A recent Fifth Circuit Court of Appeals decision reiterates the need to prove the existence of a trade secret first. See DeWolff, Boberg & Assoc. Inc. v. Pethick, No. 24-10375 (5th Cir. Apr. 3,2025).
Former Employee Accused of Theft
In 2018, DeWolff, Boberg & Associates, Inc. (DB&A) hired Justin Pethick as a regional vice president of sales. In 2020, he accepted a position at competitor, The Randall Powers Company (The Powers Co.). Following his departure, some potential DB&A clients chose The Powers Co., leading DB&A to allege that Pethick stole trade secrets to attract these clients.
The United States District Court for the Northern District of Texas excluded DB&A's damages expert (under Daubert), and granted summary judgment for the defendants due to insufficient evidence of damages. DB&A appealed, challenging both the exclusion of its expert and the ruling on its trade secrets claim.
Texas and Misappropriation of Trade Secrets
The Fifth Circuit Court of Appeals noted that, under Texas law, to prove misappropriation of trade secrets, a plaintiff must show the existence of a trade secret, improper acquisition, and unauthorized use. The court concluded that DB&A failed to identify specific trade secrets or provide evidence of their misuse, affirming the dismissal of the claim.
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