United States District Court, W.D. Texas, Austin Division
PITMAN UNITED STATES DISTRICT JUDGE
the Court in the above-entitled matter is Plaintiff's
Application for Temporary Restraining Order and Preliminary
Injunction, (Dkt. 10). On September 14, 2017, the Court held
a hearing at which it heard evidence and considered arguments
on Plaintiff's request for a temporary restraining order
(“TRO”). (Dkt. 25). The Court denied
Plaintiff's request for a TRO and set a second hearing at
which it would consider Plaintiff's request for a
preliminary injunction. (Id.). The Court held the
preliminary injunction hearing on December 19, 2017. (Dkt.
41). Having considered the parties' arguments, the
evidence presented, and the relevant law, the Court
GRANTS Plaintiff's application for a
preliminary injunction to the extent described in this order.
Accruent, LLC (“Accruent”) is a company that
provides software and services that help retail companies
select and manage their real estate and facilities. (Appl.
Prelim. Inj., Dkt. 10, ¶ 1). In early August 2017,
Accruent acquired Lucernex, Inc., another software company
that provides real estate- and facilities management products
and services to retailers. (Id. ¶ 8).
Jim Short (“Short”) was a Lucernex employee who
became an Accruent employee after the acquisition.
(Def.'s Resp. Appl. Prelim. Inj., Dkt. 16, at 6). Short
had been working for Lucernex since March 2010, first as the
director of client services until July 2012, then as a
solution engineer until July 2015, and then as the sole
senior solution engineer until he resigned. (Short Decl.,
Dkt. 16-1, ¶ 7). As director of client services,
Short's job was to implement Lucernex products for
existing Lucernex customers. (Prelim. Inj. Hr'g, Dkt. 41
(Short testimony)). As a solution engineer, Short's job
was to demonstrate Lucernex products for prospective cleints.
(Dkt. 16-1, ¶ 7).
position, Short had access to a wide range of confidential
proprietary information. Short's jobs required
significant interaction with the software development team,
the sales team, and the support team. (TRO Hr'g Tr., Dkt.
29, at 17 (Abdul testimony)). Short's experience
implementing and demonstrating Lucernex's products gave
him access to Lucernex's business development plans,
product development plans, market research, sales strategies,
software functionality and limitations, and customers'
needs and preferences. (Id. at 21-23).
joined Lucernex, Short signed a “Proprietary
Information and Inventions Agreement”
(“Agreement”), which included nondisclosure,
noncompete, and nonsolicititation provisions. (Id.
at 18-20; Agreement, Dkt. 1-1, at 5-12). In the merger,
Accruent acquired the right to enforce the Agreement against
Short. (Dkt. 41 (Robb testimony)).
Agreement's nondisclosure provision requires that Short
not “disclose, discuss, transmit, use, lecture upon, or
publish” any proprietary information as defined in the
Agreement. (Dkt. 1-1 § 2.1). The Agreement's
employee nonsolicitation provision requires that Short not
“solicit, assist, or in any way encourage” any
Lucernex employee to stop working at Lucernex for two years
after leaving the company. (Id. § 7.3). The
Agreement's customer nonsolicitation provision requires
that Short not solicit any Lucernex customers or interfere
with Lucernex's customer relationships for one year after
leaving the company. (Id. § 7.4). And finally,
the Agreement's noncompete provision requires that Short
not “compete with the Company in Business” for
two years after leaving Lucernex, either in Texas or any
other state or country where Lucernex “engages or
proposes to engage in Business.” (Id. §
8). The Agreement defines “Business” as
“those portions of the Company's business in which
[Short] actively participated or received Proprietary
August 19, 2017, Short accepted a position with Tango
Management Consulting, LLC (“Tango”). (Dkt. 16,
at 7). Short continued to work for Accruent until August 31
and then began working for Tango on September 1.
(Id.). Tango competes directly with Accruent-it is a
software company that helps retail companies select and
manage real estate and facilities. (Dkt. 29, at 25 (Abdul
testimony)). One Accruent executive described Tango as being
directly in Accruent's crosshairs as a competitor and
added that Tango had recently hired several employees away
from Accruent. (Dkt. 41 (Rivera testimony)).
hired Short as its director of services. (Dkt. 16-1, ¶
21). In that role, Short helps existing Tango customers
implement and use Tango software. (Id.). Short is
not involved directly or indirectly with the Tango sales team
and he does not interact with prospective Tango customers.
(Tyagi Decl., Dkt. 22-1, ¶ 10). According to Tango, the
company has barred Short from working for or contacting any
Lucernex customers or prospects with whom he interacted for
Lucernex. (Id. ¶ 8).
days after Short began working for Tango, Accruent filed this
action against Short, alleging that Short breached the
Agreement and requesting an injunction enforcing the
Agreement. (Compl., Dkt. 1). Accruent then filed its
application for a TRO and preliminary injunction on September
7, 2017. (Dkt. 10). The Court denied Accruent's request
for a TRO, (Dkt. 25), but scheduled a preliminary injunction
hearing, (Dkt. 35), and ordered a period of expedited
discovery in advance of the hearing, (Dkt. 36). Accruent
presented evidence and arguments in favor of its request for
a preliminary injunction at a hearing before the Court on
December 19, 2017, (Dkt. 41).
preliminary injunction is an extraordinary remedy, and the
decision to grant such relief is to be treated as the
exception rather than the rule. Valley v. Rapides Parish
Sch. Bd., 118 F.3d 1047, 1050 (5th Cir. 1997). “A
plaintiff seeking a preliminary injunction must establish
that he is likely to succeed on the merits, that he is likely
to suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in his favor, and
that an injunction is in the public interest.”
Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7,
20 (2008). The party seeking injunctive relief carries the
burden of persuasion on all four requirements. PCI
Transp. Inc. v. W. R.R. Co., 418 F.3d 535, 545 (5th Cir.
requests four kinds of injunctive relief. First, Accruent
asks the Court to enjoin Short from disclosing or using
Accruent's proprietary information. (Dkt. 10, at 10).
Second, Accruent asks the Court to enjoin Short from
soliciting Accruent employees for two years. (Id.).
Third, Accruent asks the Court to enjoin Short from
soliciting Accruent customers for one year. (Id.).
Finally, Accruent asks the Court to enjoin Short from
competing with Accruent for two years. (Id. at
Likelihood of Success on the Merits
lone cause of action against Short is a claim for breach of
contract. (Dkt. 1, ¶¶ 23-27). To succeed on its
motion for a preliminary injunction, then, Accruent must show
that there was an enforceable noncompete/nondisclosure
agreement and that Short is substantially likely to violate
that agreement. Henson Patriot Co., LLC v. Medina,
No. SA-14-CV-534-XR, 2014 WL 4546973, at *2 (W.D. Tex. Sept.
11, 2014). Short argues both (1) that the Agreement is
unenforceable and (2) that he is not violating the Agreement
even if it is enforceable. (Dkt. 16, at 10-16).
Whether the Agreement is enforceable
Texas,  “[e]very contract . . . in restraint
of trade or commerce is unlawful.” Tex. Bus. & Com.
Code § 15.05(a). “An agreement not to compete is
in restraint of trade and therefore unenforceable . . .
unless it is reasonable.” DeSantis v. Wackenhut
Corp., 793 S.W.2d 670, 681 (Tex. 1990). By statute,
covenants not to compete are reasonable-and therefore
enforceable-only to the extent that they contain
“limitations as to time, geographical area, and scope
of activity to be restrained that are reasonable and do not
impose a greater restraint than is necessary to protect the
goodwill or other business interest of the promisee.”
Tex. Bus. & Com. Code § 15.50(a). “The
hallmark of enforcement is whether or not the covenant is
reasonable, ” Marsh USA Inc. v. Cook, 354
S.W.3d 764, 777 (Tex. 2011), and courts may “dispense[
] with one or more factors entirely when the totality of
circumstances indicate[ ] that the covenant not to compete
[is] reasonably narrow to protect a company's business
interest or goodwill.” M-I LLC v. Stelly, 733
F.Supp.2d 759, 799 (S.D. Tex. 2010).
court finds that a covenant is unreasonable, it must reform
the covenant so as to render it reasonable. Tex. Bus. &
Com. Code § 15.51(c). A court may reform an unreasonable
covenant for the purpose of entering a preliminary
injunction. Tranter, Inc. v. Liss, No.
02-13-00167-CV, 2014 WL 1257278, at *10 (Tex. App.-Fort Worth
Mar. 27, 2014, no pet.) (stating that “reformation is