Weak Links in Trade Secret and Computer Fraud Litigation

Strengtening trade secret protectionsA company’s Federal Trade Secret Claim and Computer Fraud and Abuse Act claim were recently dismissed by a Michigan federal district judge. The dismissal was avoidable. But it also offers several key lessons for employers and employees when it comes to protecting and using confidential information.

The Trade Secret and Computer Fraud Litigation

The case, Ukranian Future Credit Union v Seikaly,  is somewhat convoluted. But the Cliff-note version is that the Ukrainian Future Credit Union sued its former employee, Lidia Shibanov, in Michigan State court. That suit alleged Shibanov improperly approved loan transactions.

While Shibanov was employed by the Credit Union, she emailed to her personal email address confidential Credit Union documents. In the state court litigation, the Credit Union argued Shibanov and her lawyers improperly obtained and used the confidential information. But the Michigan state court declined to protect that information as requested by the Credit Union.

The Credit Union then sued Shibanov and her attorneys in federal court. The federal suit asserted violations of the Computer Fraud Abuse Act (CFAA) and later tried to amend to add a claim under the federal Defend Trade Secret Act (DTSA).

Against this backdrop, the Michigan Federal Court dismissed the Credit Union’s suit and denied its request to amend to add a DTSA claim. The Court reasoned:

  • The Credit Union did not allege its former employee emailed confidential information to herself intending to defraud the Credit Union. This intent was required to state Computer Fraud and Abuse Act claim.
  • The Credit Union failed to assert the information emailed by the employee to herself qualified as “trade secret” as required under the Defend Trade Secrets Act.

On this last point, the Court rejected the Credit Union’s claim that two policies (Employee Fraud Policy and “ECommerce Policies and Procedures) showed it took reasonable steps to protect the secrecy of the alleged trade secret. These policies, as the Court noted, were not directed toward protecting confidentiality, but merely set forth general parameters for the operation of the Credit Union’s e-commerce and computer systems and general prohibitions against engaging in fraudulent acts.

Why this Matters to Employees and Employers

Again, this was a procedurally complicated case. But a few points are worth emphasizing for employers and employees:

  • First, no matter the reason, employees face litigation risks if they email or download information from an employer. We frequently encounter this issue in litigation between companies and their former employers. Just because there is a “smoking gun” email or document that favors your claims or defenses does not mean you have a right to take it.
  • Second, employers must make sure business reality matches up with litigation reality. In other words, if your company has not taken steps to meet the threshold requirements for a “trade secret,” i.e., maintaining the secrecy of information that is economically valuable, then a claim for trade secret misappropriation will not be successful.
  • Third, employers must evaluate how confidential information is protected. And careful scrutiny must be applied where such information consists of “trade secrets;” Simply having general policies about the use of technology or prohibited conduct means your company may forfeit down the road a trade secret claim.

For more information about federal or Michigan trade secret misappropriation and claims relating to these issues, contact attorney Jason Shinn. On behalf of his clients, Mr. Shinn has pursued and defended against these claims in Michigan and federal courts since 2001.

When it Comes to Enforcing a Noncompete Agreement is Timing Everything?

Enforcing noncompete agreement A recent noncompete case from Minnesota offers a cautionary tale for employers and cause for celebration for employees.

The case, Safety Center, Inc. v. Stier, (11/6/17), involved an employer that ran a treatment center for special-needs sex offenders. The employer sought to enforce its noncompete agreement against a former program director (Stier).

The noncompete agreement would have limited Stier’s ability to “provide services to [Safety Center’s] clients in any competitive capacity for … one year commencing from the termination of employment,” along with other post-employment restrictions.

Stier applied to the Safety Center on May 19, 2003. She also interviewed that day for a position. The next day, Stier was mailed a letter “to confirm [Stier’s] acceptance of the position [the Safety Center] offered [her].” The letter made no mention of a noncompete agreement. On Steir’s first day of employment in May 2003, she was presented for the first time a noncompete agreement, which she signed.

Fast forward to 2014 and Steir incorporated what would become a competing business. She later resigned from the Safety Center in 2015 to run her competing business.

The Noncompete Lawsuit

The Safety Center sued Steir and her business for various claims arising out of the breaching the noncompete agreement. Enforcement of the noncompete agreement, however, came down to when Stier signed it and whether continued employment provided sufficient consideration to enforce it.

The Court concluded the noncompete agreement was not enforceable. The Court reasoned that because Stier was not presented with or given notice of the noncompete agreement at the time the employment agreement was established, the noncompete agreement was not ancillary to the employment agreement. Further, the employer did not provide any independent “consideration” to support enforcement of the noncompete agreement.

Pay Attention to When Noncompetes are Signed

In our experience in representing both businesses and individuals in noncompete disputes, the circumstances presented in the above case happen all too often. For employers looking to avoid the circumstances, it is critical to closely examine your company’s process for making job offers and obtaining noncompete restrictions.

While this case addresses Minnesota law, it is also a cautionary tale for Michigan businesses as to whether additional consideration (beyond continued employment) is required to enforce a noncompete agreement. Or put another way, did the employee receive anything of value in exchange for signing the noncompete agreement? If not, then the agreement may not be enforceable. Michigan’s highest court has yet to speak on this issue, leaving the issue open for debate.

For more information about Michigan noncompete law, contact attorney Jason Shinn. Since 2001, Mr. Shinn routinely represents businesses and individuals in drafting, negotiating, and litigating noncompete disputes.

Last Day On the Job and Employee Decides to Take Down the President

Not every company has to worry that an employee’s last day on the job will be the day the employee takes down the President (more on this below). But all companies should have policies and procedures in place to prevent a departing employee from doing harm to the company.

So this happened today, for about 11 minutes Donald Trump ceased to exist … at least on Twitter (and coincidentally, a lot of celebratory noise was coming from Chief of Staff John Kelly’s office for those same 11 minutes). According to reports, Mr. Trump’s account was intentionally deactivated by someone on their last day on the job.

Mr. Trump’s Twitter account was replaced with Twitter’s standard error message, which read “Sorry, that page doesn’t exist!” Twitter’s official account later reported that Mr. Trump’s account had been temporarily deactivated due to a “human error.” This “error” was later attributed to a rogue Twitter employee who was working his or her last day.

President Trump TwitterHandling departing employees.

Terminating the employment relationship often happens because of a resignation by an employee or discharge by the employer. And how an employer handles different terminations may vary, depending on the reason employees are departing, the employees’ length of service or performance record, and the employee’s role in the company.

But regardless of why the employment relationship ended, all employers should have a plan in place for how the employment will wind down.

The end of the employment relationship is often where the trouble starts for employers.

An important decision for employers arises when an employee gives some notice of resignation, perhaps the standard two-weeks notice. Should your company continue the employment for the entire notice or something less? The example provided by the Twitter employee who took down Mr. Trump (and everyone thought it would be Robert Mueller) shows why you may not want a departing employee to remain actively employed after giving his or her notice of resignation.

Similarly, I’m representing a company in a trade secret misappropriation case. The lawsuit involves a former high-ranking manager initiated discussions with his manager about leaving the company. This discussion took place in early September 2016 with a resignation effective on September 28, 2016. In the interim, the employee misappropriated over 5 gigabytes of data from the company’s network. This misappropriation happened (or as the defendant explained it, the employer simply “misunderstood my intention”) because the individual continued to be employed after giving notice of his resignation.

Recommendations for handling employees leaving the company. 

Here are a few additional items your company may want to consider for departing employees:

  • Exit interviews. Many employers ask their departing employees to participate in an exit interview, either in person or by completing a written questionnaire. That’s fine. But it is also a good idea to conduct a pre-exit investigation to make sure there has been no suspicious downloads or transfers of company information.
  • Reminder about post-employment restrictions. If the departing employee signed a noncompete agreement, non-disclosure restriction, or other post-employment restriction, the employee should be reminded of those obligations.
  • Employer property. You should have a policy for reminding employees to return all property belonging to employers before their last day.

Contact employment attorney Jason Shinn for more information about this post, employee terminations, or HR best practices. Since 2001, Mr. Shinn has represented employers and employees in the areas of employment laws, wrongful terminations, and noncompete and trade secret claims.

Changes to the Michigan Business Court

Amendments to the Michigan Business Court SRevising Michigan Business Court Disputestatute go into effect today, October 11, 2017. These amendments primarily focus on clarifying the cases that are to be assigned to business courts.

Also, the statute was amended to clarify a Business Court’s jurisdiction to hear business disputes involving equitable or declaratory relief. The amendment now clarifies that a Business Court has jurisdiction over business and commercial disputes where equitable or declaratory relief is sought or in which the matter otherwise meets circuit court jurisdictional requirements, i.e., the amount in controversy exceeds $25,000.

Here is a link the amendments to the Business Court statute.

An action meeting the definition of a “business or commercial dispute” that is filed in a court with a business docket must be filed with the Business Court.

It is important for employers and individuals to understand that Business Court jurisdiction includes and excludes two frequent areas of litigation.

First, Business Court’s will have jurisdiction over disputes involving noncompete agreements.

Second, excluded from the jurisdiction of the Business Court are claims involving:

  1. Any employment discrimination;
  2. Any claims involving civil rights under Michigan’s Elliott-Larsen Civil Rights Act and Michigan’s Persons With Disabilities Civil Rights Act;
  3. Wrongful Discharge (except for those actions involving corporate officers or directors; and
  4. Worker’s Compensation Claims.

In 2012, the Michigan Legislature enacted the Business Court statute. The purpose of creating a specialized business Court docket was to provide a case management structure that facilitates more timely, effective, and predictable resolution of complex business cases. Our law firm routinely litigates in the Michigan business courts throughout the state. With this experience, the business court docket has been effective in meeting the goals of achieving efficient and predictable outcomes. This is especially true when it comes to noncompete litigation because judges may – but are not required to – revise a noncompete agreement for the circumstances presented by a particular case.

For these reasons, when selecting an attorney for a matter that involves a business or noncompete dispute, it is important to understand that attorney’s experience in the applicable Business Court.

For more information about Michigan Business Court litigation, including noncompete disputes, contact Jason Shinn. He has represented companies and individuals in matters involving business disputes and noncompete litigation since 2001.

Running out the Clock in Non-compete Disputes: A Frustrating Reality for Employees

Noncompete Litigation Strategy

One advantage employers often have when it comes to non-compete disputes is time; Employers may win the war without ever doing battle simply by running out the clock. This point was a central issue in a case pending before the Michigan Court of Appeals that our law firm recently argued.

Specifically, on October 4, 2017, I argued a case before the Michigan Court of Appeals about a noncompete dispute. The underlying lawsuit (filed in Circuit Court in Detroit) was somewhat unusual in that the plaintiff had sued to challenge the enforceability of the non-compete. The challenge was both to whether it was enforceable and as applied to the particular position with the new employer.

The non-compete agreement was between the individual and one company. A subsidiary company that was not a party to the contract sought to enforce it the restrictions. This subsidiary, however, was not a party or identified – directly or indirectly – in the agreement.

The case was aggressively positioned to be decided on motions. And the trial judge had expressed agreement that the new position likely did not violate the non-compete agreement; it involved a private-sector employer and a university. While this case was pending, the prospective employer initially agreed to keep the position open. However, business needs eventually intervened and the employment offer was withdrawn.

In this regard, the defendant (the prior employer/subsidiary) argued that because the job offer that sparked the suit was rescinded the case was now moot — or close to being moot. So in essence, the employer argued that it didn’t matter whether the non-compete was enforceable or, if so, whether it would have been violated by the new position because the job offer was withdrawn. Unfortunately, the trial judge agreed. And since the enforceability of the noncompete formed the foundation of the remaining claims, the judge also dismissed those claims.

The Court of Appeals

On appeal, we made several arguments for reversal and remand. One argument was that because of other provisions found in non-compete agreement – namely an invention/intellectual property assignment – the rights, or lack thereof, of the parties continued beyond the expiration of the non-compete agreement. We also argued there was no factual or legal basis for the subsidiary – a non-party to the agreement – to threaten legal action against the prospective employer for hiring my client. So this interference was not permissible under Michigan law.

Normally, one can get a feel for the outcome based on the questions and statements from the panel. But not this time; the panel gave no indication on which way their decision was leaning and only a few questions to both sides were asked.

Time is on the Employer’s Side 

Regardless of the outcome, this appeal illustrates the significant advantage employers have over individuals with non-compete enforcement. Often sending correspondence (commonly called a cease and desist letter) to a prospective employer advising them the person about to be hired is under a non-compete restriction is enough to sabotage the employment offer. Or, an employer can just run out the clock until the offer is withdrawn.

On this point, if I could wave my magic legislative wand, I would add a bad-faith provision to Michigan’s non-compete statute. Some protections are needed to guard against frivolous or overreaching threats of litigation by employers.

As a side note, Judge Henry Saad was one judge on my panel for this appeal. This would be his last day hearing appeals before retiring at the end of next month. Judge Saad has been a Court of Appeals judge since 1994. He was also my ethics professor in law school. As a judge, one thing you could count on from Judge Saad was preparation. He was always prepared with cases he decided. That preparation will be missed.

For more information about Michigan non-compete law, contact attorney Jason Shinn. Mr. Shinn routinely represents parties involved in non-compete matters. This experience includes drafting, negotiating, and representing parties trying to enforce non-compete restrictions or accused of breaching such agreements.

Navigating Differences Under Federal and State Employment Anti-Discrimination Laws

Navigating employment discrimination laws

In what should be in the category, “water is wet,” it is unlawful to discriminate against an individual based on disability. Such prohibition applies to both the federal and at the state level.

Under federal law, employers have the Americans with Disabilities Act (ADA). Under Michigan law, there is the Persons with Disabilities Civil Rights Act (PWDCRA).

While both have similar objectives, important differences exist between them, which employers and employees must understand.

To Treat or Not to Treat: Determining the Disability of an Employee

Under the ADA, an individual has a disability if a physical or mental impairment substantially limits one or more major life activities. 42 USC 12102(2). In making this determination, the ADA initially considered the effects of mitigating factors, such as medicine or treatment, in evaluating if an individual was disabled.

But the Supreme Court later in Sutton v United Air Lines, Inc, decided that with corrective measures (in Sutton the issue were corrective lenses) to mitigate the plaintiff’s impairment did not substantially limit a major life activity and therefore they were not disabled.

The Sutton decision prompted the ADA Amendments Act (ADAAA), which legislatively overruled it. Specifically, the ADA Amendments required that a court’s determination of disability must be made without consideration to the effects of mitigating measures.

Similar to the ADA, Michigan’s PWDCRA defines disability as a:

determinable physical or mental characteristic of an individual… substantially limits 1 or more of the major life activities of that individual and is unrelated to that individual’s ability to perform the duties of a particular job or position…” MCL 37.1103(D)(i).

But in contrast to federal law, the PWDCRA uses the consideration of a mitigating measure, like medication, in evaluating disability. See Payment v Dept of Transportation, which confirmed that the Michigan legislature has not amended the PWDCRA to mirror that of the ADA. Thus, federal and Michigan law differ in their evaluating a disability with the use of mitigating measures.

An Employer Subject to Federal and State Law

In determining if an employer qualifies as a covered entity under the law, we can look to the number of employees. An employer is covered under the ADA if it has 15 or more employees. To qualify under the PWDCRA, the employer has at least one employee making it that all Michigan employers qualify. With these qualifications, an employer may be subject to comply with both federal and state law. If the employer must do so, it will be likely that the more stringent of the laws will be the applicable law.

Document, Document, Document 

Going back to the Payment v Dept of Transportation decision, this case is also significant because it showed the importance of an employer documenting employment decisions. The Appellate Court determined that the evidence presented for her claim did not show that the decision by defendants was based on discrimination. Instead, it noted there may have been poor judgment on the employer’s part but that alone doesn’t constitute discrimination.

The key to this employer victory was documentation. By documenting employment decisions an employer can offer a defense against an employee’s claims. Importantly, an employer’s decision need not be perfect; an employer may make bad decisions and judges do not have to second-guess or improve upon them. Peden v Detroit, 470 Mich 195 (2004). But those decisions must be supported with credible documentation.

For more information about complying with federal or Michigan employment laws or your rights under those laws, contact Jason Shinn. Mr. Shinn has focused on employment law since 2001.

Court Blocks LinkedIn From Restricting Access to User Profiles

Data mining LinkedIn profilesA Federal Judge recently blocked LinkedIn from restricting another company from using data from LinkedIn’s website. The suit involves Linkedin and hiQ Labs, Inc. The suit also has significant ramifications for job-seekers and employers. See LinkedIn Profiles Used to Alert Employers Which Employees are Job-Hunting.

hiQ Labs Business Depends Upon Access to LinkedIn Profiles

hiQ Lab offers data analytics services that can be used to identify employees job-hunting or likely to join a competitor. It does this by automatically “scraping” data from publicly available LinkedIn profiles. hiQ Lab’s business model relies exclusively on access to data LinkedIn users have opted to publish publicly.

In the suit, hiQ Labs sought an injunction to prevent LinkedIn from blocking its access to public profiles. The Judge granted hiQ Labs’ injunction on August 14, 2017. Here is a copy of the hiQ Labs v LinkedIn, 8-14-17 Injunction Order. In sum:

  1. LinkedIn cannot prevent hiQ Labs from accessing, copying, or using public profiles on LinkedIn‟s website.
  2. LinkedIn cannot put in place any mechanism (whether legal or technical) with the effect of blocking hiQ Labs’ access to LinkedIn’s members’ public profiles.
  3. To the extent LinkedIn had put in place technology to prevent hiQ Labs from accessing this information, it must be removed within 24 hours of issuing the Court’s Order.

The Court’s decision was met with surprise and concern from industry tech experts. A great explanation for both was provided by David Berlind, editor in chief of Programmable Web, Why Forcing LinkedIn to Allow Scrapers Sets a Dangerous Precedent for the API Economy.

Limiting the Computer Fraud and Abuse Act?

While I don’t dispute the technological concerns raised by Mr. Berlind, I think the Judge’s decision also provides a positive direction from a legal perspective.

First, the Court signaled its reluctance to expand the federal Computer Fraud and Abuse Act (CFAA) to support LinkedIn’s claim. LinkedIn initially threatened to sue hiQ Labs for CFAA violations. Rather than sit and wait, hiQ Labs took preemptive action in filing suit and seeking an injunction against LinkedIn.

The CFAA, as initially enacted, criminalized computer hacking. However, it expanded over the years to extend to civil claims. It also often applies to conduct that does not bear any semblance to “computer hacking.” But this mutation has not been without concern. Here is how the Judge in the hiQ Labs opinion summarized the conflict:

As hiQ points out, application of the CFAA to the accessing of websites open to the public would have sweeping consequences well beyond anything Congress could have contemplated; it would ‘expand its scope well beyond computer hacking.’ Under LinkedIn’s interpretation of the CFAA, a website would be free to revoke ‘authorization’ with respect to any person, at any time, for any reason, and invoke the CFAA for enforcement, potentially subjecting an Internet user to criminal, as well as civil, liability.

(internal citations omitted).

The CFAA’s expansion to civil liability often creates perverse results. For example, I represented a former executive in a discrimination and breach of contract suit against her former employer. The executive had retained copies of a handful of emails with a supervisor. These emails, however, solely discussed the executive’s terms of compensation and benefits. Further, the emails were not a secret and were properly disclosed in the litigation.

The defendant employer, however, manufactured the claim that possession of these emails made for a CFAA violation. It claimed an employee handbook that discussed the ownership of company information and returning company property had been violated. This claim didn’t gain traction with the judge or mediator, but it was not for lack of trying by defense counsel.

Similarly, the hiQ Labs opinion echoed the concern about needlessly expanding the CFAA:

… the Court has serious doubt whether LinkedIn’s revocation of permission to access the public portions of its site renders hiQ‟s access “without authorization” within the meaning of the CFAA.

Second,  LinkedIn argued that hiQ Lab’s manner of accessing the publically available information on the site (by using software to automate the scraping of user data) also violated the CFAA. The Court disagreed:

A user does not ‘access’ a computer ‘without authorization’ by using bots, even in the face of technical countermeasures, when the data it accesses is otherwise open to the public.

Similarly, it is not uncommon for companies to make similar arguments about the method of access creating CFAA liability when suing a former employee.

A common example is when an employee is given computer access in one context, but accessing it or using it in another. It may be as innocuous as downloading company data to work remotely (e.g., over the weekend, while traveling, or on vacation). But the act of removing the data from the company’s networked environment – even where the employee had permission to access the data in the first place – has been claimed to be a violation.

The LinkedIn/hiQ Labs case is not over, but winning at the injunction stage is often a huge spoiler on who will ultimately prevail. For more information about this case or issues under the Computer Fraud and Abuse Act, contact attorney Jason Shinn. He represents companies and individuals in computer fraud, misappropriation of trade secret, and other business claims.

Is it Lawful to Terminate an Employee Who Attended a Neo-Nazi or White Supremacist Rally?

Is “check to see if any employees came out to support Nazis or White Supremacist” the new normal for HR? After this weekend’s tragic and despicable events in Virginia, it looks like the answer is yes.

The events in question involved a rally of white supremacist, KKK members, and Neo-Nazis that took place at the University of Virginia. Numerous videos showcase why these organizations should be despised. Further, a peaceful counter-protester, Heather Heyer, was tragically killed and more were injured when a white supremacist is alleged to have deliberately driven his car into a crowd.

However, these hate-mongers who once hid behind hoods and on the fringe are being called out for their actions. Consider the following:

  • The Washington Post (by Maura Judkis)  reported one individual was fired after he was photographed marching with torch wielding Nazis, White Supremacist, and/or KKK members. The employee, Cole White, was identified online and his photo was widely circulated.
  • CNN reported about an online crowdsourcing campaign that identifies demonstrators who attended white nationalist rallies in Charlottesville, Virginia. The campaign, led by a Twitter account, @YesYoureRacist, asks people on social media to identify white nationalists who appear in news photos of “Unite the Right” rallies.

So this raises the question of whether employers face any risks in firing an employee for off-duty attendance at a rally supporting hate-groups like the Klan or Neo-Nazis.

For private employers, the short answer is no. Michigan, like most states, is an “at-will” employment state meaning the employment relationship may be ended for any reason that is not unlawful discrimination. Supporting racist views is not a protected category.

Further, First Amendment and free assembly protections apply to government action – not private-sector employers. But even those protections probably do not extend to circumstances like those presented over the weekend.

And if you are a Michigan employer and you have questions about firing an employee who has participated in a Neo-Nazi/KKK rally or other hate groups, please feel free to contact us for a pro bono consultation. Simply put: while some American politicians are ok with legitimizing or tolerating Nazi salutes, chanting derogatory statements about blacks, Hispanics, Jews, Muslims, or LGBTQ, or others, I do not believe that business leaders should. Do this for the good of your company and for the good of society.

LinkedIn Profiles Used to Alert Employers Which Employees are Job-Hunting

Predictive HR using data analyticsUsing Linked for your job searches? Your employer may also be monitoring your LinkedIn profile to find out the same in order to take preemptive action. If this sounds like an HR remake of the sci-fi movie Minority Report, you wouldn’t be too far off.

In that movie, Tom Cruise played a detective in the “Precrime Unit.” The unit used psychics (called “precogs”) to make arrests before the crimes were committed. Here, however, the tech-start-up, HiQ Labs collects LinkedIn user data, analyzes it through an algorithm, and sells the analysis to employers to identify which employees may be looking to join a competitor.

According to hiQ Lab’s website, its “Keeper” tool provides organization with “predictive attrition insights about an organization’s employees … [and] turns those attrition insights into consumable, easy-to-deploy action plans so HR and business leaders can retain their key talent.”

But on May 23, 2017, LinkedIn sent hiQ Labs a cease-and-desist letter to stop accessing LinkedIn’s site. LinkedIn further threatened that its continued access would violate the Computer Fraud and Abuse Act, Digital Millennium Copyright Act, and California Penal Code § 502(c) and constitute common law trespass.

However, hiQ Labs preempted LinkedIn’s threatened litigation and sued for declaratory relief in California District Court. The suit, a copy is available here (hiQ Labs v Linked (PDF), essentially says, everything LinkedIn threatened is a certain waste product from a bull’s digestion system. Or if you prefer a more legalistic and euphemistic explanation:

hiQ seeks a declaration from the Court that hiQ has not violated and will not violate federal or state law by accessing and copying wholly public information from LinkedIn’s website. hiQ further seeks injunctive relief preventing LinkedIn from misusing the law to destroy hiQ’s business, and give itself a competitive advantage through unlawful and unfair business practices and suppression of California Constitutional free speech fair guarantees.

* * *

… it has instead threatened to sue hiQ under federal and state laws pertaining to hacking and unauthorized computer and network access in order to intimidate hiQ and force it to stop accessing these public profiles. But LinkedIn cannot use those laws for an improper purpose to obtain exclusive proprietary control over wholly public data in which it otherwise has no exclusive interest and which hiQ, and anyone else, can freely access on the world wide web with no log-in credentials or password. … LinkedIn would not have that data on its website in the first place but for its promise to LinkedIn members that they can publicly disclose that information on LinkedIn for all the world to see and use.

Aside from the declaratory relief, hiQ has also sued for intentional interference with contracts and business advantages; unfair and fraudulent competition under California law; promissory estoppel; free speech violations under California law (which seems problematic but maybe the judge would see it differently).

On June 30, 2017, LinkedIn and hiQ Labs agreed hiQ may continue to operate, conduct searches, and sell the results like it did before the threatened litigation while the litigation proceeds or until further order.

LinkedIn and Employment Litigation

After an employee leaves his or her employment, LinkedIn provides a wealth of potential evidence. But this evidence is used in post-employment lawsuits, often involving non-compete disputes, trade secret misappropriation, or related claims between individuals and their former employers.

But hiQ Labs seeks to change this by arming companies with data to prevent or head-off such claims. hiQ Labs (unrealistically) argues that this insight is beneficial to LinkedIn and its members because an “employer using [its services] might give an employee a ‘stay bonus’ or a career development or internal mobility opportunity” to keep them from leaving. More likely, the employee is going to be immediately locked out of the employer’s network, fired, and lucky if no further legal action is taken.

And this is precisely why LinkedIn is concerned. It argued that if its members “knew that hiQ was accessing and collecting their data” to flag them to their current employers, “many would not update their profile.”

Also, this is yet another example of how the federal 1986 Computer Fraud and Abuse Act (CFAA) should be applied to advances in technology. Originally, this statute was targeted at criminal hackers. It was later amended to provide civil remedies. Having a federal criminal statute to use or contend with in civil litigation is a game-changer – and not always for the better. For policy considerations see Computer Fraud and Abuse Act: A Criminal Statute That Extends to the Employment Relationship?).

We will continue to monitor this case given the significant impact it has on companies and their employees. For more information, contact attorney Jason Shinn. Since 2001, he has focused on addressing non-compete and trade secret misappropriation claims. He routinely represents businesses and individuals involved in these claims in federal and Michigan Courts, and frequently writes and speaks about these legal issues. Mr. Shinn also routinely represents individuals and businesses involved in CFAA claims that arise from a prior employment relationship.

Social Media – Truth Serum in an Age of Alternative Facts?

One aspect of my legal practice that has changed over the years is the amount of time I focus on my clients’ social media use, as well as investigating an opposing party’s social media accounts. The reason for such attention is simple; it is often a goldmine for inconsistencies, admissions, or even outright lies that can make or break a case.

Trump, Tweets, and Truth – Consistency is Optional

This point was recently made in a recent tweet by President Trump. He tweeted that he was the subject of a “Witch Hunt” headed up by the “man who told me to fire the FBI Director!” The man Mr. Trump references is Rod J. Rosenstein, the deputy attorney general, who authored a memorandum recommending the dismissal of Mr. Comey.

President Trump Obstruction

One problem with Mr. Trump’s tweet, however, is that it is inconsistent with what he said to NBC’s Lester Holt (the other problem is that Mr. Trump gratuitously confirms he is under investigation).

In that interview, Mr. Trump stated unequivocally that he alone had made the decision to fire Mr. Comey. He also confirmed that he reached his decision to fire Mr. Comey irrespective of any other recommendations, including that of the man leading the witch hunt.

Whether such inconsistencies prove to be detrimental in the political arena where “alternative facts” have taken hold as “acceptable” remains to be seen.

Social Media, Facts, and Litigation – Consistency Matters

However, outside of politics where facts do matter, inconsistencies between social media posts and trial evidence is detrimental. For example, we recently had a similar situation in a lawsuit involving the Michigan Whistleblower Protection Act. The manager (who was also the husband of the company’s owner) gave various reasons for why our client was fired. He eventually settled on the claim that our client lied to him about cleaning grease traps at the restaurant. The failure to clean these traps caused a dispersal of raw sewage to back up and contaminate areas of the restaurant, including the food pantry. Our client had called a Michigan Agency responsible for regulating restaurants out of concerns for how the clean-up was being handled.

The problem with the defendant’s claim was that the manager texted our client the reason he was fired was for his idea to coHawkpeak Brewing Companyntact the health department. And just to avoid any ambiguity, the manager announced, the “Health department should not have been called,” because “Shutting down is never an option!”

In a somewhat “Trumpian” move, the manager simply testified that the text message was fraudulent, which later changed to the manager’s belief it was fraudulent. Never mind the defendant previously authenticated the text message earlier in the litigation process and it was sent from the same number that the manager used to communicate with the employee (inconvenient facts).

The bottom line is, social media is increasingly a central issue when it comes to litigation. And unless you are the President, sometimes this will mean owning up to or having to explain an “inconvenient” or errant Facebook post, Tweet, text message, etc. But ignoring it or calling it “fake” or fraudulent without a factual basis is never going to work out well. Outside of politics, judges and jurors are simply too smart for such shenanigans to be fooled.

For more information about this article, contact attorney Jason Shinn. Since 2001, Mr. Shinn has addressed employment and complex litigation matters, including investigating and using social media and other digital evidence to represent his clients’ interests. Jason has also been a featured speaker on the topic of social media digital evidence and recently presented “How to Get Your Social Media, Email, and Text Evidence Admitted,” to an attorney conference.