A Company's Facebook Snooping Didn't Prevent Critical Trade Secrets Injunction

Author:Mr Greg Grisham
Profession:Fisher Phillips LLP
 
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Can a former employer's alleged misconduct defeat a request for injunctive relief against former employees when those departing workers take confidential information and clients to another employer? A federal appeals court recently addressed this question in Scherer Design Group, LLC v. Ahead Engineering LLC and decided not to apply the "unclean hands" doctrine against the employer in a trade secrets case, clearing the way for the injunction. While not a suggested approach that you should take without consulting with your attorney, the case does present an interesting situation that all employers should familiarize themselves with.

Employer Peeks At Departed Worker's Digital Footprints

Scherer Design Group (SDG) began monitoring the Facebook page of a former employee, Daniel Hernandez, claiming that he left the website open on his company laptop when he resigned. He and two other employees left SDG to work for competing companies started by another former SDG employee, Chad Schwartz. Hernandez and the two coworkers allegedly discussed the new venture on Facebook and "transmitted SDG's documents and information to Schwartz's firms."

SDG had its network administrator examine the computer histories of Hernandez and the two coworkers after they resigned. The administrator was able to access the Facebook page and "installed software that allowed him to monitor Hernandez's Facebook activity without detection." SDG monitored Hernandez's Facebook page for nearly two months, permitting the former employer to view messages that discussed how "SDG's client information and other intellectual property" were obtained by the departed employees.

SDG later sued Hernandez, Schwartz, the two competing companies, and the two former employees who went to work for the competing companies, alleging "breach of the duty of loyalty, tortious interference with prospective business relationships, and misappropriation of trade secrets," among other things. Following expedited discovery and a hearing, a New Jersey federal court granted a temporary restraining order (TRO) and a preliminary injunction that stopped the former employees from contacting SDG's clients.

Appeals Court Clears Way For Social Media Snooping

The former employees appealed the ruling and raised the "unclean hands" defense in seeking to overturn SDG's injunctive relief. Hernandez asserted that he had logged out of his Facebook account when he resigned from SDG, and a forensic expert provided an...

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