A Virginia federal court opinion issued this week illustrates the hazards of allowing employees to retain access to confidential company information after they learn of their termination.
On November 3, 2011, ECS Federal, Inc. informed Jacqueline Marsteller, a senior vice president and account executive, that she would be terminated effective at the end of the year. But ECS, a government contractor in Fairfax County, Va., continued to provide Marsteller with access to ECS’s facilities and resources, including her computer, until she left the company.
ECS alleges that after it informed Marsteller of her termination, bur before she left, she transferred “highly sensitive and confidential information” from her computer to an external storage device. Among the documents that Marsteller allegedly transferred: ECS’s list of wages for a government contract, an invoice showing hours worked and billing rates, a full list of ECS’s active contracts, and the documents that ECS used to obtain ISO certification.
ECS claimed that after her termination, Marsteller began working for another government contractor, and used the confidential, proprietary, and trade secret documents for her new employer’s benefit.
In May 2013, Marsteller filed a lawsuit against ECS, alleging, among other things, gender discrimination, breach of contract, and wrongful termination. ECS filed six counterclaims, alleging: (1) violation of Virginia’s trade secrets misappropriation statute; (2) violation of Virginia’s computer crimes statute ; (3) breach of contract; (4) conversion; (5) breach of fiduciary duty; and (6) unjust enrichment. Marsteller moved to dismiss all six counterclaims.
On September 5, 2013, Judge James C. Cacheris of the United States District Court of the Eastern District of Virginia denied the motion to dismiss the first five counterclaims, and dismissed the unjust enrichment count.
Marsteller argued that the court should dismiss ECS’s misappropriation claim because ECS did not adequately allege that she disclosed or used a trade secret. Notably, the court rejected this argument and held that improper acquisition of a trade secret is sufficient to state a claim under Virginia’s misappropriation statute.
The court denied the motion to dismiss ECS’s breach of contract counterclaim because Marsteller had signed a Proprietary Information Agreement, which requires that she return to ECS “any and all drawings, notes, memoranda, specifications, devices, formulas, and documents . . . and any other material containing or disclosing any Company Inventions, Third Party Information or Proprietary Information to the Company.”
The opinion demonstrates that companies may be able to pursue claims against former employees who retain confidential or proprietary information, particularly if the employees have signed agreements that restrict their use of the information. But the opinion also should prompt employers to carefully consider whether they should limit or monitor employees’ access to such data after they learn of their termination.
The case number is 1:13-cv-00593-JCC-JFA.