Tag Archives: spoliation

Former employer’s trade secret claim under inevitable disclosure doctrine moves forward

Copying of employer computer files central to trade secrets claim

Mobile Mark, Inc. v. Pakosz, 2011 WL 3898032 (N.D.Ill. September 6, 2011)

Defendant used to work for plaintiff. Before he left that organization to work for a competitor, he allegedly accessed plaintiff’s computer system and copied proprietary information to a laptop that plaintiff had loaned him. He then allegedly transferred the proprietary data to a number of external storage devices, and then installed and repeatedly ran a “Window Washer” program on the laptop to delete files and other data in order to conceal his activities.

Plaintiff sued, putting forth several claims, including a claim of misappropriation of trade secrets under the Illinois Trade Secrets Act, 765 ILCS 1065/2. Defendant moved to dismiss. The court denied the motion.

One of the bases for plaintiff’s trade secret misappropriation claim was that defendant, by going to work for a competitor, would inevitably disclose the proprietary information he had obtained while working for plaintiff. Looking to Illinois law, the court noted that “[i]nevitable disclosure is not assumed when an employee has general information in his head as a result of working for a company.” But “where evidence exists that the employee copied the employer’s confidential information, it leads to the conclusion of inevitable disclosure.”

Computer Fraud and Abuse Act case against hard drive destroying director goes forward

Deloitte & Touche LLP v. Carlson, 2011 WL 2923865 (N.D. Ill. July 18, 2011)

Defendant had risen to the level of Director of a large consulting and professional services firm. (There is some irony here – this case involves the destruction of electronic data, and defendant had been in charge of the firm’s security and privacy practice.)

After defendant left the firm to join a competitor, he returned his work-issued laptop with the old hard drive having been replaced by a new blank one. Defendant had destroyed the old hard drive because it had personal data on it such as tax returns and account information.

The firm sued, putting forth a number of claims, including violation of the Computer Fraud and Abuse Act (CFAA). Defendant moved to dismiss for failure to state a claim upon which relief can be granted. The court denied the motion.

Defendant argued that the CFAA claim should fail because plaintiff had not adequately pled that the destruction of the hard drive was done “without authorization.” The court rejected this argument.

The court looked to Int’l Airport Centers LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006) for guidance on the question of whether defendant’s alleged conduct was “without authorization.” Int’l Airport Centers held that an employee acts without authorization as contemplated under the CFAA if he or she breaches a duty of loyalty to the employer prior to the alleged data destruction.

In this case, plaintiff alleged that defendant began soliciting another employee to leave before defendant left, and that defendant allegedly destroyed the data to cover his tracks. On these facts, the court found the “without authorization” element to be adequately pled.

Court says law firm did not eavesdrop on employee phone calls

Bowden v. Kirkland & Ellis, 2011 WL 1211555 (7th Cir. April 1, 2011)

Two former employees of a law firm sued the firm for violation of the Electronic Communications Privacy Act, 18 USC 2510 et seq. and for violation of the Illinois Eavesdropping Act, 720 ILCS 5/14-2. The district court granted summary judgment in favor of the law firm. The former employees sought review with the Seventh Circuit. On appeal, the court affirmed the grant of summary judgment.

The court held that the former employees’ evidence of eavesdropping raised no more than a “theoretical possibility” of a violation. Even one of the strongest experts in the case triple hedged his testimony, saying the records “could indicate the potential that interception may have occurred.” So the grant of summary judgment was proper.

The plaintiffs had also raised an electronic discovery issue, namely a claim that the law firm spoliated evidence by destroying a server that contained phone records relevant to the case. The court rejected that argument, finding no credible evidence that the destruction was undertaken in bad faith.

No spoliation sanctions for deletion of email where CD copies had been made

Bakhtiari v. Lutz, — F.3d —-, 2007 WL 3377215 (8th Cir. November 15, 2007)

Not too many e-discovery (or any type of discovery) disputes get to the federal courts of appeal. But we have a recent decision from the Eighth Circuit that addressed the topic of “spoliation” when emails had been deleted.

A party in litigation is guilty of spoliation when the court finds that he or she “intentionally destroyed evidence with a desire to suppress the truth.” Greyhound Lines, Inc. v. Wade, 485 F.3d 1032, 1035 (8th Cir. 2007). Plaintiff Bakhtiari filed suit against the University of Missouri-Rolla and a number of administrators there, alleging Title VII and civil rights violations. He had been terminated from his position as a teaching assistant in the chemistry department.

Soon after Bakhtiari was terminated, but before he filed suit, the university’s IT staff backed up the contents of his email account onto two CDs. The university then allowed the messages to be deleted as part of “automated systems maintenance.” It turned over a copy of the CDs to Bakhtiari, but he claimed that large portions of data were missing.

At the trial court level, Bakhtiari claimed that the university should be sanctioned for spoliation for deleting the email messages from the server. The court denied this motion, however, and Bakhtiari sought review with the Eighth Circuit. On appeal, the court affirmed the denial of the motion.

The appellate court held that the lower court did not abuse its discretion in finding that the IT staff had taken appropriate steps to backup the data, and that Bakhtiari may himself have been responsible for the missing portions. Moreover, there was credible evidence that third parties had access to the account before the backups were made, and that Bakhtiari had asked that portions be deleted. Bakhtiari had failed to demonstrate, the court held, that the university acted with a “desire to suppress the truth.”