Arkansas courts, like most courts around the country, closely scrutinize employers' attempts to restrain former employees from competing. For example, it's generally an up-hill battle to enforce a non-compete agreement in Arkansas.
In the absence of a non-compete agreement, some employers turn to the Arkansas Trade Secrets Act to limit competition from a
former employee, but this approach just became a little more difficult when an Arkansas court recently narrowed the application of the inevitable disclosure doctrine in the state.
In Verizon v. Langston, Verizon attempted to prevent a former Alltel/Verizon employee from working for the new Little Rock telecom company, Allied Wireless Communications Corp. (AWCC). Langston worked for Alltel for twenty-five years until Verizon acquired Alltel, during which time he worked for Verizon in its Transition Planning. Langston was responsible for transitioning properties to Atlantic Tele-Network, Inc (ATNI) after Verizon sold the properties to ATNI. Langston resigned in November 2009 and began working for AWCC, a subsidiary of ATNI, as the Chief Information Officer.
Verizon sought to prevent Langston from working for AWCC because it would violate the Arkansas Trade Secrets Act and the non-disclosure portion of his employment contract, which reportedly did not contain a non-compete agreement. The court denied the injunction, in part, because the court did not believe that Langston would inevitably disclose trade secrets that he acquired with Alltel and Verizon.
Under the inevitable disclosure doctrine, a court can issue an injunction when it finds that a former employee will inevitably disclose the trade secret to the new employer, even if there is no actual proof of disclosure. Arkansas courts have accepted this doctrine (see Cardinal Freight v. JB Hunt), whereas courts in California, Florida and Virginia have rejected it. The court did not apply the doctrine to Langston primarily because AWCC took steps to ensure Langston's duties did not pertain to Verizon's confidential information. AWCC successfully argued that the trade secrets that Langston possessed would not be of value in the role he held with AWCC.
Although trade secret and non-compete litigation is largely fact-dependent, it appears that employers will now be able to hire employees who possess trade secret information when the employee is placed in a role where the trade secrets are not useful, thus narrowing the doctrine of inevitable disclosure in Arkansas.