Financial analytics firm Novantas, Inc. and two individual defendants closed out 2017 with a victory, securing the dismissal of claims by rival First Manhattan Consulting Group LLC (“First Manhattan Consulting Group”) [1], which accused them of competing unfairly by poaching First Manhattan Consulting Group’s employees in order to steal its trade secrets.  The result demonstrates the need for plaintiffs in such cases to be able to prove with specificity which trade secrets were taken or threatened by the defendants’ conduct.

The Complaint alleged that Novantas engaged in a “pattern and practice of poaching” First Manhattan Consulting Group’s employees, including defendants Peter Gilchrist and Andrew Frisbie in 2014, to gain access to First Manhattan Consulting Group’s confidential information.  These individuals, who were officers of First Manhattan Consulting Group, were subject to contractual confidentiality and employee non-solicitation obligations.  First Manhattan Consulting Group asserted causes of action for breach of contract against the individuals, for tortious interference with contract and unfair competition against Novantas, along with a misappropriation of trade secrets claim against all defendants.

The case went to trial in Supreme Court, New York County. Justice Barry Ostrager declined to submit the misappropriation claim to the jury, because the information presented by First Manhattan Consulting Group at trial did not appear to the Court to be a trade secret, and there was no testimony concerning trade secrets.  In its verdict, the jury unanimously found no liability on any of the other claims.  On December 19, 2017, the Court dismissed First Manhattan Consulting Group’s claims.

For practitioners, this outcome is a useful reminder that trade secret misappropriation claims require in-depth understanding of the client’s business, detailed allegations in pleadings of the legally required elements of a misappropriation claim and, at trial, a full presentation regarding the wrongdoing and what specific information was taken and how the plaintiff has been damaged.


[1] First Manhattan Consulting Group is unrelated to First Manhattan Co.

Co-authored by Mathew D. Dudek.

Social media has changed the way that companies and employees connect to clients and customers. As new uses for social networking emerge, legal issues in this area are arising.

In Eagle v. Morgan, et al., the United States District Court for the Eastern District of Pennsylvania was faced with one such issue: whether an employer could seize a former employee’s LinkedIn page and keep the page in operation following the employee’s termination. In that case, Linda Eagle, an executive with Edcomm Inc., had created a LinkedIn account using her work e-mail address as a sales and marketing tool. Eagle provided her LinkedIn password to certain other Edcomm employees so the employees could help monitor and update the account. Under “the LinkedIn ‘User Agreement,’ however, the account belonged to Eagle alone and she was individually bound by the User Agreement.” Following Eagle’s termination, Edcomm employees accessed the LinkedIn account and changed its password, effectively locking Eagle out of the account, and also updated Eagle’s LinkedIn page to reflect another Edcomm executive’s information, while still keeping a list of Eagle’s honors and awards. As a result, a Google search for Eagle or a search for her on LinkedIn would bring the user to Eagle’s LinkedIn account, which then bore the name, picture and credentials of the other Edcomm executive.

Eagle subsequently filed suit against Edcomm and certain individual employees, “the principal thrust of which is the alleged illegal use of Eagle’s LinkedIn account by Edcomm, to her economic detriment.”

 In addressing these claims, the court noted that on the day Eagle was terminated, Edcomm had not adopted a policy that informed its employees that their LinkedIn accounts were the property of Edcomm. Even if it had, however, the court stated that it was unclear whether such a policy would be legally valid under the contract between LinkedIn and Eagle, an individual user. Nevertheless, the court did not reach that issue given that there was no such policy in place when Eagle was terminated.

Ultimately, the court determined that Eagle’s “name” had commercial value which Edcomm had used to its own benefit. Based on this finding, the court ruled in favor of Eagle on state law claims of unauthorized use of name, invasion of privacy by misappropriation of identity, and misappropriation of identity. However, the court found Eagle’s request for damages legally insufficient because she “failed to point to one contract, one client, one prospect, or one deal that could have been, but was not obtained during the period she did not have full access to her LinkedIn account.”

Despite Eagle’s failure to establish specific damages, this case is a reminder that employers should review all policies which govern employee social media usage. Not only must such policies clearly set forth expectations regarding ownership of the account and what is and is not appropriate, such policies also need to be regularly updated to ensure compliance with the changing legal landscape, given that various state legislatures and the National Labor Relations Board are rapidly entering the fray over employee social media use and employer policies related thereto. For example, as of January 1, 2013, Illinois employers may not “request or require any employee or prospective employee to provide any password or other related account information in order to gain access to the employee’s or prospective employee’s account or profile on a social networking website or to demand access in any manner to an employee’s or prospective employee’s account or profile on a social networking website.” 820 ILCS 55/10(b)(1).

In Western Blue Print Company, LLC v. Myrna Roberts et al., the Missouri Supreme Court recently affirmed a tortious interference verdict against a manager who left to join a competitor, largely because the manager engaged in inappropriate conduct when departing one employer for another.

Tortious interference claims are commonly raised in disputes with former employees who leave to join a competitor. However, actual determinations of the merits of such claims are not common, and state supreme court parsings of such claims are even less common. Accordingly, this decision is worth reviewing.

As set forth in the opinion, Western Blue Print Company (“Western Blue”) is a document printing and management service. Myrna Roberts (“Roberts”) was one of its managers. She did not have a non-compete, and resigned without notice to join a competitor that she had helped form. After she did so, the University of Missouri chose not to renew a contract with Western Blue that Roberts had previously managed for it; rather, the university awarded the contract to Roberts’ new employer. The loss of that contract was the basis for a tortious interference claim by Western Blue against Roberts.

As a threshold matter, the Court held that even though this contract was “up for grabs” because it was subject to a competitive bid process, Western Blue “had a reasonable, valid business expectancy that it would win” the contract before Roberts’ resignation. As summarized by the Court, “Western Blue successfully bid on the contract the previous two times the university solicited bids and performed well fulfilling its obligations.” Moreover, just a few months before leaving Western Blue, Roberts purportedly told other Western Blue employees that she had the contract “locked up” for Western Blue. Accordingly, the Court found that Western Blue satisfied the threshold requirement of a reasonable, valid business expectancy.

The Court then turned its attention to whether Roberts used “improper means” to obtain the contract on behalf of her new employer, ultimately concluding that she did. In so finding, the Court noted that while she was still employed by Western Blue, Roberts “convinced other Western Blue employees to leave their jobs and work for [her new employer], instructing them to stagger their departures without notice” and “assur[ing] these employees she would be able to procure the university contract” for her new employer. Additionally, the Court noted that before resigning, Roberts deleted certain documents, and in so doing “hindered Western Blue’s ability to bid successfully” on the contract and impacted its ability “to complete its current contractual obligations to the university such that it negatively reflected on its bid.”

In sum, Western Blue prevailed on its tortious interference claim in large part because the Court found that Roberts engaged in misconduct when leaving Western Blue. Departing employees and their new employers should take heed.