In Embarcadero Techs., Inc. v. Redgate Software, Inc., four employees left their employer and began working at a new company. No. 1:17-cv-444-RP, 2018 U.S. Dist. LEXIS 1902 (W.D. Tex. January 5, 2018). The plaintiffs sued the four former employees for breach of fiduciary duty and sued their new employer for aiding and abetting breach of fiduciary duty and also sued the defendants for misappropriation of trade secrets under the Texas Uniform Trade Secrets Act (“TUTSA”), Tex. Civ. Prac. & Rem. Code § 134A.001 as well as other claims. The defendants file a motion to dismiss the plaintiffs’ breach of fiduciary duty and aiding and abetting claims due to preemption by the TUTSA.
The TUTSA contains a preemption provision: “(a) Except as provided by Subsection (b), this chapter displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret. (b) This chapter does not affect: (1) contractual remedies, whether or not based upon misappropriation of a trade secret; (2) other civil remedies that are not based upon misappropriation of a trade secret; or (3) criminal remedies, whether or not based upon misappropriation of a trade secret.” Tex. Civ. Prac. & Rem. Code § 134A.007.
The parties’ dispute centered on the meaning of “based upon misappropriation of a trade secret” in subsection (b)(2). The defendants argued that the breach of fiduciary duty claim is preempted by TUTSA because it was based on the same underlying facts as plaintiffs’ TUTSA claim—the improper taking of confidential business information—and is therefore “based upon misappropriation of a trade secret.” Id. Plaintiffs contended that their breach of fiduciary duty claim was not preempted because it alleged the improper taking of confidential information, and not trade secrets. The court stated:
After reviewing the reasoning in Super Starr and that of various other courts across the country applying Uniform Trade Secrets Act preemption, the Court finds that TUTSA’s preemption provision encompasses all claims based on the alleged improper taking of confidential business information. Without more, a breach of fiduciary duty claim cannot proceed. The underlying purpose of the TUTSA preemption provision is, as many courts have noted, to “prevent inconsistent theories of relief for the same underlying harm by eliminating alternative theories of common law recovery which are premised on the misappropriation of a trade secret.” To narrow the preemption’s application exclusively to information that qualifies as a trade secret under the statute would frustrate this purpose. Plaintiffs would like to have a TUTSA claim for all of their information taken by Frignoca that qualifies as a trade secret and a fiduciary duty claim for all of the information taken by Frignoca that does not qualify as a trade secret. But both claims stem from the same underlying harm—the taking of Plaintiffs’ confidential information. To allow multiple theories of relief for this same underlying harm would be to read the preemption provision too narrowly. Accordingly, the Court finds that TUTSA’s preemption clause applies to a breach of fiduciary duty claim that is based solely upon taking confidential information.
Plaintiffs would like for TUTSA to permit them a cause of action for every piece of information claimed to be improperly taken by Frignoca, whether or not it satisfies the statutory elements of a trade secret. This reading has been adopted by at least one federal district court in Texas. See AMID, Inc. v. Medic Alert Foundation U.S., Inc., 241 F. Supp. 3d 788, 826-27 (S.D. Tex. 2017) (finding an unfair competition claim based on confidential information not preempted by TUTSA). But given the purpose behind TUTSA’s preemption provision and the number of cases across the country applying Uniform Trade Secrets Act preemption and finding to the contrary, the Court finds that a breach of fiduciary claim based only on the improper taking of confidential information is preempted by TUTSA.
Here, Plaintiffs’ sole basis for their breach of fiduciary duty claim is the misappropriation of confidential business information. Plaintiffs state in their amended complaint that their breach of fiduciary duty claim is expressly based upon the misappropriation of trade secrets. (See Pls.’ Am. Compl., Dkt. 33, ¶ 38 (“Frignoca breached these fiduciary duties by accessing Plaintiffs’ valuable confidential and proprietary information and trade secrets for activities that were disloyal to, and harmful to, the interests of Plaintiffs. Frignoca took and used Plaintiffs’ confidential and proprietary information and trade secrets both during and after his employment with Plaintiffs for the benefit of his new employer.”)). Indeed, this language is strikingly similar to the wording of the claim for breach of fiduciary duty found preempted by TUTSA in Super Starr, which alleged the diversion of accounts and business “by using confidential and proprietary information owned by [the defendant] against the interests of [the defendant].” 531 S.W.3d at 843. Plaintiffs allege no other factual basis for the breach of fiduciary duty claim. The fact that some of the confidential information taken may not fit the statutory definition of trade secret does not change the outcome. Because Plaintiffs have not pleaded any facts unrelated to misappropriation of confidential information to support their claim for breach of fiduciary duty, the claim is preempted by TUTSA.
Id. The court also held that the aiding and abetting breach of fiduciary duty should be dismissed because it required the existence of a breach of fiduciary duty. Id.