Recent Developments in Employee Mobility, Restrictive Covenants and Trade Secrets 2021

Editors

Contributors

§ 1.1  Introduction

The ongoing COVID-19 pandemic has brought about a shift to remote work, and with it, a change to the legal obstacles employers have faced in recent months. 

Remote work may be the “new normal” for the foreseeable future, and employers trying to protect trade secrets are faced with unprecedented risks, including employees’ use of unsecure networks, printing and storing materials on personal rather than company property, and even conference calls hacked by third parties.  The unique challenges associated with remote work seem poised to bring about significant changes in the legal standards for the protection of trade secrets.[1]

Further, the use of restrictive covenants has continued to come under attack in recent years.  Over the past year, many states have introduced statutes restricting the use of employee non-compete agreements.  Given the Biden Administration’s pledge to eliminate non-compete agreements altogether, this trend is likely to continue in the coming years.  Across the country, recent state restrictive covenant statutes have imposed enhanced notice and consideration requirements for non-compete and non-solicit agreements, have limited the duration of such agreements, or have prohibited such restrictive covenants with regard to low wage employees.  In addition to legislation, in recent years, courts have continued call into question the viability of non-compete and non-solicit agreements,[2] and have readily held unenforceable such agreements as overbroad, vague, or otherwise invalid. 

The use of choice-of-law provisions, which allow a party to select a particular state’s law to apply to a contract, has similarly come under attack.  In recent years, several states have enacted statutes prohibiting the enforcement of forum-selection and choice-of-law clauses that designate another state’s forum or law against their citizens.  Even in the absence of such statues, courts have continued to find such provisions unenforceable where they might conflict with state public policy considerations.[3] 

Despite these changes, however, courts around the country have continued to see a sustained pace of new filings of employee mobility and trade secret cases over the past few years.  This Chapter provides an overview of recent developments in case law, and will serve as a practical guide for business law practitioners navigating new changes in employee mobility issues and the protection of trade secrets.

§ 1.2  Employee Mobility: Breach of the Duty Of Loyalty; Breach of Fiduciary Duties

§ 1.2.1  United States Supreme Court

There were no qualifying decisions within the United States Supreme Court.

§ 1.2.2  First Circuit

There were no qualifying decisions within the First Circuit.

Additional Cases of Note 

T.H. Glennon Co. v. Monday, No. 18-cv-30120-WGY, 2020 U.S. Dist. LEXIS 45917 (D. Mass. Mar. 17, 2020) (court found a duty of loyalty existed when the employee occupies a position of trust and confidence, which existed where the former employee during his employment had authorized access to a corporation’s in-depth proprietary client information and technical information and had signed a non-disclosure agreement).

§ 1.2.3  Second Circuit

There were no qualifying decisions within the Second Circuit.

§ 1.2.4  Third Circuit

There were no qualifying decisions within the Third Circuit.

Additional Cases of Note 

Heartland Payment Sys., LLC v. Carr, No. 3:18-cv-9764, 2020 U.S. Dist. LEXIS 15302 (D.N.J. Jan. 27, 2020) (denying motion to dismiss claim for breach of fiduciary duty and loyalty on the basis they sounded in contract because Carr, as chairman and CEO of Heartland, was bound by duties that existed before and extended beyond the contractual agreements, but granting motion to dismiss claims for fraud based on the same conduct as barred by the economic loss doctrine) (applying Delaware law); Ilapack, Inc. v. Young, 2020 U.S. Dist. LEXIS 94550 (E.D. Pa. May 29, 2020) (granting motion for preliminary injunction where former employees attempted to induce clients of their former employer while in possession of the former employer’s confidential information).

§ 1.2.5  Fourth Circuit

There were no qualifying decisions within the Fourth Circuit.

Additional Cases of Note 

Big Red Box, LLC v. Square, Inc., 2020 U.S. Dist. LEXIS 16008, at *19 (D.S.C. 2020) (dismissing plaintiff’s claim for aiding and abetting breach of fiduciary duty because no South Carolina court has recognized a fiduciary relationship based on a standard at-will employment or contract arrangement, even in cases where the employee is alleged to have been entrusted with the employer’s credit cards); Dao v. Faustin, 402 F. Supp. 3d 308, 322 (E.D. Va. 2019) (dismissing plaintiffs’ claims for breach of fiduciary duty against defendant because Virginia courts have held that an employer owes no fiduciary duty to its employees; “while an employee owes a fiduciary duty to an employer, no corresponding duty is imposed on the employer”) (citations omitted); Legree v. Hammett Clinic, LLC, 2020 U.S. Dist. LEXIS 46967, at *7-15 (D. S.C. March 18, 2020) (unpublished) (stating that while “South Carolina courts have, in limited cases, ‘recognized a tort action for breach of the duty of loyalty’ in the employment context . . . South Carolina courts have not recognized a cause of action—tort, contract, or otherwise—in relation to any other alleged duty owed by an employee to an employer, and that “the at-will nature of [p]laintiff’s employment does not in and of itself transform the relationship from contractual to ‘special’” to warrant finding a fiduciary duty of care exists) (citations omitted); United States v. Snowden, 2019 U.S. Dist. LEXIS 229931, at *21-22 (E.D. Va. 2019) (granting summary judgement to the United States Government because both the CIA and NSA Secrecy Agreements signed by defendant prohibit unauthorized publication of certain information, and defendant breached those agreements and their attendant fiduciary duties by disclosing the information through his speeches and visual aids).

§ 1.2.6  Fifth Circuit

There were no qualifying decisions within the Fifth Circuit.

Additional Cases of Note 

Melito v. Hopkins, 2020 U.S. Dist. LEXIS 79467 (E.D. La. May 6, 2020) (holding that Louisiana courts and statutes recognize the duty of loyalty, good faith, and a fiduciary duty in the context of “various relationships, not only for officers and directors of corporations,” and specifically, maintaining that Louisiana courts “enforce these duties in the context of employers and employees”).

§ 1.2.7  Sixth Circuit

There were no qualifying decisions within the Sixth Circuit.

§ 1.2.8  Seventh Circuit

Costello v. Bd. of Trs. of the Flavius J. Witham Mem. Hosp., 2019 U.S. Dist. LEXIS 203174 (S.D. Ind. November 22, 2019) (applying Indiana law) (The Southern District court granted summary judgment against plaintiff’s breach of fiduciary duty claim, holding while an employer has a “special duty” to employees under Indiana law, this does not rise to a fiduciary duty, when the required specificity of misrepresentation or intentional material omission has not been pled under the Fed. Rules Civ. Proc. Rule 9(b) or 12(b)(6) standard.); Indeck Energy Servs. v. DePodesta, 2019 IL App (2d) 190043[4] (applying Illinois law) (the Second District Appellate court reversed and remanded the trial court’s directed verdict in defendant company officer’s favor, when defendant breached his fiduciary duty to company by usurping a corporate opportunity and not disclosing the opportunity to company, but instead forming a new competing company that is “reasonably incident to [plaintiff company’s] present or prospective line of business.); Oliver v. Isenberg, 2019 IL App (1st) 181551-U[5] (the Seventh Circuit held that the plaintiff, as an employee, did not breach his fiduciary duty when he contacted his former clients after his resignation from the company; however, the same plaintiff, as corporate officer and one-third shareholder, did breach his fiduciary duty to his corporate employer when there is sufficient evidence that the plaintiff “undertook actions before he ceased being a corporate officer, and that he exploited his position as an officer” to steer clients away from the company before leaving.

§ 1.2.9  Eighth Circuit

Key Outdoor, Inc. v. Briggs, 2020 U.S. Dist. LEXIS 143170 (S.D. Iowa 2020) (unpublished).  Briggs sold the outdoor advertising business that he had owned and operated to Key Outdoor, Inc.  As part of that transaction, Briggs signed a noncompete agreement in which he promised to not engage in the outdoor advertising business for a period of 15 years in any of the counties where his prior business had done business.  The noncompete agreement did not prevent Briggs from engaging in outdoor advertising business in other areas.  Also as part of that transaction, Briggs began working as an employee of Key Outdoor.  While an employee of Key Outdoor, Briggs started another outdoor advertising business, Motion Media.  Motion Media provided outdoor advertising business services only in counties that were not covered by Briggs’s noncompete agreement, but the business was incorporated in and managed from counties that were covered by the noncompete agreement.  Key Outdoor sued Briggs and Motion Meida on a number of theories, including breach of the duty of loyalty and breach of the noncompete agreement.  As to the breach of the duty of loyalty claim, the court found that the noncompete agreement was inconsistent with the common law duty of loyalty, and so it superseded and modified that duty.  In particular, the common law duty of loyalty prohibits an employee from competing with their employer at all, but the noncompete agreement prohibited Briggs from competing only in certain counties and did not prevent him from competing in others.  The court thus granted summary judgment in favor of Briggs on Key Outdoor’s fiduciary duty claims.[6]

Additional Cases of Note 

Yant Testing, Supply & Equip. Co. v. Lakner, 2020 U.S. Dist. LEXIS 38005 (D. Neb. 2020) (unpublished) (finding likelihood of success on the merits and granting preliminary injunction as to claim for breach of fiduciary duty and duty of loyalty where employee engaged in covert actions to take and utilize employer’s confidential information and solicit employer’s customers before and after leaving employment).

§ 1.2.10 Ninth Circuit

There were no qualifying decisions within the Ninth Circuit.

§ 1.2.11 Tenth Circuit

There were no qualifying decisions within the Tenth Circuit.

Additional Cases of Note 

Aaron v. Rowell, 2019 U.S. Dist. LEXIS 179467 (D. Colo. 2019) (unpublished) (order granting summary adjudication in favor of defendant on claim for breach of duty of loyalty where plaintiff failed to raise a triable issue of fact on element of damages.  The court found that the breaches of confidentiality allegedly committed by defendant did not cause plaintiff to incur any damages because breaches occurred after deal at issue had already been terminated, and therefore, did not result in any monetary loss to plaintiff);[7] Atlas Biologicals Inc. v. Kutrubes, 2019 U.S. Dist. LEXIS 161501 (D. Colo. 2019) (unpublished) (trial court finding after five-day bench trial that defendant employee and director breached his fiduciary duties to plaintiff (bovine-serum producer) by making misrepresentations to plaintiff’s customers and prospective customers about product offerings and by soliciting their business on behalf of defendant’s contemplated new venture in direct competition with plaintiff’s business);[8] ATS Grp., LLC v. Legacy Tank & Indus. Servs., LLC, 407 F.Supp.3d 1186 (W.D. Okla. 2019) (plaintiff alleged facts sufficient to overcome 12(b)(6) motion to dismiss as to cause of action for breach of fiduciary duty, “because the existence of a fiduciary duty is generally an issue of fact.”  The district court therefore found the allegations sufficient to avoid dismissal at the pleading stage) (applying Oklahoma law as to definition of “duty” and applying federal pleading standards);[9] DTC Energy Grp., Inc. v. Hirschfeld, 420 F. Supp.3d 1163 (D. Colo. 2019) (after weighing the three Jet Courier factors as provided under Colorado law, the court found the complaint failed to allege sufficient facts to state a claim for breach of the duty of loyalty as to former HR employee where the allegations pertaining to her alleged solicitation of customers for a rival competitor were conclusory and unsupported by specific factual allegations) (applying Colorado law);[10] Freebird Communs., Inc. v. Roberts, 2019 U.S. Dist. LEXIS 196668 (D. Kan. 2019) (unpublished) (order granting summary judgment in favor of defendants on plaintiffs’ claim for aiding and abetting breach of fiduciary duty where plaintiffs failed to produce any evidence in their opposition papers establishing the prima facie elements of claim, specifically that defendants “knowing” and “substantially assisted” in any alleged breach of co-defendants’ breach of his fiduciary duty to plaintiff) (applying Kansas law).[11] 

§ 1.2.12 Eleventh Circuit

There were no qualifying decisions within the Eleventh Circuit.

§ 1.2.13 D.C. Circuit

Democracy Partners v. Project Veritas Action Fund, 453 F. Supp. 3d 261 (D.D.C. Mar. 31, 2020).  Plaintiff, a consulting group that serves liberal political organizations, brought, among other claims, a claim of breach of fiduciary duty against defendant, an organization that investigates political campaigns.  The United States District Court for the District of Columbia denied Defendant’s motion for summary judgment on the breach of fiduciary duty claim.  Defendant enlisted an activist to assume a false identity, infiltrate Plaintiff’s offices, and record all of her activities there.  The activist secured work as an unpaid intern and was granted access to confidential strategy discussions.  She was not required to sign a nondisclosure agreement.  The activist secretly recorded footage that was used as part of a YouTube series titled “Rigging the Election” – a reference to the 2016 presidential campaign.  Plaintiff claimed that it lost consulting clients as a result of the series and brought suit.  The court found that the “types of services” provided weighed against granting summary judgment as the activist was granted access to conference calls and briefings that Defendant could not have accessed otherwise.  Additionally, the court found that the “legitimate expectations of the parties” weighed against granting summary judgment as the creation of a false identity tended to show that Defendant knew the activist would have fiduciary obligations to safeguard confidential information.  Additionally, that the activist was given unrestricted access to Plaintiff’s office spaces indicated the trust placed in the activist. 

§ 1.2.14 State Cases

Texas
Reeves v. Harbor Am. Cent., Inc., No. 14-18-00594-CV, 2020 Tex. App. LEXIS 3533 (Tex. App. Apr. 28, 2020).  William Reeves began working for Harbor America Central, Inc. (“Harbor America”) in 2006.  Reeves resigned in 2016 to start a competing company, Harvest Works.  Reeves sued Harbor America for breach of contract, alleging that Harbor America owed him over $1.6 million in commissions.  Harbor America asserted counterclaims for misappropriation of trade secrets, breach of fiduciary duty, and breach of duty of loyalty, alleging that Reeves misused confidential information to develop Harvest Works, and that he solicited Harbor America’s customers in violation of Reeves’s obligations under his employment agreement with Harbor America.  Reeves filed a motion to dismiss Harbor America’s counterclaims under the Texas Citizens Participation Act (“TCPA”), arguing that the counterclaims implicated his right of association.  The lower court rejected Reeves’s motion, holding that the TCPA “categorically does not apply to non-compete, non-solicitation, or trade-secret claims.”  The appellate court reversed, however, finding that Harbor America’s counterclaims allege conduct or communications implicating Reeves’s exercise of his right of association, such as soliciting Harbor America’s customers, converting Harbor America’s customer lists, and breaching his fiduciary duty by forming a competing business.  The appellate court determined that Reeves’s conduct, and Harbor America’s corresponding counterclaims, “are based on, relate to, or are in response to Reeves’s endeavor with others [] to collectively express, promote, pursue, or defend a moon interest, the common interest being the competing business of Harvest Works.”

Additional Cases of Note 

Plank v. Cherneski, 2020 Md. LEXIS 307, at *4 (Md. Ct. App. July 14, 2020) (under Maryland law, a breach of fiduciary duty may be actionable as an independent cause of action).

§ 1.3  Restrictive Covenants: Covenants Not to Compete

§ 1.3.1  United States Supreme Court

There were no qualifying decisions within the United States Supreme Court.

§ 1.3.2  First Circuit

Russomano v. Novo Nordisk Inc., 960 F.3d 48 (1st Cir. 2020).  Court of Appeal affirmed the District Court’s conclusion that former employer was not likely to succeed on its claim for breach of noncompete provision and denied the former employer’s motion for temporary restraining order and preliminary injunction against plaintiff and his present employer because the one year non-compete agreement was triggered by company’s letter to employee eliminating his position and had expired long before he changed employers. The Court also concluded that the non-compete agreement was not reinstated when the former employer rehired the plaintiff in a new role after eliminating his earlier role because plaintiff was not required to sign a new non-compete agreement when he was rehired.

Additional Cases of Note 

T.H. Glennon Co. v. Monday, No. 18-cv-30120-WGY, 2020 U.S. Dist. LEXIS 45917 (D. Mass. Mar. 17, 2020) (holding that a former employee who incorporated a business which sold products that were similar to the products sold by his employer was not in violation of a non-compete agreement because the employer effectively blocked the employee from actually carrying out his competitive plans by his timely request for a Temporary Restraining Order); Townsend Oil Co., Inc. v. Tuccinardi, 2020 Mass. Super. LEXIS 12, Nos. 144242, 1984CV04024-BLS2 (Jan. 13, 2020) (holding that employer was not entitled to preliminary injunction to enforce non-competition agreement against a former employee because the employer did not show that mailers with the former employee’s name on them constituted solicitation by the former employee, any economic loss to the employer from losing customers to the competitor as a result of the former employee’s new employment was not very large and was readily quantifiable, and the employer failed to show that the former employee took any customer lists or other confidential information with him, or that he has used or disclosed any of the employer’s confidential information); Genzyme Corp. v. Hanglin, 2019 Mass. Super. LEXIS 1202, *1-2, 2019 WL 7496271 (employer was not entitled to a preliminary injunction preventing a former employee from starting work for a competitor in breach of a noncompetition agreement because protection of the employer from ordinary competition was not a legitimate business interest, the employer did not show that the employee was in possession of or had access to confidential information or that enforcement of the agreement was necessary to protect the employer’s goodwill, and, given the employer’s inability to identify with any specificity the confidential information that the employee could exploit, the harm can hardly be said to be significant.)

§ 1.3.3  Second Circuit

Flatiron Health, Inc. v. Carson, 2020 U.S. Dist. LEXIS 48699 (S.D.N.Y. March 20, 2020) (unpublished).  Plaintiff claimed that a former employee physician anticipatorily repudiated the terms of a noncompete agreement when he took a job at a competitor company and began working there immediately.  Plaintiff sought a declaratory judgment and injunction, arguing that the agreement barred plaintiff from working for the competitor for one year.  After a bench trial, the court denied the request.  It found that the noncompete provision was unenforceable, since its blanket prohibition against engaging in business “similar to” plaintiff’s was impermissibly vague and overbroad.  Additionally, the prohibition on working for a “competing business” encompassed entities with which plaintiff did not compete.  Since the provision was unenforceable, defendant had not anticipatorily breached the agreement.  The court later denied plaintiff’s motion for a temporary restraining order and injunction against defendant working for the competitor while the case was on appeal.  Flatiron Health, Inc. v. Carson, 2020 U.S. Dist. LEXIS 58086 (S.D.N.Y. Apr. 1, 2020) (unpublished). [12]

Additional Cases of Note   

Testing Servs., N.A. v. Pennisi, 2020 U.S. Dist. LEXIS 40476 (E.D.N.Y. March 9, 2020) (unpublished) (holding that a five-year noncompete clause was reasonable in the context of the sale of a business, especially since it was limited to two states and only prohibited activities directly performed by the prior business). 

§ 1.3.4  Third Circuit

Cabela’s LLC v. Highby, 801 Fed. Appx. 48 (3rd Cir. (W.D. Pa.) 2020).  Cabela’s appealed the district court’s order denying its motion for preliminary injunction, which sought to enjoin Matthew Highby, Molly Highby, and Highby Outdoors, LLC’s alleged violations of certain non-compete, non-solicitation, and confidentiality provisions in their agreements.  The court affirmed the district court’s denial of preliminary injunction.  The appellate court held that the district court correctly identified a conflict between Delaware’s fundamental policy in upholding the freedom of contract and Nebraska’s fundamental policy of not enforcing contracts that prohibit ordinary competition.  Because the agreements were executed in Nebraska between Nebraska citizens, the alleged breaches occurred in Nebraska, and Cabela’s claims are partially based upon Nebraska law, Nebraska has materially greater interest in applying its laws to the agreements if the agreements prohibit ordinary competition.  Further, the court held that the district court correctly determined that the agreements constrained ordinary competition because they prohibited the Highbys from using the general skills and training they acquired while they were employed at Cabela’s in any retail space selling hunting, fishing, and other outdoor products with a reach outside of Nebraska. 

Because of the unenforceability of the non-compete provision, the nonsolicitation provision in the agreements was also void.  The court held that the covenant and noncompetition provisions formed one integrated covenant not to compete that constituted an unenforceable restraint on trade under Nebraska law.  Under Nebraska law, where multiple provisions in an agreement form one covenant not to compete, any void provision invalidates the remainder of the agreement.  Thus, because Cabela’s failed to show a likelihood of success on the merits for its breach of contract claims, the court affirmed the district court’s denial of preliminary injunction.

Tilden Rec. Vehicles, Inc. v. Belair, 786 Fed. Appx. 335 (3rd Cir. (E.D. Pa.) 2019).  When George Belair joined Tilden Recreational Vehicles, Inc. d/b/a/ Boat-N-RV Superstore (“BNRV”) as a sales representative, he signed an employment non-compete agreement stating he could not work in recreational vehicle sales within fifty miles of BNRV for a year after his employment.  When Belair left BNRV for its competitor Chesaco, BNRV sued for breach of contract.  The district court granted BNRV’s request for a preliminary injunction enforcing a modified, less-restrictive version of the agreement.  The appellate court held that the district court did not abuse its discretion in concluding BNRV was entitled to preliminary relief.  Because Belair received significant training specific to RV sales, including confidential information regarding BNRV’s pricing and sales strategies relative to competitors, BNRV showed it likely had several legitimate protectable interests in restraining Belair’s employment.  However, the district court was required to consider a bond under Federal Rule of Civil Procedure 65(c) before issuing the preliminary injunction.  Because the district court did not consider a bond, the appellate court is vacated the preliminary judgement, without disturbing the district court’s other holdings, remand with instructions to consider an appropriate bond should the district court reissue the preliminary injunction. 

Additional Cases of Note 

ADP, LLC v. Trueira, No. 18-cv-3666, 2019 U.S. LEXIS 181537 (D.N.J. Oct. 18, 2019) (granting preliminary injunction where the plaintiff and defendant were competitors, and such harm consists of potential misuse of confidential information, loss of business opportunities, and impairment of business goodwill); ADP, LLC v. Pittman, No. 19-cv-16237, 2019 U.S. Dist. LEXIS 181274 (D.N.J. Oct. 18, 2019) (enjoining former ADP employee Pittman from working at an competitor after finding her noncompete and nonsolicitation agreements with ADP were unduly burdensome because they prohibited her from participating “in any manner” with a competing business and “blue-penciling” the agreements to only prohibit solicitation of ADP’s actual clients, prospective clients the former employer learned of while at ADP, and competition within certain geographical limits); Ardurra Grp., Inc. v. Gerrity, No. 19-3238, 2019 U.S. Dist. LEXIS 211177 (E.D. Pa. Dec. 9, 2019) (granting preliminary injunction to enforce “worldwide” noncompete provisions in a purchase agreement and an employment agreement because the relevant geographic scope, where the acts complained of occurred, was reasonable) (applying Delaware law); Citizens Bank, N.A. v. Baker, No. 2:18-cv-00826-RJC, 2020 U.S. Dist. LEXIS 44845 (W.D. Pa. Mar. 16, 2020) (granting defendant’s motion to modify preliminary injunction enforcing noncompete agreement due to a “change in circumstances” where the contractual noncompete duration was 12 months but the injunction had been enforced for 17 months); Lvl Co. v. Atiyeh, No. 19-cv-3406, 2020 U.S. Dist. LEXIS 114282 (E.D. Pa. June 30, 2020) (granting preliminary injunction where a non-convenantor who benefits from the covenantor’s relationship with a competition business must abide by the same restrictive covenant agreed to by the covenantor under Pennsylvania law) (applying Pennsylvania law); Revzip, LLC v. McDonnel, No. 3:19-cv-191, 2019 U.S. Dist. LEXIS 225648 (W.D. Pa. Nov. 14, 2019) (issuing temporary restraining order to stop McDonnell, former owner and employee of Power House, from continuing to breach his noncompete and nondisclosure agreements by working for a competing sandwich); Yost v. Mid-West Hose & Specialty, Inc., No. 18-cv-311, 2019 U.S. Dist. LEXIS 164417 (W.D. Pa. Sept. 25, 2019) (denying a preliminary injunction where the alleged harm will occur only in the indefinite future and the plaintiff did not establish a likelihood of success where it did not show the existence of an enforceable agreement).

§ 1.3.5  Fourth Circuit

Software Pricing Partners, LLC v. Geisman, 2020 U.S. Dist. LEXIS 105310 (W.D.N.C. 2020) (unpublished).  Software Pricing Partners, LLC (SPP) alleged that former member and manager, James Geisman, “misappropriated confidential information and trade secrets from SPP and used such information and trade secrets to solicit business in competition with SPP,” in breach of the Member Exit Agreement (MEA) he executed upon leaving SPP.  In response to Geisman’s motion to dismiss, the court held the noncompete provision vastly overbroad and unenforceable as a matter of law where the geographic restriction at issue extended to any country where plaintiff “in the future does business or has a customer.”  The court stated, “[e]ven if the Court could use its limited blue pencil authority to narrow the geographic restriction to the United States, the nationwide restriction coupled with the five-year time restriction would still be unreasonable.”  The court further held that the noncompete provision was unenforceable since it was an unreasonably broad restriction on indirect ownership because it prohibited Geisman from “indirectly owning an interest in any non-public entity that engages directly or indirectly in providing products or services directly or indirectly related to” plaintiff’s line of business.  Lastly, the court held the purported nondisclosure provision was more appropriately characterized as a noncompete provision and must be reasonable as to time and territory where it prevented “use or disclosure of all information related to SPP’s business, as well as all contacts and relationships related to SPP’s business—except in connection with performing services for SPP”.

Additional Cases of Note 

Allegis Grp., Inc. v. Jordan, 951 F.3d 203, 209-11 (4^th Cir. (Md.) (2020) (holding the customer and employee nonsolicitation and noncompete provisions in employer’s Incentive Investment Plan enforceable against employees who elected to participate in the Plan in exchange for 30 months of payments following separation from service because the relevant provisions were conditions precedent, not restrictive covenants subject to a reasonableness standard or forfeiture of benefits accrued during employment, “inasmuch as the Plan explicitly used words indicative of conditionality”); Lumber Liquidators, Inc. v. Cabinets To Go, LLC, 415 F. Supp. 3d 703, 716 (E.D. Va. 2019) (where there are restrictive covenants between two businesses as opposed to between employer and employee, both the Supreme Court of Virginia and the Fourth Circuit have made clear that courts should apply the less-restrictive Merriman factors: “restraint of trade will be held void as against public policy if it is [1] unreasonable as between the parties or [2] is injurious to the public”) (citations omitted).

§ 1.3.6  Fifth Circuit

Kamel v. Avenu Insights & Analytics LLC, 2020 U.S. Dist. LEXIS 147391 (E.D. Tex. May 5, 2020) (unpublished).  Avenu Insights & Analytics (“Avenu”) employed Ted Kamel as a client services manager interacting with Avenu’s Texas clients.  In March 2018, Kamel ended his employment with Avenu and began working with Avenu’s competitor. Kamel brought a state action seeking declaratory judgment that his agreement with Avenue, which included non-disclosure, non-solicitation, and non-competition clauses, was unenforceable.  The non-compete provision was for a period of twelve months following termination and limited the geographic area to thirteen named states.  Avenu removed the case to district court and sought summary judgment that the agreement was enforceable.  The district court first found that since Kamel only worked for Avenu in Texas serving Texas client, the thirteen state restriction was overbroad and unreasonable.  The district court reformed the contract, holding the reasonable restriction would be to limit Kamel from competing with Avenu in Texas only.  The district court then granted Avenu’s motion for summary judgment and found that under Texas law the non-compete agreement, as reformed, was valid and enforceable as it was ancillary to an otherwise enforceable agreement and was reasonably limited to be enforceable in Texas only.

Additional Cases of Note 

Hydroprocessing Assocs., LLC v. McCarty, 2019 U.S. Dist. LEXIS 145108 (S.D. Miss. Aug. 23, 2019) (granting preliminary injunction to enforce non-compete clause against former employees, holding a 12–18 month non-compete/recruitment period limited to “covered client[s]” is reasonable and does not impose an undue hardship); Marquis Software Sols., Inc. v. Robb, 2020 U.S. Dist. LEXIS 33385 (N.D. Tex. Feb. 27, 2020) (granting a temporary restraining order to enforce non-compete clause against former employee – after reforming the non-compete clause to be reasonably limited to employee’s scope of activity for former employer); Realogy Holdings Corp. v. Jongebloed, 957 F.3d 523, 526 (5th Cir. 2020) (affirming district court entering a preliminary injunction to enforce on-compete agreement and its holding that the non-compete agreement was enforceable).

§ 1.3.7  Sixth Circuit

There were no qualifying decisions within the Sixth Circuit.

§ 1.3.8  Seventh Circuit

Oliver v. Isenberg, 2019 IL App (1st) 181551-U[13] (The Seventh Circuit held that restrictive covenants unreasonable and unenforceable, when it prevents shareholders from “working at any manufacturer’s representative company in any manner whatsoever” for a period of five years, and a court’s use of the “blue pencil doctrine” is discretionary.)

§ 1.3.9  Eighth Circuit

Key Outdoor, Inc. v. Briggs, 2020 U.S. Dist. LEXIS 143170 (S.D. Iowa 2020) (unpublished) (applying Illinois law as to breach of noncompete agreement claim).  Briggs sold the outdoor advertising business that he had owned and operated to Key Outdoor, Inc.  As part of that transaction, Briggs signed a noncompete agreement in which he promised to not engage in the outdoor advertising business for a period of 15 years in any of the counties where his prior business had done business.  The noncompete agreement did not prevent Briggs from engaging in outdoor advertising business in other areas.  Also as part of that transaction, Briggs began working as an employee of Key Outdoor.  While an employee of Key Outdoor, Briggs started another outdoor advertising business, Motion Media.  Motion Media provided outdoor advertising business services only in counties that were not covered by Briggs’s noncompete agreement, but the business was incorporated in and managed from counties that were covered by the noncompete agreement.  Key Outdoor sued Briggs and Motion Meida on a number of theories, including breach of the duty of loyalty and breach of the noncompete agreement.  The breach of noncompete agreement claim was based solely on the fact that Briggs incorporated Motion Media in, and managed it from, counties covered by the noncompete agreement (because Motion Media’s actual services were not provided in covered counties, those services were not the basis for the breach of noncompete agreement claim).  Applying Illinois law, the court held that the noncompete agreement was unenforceable to the extent it barred Briggs from merely incorporating and managing an outdoor advertising business in any of the covered counties (where no actual services were provided in those covered counties).  The court explained that Key Outdoor failed to show how that specific restriction would be necessary to protect its interest in goodwill, particularly given that the agreement permitted Briggs to conduct business in all non-covered counties with any customers (including Key Outdoor’s customers).  The court thus granted summary judgment in favor of Briggs on Key Outdoor’s breach of noncompete agreement claim.[14] 

Perficient, Inc. v. Munley, 2019 U.S. Dist. LEXIS 152026 (E.D. Mo. 2019) (unpublished).  Munley had been an employee of Perficient, Inc. (Perficient), a digital transformation consulting firm specializing in the sale and implementation of customized third-party software, including Salesforce, among others.  Munley had direct responsibility for Perficient’s Salesforce practice and five other business units, and he also served for a time as the acting general manager of the Salesforce practice.  Munley executed multiple contracts with Perficient containing restrictive covenants, including a covenant not to work for a competing business or perform competitive duties for 24 months following his departure, a covenant not to use or disclose Perficient’s trade secrets or other proprietary information, and a covenant not to solicit Perficient’s clients or employees for a period of 12 or 24 months following his departure.  Munley subsequently left Perficient and joined another company to oversee the operation of its pre-existing Salesforce business unit according to the new company’s proprietary internal processes and strategies.  Perficient sued Munley and the new company on a number of theories, including breach of contract (for breach of each of the restrictive covenants to which Munley agreed) and trade secret misappropriation.  As to the restrictive covenants not to compete, the court first recognized that employers have legitimate protectable interests in trade secrets and customer contacts.  The court nevertheless found that the restriction against working for any competing business was broader than necessary to protect Perficient’s interests and was therefore unenforceable.  The court emphasized that Perficient failed to show how performing work for the new company relating to products for which Perficient does not provide consulting services would implicate its protectable interests, and so the blanket prohibition of this covenant was unenforceable.  However, the court found that the narrower covenant not to perform competing duties was enforceable because it related directly to the customers and trade secrets put at risk by Munley’s inside knowledge.  Accordingly, the court granted an injunction enjoining Munley from performing services on behalf of the new company relating Salesforce products.[15] 

Signature Style, Inc. v. Roseland, 2020 U.S. Dist. LEXIS 1098 (D. Neb. 2020) (unpublished).  Roseland had been an employee of Signature Style, Inc. (Signature Style), which designs, manufactures, and sells championship and class rings nationwide.  While an employee of Signature Style, and as a condition of his continued employment, Roseland signed a noncompete agreement in which he promised he would not set up his own competing business within 50 miles of any Signature Style location, for a period of 3 years.  Roseland subsequently notified Signature Style that he would be resigning and starting his own jewelry design and sales business.  Signature Style sued Roseland on a number of theories, including breach of the noncompete agreement.  Roseland moved to dismiss, arguing that the noncompete provision was unenforceable as a matter of Nebraska law.  The court agreed, holding that while an employer has a legitimate business interest in protection against a former employee’s competition by improper and unfair means, the employer is not entitled to protection against ordinary competition from a former employee.  The court found that because the noncompete agreement did not merely restrict Roseland from unfairly competing by soliciting customers with whom he had actually done business while at Signature Style, but instead broadly restricted him from competing at all, it was unenforceable as a matter of law.  The court thus granted Roseland’s motion to dismiss the breach of contract claim as to the noncompete provision.

Additional Cases of Note 

CRST Expedited, Inc. v. TransAm Trucking, Inc., 960 F.3d 499 (8th Cir. (Iowa) 2020) (in context of intentional interference with a contract claim by one trucking company against competitor hiring the first company’s truck drivers, finding noncompete provision with a term of only the portion of a ten-month restrictive period that remained as of the employee’s departure to be short and reasonable and thus not void in violation of public policy); Farm Credit Servs. of Am., FLCA v. Mens, 456 F. Supp. 3d 1173 (D. Neb. 2020) (finding employee’s covenant not to compete was valid and enforceable because employer had protectable interest in customers that employee had brought with her upon joining employer)[16]; Goff v. Arthur J. Gallagher & Co., 2020 U.S. Dist. LEXIS 79437 (W.D. Ark. 2020) (unpublished) (finding, where the plaintiff had sold his business to the defendant and been retained as an employee of the defendant, that the plaintiff had failed to prove that a five-year, geographically-limited noncompetition provision he had entered into as part of sale and employment was unreasonable, invalid, and unenforceable); H&R Block Tax Servs., LLC v. Cardenas, 2020 U.S. Dist. LEXIS 36307 (W.D. Mo. 2020) (unpublished) (granting temporary restraining order and preliminary injunction against former franchisee based on violation of noncompete and nonsolicitation covenants, finding the covenants (which were for two-years and limited to the former franchise territory) appropriately protected legitimate interests and were appropriately narrow in both time and geographic reach); Parameter LLC v. Poole, 2019 U.S. Dist. LEXIS 211459 (E.D. Mo. 2019) (unpublished) (where the defendant former employee had signed agreements promising that for one year after termination he would not compete with plaintiff former employer or solicit its customers, but had then joined a competitor and solicited the plaintiff’s customers, granting preliminary injunction enjoining the defendant from (i) maintaining employment with the competitor in a capacity that would be competing and (ii) soliciting customers that he had solicited or contacted during final 12 months of prior employment); Sterling Computs. Corp. v. Fling, 2019 U.S. Dist. LEXIS 177168 (D.S.D. 2019) (unpublished) (granting temporary restraining order and preliminary injunction against former employee who breached agreement to not compete with former employer or solicit their clients for one year following termination of employment).

 § 1.3.10 Ninth Circuit

There were no qualifying decisions within the Ninth Circuit.

§ 1.3.11 Tenth Circuit

There were no qualifying decisions within the Tenth Circuit.

Additional Cases of Note 

Biomin Am. V. Lesaffre Yeast Corp., 2020 U.S. Dist. LEXIS 54647 (D. Kan. 2020) (unpublished). (Denial of TRO seeking enforcement of individual defendant Bell’s noncompete provisions for failure to establish likelihood of success on breach of noncompete provision claim where plaintiff Biomin failed to show that the two entities were competitors.  Where there was a seven-month delay between the time Bell left his employment with Biomin and when Biomin began investigating whether Bell was in violation of his noncompetition agreement; where Biomin voiced no objection to Bell accepting employment with Lesaffre; and where Bell even met with his replacement at Biomin while already employed at co-defendant Lesaffre Yeast to help the transition process, these facts suggested that Biomin did not view Lesaffre as a competitor and tipped the scales in Bell’s favor at this preliminary stage);[17] CGB Diversified Servs. v. Adams, 2020 U.S. Dist. LEXIS 45729 (D. Kan. 2020) (unpublished) (order denying plaintiff’s motion for expedited discovery in action alleging unlawful competition using proprietary trade secrets where motion not supported by objective factual submissions, but rather relied entirely on conclusory allegations); Email on Acid, LLC v. 250ok, Inc., 2020 US Dist. LEXIS 10301 (D. Colo. 2020) (unpublished) (denial of preliminary injunction where breach of noncompete clause was established but there was no evidence in the record of any past, current or future irreparable harm.  “[T]he Court will not presume irreparable harm based solely on an alleged breach of a non-compete provision.  Instead, the Court must find evidence in the record establishing irreparable harm resulting from such a breach”).

§ 1.3.12 Eleventh Circuit

There were no qualifying decisions within the Eleventh Circuit.

§ 1.3.13 D.C. Circuit

There were no qualifying decisions within the D.C. Circuit.

§ 1.3.14 State Cases

Arkansas
Lamb & Assocs. Packaging, Inc. v. Best, 595 S.W.3d 378 (Ark. Ct. App. 2020).  Best was employed as an officer manager for Lamb & Associates Packaging, Inc. (Lamb), a corrugated box converter.  As a condition of his employment at Lamb, Best signed an agreement with noncompete, nondisclosure, and nonsolicitation provisions.  Lamb discovered that, while employed at Lamb, Best had shared some of Lamb’s confidential information (including plans to add a new high-speed digital printer to its process) with his uncle, who had used the information to establish a new digital printing business for corrugated board that might work with competing corrugated box converters.  Lamb terminated Best and sued him on a number of theories, including breach of his noncompete agreement.  The court held that the noncompete provision was unenforceable and affirmed the lower court’s denial of injunctive relief.  The court acknowledged (i) that the standard for an enforceable noncompete covenant includes that it be designed to defend an employer’s protectable business interest, and (ii) that protectable business interests include an employer’s trade secrets and other confidential business information.  The court nevertheless held the noncompete provision at issue unenforceable on the grounds that Lamb did not have a protectable business interest in its confidential information, including because it did not take steps to prevent other employees with access to confidential information from using it to compete with Lamb post-employment.  In particular, other employees with access to confidential information had not been required to enter into agreements like Best’s with noncompete, nondisclosure, and nonsolicitation provisions.  The court additionally held the noncompete provision was unenforceable because the information at issue was readily ascertainable and thus not confidential, and so it could not be used by Best to gain an unfair competitive advantage. 

lowa
Cedar Valley Med. Specialists, PC v. Wright, 940 N.W. 2d 442 (Iowa Ct. App. 2019).  Wright was a cardiothoracic surgeon who was an employee of Cedar Valley Medical Specialists (CVMS).  His employment contract with CVMS included: (i) a noncompete provision in which he agreed that for two years following the end of his employment with CVMS, he would not engage in any business or practice related to medicine within 35 miles of Black Hawk County, Iowa; and (ii) a liquidated damages provision for any breach of the noncompete provision (in the amount of the greater of $100,000 or the amount of Wright’s compensation from CVMS during the final six months of his employment).  Wright retired from CVMS on December 31, 2017 and began working full time for another hospital on January 1, 2017.  CVMS sued for breach of the employment contract’s noncompete provision and sought to enforce the liquidated damages provision.  Wright argued that the noncompete provision was unenforceable and prejudicial to the public interest and that the liquidated damages provision constituted an unenforceable penalty.  The court disagreed and affirmed the lower court’s judgment in favor of CVMS against Wright.  The court found the noncompete provision enforceable because (i) it was necessary to protect CVMS’s business because the Black Hawk County area could only support one cardiothoracic surgeon and Wright would be directly competing with any replacement surgeon CVMS hired, (ii) the terms of the noncompete (i.e., two years and 35 miles) were facially reasonable under Iowa law and not unduly restrictive as to time or area, and (iii) the restriction was not contrary to public policy because the record indicated there were only limited emergent surgeries in the area, community needs were being accommodated by hospitals in the wider area around the county, and CVMS was seeking only to enforce the liquidated damages provision rather than enjoining Wright from continuing to practice.[18]

Pennsylvania
Rullex Co., LLC v. Tel-Stream, Inc., 232 A.3d 620 (Pa. 2020).  Rullex sought a preliminary injunction to prevent Karnei from continuing to work for a competitor in alleged violation of a noncompete agreement (“NCA”) that Karnei signed at least two months after he began working for Rullex.  The Superior Court panel and trial court held that because Karnei executed the NCA after commencing working for Rullex, it needed to be supported by new and valuable consideration, beyond mere continued work.  The Supreme Court rejected the lower courts’ bright-line rule.  Instead, it held that “for a restrictive covenant executed after the first day of employment to be enforceable absent new consideration, the parties must have agreed to its essential provisions as of the beginning of the employment relationship.”  Because Karnei started working for Rullex before signing the NCA, and Rullex failed to prove the parties agreed to its substantive terms at the outset of Karnei’s employment, the NCA was not enforceable.

Additional Cases of Note 

Andy-Oxy Co., Inc. v. Harris, 834 S.E.2d 195 (N.C. Ct. App. 2019) (finding that the noncompete covenant was overly broad because it effectually precluded the defendant from having any association with a business in the same field as the plaintiff, even future work distinct from his duties as an outside salesman; North Carolina’s ‘blue pencil’ rule allows a court to at most, choose not to enforce a distinctly separable part of a covenant and because the covenant was not distinctly separable, the entire covenant was rendered unenforceable)[19]; Special Servs. Bureau, Inc. v. Vollmerhausen, 2019 W. Va. LEXIS 401, at *4-5 (W.Va. 2019) (affirming the circuit court’s holding that the employee’s skills acquired during her employment – responding to calls, owning a cell phone, digital camera, and fax machine, attending all show cause, forfeiture, and any other hearings requiring attendance, requiring all persons on bond to call in on a monthly basis, ensuring payments were collected weekly for accounts that had premiums extended on credit, and ensuring that all bail contracts are completely filled out within a week – were of a general managerial nature, and therefore the restrictive covenant in her employment agreement would not be enforced because such skills and information are not protectable employer interests); Arvidson v. Buchar, 72 V.I. 50 (Super. Ct. 2019) (refusing to certify an interlocutory appeal because, even though the Virgin Islands Supreme Court has not yet ruled on the validity of covenants not to compete, the jurisprudence on covenants was largely consistent and thus there was not a substantial ground for difference in opinion with regard to the law); Zanella’s Wax Bar, LLC v. Trudy’s Wax Bar, LLC, 291 So. 3d 693, 699 (La. Ct. App. 2019) (holding a non-competition agreement, which purported to establish non-competition territory as 50-mile radius of any of plaintiff’s locations without identifying or defining the parishes or municipalities in which plaintiff had locations, was invalid and unenforceable under La. Rev. Stat. Ann. § 23:921).

§ 1.4  Customer and Employee Non-solicitation Agreements

§ 1.4.1  United States Supreme Court

There were no qualifying decisions within the United States Supreme Court.

§ 1.4.2  First Circuit

NuVasive, Inc. v. Day, 954 F.3d 439 (1st Cir. 2020).  In Nuvasive, the court of appeals found that in issuing a preliminary injunction enforcing an employment contract’s non-solicitation clause, the lower court properly applied Delaware law under the employment contract’s choice of law provision because there was no basis for finding that the fundamental public policy exception to Massachusetts’ choice of law rules did not apply, such that the choice of law clause selecting Delaware law should not be given effect, since an employee’s voluntary decision to leave a job was not a qualifying change under Massachusetts’ material change doctrine.

§ 1.4.3  Second Circuit

There were no qualifying decisions within the Second Circuit.

Additional Cases of Note 

Flatiron Health, Inc. v. Carson, 2020 U.S. Dist. LEXIS 48699 (S.D.N.Y. March 20, 2020) (unpublished) (declining to enforce nonsolicitation provision that made no distinction between customers defendant interacted with and those he did not).[20]

§ 1.4.4  Third Circuit

There were no qualifying decisions within the Third Circuit.

§ 1.4.5  Fourth Circuit

There were no qualifying decisions within the Fourth District.

Additional Cases of Note 

ABC Phones of N.C., Inc. v. Yahyavi, 2020 U.S. Dist. LEXIS 59047, at *8 (E.D.N.C. 2020) (unpublished) (denying grant of preliminary injunction, holding the non-monetary harms alleged—loss of employees and employee morale—were “blanket assertions devoid of any justification for relief,” where “[w]ithout factual enhancement, it [was] not clear to the court that they [were] harms that once lost, are lost in perpetuity”); ABC Phones of N.C., Inc. v. Yahyavi, 2020 U.S. Dist. LEXIS 128867, at *16 (E.D.N.C. 2020) (unpublished) (denying defendant’s motion to dismiss, holding “the terms recruit, solicit, or induce, are not impermissibly vague by their plain meaning or as applied to the Agreement as a whole, because this clause applies only to employees, which is a clear, finite number of people”); Allegis Grp., Inc. v. Jordan, 951 F.3d 203, 209-11 (4^th Cir. (Md.) 2020) (holding that the customer and employee nonsolicitation provisions in employer’s Incentive Investment Plan were not subject to a reasonableness standard since the provisions were conditions precedent for payment to employees who elected to participate in the Plan following separation of service)[21];  GMS Indus. Supply v. G&S Supply, LLC, 441 F. Supp. 3d 221, 227-28 (E.D.V. 2020) (rejecting the magistrate judge’s report and recommendation concluding that enforcing the employee nonsolicitation clause would require “blue penciling”, impermissible under Virginia law, because although the unenforceable customer nonsolicitation clause and supplier non-disclosure clauses were in the same paragraph, the employee nonsolicitation clause could instead be “severed”  and construed independently since they were “separate clauses that impose distinct duties”); GMS Indus. Supply v. G&S Supply, LLC, 441 F. Supp. 3d 221, 230-31 (E.D.V. 2020) (holding that the customer nonsolicitation clause was overbroad and unenforceable because it prohibited soliciting a customer or prospective customer to “refrain from establishing or expanding a relationship with the Company” which the court said could be interpreted to prohibit “soliciting a company to purchase goods that do not even compete with [the plaintiff]’s products”); inVentiv Health Consulting, Inc. v. French, 2020 U.S. Dist. LEXIS 24352, at *14 (E.D.N.C. 2020) (unpublished) (limiting discovery of the identities of the defendant’s employer’s employees to those who were once employed by the plaintiff, reasoning that the identities of any of the employees who were never plaintiff’s employees are likely not relevant to plaintiff’s claims for breach of the nonsolicitation provision of the employment agreement); Software Pricing Partners, LLC v. Geisman, 2020 U.S. Dist. LEXIS 105310, at *21 (W.D.N.C. 2020) (unpublished) (holding the nonsolicitation provision at issue unreasonable because it went so far as to prohibit defendant from soliciting any person with whom plaintiff may potentially do business)[22].

§ 1.4.6  Fifth Circuit

Brock Serv., L.L.C. v. Rogillio, 936 F.3d 290 (E.D. Tex. Feb. 21, 2020).  Richard Rogillio began working for Brock Services, L.L.C. (“Brock”) in 2010.  When he joined, Rogillio signed an Employment and Non-Competition Agreement (“Agreement”), requiring that he not solicit Brock employees or compete with Brock within a “Restricted Area.”  The Agreement defined the “Restricted Area” as a “100 mile radius of any actual, future or prospective customer, supplier, licensor, or business location of the Company,” and listed specific “parishes” that fell under the provision.  The Agreement also contained a “severability provision,” saving the Agreement should a court find any part of the Agreement invalid.  Rogillio resigned from Brock in 2018, and went to work for a direct competitor.  As part of his new employment, Rogillio was assigned to manage employees in some of the parishes listed in the “Restricted Area,” and met with Brock customers in some of the listed parishes.  Brock sued Rogillio for violating his employment agreement’s non-compete provision, and requested a preliminary injunction.  In response, Brock argued that the Agreement was overbroad because it was not limited to specified parishes and municipalities, as required by Louisiana law.  The lower court reformed the Agreement to only list the specified parishes, and granted the preliminary injunction.  The appellate court affirmed, holding that the lower court properly reformed the overboard provisions.  The appellate court rejected Rogillio’s argument, finding that the trial court did not err when it excised “the offending language.”  The resulting Agreement was valid because it “specified particular parishes and the municipality of New Orleans.  The court concluded that the lower court’s reformation “served only to narrow the provision’s scope by removing catch-all clauses that went beyond the listed parishes.”  Rogillio knew that he could be prohibited from working in the identified parishes when he signed the Agreement, and therefore the injunction was proper.

Zywave, Inc. v. Cates, 2020 U.S. Dist. LEXIS 44082 (E.D. Tex. Feb. 21, 2020).  Justin Cates was a sales representative for Zywave, Inc. (“Zywave”), and supervised a number of employees as part of his role with the company.  At the outset of his employment, Cates signed a Non-Solicit and Non-Compete Agreement (“Agreement”).  Cates resigned in August 2017, and joined ThinkHR Corporation.  Zywave sued Cates and ThinkHR, alleging that Cates recruited Zywave employees to work with ThinkHR, and alleged that ThinkHR tortuously interfered with the Non-Solicit and Non-Compete Agreement between Cates and Zywave.  With respect to the tortious interference allegation, ThinkHR admitted that it intentionally interfered with the Agreement, but asserted the defense of “justification” and “good faith,” claiming that it discussed the Agreement with their legal counsel before recruiting then-Zywave employees.  However, when asked to produce evidence of such communications with its legal counsel, ThinkHR stated that no written legal opinion exists in support of its defense, and that it would not disclose the name of the attorney that it allegedly consulted regarding the Agreement.  Because ThinkHR could not, or would not, produce evidence of its “good faith and honest assertion of a right,” the court found that it was liable for tortious interference of the Agreement.

§ 1.4.7  Sixth Circuit

There were no qualifying decisions within the Sixth Circuit.

§ 1.4.8  Seventh Circuit

There were no qualifying decisions within the Seventh Circuit.

§ 1.4.9  Eighth Circuit

Beef Prods., Inc. v. Hesse, 2019 U.S. Dist. LEXIS 197236 (D.S.D. 2019) (unpublished).  Hesse was an employee of Beef Products, where he served as head of sales and oversaw a fourteen-person sales group for more than a decade.  In connection with transitioning from full time employment to on-call employment with Beef Products, Hesse signed an agreement with Beef Products that included a nonsolicitation provision in which Hesse promised that for one year following his on-call employment, he would not directly or indirectly solicit for employment any Beef Products employee with whom he had personal contact in the prior twelve months.  Hesse then began working for another company and solicited several of Beef Products’ sales employees to work at that new company.  When Beef Products sued Hesse on a number of theories, including breach of contract, Hesse counterclaimed and, inter alia, requested a declaratory judgment that the nonsolicitation provision was per se unenforceable.  The court held that the nonsolicitation provision was enforceable because it was not a general restraint on trade, as it only prohibited Hesse from soliciting Beef Products’ employees.  The court emphasized that it did not (i) restrain Hesse from exercising a lawful profession, trade, or business; (ii) restrain Hesse generally from recruiting personnel for his new company in any manner except as to the small group of employees at Beef Products that Hesse willingly agreed to not solicit; or (iii) restrain the new company from recruiting personnel from Beef Products, so long as Hesse was not involved in such recruitment.  Thus, the court denied Hesse’s request for declaratory judgment.

Farm Credit Servs. of Am., FLCA v. Mens, 456 F. Supp. 3d 1173 (D. Neb. 2020).  Mens was hired as a crop insurance agent by Farm Credit Services of America, FLCA (Farm Credit).  Prior to being hired by Farm Credit, Mens had sold crop insurance for more than a decade and had developed business relationships with many customers through her personal contacts and community connections.  When Mens joined Farm Credit, approximately 50 of her existing customers followed her, transferring their business to Farm Credit.  During her employment at Farm Credit, Mens entered into an agreement with Farm Credit in which she agreed that for a period of two years following the end of her employment, she would not seek or accept employment with or solicit the business of or sell to any of the Farm Credit customers with whom Mens did business or had contact while employed at Farm Credit.  Mens subsequently left Farm Credit and joined a competitor selling the same or similar products within the same geographic area.  Upon learning of her move to the competitor, some of Mens’s 50 prior existing customers who had previously followed her to Farm Credit now followed her to her new employer, insisting that she continue to serve as their crop insurance agent.  Farm Credit sued Mens and sought an injunction.  Mens argued that the restrictive covenant agreement she had signed was unenforceable because Farm Credit had no legitimate interest in the customers that she had developed prior to working for Farm Credit.  The court disagreed, holding that notwithstanding her prior relationships with the customers, once Mens joined Farm Credit and the customers transferred their business to Farm Credit, those customers were new business for Farm Credit and Mens’s work with them was for the sole benefit of Farm Credit, such that Farm Credit had a protectable interest in those transferred customers.

Additional Cases of Note 

Farm Credit Servs. of Am., FLCA v. Tifft, 2019 U.S. Dist. LEXIS 234158 (D. Neb. 2019) (unpublished) (finding nonsolicitation provision restricting employee, for period of two years following termination, from soliciting customers with whom she worked was enforceable because two-year period was reasonable under the circumstances to protect the employer’s interest in maintaining its customer relationships and goodwill, the restriction was not unduly harsh and oppressive (even though it lacked a geographic limitation, because it was limited to customers with whom employee actually worked), and the restriction was not injurious the public interest); H&R Block Tax Servs., LLC v. Cardenas, 2020 U.S. Dist. LEXIS 36307 (W.D. Mo. 2020) (unpublished) (granting temporary restraining order and preliminary injunction against former franchisee based on violation of noncompete and nonsolicitation covenants, finding the covenants (which were for two years and limited to the former franchise territory) appropriately protected legitimate interests and were appropriately narrow in both time and geographic reach); Kistco Co. v. Patriot Crane & Rigging, LLC, 2019 U.S. Dist. LEXIS 198759 (D. Neb. 2019) (unpublished) (granting in part preliminary injunction against former employee who had agreed to restrictive covenant prohibiting, for one year following termination, solicitation or service of former employer’s custom but who had joined a competitor and proceeded to service former employer’s customers); Parameter LLC v. Poole, 2019 U.S. Dist. LEXIS 211459 (E.D. Mo. 2019) (unpublished) (where the defendant former employee had signed agreements promising that for one year after termination he would not compete with plaintiff former employer or solicit its customers, but had then joined a competitor and solicited the plaintiff’s customers, granting preliminary injunction enjoining the defendant from (i) maintaining employment with the competitor in a capacity that would be competing and (ii) soliciting customers that he had solicited or contacted during final 12 months of prior employment).

§ 1.4.10 Ninth Circuit

There were no qualifying decisions within the Ninth Circuit.

§ 1.4.11 Tenth Circuit

There were no qualifying decisions within the Tenth Circuit.

Additional Cases of Note 

Biomin Am. V. Lesaffre Yeast Corp., 2020 U.S. Dist. LEXIS 54647 (D. Kan. 2020) (unpublished).  (Denial of TRO to enforce nonsolicitation of customer provision in employment contract where insufficient evidence that plaintiff Biomin and defendant Lesaffre Yeast were competing entities, particularly where plaintiff’s submitted affidavits were based entirely on hearsay.  Defendant’s counter-affidavits were based on personal knowledge, and the court therefore afforded those more weight and reliability than the evidence submitted by plaintiff.  On balance, the court found that Biomin did not meet its burden of demonstrating a likelihood of success on its claim for breach of the customer nonsolicitation provision, because the record also established that the alleged “solicited” employee first resigned from her position at Biomin, and then she subsequently contacted co-defendant Bell inquiring about employment opportunities at Lesaffre (and not the other way around).)[23]  

 § 1.4.12 Eleventh Circuit

There were no qualifying decisions within the Eleventh Circuit.

§ 1.4.13 D.C. Circuit

There were no qualifying decisions within the D.C. Circuit.

§ 1.4.14 State Cases

Indiana
Heraeus Med., LLC v. Zimmer, Inc., 135 N.E.3d 150 (Ind. 2019).  After being promoted to a director role, Zimmer employee Kolbe signed a nonsolicitation agreement with the relevant term stating “employee will not employ, solicit for employment, or advise any other person or entity to employ or solicit for employment, any individual employed by company.”  (emphasis in original).  The agreement also contained a reformation clause, allowing the court to modify unenforceable provisions.  Zimmer was the then-exclusive distributor for Heraeus.  Heraeus created an affiliate company, Heraeus Medical, which Kolbe began working at and filled some positions with former Zimmer employees.  When The Indiana Supreme Court was tasked with determining whether the court of appeals properly modified the agreement under the “blue pencil doctrine” when it added language modifying the scope to only “those employees in which [Zimmer] has a legitimate protectable interest.”  The Supreme Court held that the “blue pencil doctrine” may only act as “an eraser—providing that reviewing courts may delete, but not add, language to revise unreasonable restrictive covenants.  And parties to noncompetition agreements cannot use a reformation clause to contract around this principle.”  Otherwise, reformation clauses may promote employers to create unenforceable agreements.

Additional Cases of Note 

Andy-Oxy Co., Inc. v. Harris, 834 S.E.2d 195 (N.C. Ct. App. 2019) (holding that the nonsolicitation covenant was unenforceable because it was overly broad and did not protect a legitimate business interest because it vaguely referred to all of the plaintiff’s customers within the restricted area without any limitations in scope to customers with whom the defendant had material contact during his employment and position);[24] SourceOne Grp., LLC v. Ray Gage & Myers & Gage, Inc., 138 N.E.3d 994 (Ind. Ct. App. 2019) (unpublished) (finding nonsolicitation agreement with a term of 30 months enforceable and not overly broad when defendant had access to plaintiff’s entire book of business, “customer” was reasonably defined and limited to only those during defendant’s tenure, and defendant’s position gave him “a unique competitive advantage”).

§ 1.5  Misappropriation of Trade Secrets

§ 1.5.1  United States Supreme Court

There were no qualifying decisions within the United States Supreme Court.

§ 1.5.2  First Circuit

There were no qualifying decisions within the First Circuit.

Additional Cases of Note 

Allstate Ins. Co. v. Fougere, No. 16-11652-JGD, 2019 U.S. Dist. LEXIS 168577 (D. Mass. Sept. 30, 2019) (unreported) (Defendants were liable for misappropriating customer information pursuant to the Defend Trade Secrets Act of 2016, in part, because their employment agreement stipulated that the information was confidential and belonged to Allstate Ins. Co.); Viken Detection Corp. v. Videray Techs., Inc., No. 19-10614-NMG, 2020 U.S. Dist. LEXIS 2138 (D. Mass. Jan. 7, 2020) (unpublished) (Plaintiff sufficiently pled trade secret misappropriation by alleging a former director of engineering started his own company with undisclosed product development information).

§ 1.5.3  Second Circuit

Capricorn Mgmt. Sys. v. Gov’t Emples. Ins. Co., 2020 U.S. Dist. LEXIS 45301 (E.D.N.Y. March 16, 2020) (unpublished).  Plaintiff agreed to provide medical bill review software designed specifically for defendant.  Plaintiff sent source code to defendant and otherwise provided the services for approximately six years before defendant implemented a new claims management platform utilizing software from another company.  Plaintiff alleged that this new software and system had been designed and developed using plaintiff’s operations and technology and brought claims for misappropriation of trade secrets and confidential information under the federal Defend Trade Secrets Act and the Maryland Uniform Trade Secrets Act.  The court affirmed a magistrate judge’s grant of summary judgement for defendants on those counts, finding that the “modules and methods” of plaintiff’s software were not a trade secret.  Plaintiff simply listed the functions of the software and failed to present evidence of how they functioned together in a unique way.  Furthermore, the software’s functionality was dictated by defendant and its proprietary business requirements.  Finally, plaintiff did not redact its copyright filings regarding the software, which “vitiates a trade secret claim.”

KCG Holdings, Inc. v. Khandekar, 2020 U.S. Dist. LEXIS 44298 (S.D.N.Y. March 12, 2020) (unpublished).  A financial services firm brought trade secret and other claims after defendant—a quantitative analyst for plaintiff—viewed and copied market “predictors” created by fellow analysts while he was applying for a job at a competitor.  There was no dispute that the predictors were trade secrets that defendant was told not to view.  However, defendant claimed that he did not improperly “use” the trade secrets, since he viewed the predictors only to improve his own personal knowledge and work for plaintiff.  The court disagreed, holding that “reviewing another’s trade secrets to develop one’s personal knowledge constitutes use, and therefore misappropriation—even if that review is ostensibly for the trade secret owner’s benefit.”  In reaching this decision, the court looked at the language of the statute, the Restatement (Third) of Unfair Competition, and case law, all of which supported that the defendant “used” a trade secret, even if it was for his own benefit and to develop his own knowledge and expertise.  The court acknowledged that the case “touches on the outer reaches of the definition of ‘use’” under federal and New York trade secret law, but the definition was meant to be broad.

Parchem Trading, Ltd. v. DePersia, 2020 U.S. Dist. LEXIS 25970 (S.D.N.Y. Feb. 14, 2020) (unpublished).  Defendant was a former sales employee of plaintiff.  Shortly before her departure, she sought from plaintiff a list of historical sales by product to Bristol-Myers Squibb.  She did not return the list prior to her departure.  Upon her departure, a contact from Bristol-Meyers Squibb wrote to her on LinkedIn, “You can’t leave Parchem! This is unacceptable.”  In response, defendant wrote, in part, “It was an absolute pleasure working with you.  I will be starting at Charkit in Newark, CT on May 9th.  Please contact me if there is anything I can help with . . . and hope to talk soon.”  Plaintiff alleged that defendant revealed proprietary information in that meeting and later diverted sales from plaintiff to defendant’s company.  The court disagreed and granted summary judgment to defendant.  Defendant had not signed a noncompete or nonsolicitation agreement with plaintiff and was free to pursue the meeting with Bristol-Meyers Squibb.  Even assuming that the purchase history list constitutes a trade secret, there was no evidence defendant misappropriated the list.  Nothing in the LinkedIn exchange implicated the use of any trade secret, and “the record demonstrates none of the unlikely-to-be-coincidental circumstances that typically create the possibility of such reasonable inferences.”

Additional Cases of Note 

Iacovacci v. Brevet Holdings, LLC, 437 F. Supp. 3d 367 (S.D.N.Y. 2020) (explaining that while the Defend Trade Secrets Act only applies to acts of misappropriation occurring on or after its enactment in May 2016, counterclaim defendants specifically alleged that the unlawful activity continued until plaintiff’s termination in October 2016, and they did not have to specify exactly what unlawful activity he committed post-May 2016 to survive a motion to dismiss); Kraus USA, Inc. v. Magarik, 2020 U.S. Dist. LEXIS 83481 (S.D.N.Y. May 12, 2020) (unpublished) (holding that plaintiff’s conversion claim could proceed, since the trade secrets plaintiff alleged defendant converted—technical product specifications, information on upcoming designs, sales data, e-commerce know-how and data, customer lists, vendor relationships, the identity of contractual counterparties, and internal cost structure and operating expenses—“were stored on the computer but likely shared in some tangible, documentary form”); Pauwels v. Deloitte LLP, 2020 U.S. Dist. LEXIS 28736 (S.D.N.Y. Feb. 19, 2020) (unpublished) (granting motion to dismiss misappropriation of trade secrets claim where the only steps plaintiff took to maintain secrecy of his financial model were to initial “most” of the spreadsheets, and he did not otherwise mark them as confidential or have an agreement with defendants to keep them secret); Smart Team Global, LLC v. HumbleTech, LLC, 2020 U.S. Dist. LEXIS 95452 (S.D.N.Y. June 1, 2020) (unpublished) (applying Virginia law) (holding that plaintiff’s common law claims were not preempted by the Virginia Uniform Trade Secrets Act, since plaintiff’s unfair competition, breach of loyalty, tortious interference, and unjust enrichment claims were not premised entirely on the alleged misappropriation of trade secrets).

§ 1.5.4  Third Circuit

Advanced Fluid Sys. v. Huber, 958 F.3d 168 (3rd Cir. (Pa.) 2020).  Huber worked for Advanced Fluid Systems (“AFS”), a company that distributes, manufactures, and installs hydraulic components and hydraulic systems.  In 2009, AFS entered into a three-year contract with the Virginia Commonwealth Space Flight Authority (the “Space Flight Authority”) to build, install, and maintain a hydraulic system for the NASA rocket launch facility on Wallops Island, Virginia.  AFS supplied Space Flight Authority with a package of confidential engineering drawings.  In 2012, Space Flight Authority was acquired by Orbital.  AFS did not execute a non-disclosure agreement with Orbital, but Orbital maintained a practice of only disclosing AFS’s drawings on a need-to-know basis.  During this time, Huber began sending various confidential AFS internal documents and engineering drawings to Livingston.  At issue was whether AFS, by virtue of its Agreement with the Space Flight Authority—a contract that explicitly designates the confidential information at issue in this case as the Space Flight Authority’s “exclusive property”—can maintain a trade secret misappropriation claim under Pennsylvania law. 

The court held that lawful possession of a trade secret can be sufficient to maintain a misappropriation claim, even absent ownership.  In other words, it is the secret aspect of the knowledge that provides value to the person having the knowledge.  While the information forming the basis of a trade secret can be transferred, as with personal property, its continuing secrecy provides the value, and any general disclosure destroys the value.  Further, the court held that ownership of a trade secret—or any intellectual property for that matter—undoubtedly imbues the owners with the authority to give other lawful possession, including by merely consenting to that possession.  Such possessory rights were given to AFS, even if a full ownership interest was not.  The course of conduct is evidence because it shows that AFS clearly had permission to hold and use the secrets.  While Space Flight Authority did not contractually bind itself to preserve confidentiality of AFS’s designed, it nevertheless believed it had such an obligation and conducted itself in a manner consistent with that belief. 

PPG Indus. v. Jiangsu Tie Mao Glass Co., No. 2:15-cv-00965, 2020 U.S. Dist. LEXIS 55687 (W.D. Pa. 2020).  In February 2015, PPG Industries, Inc. (“PPG”) learned that one its former employees stole and then sold multi-million-dollar trade secrets to Jiangsu Tie Mao Glass Company (“TMG”), a Chinese competitor of PPG.  PPG learned that TMG engaged in a years-long effort to obtain its proprietary information from the former employee in exchange for tens of thousands of dollars funneled to the employee via a TMG representative’s bank account.  The Federal Bureau of Investigation (“FBI”) arrested the former PPG employee.  PPG moves for default judgment on its trade secrets misappropriation claim.  Defendant moves to set aside the default.  Defendants’ motion to set aside default is based entirely on the argument that the court lacks personal jurisdiction over all three defendants.  PPG provided evidence to establish the court’s personal jurisdiction over all three defendants.  The Third Circuit’s usual standard for assessing a motion to set aside a default requires the Court to examine three factors.  However, when the default is void, the court need not invoke the three factors.  Instead, when the entry of default is void, it would be legal error for the court to deny defendant’s motion to set it aside.  Because defendants do not make any arguments under the three-prong test, the court denied the defendants’ motion because it determined it had personal jurisdiction, and thus the default judgment was not void. 

The court further granted a permanent injunction to protect against defendants’ use or threatened use of the misappropriated trade secrets.  The court found that there was an Erie doctrine problem, but determined that permanent injunctions were substantive law, which would be governed by state law.  Thus, the court applied Pennsylvania law to determine whether a permanent injunction should be granted.  In order to obtain a permanent injunction, the plaintiff must show: (1) the existence of a trade secret; (2) the communication of the trade secret pursuant to a confidential relationship; (3) the use or threatened use of the trade secret in violation of that confidence; and (4) harm.  The court found the PPG established each of these four parts, and granted a permanent injunction.

Additional Cases of Note 

Revzip, LLC v. McDonnell, No. 3:19-cv-191, 2019 U.S. Dist. LEXIS 211836 (W.D. Pa. Dec. 9, 2019) (denying preliminary injunction where the plaintiff did not establish that the balance of equities favored granting a preliminary injunction because there was no evidence that restraining competition by the defendants would prevent plaintiff’s alleged harm stemming from disclosure of trade secrets); Schuylkill Valley Sports, Inc. v. Corporate Images Co., No. 5:20-cv-02332, 2020 U.S. LEXIS 103828 (E.D. Pa. June 15, 2020) (holding that the plaintiff was not entitled to a preliminary injunction for trade secret misappropriation where it had not shown that the customer list that it alleged was a trade secret was ever used or disclosed where the only evidence presented was two emails sent by the two former employees with the customer list to their personal emails).

§ 1.5.5  Fourth Circuit

There were no qualifying decisions within the Fourth District.

Additional Cases of Note 

Albert S. Smyth Co. v. Motes, 2020 U.S. Dist. LEXIS 138631, at *8-12 (D. Md. 2020) (unpublished) (holding plaintiff employer, Smyth, failed to produce sufficient evidence to support a Dropbox account containing “49 folders, 603 subfolders, 4.8 gigabytes of data, and 10,323 files which together represented virtually all of the business records of the Smyth entities” met the definition of a trade secret (except for the customer lists), where plaintiff failed to produce any documents found in the 49 folders that allegedly contained trade secrets and merely provided the names of the folders which “offer[ed] limited insight into their contents”);  Id.at *14 (holding that mere retention of access to the plaintiff’s customer lists in violation of the plaintiff’s document policy did not alone amount to misappropriation within the meaning of the DTSA and the MUTSA); Brightview Grp., LP v. Teeters, 441 F. Supp. 3d 115, at 130-31 (D. Md. 2020) (finding the plaintiff was likely to succeed in showing that “the confidentiality policy contained in its handbook, coupled with its restriction of access to the underwritings to approximately three percent of all Brightview employees,” constituted reasonable security measures to protect its underwritings as trade secrets, even though defendants argued it did not require its employees to sign employment agreements or covenants, or that employees could copy underwritings onto a personal storage device); Id. at  137-38 (stating that although the Second Circuit’s holding in Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 118 (2d Cir. 2009), aligns it with other courts that employ a rebuttable presumption of irreparable harm in trade secret misappropriation cases, “[w]hile the Fourth Circuit has not affirmatively staked a position on this precise issue, it appears to require an individualized analysis of irreparable harm on a case-by-case basis”); Md. Physician’s Edge, LLC v. Behram, 2019 U.S. Dist. LEXIS 163536, at *15-16 (D. Md. 2019) (unpublished) (denying defendant’s motion for summary judgment because misappropriation of trade secrets can occur if the employee knows or has reason to know that he or she acquired them by improper means; the expiration of a nonsolicitation agreement does not constitute the expiration of a party’s obligation not to misappropriate trade secrets).

§ 1.5.6  Fifth Circuit

There were no qualifying decisions within the Fifth Circuit.

Additional Cases of Note 

Cajun Servs. Unlimited, LLC v. Benton Energy Serv. Co., 2020 U.S. Dist. LEXIS 11247 (E.D. La. Jan. 23, 2020) (granting injunction against defendant from further misappropriating plaintiff’s trade secrets after jury verdict found defendant had misappropriated plaintiff’s trade secrets under both the Defend Trade Secrets Act and the Louisiana Uniform Trade Secrets Act); Comput. Scis. Corp. v. Tata Consultancy Servs., 2020 U.S. Dist. LEXIS 51594 (N.D. Tex. Feb. 7, 2020) (granting in part defendant’s motion to dismiss plaintiff’s state law claims for unfair competition as preempted by the Texas Uniform Trade Secrets Act but denying defendant’s motion under the Defend Trade Secrets Act, finding plaintiff had pled sufficient facts to state a plausible claim for relief); Keurig Dr Pepper Inc. v. Chenier, 2019 U.S. Dist. LEXIS 142649 (E.D. Tex. Aug. 22, 2019) (granting temporary restraining order from any party using or disclosing plaintiff’s trade secret information and ordering the return of all files, documents, and devices containing plaintiff’s trade secrets).

§ 1.5.7  Sixth Circuit

There were no qualifying decisions within the Sixth Circuit.

§ 1.5.8  Seventh Circuit

Motorola Sols. v. Hytera Communs. Corp., 436 F. Supp. 3d 1150 (N.D. Ill. 2020).  Plaintiff Motorola alleged that defendant Hytera stole several of its employees in Malaysia, who then stole documents containing trade secrets, and then developed an almost identical radio to plaintiff’s, and sold it in the United States.  The trial court went through an extensive legal analysis to determine whether the Defend Trade Secrets Act of 2016 (DTSA) and the Illinois Trade Secret Act (ITSA) applied extraterritorially in a private cause of action.  The court analyzed the DTSA in context with its neighboring statute, 18 U.S.C. § 1837, and determined that if either prong of section 1837 is met, then the statute could apply extraterritorially in a civil context.  Defendants met prong two, because they committed “an act in furtherance of the offense” in the United States.  However, the court found that the ITSA did not “clearly express an intent by the legislature for extraterritorial reach” because the language relating to “geographical limitation” related to the “analysis of the reasonableness of restrictive covenants.”

§ 1.5.9  Eighth Circuit

Cambria Co. LLC v. Schumann, 2020 U.S. Dist. LEXIS 11373 (D. Minn. 2020) (unpublished).  Schumann was an employee of Cambria Company LLC (Cambria), a quartz surface manufacturer.  Cambria considered its recipes and manufacturing processes for making quartz surfaces, including modifications to the machines used in manufacturing quartz surfaces, to be proprietary, confidential, and trade secrets.  Because Cambria believed Schumann’s role exposed him to its secret information, it had him sign a confidentiality agreement and a two-year noncompete agreement.  Schumann resigned in December 2017 and went to work for a wood products manufacturer for the two-year duration of his noncompete agreement.  Schumann then joined a competing quartz surface manufacturer.  Cambria requested assurances from Schumann and the competitor that Schumann would not violate his confidentiality agreement.  The competitor assured Cambria it was hiring Schumann for his general knowledge and expertise and that he could perform his job duties without violating the confidentiality agreement; it further offered to instruct Schumann that it did not want to receive any confidential information or trade secrets in breach of any obligation to Cambria.  The competitor had Schumann sign an agreement to that effect.  Cambria nevertheless sued Schumann and the competitor on a number of theories, including trade secret misappropriation, arguing Schumann would inevitably breach the confidentiality agreement.  Cambria moved for a preliminary injunction to enjoin Schumann from working at the competitor while the case proceeded.  The court denied the injunction.

While accepting the proposition that Cambria had trade secrets, the court nevertheless found that Cambria had failed to identify them with sufficient specificity for the court to fashion an injunction.  The court emphasized as to this point that Cambria’s definition of the trade secrets at issue was a shifting target, and that the requirement of sufficiently identifying the trade secrets at issue was particularly important here because there was no allegation that Schumann had taken anything with him or behaved inappropriately when he left Cambria.  Next, the court found that Cambria did not establish a likelihood of success on its “inevitable disclosure” theory of misappropriation.  The court noted that Minnesota courts and the Eighth Circuit have neither accepted nor rejected the “inevitable disclosure” doctrine.  It then assumed, without deciding, that the doctrine could be applied in the correct case, but then held that this was not such a case.  The court explained that the burden is higher under the “inevitable disclosure doctrine,” requiring demonstrating a high probability of inevitable disclosure, and that the evidence and assertions Cambria proffered, which were contradicted and/or undermined by other evidence proffered by the defendants, failed to satisfy this heightened burden.

Perficient, Inc. v. Munley, 2019 U.S. Dist. LEXIS 152026 (E.D. Mo. 2019) (unpublished).  Munley had been an employee of Perficient, Inc. (Perficient), a digital transformation consulting firm specializing in the sale and implementation of customized third-party software, including Salesforce, among others.  Munley had direct responsibility for Perficient’s Salesforce practice and five other business units, and he also served for a time as the acting general manager of the Salesforce practice.  Munley executed multiple contracts with Perficient containing restrictive covenants, including a covenant not to work for a competing business or perform competitive duties for 24 months following his departure, a covenant not to use or disclose Perficient’s trade secrets or other proprietary information, and a covenant not to solicit Perficient’s clients or employees for a period of 12 or 24 months following his departure.  Munley subsequently left Perficient and joined another company to oversee the operation of its pre-existing Salesforce business unit according to the new company’s proprietary internal processes and strategies.  Perficient sued Munley and the new company on a number of theories, including breach of contract (for breach of each of the restrictive covenants to which Munley agreed) and trade secret misappropriation.  As to the trade secret misappropriation claim, the court noted the absence of evidence of specific trade secrets Munley might have misappropriated other than information he included in an email to Perficient’s CEO and CFO proposing a business deal between Perficient and the new company.  As to the information in that email, though, the court found that Munley used that information without Perficient’s consent and that Munley’s use of the information to broker a deal demonstrated that it has value to both companies.  The court nevertheless found no evidence of damages caused by the email, as it was sent only to Perficient (the owner of the trade secret information) and was not shared with anyone else.  The court thus concluded that Perficient could not succeed on its trade secret misappropriation claims.[25]

Smithfield Packaged Meats Sales Corp. v. Dietz & Watson, Inc., 2020 U.S. Dist. LEXIS 109309 (S.D. Iowa 2020) (unpublished).  Dietz & Watson, Inc. (Dietz), a seller of packaged deli products, hired Conrad, a former employee of Smithfield Packaged Meats Sales Corp. (Smithfield), another seller of packaged deli products, as part of Dietz’s effort to build a Midwest sales team and increase its Midwest sales.  Smithfield sued Dietz and Conrad on a number of theories, including trade secret misappropriation, and moved for a preliminary injunction on its trade secret misappropriation claims.  Smithfield identified the terms of its customer program agreements as the trade secret at issue.  At Smithfield, Conrad had served as Deli Sales Director for the central and southern regions of the United States, and in that position he had negotiated and supervised the performance of many of Smithfield’s programs with customers and was responsible for managing client relationships and training retail customers on deli industry knowledge.  Around the time Conrad left Smithfield to join Dietz, he downloaded various files from his Smithfield laptop to a USB drive and retained approximately 1,300 pages of hard copy documents.  The documents included information about Smithfield’s customer program terms.  The court found that the customer program terms were trade secrets.  It found they had independent economic value and were not generally known or readily accessible.  It further found that they were the subject of reasonable efforts to maintain their secrecy, because while Smithfield did not require most of its customers to sign confidentiality agreements, it took other reasonable steps to protect the confidentiality of its program terms.  The court further found that Smithfield had presented compelling evidence of threatened misappropriation, including based on Conrad’s actions prior to leaving Smithfield and the fact that Dietz appeared to be targeting Smithfield’s largest customers after hiring Conrad.  The court thus found a likelihood of success and granted a preliminary injunction.

Additional Cases of Note 

Yant Testing, Supply & Equip. Co. v. Lakner, 2020 U.S. Dist. LEXIS 38005 (D. Neb. 2020) (unpublished) (finding likelihood of success on the merits and granting preliminary injunction as to trade secret misappropriation claim, finding that customer list with not just client names but also private and direct email addresses, preferences, equipment costs, bid information, pricing information, and other financial information was protectable trade secret).

§ 1.5.10 Ninth Circuit

There were no qualifying decisions within the Ninth Circuit.

§ 1.5.11 Tenth Circuit

There were no qualifying decisions within the Tenth Circuit.

Additional Cases of Note 

Aaron v. Rowell, 2019 U.S. Dist. LEXIS 179467 (D. Colo. 2019) (unpublished) (denial of defendant’s summary judgment motion as to misappropriation of trade secrets claim brought under the Defend Trade Secrets Act (DTSA) and the Colorado Uniform Trade Secrets Act (CUTSA) where plaintiff’s evidence in opposition thereto raised enough of a factual dispute as to whether defendant disclosed the existence of proprietary deal);[26] Atlas Biologicals Inc. v. Kutrubes, 2019 U.S. Dist. LEXIS 161501 (D. Colo. 2019) (unpublished) (After five-day bench trial, trial court found in favor of plaintiff (a bovine serum-based product producer) against former employee for claim for misappropriation of trade secrets under CUTSA);[27] ATS Grp., LLC v. Legacy Tank & Indus. Servs., LLC, 407 F.Supp.3d 1186 (W.D. Okla. 2019)  (order granting 12(b)(6) motion to dismiss plaintiff’s federal and state law claims for misappropriation of trade secrets arising under both DTSA and the Oklahoma Uniform Trade Secrets Act (OUTSA) where plaintiff did not sufficiently allege that the information designated as trade secrets “derived independent economic value” from remaining confidential);[28] Biomin Am. v. Lesaffre Yeast Corp., 2020 U.S. Dist. LEXIS 54647 (D. Kan. 2020) (unpublished) (denial of TRO where plaintiff set forth no facts or evidence showing defendants used its trade secrets or confidential information in soliciting customers, and where plaintiff did not identify any specific trade secret or other confidential information allegedly used);[29] Biomin Am. v. Lesaffre Yeast Corp., 2020 U.S. Dist. LEXIS 93197 (D. Kan. 2020) (unpublished) (dismissal of claim brought under DTSA where complaint was devoid of factual allegations and relied primarily on legal conclusions, and therefore could not plausibly state a claim under DTSA against any defendant.  The court further declined to exercise supplemental jurisdiction over remaining state law claims where DTSA claim provided only anchor for federal jurisdiction); CGB Diversified Servs.v. Adams, 2020 U.S. Dist. LEXIS 64132 (D. Kan. 2020) (unpublished)  (order granting 12(b)(6) motion to dismiss claim for misappropriation of trade secrets under DTSA where allegations in complaint at most alleged that defendant had access to trade secrets as part of his employment, that he accessed that information, and that he went to work for a competitor.  The court declined to infer any wrongdoing from those facts alone, noting that doing so “would throw the plausibility standard out the window.”  The court further declined to exercise supplemental jurisdiction over plaintiff’s remaining state law claims for misappropriation of trade secrets under Kansas Uniform Trade Secrets Act (KUTSA) and breach of fiduciary duties where DTSA claim provided only anchor for federal jurisdiction); CGB Diversified Servs.v. Forsyth, 2020 U.S. Dist. LEXIS 84013 (D. Kan. 2020) (unpublished) (plaintiff agriculture and crop insurance underwriter alleged facts sufficient to defeat 12(b)(6) motion to dismiss claims for misappropriation of trade secrets under DTSA and KUTSA where complaint alleged that defendant used or provided to a third party confidential customer lists and information, types and levels of crop insurance coverage and insurance policy numbers.  Plaintiff further sufficiently alleged that its trade secrets “derive independent economic value” by remaining confidential by expressly pleading that the secrecy of its confidential and proprietary information provides it a competitive advantage); Cypress Advisors, Inc. v. Davis, 2019 U.S. Dist. LEXIS 223518 (D. Colo. 2019) (unpublished) (denial of defendant’s summary judgment motion on plaintiff’s cause of action for misappropriation of trade secrets under CUTSA where triable issue existed as to whether security over database was sufficient to be considered a trade secret) (applying Colorado law); DTC Energy Grp., Inc. v. Hirschfeld, 420 F. Supp.3d 1163 (D. Colo. 2019) (motion to dismiss claim for misappropriation of trade secrets under DTSA and CUTSA granted as to HR employee where allegations of soliciting customers did not require any use of identified “trade secrets,” and also granted as to corporate officer defendants where allegations at most showed that defendants knew that their rival company would attempt to compete for plaintiff’s business, not steal its trade secrets.  Motion to dismiss denied as to fourth defendant where complaint sufficiently alleged that he obtained confidential financial information and a Profit Calculator, and knew or had reason to know that the disclosure of trade secrets violated co-defendants’ duty of loyalty to plaintiff, sufficient to state a claim under both DTSA and CUTSA);[30]   Franchising v. Richter, 2020 U.S. Dist. LEXIS 113018 (D.N.M. 2020) (unpublished) (granting in part and denying in part defendant’s motion to compel discovery requests tailored at producing and identifying the proprietary information allegedly misappropriated by defendant); Freebird Communs., Inc. v. Roberts, 2019 U.S. Dist. LEXIS 196668 (D. Kan. 2019) (unpublished) (order granting summary judgment in favor of defendants on misappropriation of trade secrets claims brought under DTSA and KUTSA where plaintiffs’s opposition failed to produce any evidence showing any “reasonable measures” to maintain the information’s secrecy and where plaintiffs admitted they could not identify specific names, contact information, or specific documents that were allegedly misappropriated);[31] Genscape, Inc. v. Live Power Intelligence Co. NA, LLC, 2019 U.S. Dist. LEXIS 151735 (D. Colo. 2019) (unpublished) (order granting plaintiff’s motion to restrict in part access to plaintiff’s notice of identification of representative trade secrets in action asserting claims of violations under DTSA, CUTSA and Kentucky Uniform Trade Secrets Act, where sufficient argument was made that granting defendant party access to the restricted information (as opposed to their counsel as provided under the protective order) would cause competitive injury to Plaintiff); M.M.A. Design, LLC v. Capella Space Corp., 2020 U.S. Dist. LEXIS 26963 (D. Colo. 2020) (unpublished) (refusal of district court to exercise supplemental jurisdiction over defendant’s state law counterclaims where inadequate showing that the counterclaims derived from the same “nucleus” of operative facts as plaintiff’s direct claims sounding in misappropriation of trade secrets and common-law unfair competition.)

 § 1.5.12 Eleventh Circuit

There were no qualifying decisions within the Eleventh Circuit.

§ 1.5.13 D.C. Circuit

There were no qualifying decisions within the D.C. Circuit.

§ 1.5.14 State Cases

Gaskamp v. WSP USA, Inc., 596 S.W.3d 457 (Tex. App. 2020) (en banc).  WSP USA (“WSP”) sued former employees related to their alleged misappropriation of WSP’s trade secrets.  Trial court denied defendants’ motion to dismiss under the Texas Citizens’ Participation Act (“TCPA”) alleging the suit related to the defendants’ exercise of free speech.  The court of appeals affirmed, holding communications between defendants through which they allegedly misappropriated and used WSP’s trade secrets are not protected under the TCPA.  The court of appeals noted a split in case law regarding whether TCPA’s right of association protecting “common interest” applies to communications between, and to the sole benefit of, the alleged tortfeasors.  The court held that the state legislature’s 2019 amendment of the TCPA elected to limit the scope of “common interest” to matters of public concern.  Therefore the alleged conduct, communications solely between the five defendants, did not relate to matters of public concern and was not protected under the TCPA.

Additional Cases of Note

Johnston v. Vincent, 2020 La. App. LEXIS 769, 19-55 (La. App. 3 Cir May 20, 2020) (reversing trial court’s judgment granting involuntary dismissal, holding that the record established that the defendant was aware of the continued use of plaintiff’s trade secrets; did not stop that use; and continued to financially benefit); SciGrip, Inc. v. Osae, 373 N.C. 409, 420-22 (N.C. February 28, 2020) (upholding the trial court’s use of the lex loci test in the misappropriation of trade secrets context, which applies the substantive law of the state “where the injury or harm was sustained or suffered,” rather than the most significant relationship test which applies a totality of the circumstances test to determine the state that has the most significant relationship to the claim).

§ 1.6  Damages

§ 1.6.1  United States Supreme Court

There were no qualifying decisions within the United States Supreme Court.

§ 1.6.2  First Circuit

There were no qualifying decisions within the First Circuit.

§ 1.6.3  Second Circuit

There were no qualifying decisions within the Second Circuit.

§ 1.6.4  Third Circuit

There were no qualifying decisions within the Third Circuit.

Additional Cases of Note 

Revzip, LLC v. McDonnel, No. 3:19-cv-191, 2019 U.S. Dist. LEXIS 225648 (W.D. Pa. Nov. 14, 2019) (issuing temporary restraining order to stop McDonnell, former owner and employee of Power House, from disclosing or using any of Power House’s trade secrets in violation of his nondisclosure agreement, including secret recipes and customer information to a competing sandwich shop).[32]

§ 1.6.5  Fourth Circuit

There were no qualifying decisions within the Fourth District.

Additional Cases of Note 

Movement Mortg., LLC v. Franklin First Fin., Ltd., 2019 U.S. Dist. LEXIS 166766, at *10-11 (W.D.N.C. 2019) (applying North Carolina and Florida law) (holding that the plaintiff is entitled to $1,142,431.00 in lost profit damages for proving damages with reasonable certainty by: 1) submitting profit and loss data for the region over which its former employee was a market leader during his employment and the twelve-month time period during which he was prohibited from soliciting employees, customers, and referral sources; and 2) an affidavit from the employee’s manager, detailing the previous year’s and expected Net Income Before Taxes (NIBT) for the employee’s region where the manager avers that he would have expected the NIBT to either remain the same or increase if its former employee and his team had not left to work at the defendant’s company).

§ 1.6.6  Fifth Circuit

There were no qualifying decisions within the Fifth Circuit.

Additional Cases of Note 

StoneCoat of Tex., LLC v. Proposal Stone Design, LLC, 426 F. Supp. 3d 311 (E.D. Tex. Sept. 12, 2019) (holding that plaintiff was not entitled to damages because it did not retain an expert on economic damages) (“Estimation of damages should not be based on sheer speculation.  If too few facts exist to permit the trier of fact to calculate proper damages, then a reasonable remedy in law is unavailable.”).

§ 1.6.7  Sixth Circuit

There were no qualifying decisions within the Sixth Circuit.

§ 1.6.8  Seventh Circuit

Indeck Energy Servs. v. DePodesta, 2019 IL App (2d) 190043[33] (the Seventh Circuit ruled that the trial court did not err in denying disgorgement of defendant corporate officer’s management fees earned after resignation from plaintiff company or a constructive trust on profits because “their breaches…ended with their employment” with plaintiff company, and any future profits were “speculative at best”); NuVasive Clinical Servs. v. Neuromonitoring Assocs., LLC, No. 18 C 4304, 2020 U.S. Dist. LEXIS 64996 (N.D. Ill. Apr. 14, 2020) (when defendants hired plaintiff’s former employees via a staffing agency, in violation of a settlement agreement that prohibited them from hiring any employees employed by plaintiff for a one-year period, the trial court held the proper remedy was attorneys’ fees and for defendant to 1) cease employment of any former employee if their employment was continuous, and 2) bar any employee from working after March 11, 2020 for the same amount of time that employee worked prior to March 11, 2020).

§ 1.6.9  Eighth Circuit

There were no qualifying decisions within the Eighth Circuit.

§ 1.6.10 Ninth Circuit

There were no qualifying decisions within the Ninth Circuit.

§ 1.6.11 Tenth Circuit

There were no qualifying decisions within the Tenth Circuit.

Additional Cases of Note 

Atlas Biologicals Inc. v. Kutrubes, 2019 U.S. Dist. LEXIS 161501 (D. Colo. 2019) (unpublished).  (Award of $1,363,893.62 plus attorney’s fees found for plaintiff in connection with claim for misappropriation of trade secrets under CUTSA after five-day bench trial.  Amount did not reflect compensatory damages as they were found duplicative of the actual damages awarded in connection with its claim under the Lanham Act for trademark infringement, but included award of $681,946.81 for unjust enrichment and an additional $681,946.81 in exemplary damages in light of evidence of defendant’s “willful and wanton disregard” of plaintiff’s rights.  Award of $30,618.09 in damages awarded to plaintiff in connection with “breach of fiduciary duty” claim, which reflected the amount of compensation plaintiff paid defendant during time period of fiduciary breach.)[34]

§ 1.6.12 Eleventh Circuit

There were no qualifying decisions within the Eleventh Circuit.

§ 1.6.13 D.C. Circuit

There were no qualifying decisions within the D.C. Circuit.

§ 1.6.14 State Cases

Indiana
Am. Consulting, Inc. v. Hannum Wagle & Cline Eng’g, Inc., 136 N.E.3d 208 (Ind. 2019) (holding liquidated damages provisions in several employees’ nonsolicitation agreements were actually intended to punish the breaching employees by making them pay more than their actual salaries, or were not tied to actual losses, but instead tied to a percentage of the prior year’s revenue, or were variable depending on which employee breached).

lowa
Cedar Valley Med. Specialists, PC v. Wright, 940 N.W. 2d 442 (Iowa Ct. App. 2019).  Wright was a cardiothoracic surgeon who was an employee of Cedar Valley Medical Specialists (CVMS).  His employment contract with CVMS included: (i) a noncompete provision in which he agreed that for two years following the end of his employment with CVMS, he would not engage in any business or practice related to medicine within 35 miles of Black Hawk County, Iowa; and (ii) a liquidated damages provision for any breach of the noncompete provision (in the amount of the greater of $100,000 or the amount of Wright’s compensation from CVMS during the final six months of his employment).  Wright retired from CVMS on December 31, 2016 and began working full time for another hospital on January 1, 2017.  CVMS sued for breach of the employment contract’s noncompete provision and sought to enforce the liquidated damages provision.  Wright argued that the noncompete provision was unenforceable and prejudicial to the public interest and that the liquidated damages provision constituted an unenforceable penalty.  The court disagreed and affirmed the lower court’s judgment in favor of CVMS against Wright.  The court found the liquidated damages provision was not an unenforceable penalty because it was reasonable as it did not exceed the anticipated losses from Wright’s breach of the noncompete and because Wright is an intelligent and sophisticated surgeon who negotiated the terms of his employment with the liquidated damages in mind.[35]

Wisconsin
Sanimax LLC v. Blue Honey Bio-Fuels, Inc., 945 N.W.2d 366 (Wis. Ct. App. 2020) (affirming award of attorney fees to defendants, under Wis. Stat. § 134.90(4)(c), under the Uniform Trade Secrets Act (UTSA), when 1) plaintiff’s claims were “objectively specious” because customer lists in the grease collection industry are not trade secrets when they contain names and collector’s internal pricing, and 2) there is subjective bad faith when “it is basically retribution” because the employer is mad and has no evidence of misappropriation).

Additional Cases of Note 

Prime Communs., L.P. v. Spring Bus. Solutions, 202 Tex. Dist. LEXIS 2346 (Tex. 400th Jud. Dist. Mar. 25, 2020) (granting temporary restraining order and enjoining former employees from disclosing or making use of Prime’s confidential, proprietary, and trade secret information to assist or benefit any competitor of Prime, including but not limited to recruiting and hiring employees and offering products and services to customers) (“The Court is of the opinion that . . . Prime will suffer irreparable and immediate harm unless the Agreement between Prime and [former employee] is enforced and Defendants are enjoined from soliciting for employment individuals bound by noncompetition agreements with Prime and misappropriating Prime’s trade secrets.  Specifically, Prime will suffer immediate and irreparable harm to its business, its reputation, and its ability to compete.”).

[1] See, e.g., Smash Franchise Partners, LLC v. Kanda Holdings, Inc., No. 2020-0302-JTL, 2020 Del. Ch. LEXIS 263 (Ch. Aug. 13, 2020) (finding no trade secret protection for information disclosed on Zoom calls where a company “freely gave out Zoom information for [its calls],” “used the same Zoom meeting code for all of its meetings,” and “did not require that participants enter a password and did not use the waiting room feature to screen participants”); API Ams., Inc. v. Miller, 380 F. Supp. 3d 1141, 1149-50 (D. Kan. 2019) (finding that an employer took reasonable efforts to protect its trade secrets despite a remote working arrangement, because it required employees to sign confidentiality agreements and provided a network address, which “obivat[ed] any need to transmit messages and documents containing [the employer’s] trade secret information to [the employee’s] personal account).

[2] See e.g. AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc., 28 Cal. App. 5th 923 (2018) (questioning the “continuing viability” of precedent allowing for reasonable employee non-solicitation agreements, given the clearly “settled legislative policy in favor of open competition and employee mobility”).

[3] See, e.g., Cabela’s v. Highby, 801 Fed. Appx. 48 (3d Cir. Apr. 14, 2020) (holding that a Delaware choice-of-law provision was unenforceable because the agreement was negotiated in Nebraska between Nebraska citizens, and the alleged breaches occurred in Nebraska, and thus, Nebraska had the “materially greater interest” in the litigation.).

[4] See Section 1.6.8 for a summary of the court’s ruling on the issue of remedies.

[5] See Section 1.3.8 for a summary of the court’s ruling on the issue of the restrictive covenant.

[6] See Section 1.3.9 for a summary of the court’s ruling on the issue of the noncompetition provision.

[7] See Section 1.5 for a summary of the court’s ruling on the issue of misappropriation of trade secrets claim.

[8] See Section 1.5 for a summary of the court’s ruling on the issue of misappropriation of trade secrets claim and Section 1.6 for a summary of the court’s assessment of damages.

[9] See Section 1.5 for a summary of the court’s ruling on the issue of misappropriation of trade secrets claim.

[10] See Section 1.5 for a summary of the court’s ruling on the issue of misappropriation of trade secrets claim.

[11] See Section 1.5 for a summary of the court’s ruling on the issue of misappropriation of trade secrets claim.

[12] See Section 1.4.3 for a summary of the court’s ruling on the issue of the customer nonsolicitation provision.

[13] See Section 1.2.8 for summary of the court’s ruling on the issue of fiduciary duty.

[14] See Section 1.2.9 for a summary of the court’s ruling on the issue of the duty of loyalty.

[15] See Section 1.5.9 for a summary of the court’s ruling on the issue of trade secret misappropriation.

[16] See Section 1.4.9 for a summary of the court’s ruling on the restrictive covenant, which included a prohibition against soliciting customers.

[17] See Section 1.4 for a summary of the court’s ruling on the issue of employee nonsolicitation claim, and Section 1.5 for a summary of the court’s ruling on the issue of misappropriation of trade secrets claim.

[18] See Section 1.6.14 for a summary of the court’s ruling on the issue of the liquidated damages provision.

[19] See Section 1.4.14 for a summary of the court’s ruling on the issue of Customer and Employee Nonsolicitation Agreements.

[20] See Section 1.3.3 for a summary of the court’s ruling on the issue of the noncompete provision.

[21] See Section 1.3.5 for an additional case of note on the issue of Covenants Not to Compete.

[22] See Section 1.3.5 for a summary of the court’s ruling on the issue of Covenants Not to Compete.

[23] See Section 1.3 for a summary of the court’s ruling on the issue of noncompete covenants and Section 1.5 for a summary of the court’s ruling on the issue of misappropriation of trade secrets claim.

[24] See Section 1.3.14 for the court’s ruling on the issue of Covenants Not to Compete.

[25] See Section 1.3.9 for a summary of the court’s ruling on the issue of the noncompetition restrictive covenants.

[26] See Section 1.2 for a summary of the court’s ruling on the issue of breach of duty of loyalty claim.

[27] See Section 1.2 for a summary of the court’s ruling on the issue of breach of fiduciary duty and Section 1.6 for a summary of the court’s assessment of damages.

[28] See Section 1.2 for a summary of the court’s ruling on the issue of breach of fiduciary duty claim.

[29] See Section 1.3 for a summary of the court’s ruling on the issue of noncompete covenants and Section 1.4 for a summary of the court’s ruling on the issue of employee nonsolicitation claim.

[30] See Section 1.2 for a summary of the court’s ruling on the issue of breach of loyalty claim.

[31] See Section 1.2 for a summary of the court’s ruling on the issue of breach of fiduciary duty claim.

[32] See Section 1.3.4 for a summary of the court’s ruling on the issue of covenants not to compete.

[33] See section 1.2.8 for the court’s ruling on defendant’s breach of fiduciary duty.

[34] See Section 1.2 for a summary of the court’s ruling on the issue of breach of fiduciary duty and Section 1.5 for a summary of the court’s ruling on the issue of misappropriation of trade secrets.

[35] See Section 1.3.14 for a summary of the court’s ruling on the issue of the noncompete provision.