One Bite At The Apple: What Coe V. DNOW LP Means For Trade Secret Cases In Texas

For years, Texas employers suing departing employees for trade secret theft have relied on a familiar playbook: allege misappropriation, pile on conspiracy and breach of fiduciary duty claims, and aim for joint and several liability. That playbook was recently shredded in a decision by the Houston Court of Appeals.

In Coe v. DNOW LP, Houston's Fourteenth Court of Appeals held that the Texas Uniform Trade Secrets Act ("TUTSA") preempts adjacent tort claims. Coe v. DNOW LP, 718 S.W.3d 338 (Tex. App. 2025). In other words, if a claim is based on the same facts as trade secret misappropriation, it must be brought under TUTSA—and nowhere else. Id. at 353.

The result was dramatic: a $9 million jury verdict collapsed into just $11,250 in actual damages against a single employee. The Coe opinion sends a clear warning—plaintiffs no longer get two bites at the apple, and future trade secret battles in Texas will be fought on a much narrower field.

Coe's Disruption of the Exodus Theory

Texas employers facing a wave of departures have traditionally leaned on what practitioners call the "employee exodus model." The logic was simple: if a large number of employees leave at once for a competitor, the losses must be traceable to trade secret misuse, collusion or both. Employers would frame the "exodus" itself as circumstantial proof of misappropriation, then stack claims like conspiracy and civil theft to extend liability beyond the individuals who actually handled trade secret materials.

This strategy often resonated with juries. A mass departure creates a powerful narrative—loyal employees don't just walk out in droves without something improper driving it.

Coe represents a sharp break from that approach. By adopting the "same conduct" test for preemption, the court effectively stripped away the ability to treat an employee exodus as a catch-all damages multiplier. Id. at 355. ("We conclude that the 'compare-the-facts' or 'same conduct' test employed by the majority of courts is more consistent with the Act's language and with Texas law."). The opinion makes clear that unless the plaintiff can tie each departing employee's conduct to specific trade secret misappropriation, the mass-departure narrative alone won't sustain overlapping theories like conspiracy or fiduciary duty. Id. at 353.

In practical terms, that means no more sweeping liability that turns thirty departures into a joint-andseveral hammer against a competitor. Liability must now be individualized, calibrated to what each defendant actually did with protected information.

Civil Theft's Retreat After 2013

Another casualty in Coe is the Texas Theft Liability Act (TTLA). For years, plaintiffs used TTLA as a parallel hook, arguing that copying confidential files was "theft." That approach quietly eroded in 2013, when the Legislature amended TTLA to delete Penal Code §31.05 (theft of trade secrets), narrowing the statute to ordinary theft under Penal Code §31.03. The upshot: plaintiffs must now show "intent to deprive" the owner of property—not just copying or forwarding information.

In Coe, the trial court failed to instruct the jury on this "intent to deprive" element, and on appeal, the omission proved fatal. Id. at 365. Measured against the correct standard, there was no evidence of TTLA theft because the defendants never deprived DNOW of its data—they copied it, but DNOW still had it. Id. at 366. ("All of [DNOW's] civil-theft claims rely on the copying or communication of trade secrets or confidential information without depriving DNOW of the use of the originals. Such conduct does not constitute 'theft' under the [TTLA].").

That finding wiped out TTLA liability entirely and critically triggered TTLA's mandatory fee-shifting provision. Defendants walked away not only free of theft damages but entitled to recover attorneys' fees for beating the TTLA claims.

By enforcing the Legislature's 2013 amendment to the Texas Theft Liability Act (TTLA), the Court in Coe shut the door on treating information-copying as theft. Only conduct that truly locks the owner out—like destroying files, wiping servers, or withholding access—will plausibly support TTLA liability going forward.

Coe as the Culmination of a Decade-Long Realignment

The tightening of TUTSA's preemption doctrine reflects a broader historical shift in Texas trade secret law. For decades, Texas courts operated under common law principles, where plaintiffs often layered different theories together to maximize leverage. This patchwork approach gave way in 2013, when the Legislature enacted TUTSA to align Texas with the nearly uniform model adopted in most other states, and again in 2017 with amendments incorporating features of the federal Defend Trade Secrets Act.

Since then, the real battleground has been judicial interpretation. Some courts allowed extra claims if framed around "confidential information," while others held that any misuse of business data was displaced by TUTSA. Federal district courts, often citing Embarcadero v. Redgate, leaned toward the broader reading. Embarcadero Techs., Inc. v. Redgate Software, Inc., No. 1:17–CV–444–RP, 2018 WL 315753, at *3 (W.D. Tex. Jan. 5, 2018) (holding that TUTSA preempts "all claims based on the alleged improper taking of confidential business information," including those not meeting the statutory definition of a trade secret).

In this context, Coe can be seen as the latest step in a decade-long project: moving Texas away from sprawling common-law remedies toward a streamlined, statute-driven regime that narrows claims, clarifies duties and reinforces uniformity across jurisdictions.

Conclusion

Texas trade secret litigation is no longer about how many claims a plaintiff can stack, but how clearly it can prove misappropriation under TUTSA. The days of treating an employee exodus as a readymade damages model, or leaning on conspiracy and TTLA as fallback hooks, are over. Courts will demand precision: each defendant's conduct must be tied to a specific act of misappropriation, and liability will rise or fall on that showing alone.

For plaintiffs, this means recalibrating strategy—focusing on contracts, confidentiality agreements, and conduct that truly falls outside TUTSA's scope. For defendants, it offers new leverage: preemption and fee-shifting can collapse extensive claims into a narrower, more defensible fight.

Originally published by State Bar of Texas Intellectual Property Section's "The Tipsheet"

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