was not adopting the inevitable disclosure doctrine. Whether "probable disclosure" is actually a viable theory under Texas law remains unresolved by the the Texas Supreme Court.

Read David Knight's analysis of a recent Ohio inevitable disclosure case here.

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The Employee Wins: California Supreme Court Non-Compete Opinion

California lawyer Scott Pearce provides an analysis of Edwards v. Arthur Anderson, a 2008 California Supreme Court Case addressing non-compete agreements.




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A doctor's departure.

The departure of a doctor from a medical practice group is not always amicable. In some situations, the medical records of a departing doctor's patients may be held hostage. The Texas Occupations Code and Texas Medical Board Rules (located in the Texas Administrative Code) both contain provisions addressing medical records.

Chapter 159 of the Occupations Code addresses the confidentiality and release of patient records. (159.002(2) & 159.005)

Texas Medical Board Rules Section 165.5 requires that the departing physician post a sign in her office informing the patients of the departure, publish notice in the newspaper, and send letters to all patients. Section 165.5(c) prevents other physicians from preventing the departing doctor from posting a sign or withholding contact information for patients.

A departing doctor should instruct her patients to fill out appropriate releases so the patients' records are transferred to the doctor's new office. The departing doctor should also follow all departure requirements contained in the Texas Medical Board Rules.

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Nebraska Non-Solicitation Case

Happy holidays to you and your family.

Below is a link to an article written by Seattle attorney Jill Pugh regarding a Nebraska Court of Appeals opinion affirming the enforceability of a non-solicitation agreement. Aon Consulting, Inc. sued to enforce the agreement against a former employee. The agreement was actually signed by the employee with a predecessor company that was acquired by Aon.

Here is a link to the opinion.

Here is a link to the blog.

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The Non-Compete Playbook: The Injunction Hearing

An injunction hearing in Texas state court is similar to a bench trial. Depending on the Court's preferences, both parties may offer opening and closing remarks. The party with the burden of proof on the injunction, in this case Company A, will offer its evidence and then Jordan James has the opportunity to offer any evidence she would like the court to consider. This may consist of deposition testimony, live testimony in the courtroom, and the offering of documents into evidence.

After presentation of the evidence, the Judge determines whether Company A is entitled to a temporary injunction. In the Company A/Jordan James dispute three individuals testified: James, her supervisor at Company A, and a law firm client of Company A's. The Court after considering the evidence, denied the injunction.

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Injunctions and the NFL

The use of injunctive relief has been discussed at length in this blog. Last week a federal judge in Minnesota issued an injunction preventing the National Football League from suspending several players for violation of its anti-doping policy including New Orleans Saint Deuce McAllister (pictured right). Until further ruling from the Court, McAllister and the other players may continue to play on Sunday. McAllister carried the ball one time yesterday in the Saints' victory over the Atlanta Falcons.

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