In a recent decision from the Southern District of New York, Judge William H. Pauley III rejected the use of the “inevitable disclosure” doctrine as a basis for an independent claim and outright granted a Rule 12(6)(6) motion to dismiss the complaint brought by a California employer against its former New York based employee.
Janus et Cie v. Andrew Kahnke, 12 Civ. 7201 (WHP) (U.S. District Court, S.D.N.Y., August 29, 2013) is a case brought by Janus, a provider of high-end residential and commercial furnishings, against Andrew Kahnke, a sales manager in one of its showrooms who was subject to a confidentiality agreement without any restrictive covenants. When Kahnke resigned and went to work for a direct competitor, Janus commenced an action for inevitable disclosure of trade secrets, seeking a permanent injunction barring him from disclosing any of Janus’ trade secrets or confidential information and from working for Dedon, his new employer, in any area where they are direct competitors.
Janus does not allege that Kahnke breached the non-disclosure agreement. Nor does Janus assert any facts indicating that Kahnke actually misappropriated or disclosed any of Janus’ trade secrets. Rather, Janus seeks an injunction based on the theory that “Kahnke’ s position with Dedon is so similar . . . that he cannot possibly perform the functions of his position . . . without using and/or disclosing confidential information and trade secrets belonging to Janus.” (Compl. ¶ 28.)
The Court wrote:
Janus makes the extraordinary request that this court be the first to recognize the inevitable disclosure of trade secrets as a stand-alone claim in a complaint bereft of any allegations that Kahnke misappropriated trade secrets or breached a non-compete agreement. In essence, Janus asks this court to allow a lawsuit to proceed to discovery when the Complaint alleges no wrongdoing by Kahnke. But the end game is a permanent injunction that would greatly expand the reaches of a restricted doctrine heavily disfavored under New York law.
After analyzing New York precedent, the Court acknowledged the possible validity of the doctrine of inevitable disclosure, but rejected the notion that it constituted a stand-alone cause of action absent allegations of related unlawful conduct. In granting the motion to dismiss the case, the Court refused “to countenance the imposition of an unlimited, unbargained-for restrictive covenant on Mr. Kahnke based on thread bare allegations.”
When suing a former employee with sensitive confidential information, this case stands for the proposition that you need more than mere inference of potential use or disclosure of such information to withstand a motion to dismiss. Some evidence of wrong-doing rising to level of an actual breach of contract, misappropriation or other tortious conduct will be necessary to plead a sustainable cause of action.