In the recent non-compete case Orchestrate v. Trombetta,[1] a U.S. district court judge not only denied a motion for sanctions for an employee’s alleged violation of a temporary restraining order, the judge severely criticized the conduct of the employer’s counsel.  “Litigation is not a game,” the exasperated judge wrote. “This has to and will stop. The jig is up!”  The case provides a cautionary tale for lawyers who handle non-compete litigation—or any kind of litigation.[2]

Orchestrate was in many ways a typical non-compete case: Employee (Trombetta) signed a non-compete and confidentiality agreement with Employer (Orchestrate). Employee left Employer and joined Competitor (Borden-Perlman). Employer sued, claiming Employee breached the non-compete and that Competitor tortiously interfered with the non-compete. The court signed a Temporary Restraining Order barring Employee from pursuing certain clients.

Pretty typical so far, but somewhere things went south. Employee pursued certain clients, and Employer filed a motion for sanctions for violating the TRO. Employee admitted pursuing three clients but argued the TRO did not cover those clients. Employer argued the TRO did cover those clients.

This should have been pretty simple, right? The TRO must have listed the clients the Employee could not pursue, so all the judge had to do was to see if those three clients were on the list in the TRO. Right?

Of course it was not that simple. The relevant terms of the TRO were in three different documents: the TRO itself, a separate “Designated Client List” identifying the clients Employee could not pursue, and an “Addendum” that appeared to carve out 25 clients that Employee could pursue. (The actual facts were even more complicated than this.)

The root of the trouble was the need to consult and harmonize at least three different documents to determine what Employee was prohibited from doing. Employee initially testified in his deposition that he did not violate the TRO, but through aggressive questioning Employer’s counsel got Employee to admit that he repeatedly violated the TRO and committed perjury.

So what is wrong with aggressively questioning a witness until he admits he is not telling the truth? Isn’t that what a tough litigator is supposed to do?

The problem with Employer’s counsel’s approach was twofold. The first problem was one of substance. Employer’s counsel got Employee to admit he violated the TRO by refusing to show Employee the Addendum with the “carve out” of 25 clients. In addition, Employer’s counsel confused the witness by providing a “misleading” definition of perjury, “blurring the distinction between a false or incorrect statement and perjury.” As a result of these tactics, the judge said, the deposition transcript had “little utility for any purpose.”

The second problem was one of style. After reviewing the deposition, the judge found Employer’s counsel’s conduct “rude and unprofessional,” “condescending and patronizing,” and full of “unpleasantries.” He characterized the lawyer’s approach as “browbeating and intimidation.”

Despite the Employee “admitting” he violated the TRO and committed perjury, the district court denied Employer’s motion for sanctions. First, the motion failed for the simple reason that pursuing the three clients was not a violation of the TRO. The court ruled that reading the TRO, Designated Client List, and Addendum together, the documents unambiguously provided that Employee was allowed to pursue the 25 clients listed in the Addendum.

Second, the motion would fail anyway because the TRO failed to comply with Federal Rule of Civil Procedure 65(d)(1), which expressly requires the acts to be restrained to be stated in the injunction, not by reference to another document. The violation was not merely technical: the deposition of Employee showed that the reference to other documents in the TRO caused confusion and unnecessary litigation over the meaning of the TRO. The judge said all of this could have been avoided had the TRO complied with the rule.

So, Orchestrate v. Trombetta provides some helpful lessons for lawyers—and their clients—both in non-compete litigation and other litigation:

  1. If you get an injunction or TRO, do state specifically in the injunction itself what the defendant is barred from doing; don’t have the injunction refer to other documents. (If the injunction must refer to a double-super-secret customer list, consider moving to file the injunction under seal, rather than referencing an extrinsic document.)
  1. Don’t use an incomplete version of an injunction or agreement to mislead a witness into admitting he or she failed to comply with the injunction or agreement.
  1. Don’t repeatedly accuse a witness of “perjury” for testimony that a judge is likely to view as simply mistaken or incorrect.
  1. Don’t do things in a deposition or hearing that a judge is likely to view as “bullying tactics,” “beating down” a witness, “browbeating and intimidation,” “rude and unprofessional,” or “condescending and patronizing” to opposing counsel.

Of course, it’s not always easy to know where to draw the line in a deposition. Lawyers often must be firm and tenacious to deal with evasive witnesses—and their obstructive counsel—who refuse to admit facts they know to be true. But some lines are clear. Using deception or confusion to get a witness to admit a fact favorable to your position may feel good or impress your client in the moment, but ultimately it will backfire when the rest of the story comes to light.

cropped-head-shot-photo-of-zach-wolfe.jpg

Zach Wolfe is a Texas trial lawyer who handles non-compete and trade secret litigation. His firm Fleckman & McGlynn, PLLC has offices in Houston, Austin, and The Woodlands.

These are his opinions, not the opinions of his firm or clients, so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case.

[1] Orchestrate Hr, Inc. v. Trombetta, No. 3:13-CV-2110-L, 2016 WL 3179967 (N.D. Tex. June 6, 2016).

[2] Caveat: I was not personally involved in the case and therefore do not know if the opinion’s recitation of facts is accurate or fair to the employer’s counsel; I’m just taking the facts stated in the opinion at face value.

 

3 thoughts on ““Litigation Is Not a Game”: Recent Texas Case Shows How Not to Enforce an Injunction in Non-Compete Litigation

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s