You may have heard something in the news about a former employee getting caught holding onto his prior employer’s documents after losing his job. This example is unusual, to say the least. And setting aside your political leanings, let’s look at how similar scenarios play out for the rest of us.
The Lawsuit against former employees.
Specifically, on September 7, 2022, Plaintiffs Dearborn Mid-West Company and Dearborn Holding Company, LLC, sued three former employees for violations of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § §§ 1836 et seq., the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq., the Michigan Uniform Trade Secrets Act, Mich. Comp. Laws § 445.19021 et seq., as well as breach of contract, common law unfair competition, statutory and common law conversion, and civil conspiracy.
Similar to a certain ex-employee living at Mar-a-Lago Florida, the three former employees decided to hold onto copies of business records after their employment ended.
Specifically, Plaintiffs conducted a computer forensic audit of three former employees’ old computers, which confirmed they had collectively “copied. . . thousands of files containing” confidential and trade secret information by transferring them to external drives and forwarding emails to their personal accounts before leaving their previous positions. For some, this might be described as political theater or a Witchhunt. But for Plaintiffs, they described these actions as a:
… brazen theft and unauthorized use of [Plaintiffs’] trade secrets, proprietary standards, and other confidential competitive information—information that [Plaintiff] created over … 75 years, and through the expenditure of millions of dollars. Defendants’ theft was no accident, and instead the result of a months-long, carefully calculated plan: indeed, the individual Defendants systematically stole tens of thousands of files filled with [Plaintiffs’] confidential, proprietary, and trade secret information before they resigned their employment … and went to work for its competitor.
Before the defendant former employees responded to the lawsuit, the Plaintiffs moved for a temporary restraining order and preliminary injunction, but it was denied. Having litigated these sorts of claims, including seeking the same kind of relief, the denial has very little to do with the underlying merits or likely strength of the case; Temporary restraining orders (TRO) – especially TROs that are sought without the opposing party having an opportunity to respond – require a high-burden to be met. And one or two facts can tip the scale in meeting that burden.
Departing Employees and Protecting Confidential Information.
While the Court denied the requested TRO, it also noted that “Plaintiffs lay out what appears to be a strong case for their underlying claims.” And those claims provide for statutory attorney fees and the means to potentially recoup millions of dollars from the defendants. This might not be a big deal if you are an ex-President, a billionaire, you can convince enough people (i.e., five jurors) that the claims are just a witch-hunt, the case gets assigned to a judge you appointed to the bench or any combination of the preceding. But if none of those factors apply, then you probably should be concerned. And here are two points to consider:
- First, there are almost always digital fingerprints left behind if an employee decides to walk out the door with copies of the employer’s business information. So it is vitally important for employers to have plans and procedures in place to preserve and discover such evidence.
- Second, for individuals starting a new job or company, there will almost always be digital fingerprints you leave behind if you decide to walk out the door with company information. And even if you are like most departing employees who do not misappropriate business information, it may not matter if you signed a non-compete agreement or other post-employment restriction. So unless you happen to be a former President and billionaire, it is important to know and understand what obligations you may have when your employment ends.
If you have such obligations, then it is important to consult with an experienced non-compete attorney to discuss options for complying with your post-employment restrictions or challenging them if necessary.
Contact Michigan attorney Jason Shinn if you have questions about this article, conducting workplace investigations, or noncompete restrictions. Since 2001, Mr. Shinn has represented companies and individuals concerning the issues discussed above and other employment matters under federal and Michigan employment laws.