In a fact pattern that resembles the Clue board game, the Missouri Supreme Court had to decide whether a former employee locking his former employer’s customer list in a safe-deposit box constituted the unlawful misappropriation of a trade secret.
Under the Missouri Uniform Trade Secrets Act (MUTSA), a claim for misappropriation of trade secrets has three elements: (1) a trade secret exists, (2) the defendant misappropriated the trade secret, and (3) the plaintiff is entitled to either damages or injunctive relief.
In this case, the employee’s employment agreement contained a covenant not to compete. However, the non-compete would not apply if the company was sold.
Clue #1: The contents of the safe-deposit box
When the employee became aware of merger negotiations involving his then employer, a financial management services company, he prepared for his potential departure by placing a list of his clients in a safe-deposit box. He also added a cellphone containing the contact information of approximately 200 clients, and 39 pages of documents containing information about those clients, including names, addresses, telephone numbers, email addresses and confidential financial information.
Subsequently, the employee became affiliated with a new company as a registered investment adviser and began contacting his former clients. The former employer then filed a lawsuit against both the employee and his new firm.
Clue #2: Was the client list a trade secret?
The amended petition of the financial management services company claimed its “client database” deserved trade secret protection because it contained names, contact information, and personal and private information not available to the public of its clients and prospective clients, as well as information relating to client and potential-client lists; personal and private information about clients and potential clients; specialized needs and preferences of clients and potential clients; client and prospective-client contacts; marketing information; and the size and profitability of their clients’ accounts.
First, the Missouri Supreme Court noted that whether a client list constitutes a trade secret is determined on a case-by-case basis, and there are differing opinions from many courts. Ultimately, the Missouri court said the main question under MUTSA was whether there was evidence that the new employer had acquired a trade secret while knowing or having reason to know that it was doing so by improper means. Thus, the court felt it didn’t have to decide whether the client list was a trade secret.
Last clue: Game over
Instead, the Missouri Supreme Court noted there was no evidence that the new employer ever obtained a copy of the client list, or that it ever accessed any safe-deposit box that contained the cellphone or client information. Thus, the court said the claim for misappropriation of a trade secret failed as a matter of law.