Johnston v. American Speedreading Academy, Inc.

• Decision Date: 26 June 1975
• Docket Number: No. 18680,18680
• Citation: 526 S.W.2d 163
• Parties: Floyd JOHNSTON et al., Appellants, v. AMERICAN SPEEDREADING ACADEMY, INC., Appellee.
• Court: Texas Court of Appeals

Page 163

526 S.W.2d 163

Floyd JOHNSTON et al., Appellants, v. AMERICAN SPEEDREADING ACADEMY, INC., Appellee.

No. 18680.

Court of Civil Appeals of Texas Dallas.

June 26, 1975.

Z. T. Fortescue, III, Fiedler & Fortescue, Richardson, for appellants.

William M. Hayner, Flagg, Cooper Hayner, Miller, Long & Owen, Dallas, for appellee.

CLAUDE WILLIAMS, Chief Justice.

Alleging breach of fiduciary duties, conspiracy and unfair competition, American Speedreading Academy, Inc., sought injunctive relief, as well as actual and exemplary damages, against former employees who had resigned from plaintiff corporation and formed a competing company called Educational Reading Services, Inc. Following a hearing, the trial court issued a temporary injunction restraining the former employees and the new corporation from engaging in practices claimed to amount to unfair competition. From that order two of the former employees, Floyd Johnston and Robert Royal, and the new corporation Educational Reading Services, Inc., appeal.

The record reveals that in 1972 Robert B. Johnson and wife Lucille Johnson incorporated American Speedreading Academy, Inc. The business of this corporation was to teach speedreading and to license academies across the nation to hold speedreading classes. Employing the copyrighted training materials developed by Lucille Johnson, along with the market expertise of Robert Johnson, American Speedreading Academy progressed from a single home office in Dallas, Texas, to forty-seven licensees throughout the United States. More specifically, the record reveals that licenses were issued by American Speedreading Academy in Florida, South Carolina, New Mexico, Texas, Iowa, Washington, Wisconsin and Indiana. Since its formation, the appellee-corporation has built up an administrative staff as well as a staff of salesmen to market appellee's method of teaching speedreading to prospective licensees. Among these employees was Floyd Johnston, one of appellants, whose duties primarily involved the sale of appellee's licenses and courses to individuals. He acted as sales manager and eventually became vice president of appellee-corporation. His duties gave him access to information concerning all facets of appellee's business operations, including knowledge concerning the various licensees and prospective licensees throughout the country. Robert Royal, appellant, was also a former employee of appellee-corporation, where he was employed primarily to market programs to licensees. Robert L. Cook and Glenn Beaver were also former employees of appellee-corporation. The testimony reveals that Johnston, Beaver, Royal and Cook constituted the principal staff of the appellee-corporation. In January 1975, Beaver, Royal and Johnston withdrew from appellee-corporation and became the incorporators of Educational Reading Services, Inc. which engaged in active competition with American Speedreading Academy, Inc. After resigning from appellee-corporation, Floyd Johnston sent letters to many of the existing licensees of American Speedreading Academy in which he informed them not only of his resignation from that company but apprised them of the fact that he had become associated with a group of former employees who were entering into a speedreading program far superior to the 'antiquated' American Speedreading Academy methods. The record also reveals that the departing employees of appellee-corporation utilized information obtained from appellee's 'lead book' which included valuable and pertinent information concerning potential licensees. The record contains abundant testimony concerning actions and conduct on the part of both Johnston and Royal toward various licensees of American Speedreading Academy which tended to either cause or persuade such licensees to cease their business dealings with appellee-corporation and to become associated with the new corporation.

The trial court, in its temporary injunction, specifically enjoined and restrained appellants from:

1. Inducing, enticing or soliciting employees of Plaintiff to leave Plaintiff's employment;

2. Contacting communicating or soliciting with any customer of Plaintiff derived from any customer list, customer lead, mail, printed material or other information secured from Plaintiff or its present or past employees;

3. Entering into any contract with a customer or prospective customer with American Speedreading Academy, Inc., who has been since October 1, 1974, solicited by American Speedreading Academy, Inc. either through its sales personel or in any other manner solicited for purposes of entering into business relations with American Speedreading Academy, Inc.;

4. In any other manner using any customer list or customer leads, mail, telephone numbers, printed material or confidential material of Plaintiff's secured from its employees or former employees;

5. Making or copying in any way any customer lists or customer leads, mail, telephone numbers, printed material or other materials secured from the Plaintiff;

6. Discussing any activities, method of operations, finances, confidential practices and private business information of the Plaintiff with any other party;

7. From engaging in any business endeavor of whatsoever nature which has among its purposes and/or endeavors the selling, counselling, advising, teaching, soliciting or dissemination of information concerning speedreading, accelerated learning or any topic related thereto, within any State of the United States of America in which American Speedreading Academy, Inc....