An interesting case arose out of the Middle District of Tennessee, which explored the overlapping claims involving an employer suing some of its former employees for trade secret misappropriation, breach of the duty of good faith and loyalty, and civil conspiracy. In Ram Tool & Supply Company, Inc. v. HD Supply Construction LTD., et al., the court allowed the common law claims of breach of duty of good faith/loyalty and civil conspiracy to survive the former employees' motion for summary judgment, notwithstanding the preemption of factually similar claims by the Tennessee Uniform Trade Secrets Act.
The facts appear quite colorful. Briefly, two businesses (Ram Tool & Supply and White Cap Construction Supply) compete in the construction tools and materials distribution industry. Ram Tool had a sales team in Nashville. White Cap didn't, but planned on opening one. Ram Tool alleged that over a period of about six months, White Cap targeted Ram Tool's Nashville manager, who agreed to move over to White Cap. While still employed with Ram Tool, the Nashville manager heavily recruited other Ram Tool employees; negotiated the hiring of Ram Tool employees for White Cap, while the manager was still on the Ram Tool payroll; and identified himself as the White Cap branch manager on White Cap letterhead while still employed by Ram Tool. To add insult to injury, on his last day of employment with Ram Tool, the Nashville manager received an order at Ram Tool, which he promptly forwarded to his new White Cap team calling it the "first order".
None of the Ram Tool employees were bound by any non-compete agreements or non-solicitation agreements. Rather, the claims against them were brought under common law theories that apply to all employees.
The court did not reach the merits of the dispute or opine on fault as the matter must still be tried to conclusion. Instead, the case dealt with the legal ruling of whether the Tennessee Uniform Trade Secrets Act precluded all of the common law claims, as is often the result. The court said no – the common law claims (i.e. breach of duty of loyalty, etc.) survived as the facts supporting those claims did not involve any alleged trade secret theft. In other words, the former Nashville manager and others, have quite the uphill battle to tread as they attempt to defeat of multiple claims being levied against them.
Situations involving employee dishonesty and switching over to competitors, both with and without non-compete agreements, often result in contentious litigation. And, as shown by this case, require a solid understanding of the interplay of the various overlapping claims.