Massachusetts Federal Court Enjoins Seafood Supplier Executive from Working for Competitor After Downloading Trade Secrets
A Massachusetts Federal Court recently enjoined the former Director of Research and Development and Quality Assurance of National Fish & Seafood, Inc. (“National Fish”) from working for a competing seafood supplier based in Florida after it determined that she had downloaded thousands of documents from National Fish’s computer systems during her final days with the company. Kathleen Scanlon had worked for the Gloucester, Massachusetts-based seafood supplier for twenty-three years when she was approached by the CEO of Tampa Bay Fisheries, Inc. (“Tampa Bay Fisheries”) to see if she was interested in taking a position as director of food safety for the company.
Shortly after Tampa Bay Fisheries’ inquiry, Scanlon copied thousands of documents over a period of several days from National Fish’s computer system to a USB drive and into a newly established Gmail account. Scanlon copied recipes, cost analyses, policy documents, product specifications, and several documents concerning one of National Fish’s major customers. Scanlon’s copying continued up to the day she informed National Fish of her plans to resign.
Scanlon testified at a hearing that she had no personal email address and no personal computer devices and, as a result, all of her personal information accumulated over the course of two decades was stored on National Fish’s computers and servers. She claimed that she was not tech savvy and in an effort to preserve her personal information, she simply copied information without knowing what she was taking. She could not explain how National Fish’s documents came to be downloaded to her USB device and personal email account.
The court rejected Scanlon’s excuses, particularly because she had engaged Tampa Bay Fisheries’ IT director to help with copying her personal information, although she never asked for assistance from National Fish. She also sent documents to Tampa Bay Fisheries employees while still employed by National Fish to assist Tampa Bay Fisheries in using new software that she recommended they purchase. Finally, on her penultimate day of work, she took photographs of National Fish’s clam processing line, despite a longstanding policy against such photography.
The court held that Scanlon was subject to the terms and conditions of National Fish’s company handbook. Those terms prohibited Scanlon from disseminating trade secrets, confidential information, client records, and any company proprietary information. The court found that Scanlon had not complied with those rules by copying National Fish’s information with the intent to keep the documents for future use. Although much of the information she took was merely company information, at least two of the documents constituted trade secrets, including proprietary seafood recipes.
Although the court found that Tampa Bay Fisheries had not directed or encouraged Scanlon to download National Fish’s information, it nevertheless issued a preliminary injunction enjoining (1) Scanlon and Tampa Bay Fisheries from viewing or otherwise using any of the National Fish documents that Scanlon copied and (2) Scanlon from beginning her employment with Tampa Bay Fisheries. The court also ordered that an independent expert forensically examine Tampa Bay Fisheries’ servers for any emails from Scanlon and any National Fish files copied by Scanlon that had been stored on Tampa Bay Fisheries’ network drives.
The court’s order enjoining Scanlon from beginning work for Tampa Bay Fisheries is particularly noteworthy because Scanlon was not subject to any restrictive covenants that would otherwise prohibit her from working for a competitor. The case is a reminder that even in the absence of a non-competition or non-solicitation provision in an employment contract, a former employee may still be enjoined from working for a competitor if they misappropriated trade secrets and a court finds that they are likely to use those trade secrets on behalf of their new employer.