This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The case concerns the enforcement of a covenant not to compete and allegations of trade secret misappropriation. The Plaintiff, a staffing company specializing in medical professional placements, employed the Defendant under an agreement containing a non-compete clause. After her termination, the Defendant joined a competing firm owned by her brother and allegedly used confidential information and trade secrets from her former employer to solicit its clients and gain a competitive advantage (paras 1-7).
Procedural History
- District Court, May 18, 2006: The court enforced the covenant not to compete, awarded compensatory and punitive damages to the Plaintiff for trade secret misappropriation, and granted injunctive relief. The court also awarded attorney fees and costs to the Plaintiff (paras 10-11).
Parties' Submissions
- Appellant (Defendant): Argued that the covenant not to compete was overly broad and unenforceable, the Plaintiff had no trade secrets requiring protection, and the district court erred in awarding damages based on inadmissible evidence. The Defendant also contended that the three-year non-compete period should have started upon her termination, not the date of judgment, and that the district court failed to exercise independent judgment (paras 11, 14, 18, 25-27).
- Appellee (Plaintiff): Asserted that the Defendant misappropriated trade secrets, including a proprietary database developed at great expense, and used this information to compete unfairly. The Plaintiff supported the district court’s findings and argued that the evidence demonstrated willful and malicious conduct by the Defendant (paras 7, 19-23, 26-27).
Legal Issues
- Was the covenant not to compete enforceable, and did the district court err in extending its time limit to begin from the date of judgment?
- Did substantial evidence support the district court’s award of compensatory and punitive damages for trade secret misappropriation?
- Did the district court fail to exercise independent judgment by adopting the Plaintiff’s proposed findings and conclusions nearly verbatim?
Disposition
- The covenant not to compete was deemed expired as of June 18, 2007, and the district court’s judgment extending its enforcement was reversed (paras 12, 17).
- The district court’s award of compensatory and punitive damages for trade secret misappropriation was affirmed (paras 18, 27).
- The district court’s adoption of the Plaintiff’s proposed findings and conclusions was upheld (para 28).
Reasons
Per Bustamante J. (Alarid and Robinson JJ. concurring):
Covenant Not to Compete: The court held that the covenant’s three-year restriction began upon the Defendant’s termination, as explicitly stated in the agreement. Extending the period to begin from the date of judgment was an error. Since the covenant expired in 2007, the issue of its reasonableness was moot (paras 13-17).
Trade Secret Misappropriation: The court found substantial evidence supporting the district court’s conclusion that the Plaintiff’s database constituted a trade secret under the Uniform Trade Secrets Act. The database was developed at significant expense, contained confidential information, and provided a competitive advantage. Evidence also supported the finding that the Defendant misappropriated this information, including files found on her personal computer and her solicitation of the Plaintiff’s clients (paras 18-27).
Independent Judgment: The court rejected the Defendant’s claim that the district court failed to exercise independent judgment. While the district court adopted most of the Plaintiff’s proposed findings, it rejected some and based its decision on substantial evidence in the record (para 28).
The case was remanded for proceedings consistent with the appellate court’s opinion (para 29).