Lessons for Employers from the Utah Supreme Court’s Decision in Feller Behavioral Health v. Freedom Counseling

Disclaimer: This blog is for legal informational purposes only. Nothing within this blog should be considered legal advice. Engaging with this article and this website does not create an attorney-client relationship between you and Walker Law Firm of Cache Valley. We are not your attorneys. Consult with a lawyer if you are in need of legal assistance.

What Happened in the Case

Feller Behavioral Health v. Military and Veteran, 2025 UT 33, came out of a dispute between two behavioral health providers in Utah. Freedom Counseling, a small therapy practice, had four therapists working under employment agreements that included non-compete, non-solicitation, and confidentiality provisions. These agreements required the therapists to protect confidential information—like client lists, insurance details, and business strategies—and not use it outside their work at Freedom Counseling.

While still employed, the therapists began talking with Dr. Kelly Feller, director of Feller Behavioral Health (FBH), about switching jobs. During those talks, Dr. Feller asked them to share information about:

• Their employment agreements with Freedom Counseling (to check for non-competes).
• Their client lists, including names, insurance companies, ID numbers, and even co-pay details.
• Whether they were “credentialed” with insurance providers, and the reimbursement rates they received.

All four therapists later joined FBH. Around 49 clients followed them. Freedom Counseling eventually shut down.

Freedom Counseling sued FBH, claiming that it had violated Utah’s Uniform Trade Secrets Act (UTSA) by misappropriating client information. The trial court agreed with Freedom Counseling on liability, finding that trade secrets existed and had been misappropriated, leaving only damages for trial.

The Utah Supreme Court reversed.

The Court said that while Freedom Counseling showed some questionable behavior by FBH, it did not prove the key legal requirement: that FBH’s use of client information caused actual damages. Evidence showed that clients left Freedom Counseling not because FBH used client data to solicit them, but because their trusted therapists chose to move. Without a legally sufficient damages theory, Freedom Counseling’s claim failed as a matter of law.

Why This Matters for Employers

The ruling highlights how fragile and complicated employment agreements can be when employees move from one company to another. Employers often think that a simple non-compete or confidentiality clause will be enough to protect them. But as this case shows, courts demand very specific and enforceable terms—plus actual proof of damages—before they’ll shut down competition or award money.

If you are an employer, especially in Utah where non-competes and confidentiality agreements are closely scrutinized, there are lessons you can take from this case.

Lessons for Drafting Better Employment Agreements

1. Be Clear About What Counts as Confidential

Freedom Counseling had therapists sign agreements that covered “all non-public information, trade secrets, and proprietary information.” While that sounds broad, courts want employers to define confidential information with specificity.

For example:

• Instead of saying “all company information,” spell out categories like client contact details, pricing structures, marketing strategies, insurance credentialing records, or training materials.
• Clarify how that information should be stored, used, and returned when employment ends.

A court is more likely to protect well-defined categories of information than vague, catch-all terms.

2. Don’t Rely Too Heavily on Non-Competes

Utah law restricts how long non-compete agreements can last—generally no more than one year. Courts are reluctant to stop employees from working elsewhere unless an agreement is very carefully drafted.

Instead of relying solely on a non-compete, employers should consider:

• Non-solicitation agreements (preventing employees from directly contacting or recruiting former clients).
• Non-disclosure agreements (NDAs) (prohibiting use or sharing of client lists, pricing, or strategies).

These are often easier to enforce than a blanket non-compete.

3. Build Strong Non-Solicitation Clauses

The real harm in this case wasn’t that the therapists went to work for FBH—it was that a large number of clients followed them. But the Utah Supreme Court noted that clients made that choice because of their relationship with the therapists, not because FBH misused secret data.

A well-drafted non-solicitation clause can help prevent departing employees from encouraging or inducing clients to move with them. Such clauses should cover:

• Direct solicitation (phone calls, emails, texts).
• Indirect solicitation (using third parties to reach out).
• Solicitation of both clients and employees.

This protects your client base while respecting client choice.

4. Address Trade Secrets and Client Lists Directly

Client lists are often at the center of disputes. To maximize protection:

• Label them as confidential in your agreements.
• Limit employee access to “need to know.”
• Use password protections or secure databases.
• Require return or deletion of lists at termination.

Courts are more willing to recognize trade secrets when employers can show they actively treated the information as secret.

5. Document Why Restrictions Are Needed

If challenged, employers must show that restrictions are reasonably necessary to protect legitimate business interests. That might include:

• Protecting proprietary client databases.
• Safeguarding pricing structures that give you an edge.
• Preserving investments in training employees.

If restrictions seem too broad or unnecessary, courts may strike them down.

What Employers Should Do Now

This case is a reminder that prevention is much cheaper than litigation. Employers should:

• Review current employment agreements to ensure confidentiality and non-solicitation clauses are clear, enforceable, and tailored to Utah law.
• Train supervisors not to solicit or use another employer’s confidential information when hiring.
• Protect client and business data with real security measures—not just paper promises.
• Work with legal counsel to update agreements regularly, especially as laws on non-competes and trade secrets evolve.

How Walker Law Firm of Cache Valley Can Help

At Walker Law Firm of Cache Valley, we help businesses protect themselves before disputes arise. Whether you are:

• Hiring new employees and need strong contracts,
• Reviewing your current agreements for compliance with Utah law,
• Dealing with sensitive client information, or
• Facing a potential dispute with a competitor,

we can guide you through drafting, reviewing, and enforcing agreements that protect your company without overreaching. Don’t hesitate to reach out for a free consultation to see how we might be able to help.