Quantcast
Home / Opinion Digests / Labor & Employment / Employment –  Company can pursue ex-employee for retained property, trade secrets

Employment –  Company can pursue ex-employee for retained property, trade secrets

Because an employer did not abandon its claim that a former employee breached his employment agreement by retaining company property after resignation, the district court erred in dismissing the claim. And because the employer took steps to maintain the secrecy of certain documents, the district court erred in finding for the employee on the trade secrets claim.

Background

Diego de Amezaga worked for AirFacts from 2008 to 2015 under an employment agreement that required him to return all AirFacts property, including documents, upon leaving the company. On Feb. 6, 2015, de Amezaga gave AirFacts his notice of resignation. On de Amezaga’s final day at AirFacts, he emailed a spreadsheet outlining a proration framework and a database model, both relating to AirFacts’ upcoming proration software product, to his personal email account. About a month after his AirFacts employment ended, de Amezaga used his AirFacts employee credentials to remotely log in to his AirFacts account and downloaded two flowcharts he created during his employment.

The employment agreement also imposed a non-compete restriction on de Amezaga’s employment for a year after he left AirFacts. Three months after leaving AirFacts, de Amezaga began working at American Airlines in the refunds department.

AirFacts sued de Amezaga for breach of contract under the employment agreement; misappropriation of trade secrets under the Maryland Uniform Trade Secrets Act (“MUTSA”); and conversion. The district court held a five-day bench trial during which AirFacts abandoned its conversion claim. In its memorandum opinion, the court concluded that AirFacts had also abandoned its breach of contract claim based upon paragraph 4.2 of the employment agreement, covering return of company property. The court thus analyzed count one only as to the non-compete paragraph of the agreement (paragraph 8.1), and found that de Amezaga’s work at American was neither similar to AirFacts’ work nor in competition with AirFacts’ proration product.

On count two, the district court found that the flowcharts contained public information and were widely available to AirFacts’ employees, and it concluded those documents were not trade secrets under the MUTSA. And while the court held the proration documents were MUTSA trade secrets, the court found that de Amezaga did not misappropriate those documents because he accessed them with authorization while he was an AirFacts employee. Consequently, the court entered judgment for de Amezaga on all counts.

Analysis

We turn to the district court’s determination that AirFacts abandoned its paragraph 4.2 claim. Upon review of the record, particularly the closing argument transcript and AirFacts’ filings, we cannot fairly draw an inference of abandonment. AirFacts’ consistent representations preclude a finding of abandonment. While AirFacts’ failure to address the paragraph 4.2 contentions in closing may have been sloppy advocacy, that failure did not rise to a clear and unambiguous abandonment of a claim it had consistently pursued throughout the case. Consequently, applying our commonsense standards for claim abandonment, we hold the district court clearly erred in holding AirFacts abandoned its paragraph 4.2 contentions.

Turning to AirFacts’ breach of contract claim for violation of the non-compete clause, is undisputed that American was an AirFacts customer while de Amezaga worked at AirFacts. Nonetheless, AirFacts concedes that the audit functions de Amezaga performed at AirFacts and the refund functions he performs at American have distinct purposes and end recipients. These distinctions are significant and confirm that de Amezaga’s work at American is not “in competition with” or “similar to” AirFacts’ services. Consequently, he has not breached paragraph 8.1(d)(i). We likewise conclude that de Amezaga did not breach paragraph 8.1(d)(ii) by working at American despite his knowledge of AirFacts’ anticipated proration product.

We now turn to AirFacts’ Maryland trade secrets claims. The district court concluded that the flowcharts are not trade secrets because they are simply an “overview” of publicly available ATPCO information that AirFacts did not own. As a consequence, the district court held there was no MUTSA claim regarding the retained flowcharts. We disagree. Amezaga’s painstaking expert arrangement of the ATPCO data made the flowcharts inherently valuable separately and apart from the publicly available contents. Second, the flowcharts are valuable because they would improve AirFacts’ efficiency in the performance of its contractual obligations. Finally, AirFacts took reasonable steps to maintain the flowcharts’ secrecy. Therefore, we conclude the district court erred in holding the flowcharts are not trade secrets and vacate and remand this claim for the district court to address in the first instance whether de Amezaga misappropriated these trade secrets.

Finally, we address AirFacts’ trade secrets claim relating to the proration documents. Because we follow the district court’s credibility determination that de Amezaga accessed the proration documents with authorization and did not intend to access, use or send them to anyone (but his AirFacts supervisors) after his last day at AirFacts, we affirm.

Affirmed in part, vacated in part.

AirFacts, Inc. v. de Amezaga (Lawyers Weekly No. 001-166-18, 24 pp.) (Agee, Steven, J.) Case No. 17-2092, Nov. 20, 2018, from D. Md. (Chasanow, Deborah, J.). Nicholas Hantzes for Appellant, Jerry R. Goldstein for Appellee.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

*