Hiring Company’s Remedial Measures Protect Against a Threatened Temporary Restraining Order

The court’s opinion offers helpful guidance on steps employers can take during the recruiting and onboarding process to help insulate themselves against similar claims.

Background

Aon filed suit against Alliant and nine former employees in its facultative reinsurance division after those employees left to join Alliant, recruited 26 of their colleagues to come with them, and, shortly thereafter, launched a new reinsurance brokerage group for Alliant composed almost entirely of those former Aon employees.

Aon’s complaint alleged that the individual defendants misappropriated trade secrets in the days before they left the company in violation of the federal Defend Trade Secrets Act (DTSA) and also breached restrictive covenants and confidentiality provisions in agreements they entered into with Aon. Additionally, Aon alleged that Alliant induced the individual defendants to breach their agreements with Aon, among other claims.

The temporary restraining order Aon sought would have required the defendants to return any trade secret materials belonging to Aon that were in their possession, to submit their devices for forensic investigation, and to refrain from using any of Aon’s confidential information and trade secrets in the future.

Analysis

The court denied Aon’s request for a restraining order because Aon was unlikely to succeed on the merits of its trade secrets misappropriation claim. In particular, Aon could not show the former employees misappropriated trade secrets “through improper acquisition, disclosure, or use,” as is required under the DTSA.

Aon had uncovered evidence that the individual defendants allegedly accessed or emailed to themselves highly sensitive confidential business information on the eve of their departures, which included employee-specific compensation information, financial information, knowledge concerning employee-client relationships, budgets and forecasts, client lists, renewal information, and confidential pricing information, among other things. However, the former Aon employees argued in sworn affidavits that they had accessed the information in question for legitimate reasons in the course of fulfilling their job responsibilities up until their date of departure.

The court found that Aon failed to rebut the employees’ assertions that they had accessed confidential information for a proper purpose, holding that “[f]actual enhancement of ‘improper’ is necessary where [a former employer] alleges defendants had access to trade secrets because of their position in the company and accessed the information while still employed.” In other words, it is not enough for an employer to show that employees accessed confidential materials on the eve of their departure from the company — even under suspicious circumstances. Rather, the employer must also provide evidence that the employees accessed the information for an improper purpose and not in the course of performing their job duties.

The court’s decision was also based in large part on the fact that Alliant undertook proactive remedial measures during the employees’ onboarding process to ensure that the employees did not take or use any of Aon’s confidential business information. Alliant submitted to the court a copy of its “Prospective Employee Departure Protocols,” which all of the employees were required to sign. These protocols stated that:

• Prospective employees were prohibited from misappropriating or disclosing confidential information of their former employer during the interview process or thereafter;
• Prospective employees were obligated to serve their current employer’s best interests at all times they remained employed, not solicit other employees or customers to join Alliant, and not even speak with other employees or customers about their potential departure;
• Prospective employees were strictly prohibited from transferring any of their former employer’s confidential information from their business email account to their personal email account, or otherwise download or save such information to another storage device; and
• Prospective employees subject to non-solicitation provisions were prohibited from speaking with their former colleagues about potential employment at Alliant.

The court was also heavily persuaded by the fact that Alliant had hired a third-party consultant to remove emails containing Aon information from the employee’s personal email accounts and create a mirror image of the employees’ devices for document preservation purposes.

Takeaways

This case underscores two primary factual issues that frequently arise in trade secret misappropriation cases. First, even where employees have accessed confidential information shortly before their departure — and even where they have sent confidential information to a personal email account shortly before leaving — employers still must show that their access was improper and that there was no legitimate reason for them to access the information in the course of performing their legitimate duties. Employers would also be well advised to have strict policies prohibiting employees from forwarding business information to their personal email accounts generally — an issue that arises more frequently as more employees work remotely.

Second, employers can mitigate the risk of trade secret misappropriation claims by taking proactive steps to prevent prospective employees from bringing confidential information belonging to their former employers, whether inadvertently or not. This case further emphasizes that new employers are not well served by sticking their heads in the sand, but rather that they may be able to escape trade secret misappropriation liability by being proactive and taking steps to remove trade secret information from their systems (while also preserving it in the event of litigation).

As trade secrets claims become more common, employers should evaluate their recruitment and information technology procedures to determine whether there are improvements they can make to better position themselves to defend against misappropriation claims.