An August 10 decision from the District Court of New Jersey in Bramshill Investments LLC v. Pullen highlights the dangers posed to an employee who opts to forward or download work information to a private account.
And yes, I get asked about this an awful lot - usually by an employee, and almost invariably, after they've already done it.
"What's the danger in doing that?" you ask.
The short answer: if your (former) employer chooses to sue you for misappropriating their confidential, proprietary information, chances are that you will be stuck in that litigation for the long haul, incurring significant legal fees to defend yourself - regardless of whether that information was, in the end, legitimately proprietary or not.
The Legal Reasons for Why Downloading the Company's Confidential Information Subjects Employees to Liability
Fortunately, the Federal Court's opinion in Bramshill Investments LLC v. Pullen is well-written, and provides a nice synopsis of the law in New Jersey on this subject.
In this case, the plaintiff claimed that in or around August 2019, its outside compliance consultant discovered that Pullen was “sending proprietary documents and information from her Bramshill email account to her SparHawk email account,” including files such as Plaintiff’s “most-coveted client list” and various other “employee client lists.” After terminating defendant, Bramshill sued Pullen under a number of different legal theories, including under the Defend Trade Secrets Act ("DTSA") for misappropriation of their trade secret information.
Defendant moved to dismiss the complaint at the outset of the action, contending that the complaint lacked specificity as to how Pullen used this confidential information to harm plaintiff, and was therefore ripe for dismissal.
But that's not how the Court held.
Instead, the Court stated, in pertinent part, as follows:
"The DTSA and NJTSA require a plaintiff to show “(1) the existence of a trade secret, defined broadly as information with independent economic value that the owner has taken reasonable measures to keep secret, and (2) misappropriation of that secret, defined as the knowing improper acquisition and use or disclosure of the secret.” Par Pharm., Inc. v. QuVa Pharm, Inc., 764 F. App’x 273, 278 (3d Cir. 2019) ...
"Misappropriation is defined in the DTSA to include “[1] ‘acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means’ or [2] ‘disclosure or use of a trade secret of another without express or implied consent’ in specified circumstances.” AUA Priv. Eq. Partners, LLC v. Soto, No. 17-8035, 2018 WL 1684339, at *4 (S.D.N.Y. Apr. 5, 2018) (quoting 18 U.S.C. § 1839(5) (emphases added)). “Improper means” is defined under the DTSA as “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.”4 18 U.S.C. § 1839(6). Taken together, the DTSA “contemplates three theories of liability: (1) acquisition, (2) disclosure, or (3) use.” Soto, 2018 WL 1684339, at *4 (quoting Cave Consulting Grp., Inc. v. Truven Health Analytics Inc., No. 15-2177, 2017 WL 1436044, at *4 (N.D. Cal. Apr. 24, 2017)).
Critically, in turning back defendant's attempt to dismiss the complaint, the District Court specifically held that
"At the motion to dismiss stage, a plaintiff is not required to make specific allegations regarding a defendant’s use or disclosure of trade secrets to state a prima facie claim of misappropriation. See Chubb INA Holdings Inc. v. Chang, No. 16-2354, 2017 WL 499682, at *10 (D.N.J. Feb. 7, 2017) (further citations omitted).
The Takeaway
As we and our colleagues who work in the non-compete space always advise our clients on the employee side of the equation - it is never a good idea to download or forward your company's client information to your private account; it makes it much, much more likely your former employer will choose to sue you, if for no other reason than to make an example out of you to their other employees, and it will also make it much easier for them to do so successfully.
