As readers of this blog know, most trade secret misappropriation claims are brought in civil complaints—but a recent case out of Pennsylvania reveals how quickly the tables can turn on a civil plaintiff asserting claims against her former employer, resulting not only in civil counterclaims for trade secret misappropriation, but also in criminal prosecution. This case reveals how defense counsel can—and should—take an aggressive approach to protection of clients’ confidential and trade secret information, not only to preserve clients’ claim that such information is confidential, but to obtain critical leverage in high-stakes litigation. 

In Spano v. Ohio Hospice & Palliative Care, pending in the United States District Court for the Western District of Pennsylvania, a certified nursing assistant and her sister filed a proposed class action against their former employer alleging violations of the federal Age Discrimination in Employment Act and the Pennsylvania Wage Payment and Collection Law. But during discovery in that case, Spano produced pilfered records that she had taken after being terminated for falsifying her timesheets. The following month, during her deposition, she testified that she took over 700 pages of confidential and proprietary business and patient records when she was fired and handed them over to her counsel for use in prosecuting her claims against her former employer. The records at issue not only contained her former employer’s confidential and proprietary business information, including internal business policies, training information, and notes, but also the protected health information of over 100 patients.

Upon discovering her theft, her former employer immediately notified state and federal law enforcement of her criminal misconduct, and on April 15, 2019, the Allegheny County district attorney’s office filed a criminal complaint charging Spano with felony theft of trade secrets and misdemeanor theft by unlawful taking. In addition to the criminal charges, Spano is also now defending against her former employer’s civil counterclaims for conversion, misappropriation of trade secrets, and breach of fiduciary duty. In its counterclaims, the former employer alleges that “immediately after [being] notified of her termination, [Spano] went to a secure room where [employer]’s confidential business records and patient records were being stored. Spano surreptitiously gathered the records and stole them.” Remarkably, Spano’s counsel called the criminal investigation into his client’s misdeeds “an abomination of justice” and a “disgrace.”

This case demonstrates the true risk of violating confidentiality agreements and misappropriating trade secrets. A former employee who misappropriates trade secrets is not only subject to civil liability, but can also be charged criminally, even if their intended goal was to further their own claims of discrimination, wage violations, or the like. The case also reflects an aggressive option for defense counsel in dealing with emboldened plaintiffs and their counsel, who are increasingly resorting to self-help tactics to bolster their litigation position. While collection of some sensitive and/or confidential documents not rising to the level of trade secrets may, in some circumstances, be considered protected activity (depending on a variety of factors, including the relevance of the purloined documents and the manner in which they were obtained), litigants who discover that their adversaries have obtained trade secret information through self-help tactics should consult with their attorneys to see if such conduct could be actionable. Defense counsel must be proactive and assertive in protecting their clients’ confidential information, even when defending against serious claims, not only to maintain the confidentiality of such information (which can lose its protected status if the company does not take adequate measures to protect it), but to gain leverage in litigation.