Generally, a breach of duty of loyalty occurs when an employee (such as a manager or top-level employee) utilizes their employer’s business to further their personal interests. Usually, employees are free to prepare and plan to compete against their current employers before parting ways with their employers and/or terminating their employment, as long as no non-compete agreement exists. However, an employer may find it necessary to bring a claim for breach of the duty of loyalty if, leading to the actual realm of aiding a competitor or actual competition, an employee acts in a manner that goes beyond mere preparation or planning, such as misusing and/or misappropriating an employer’s trade secrets and/or confidential information.
To continue our discussion, this training note is a review of the concept of “Tortious Interference Claims,” which is part of the common law tort claims brought under the UTSA and DTSA.
Tortious Interference Claims under the Defend Trade Secrets Act of 2016 (DTSA) and/or Uniform Trade Secrets Act (UTSA)
Whenever a former employee misappropriates and/or uses confidential information or trade secrets to benefit a competitor, the former employer should consider bringing tortious interference claims based on prospective economic advantage, business relationships, and contractual relationships. It is crucial to note that courts will require an employer, as the plaintiff alleging tortious interference, to show that the defendant(s) used certain improper means or motives to act tortiously, as opposed to demonstrating that the defendant(s) engaged in legitimate competitive activity.
Moreover, in addition to capturing specifics to avoid dismissal, such as detailing and describing the action(s) of the defendant(s) that allegedly constitute interference and providing evidence that a business or contractual relationship with an identified third party exists, an employer should ensure that it has pleaded these claims with caution. Further, pursuant to the procedure outlined in the court’s local rules, the employer should apply for the impounding or sealing of any documents whose secrecy should be maintained to ensure that the public and the media do not access confidential information provided and disseminated through court filings. Importantly, by raiding the employer’s staff, tortious interference claims could also be brought against any competitor employer that took part in tortious interference.
Additional Common Law Tort Claims
In addition to the breach of fiduciary duty claims, breach of duty of loyalty claims, and tortious interference claims discussed in Parts XIII, XIV, and XV of this series, respectively, employers may also consider bringing additional law tort claims against employees who have engaged in the misappropriation of their former employer’s trade secrets and/or confidential information. Such claims include but are not limited to (1) unjust enrichment, (2) conversion, and (3) unfair competition. These claims will be discussed later in another blog.
In Part XVI of this series and our blog post titled “Breach of Restrictive Covenant Claims under the DTSA & UTSA,” we will move the discussion forward by hammering on “Common Law Contract Claims” and the circumstances under which the breach of restrictive covenant claims could be sought to protect an employer’s trade secrets and/or confidential information from misappropriation.
Until then, stay tuned for more education, training, and legal guidance. In the interim, reach out to us with questions or comments via the Contact Us page on our website!
Always rising above the bar,
Isaac T.,
Legal Writer, Author, & Publisher.