Trade Secret – Can Damaged Party Obtain Ex-Worker’s Emails Sent on New Employer’s System?

Trade secret litigation invariably involves ESI.  Craig Ball has written “What’s in a Name (or Hash Value)?,” discussing the use of hash values and file names in tracking down stolen data.  In “The Gang That Couldn’t Spoliate Straight,” I discussed an order that the alleged wrongdoer preserve ESI and the potential issues with the Computer Fraud and Abuse Act (“CFAA”) in trade secret litigation, especially while Van Buren v. U.S., No. 19-783, is pending in the Supreme Court.

A March 1, 2021, article in Bloomberg Law’s E-Discovery and Legal Tech publication, titled “Data Backup Company Wants Ex-Worker Emails in Trade Secrets Case,” reinforces that point and also poses an interesting third-party discovery issue in trade secret litigation. The reporters on the article are Jake Holland and Kibkabe Araya at Bloomberg.

Plaintiffs, Datto, Inc., et al., employed Mr. Moore.  “As a result of his position, Moore had access to various types of confidential information maintained by Datto and Datto Europe for their business globally.”  Datto, Inc. v. Moore, 2020 WL 7318957, at *1 (M.D. Fla. Dec. 11, 2020).

Moore and Datto separated, and Moore then went to work for Datto’s competitor, ConnectWise, LLC.  Demonstrating the ubiquity of ESI issues in this type of litigation, the court wrote:

“Forensic analysis shows that between May 11, 2020, when he was informed of his redundancy, and August 3, 2020, after the end of his employment, Moore inserted at least four different USB storage devices into his Datto laptops, which contain hundreds of confidential Datto documents.”

Id. at *2.  This type of information may be stored in a Windows Registry file.  The court continued:

According to Datto and Datto Europe, Moore “had no business reason to access his Datto laptops” at this time, he “never returned any of these USB devices to Datto and, upon information and belief, Moore is currently in possession of these devices that contain hundreds of confidential Datto documents.” … Additionally, on August 3, 2020, Moore allegedly “accessed hundreds of confidential files on the laptops after inserting an USB device into his Datto-issued laptops for the purpose of misappropriating Datto’s confidential trade secrets information.” … “The documents Moore accessed and misappropriated contain, among other things, information about current and target customers, spend by customer and product, sales forecasts, and geographic regions ranked by sales opportunities.” …

Then, despite the non-competition provisions of the Employment Agreement, Moore began working with Datto’s direct competitor, ConnectWise, in Tampa, Florida, on September 1, 2020.

Id. at *2.

Datto sued Moore alleging CFAA violations, breach of contract, violation of the Defend Trade Secrets Act, and violation of Florida’s analog.  It claimed that Moore had taken Datto’s proprietary information to Datto’s competitor.

Holland and Araya explained: “ConnectWise terminated Moore shortly after Datto sued him, and also retained forensic experts that found Moore had used a personal USB device to transfer two Datto documents to his ConnectWise-issued laptop, according to the motion.”

In short, it is alleged that due to Moore’s wrongful actions, Datto’s data now resided on competitor ConnectWise’s information technology system.

The Bloomberg article describes the procedural positions:

• Datto served a subpoena on non-party ConnectWise, which sought “emails sent and received by Moore from his ConnectWise email account….”
• ConnectWise responded that the subpoena was unduly burdensome and asserted that Datto sought irrelevant and proprietary information.
• Datto replied that ConnectWise presents a “there’s nothing to see here, just trust me” response.  It asserts that, without access to the emails, it must “guess and hope” that proprietary information was not disclosed to its competitor.

ConnectWise moved to quash the subpoena.  ECF No. 62.  Datto has moved to enforce it.  ECF No. 64.   Responses were filed on February 22 and 23, 2021.  ECF Nos. 68-69.

It is often the case that, in misuse of trade secrets cases, the plaintiff’s former employee goes to work for a direct competitor.  That competitor may be culpable. Or, it may be innocent and wholly unaware of the wrongdoing.

In either event, a plaintiff may have two reasons to seek discovery from the competitor.

• First, it may be able to prove its case against the named defendant with the information obtaining.
• Second, it may disadvantage a competitor.

It will be interesting to see how the court resolves the issues where, as here, the wrongdoer clearly put plaintiff’s data on the subsequent employer’s computer system.

UPDATE:

A May 15, 2021, docket entry states: “ENDORSED ORDER: Pursuant to the joint stipulation of dismissal with prejudice (Doc. # 87 ), this case is dismissed with prejudice with each party to bear their own costs, expenses, and attorneys’ fees. The Clerk is directed to terminate any pending deadlines and motions and, thereafter, close the case. Signed by Judge Virginia M. Hernandez Covington on 5/15/2021….”

The docket for the preceding day states: “NOTICE of HEARING; IN-PERSON oral argument on the Motion to Compel Discovery from Plaintiffs (First Request for Production and Interrogatories) is SCHEDULED for 6/1/2021 at 2:30 PM in Tampa Courtroom 12 A before Magistrate Judge Thomas G. Wilson….”