Lawyers love to put in as many
counts as they can think of into a complaint. They throw everything they can
think of against the wall and see if it sticks.
In Georgia and many other states, like Hawaii; New Hampshire, and Utah, if
they make the case about a trade secret they may be hoisting themselves with
their own petard (I love that phrase). That is because the preemptive reach of
the Trade Secrets Act in Georgia is growing.
If the judge thinks a case is about trade secrets (even if a trade
secret violation is not pled as a count) then the Trade Secrets Act may preempt
any tort claims, making the case
far more difficult to prove and win. Lawyers
must be careful about how they frame a case from the outset. A skilled trade
secrets defender can make you regret you ever brought up that customer list
your client is obsessed with. I attended
a great ABA seminar in Chicago last summer on Advanced Trade Secrets tactics
that was an excellent practical skills course in how to thoroughly abuse plaintiff's
trade secrets cases and make life miserable for amateur trade secrets
practitioners. And if you think you can
do it yourself and make a trade secrets case, good luck with that. Just saying.
The Uniform Trade Secrets Act with
1985 Amendments was the inspiration for the Georgia Trade Secrets Act of 1990
(GTSA), OCGA § 10-1-760 et seq. The GTSA stands out among most Georgia statutes
for its preemption clause, OCGA § 10-1-767. The preemption clause states,
“Except as provided in subsection (b) of this Code section, this article shall
supersede conflicting tort, restitutionary, and other laws of this state
providing civil remedies for misappropriation of a trade secret.”
(emphasis added). Many states have adopted
the suggestions in the Uniform Act. Trade secrets on the civil side is
currently a matter of state law, you cannot register a trade secret with
anyone, you can only protect it from theft and file a state law claim to get
one back from a thief and the damage done.
One year ago, the Georgia Supreme Court reaffirmed in Robbins
v. Supermarket Equip. Sales, LLC that when plaintiff's tort claims “rely on
the same allegations as those underlying the plaintiff's claim for misappropriation
of a trade secret,” it will be preempted by the GTSA, even if the theft is not
of an "According to Hoyle" trade secret. (Robbins v. Supermarket
Equip. Sales, LLC, 290 Ga. 462, 466, 722 S.E.2d 55, 58 (2012); ProNvest,
Inc. v. Levy, 307 Ga. App. 450, 451, 705 S.E.2d 204, 206 (2010)). In so
ruling, the GTSA exemption clause has been broadened
to bar any relief to a trade-secrets-plaintiff even when the court finds that
the alleged misappropriation was not of a true trade secret as defined in the
GTSA. Unless the plaintiff’s claim falls under an exception to
preemption, such as a contract claim, the GTSA’s remedies are the only ones
available to a trade-secrets-plaintiff, and only to one who is able to
successfully argue that what was taken was a trade secret.
This may seem counter intuitive. How can the relief offered
by the GTSA apply only to misappropriations of trade secrets, while the
preemption clause applies to trade secrets and non-trade secrets alike? The
Court reasoned that if a plaintiff could, with the same allegations, get the
same relief it would have received had what was taken qualified as trade
secrets, it would undermine the exclusivity of the GTSA. The preemption clause
gives plaintiffs only one bite at the apple, and they cannot rely on some other
theory when that fails. Interestingly, a federal district court in Illinois
came to the opposite conclusion only two months later, arguing that the literal
language of the statute would not preempt common law theories such as unjust
enrichment or fraudulent inducement when a applied to non-trade-secrets. Miller
UK Ltd. v. Caterpillar Inc., 859 F. Supp. 2d 941, 947 (N.D. Ill. 2012). Illinois and Wisconsin are staking out a
different path unfriendly to a broad preemptive scope for the Trade Secrets
Act. They argue the plain language of
the Act does attempt to broadly preempt claims like unjust enrichment that are
often included in trade secret complaints.
In my opinion, if the unjust enrichment is related to allegedly taking
money from former customers then it is about trade secrets and should be
preempted. Moreover, no breach of
contract claims are preempted and you can get your damages that way.
The fact of the matter is that few cases about an employee
leaving or a business deal falling apart are only about a customer list, the
secret formula or such things. They are
usually about some other forms of alleged lying, cheating, stealing or hurt
feelings. Having a trade secret, adequately
protecting it, and proving the value of it are hard things to do and frankly
there are not many of us lawyers that are highly specialized in trade
secrets. Those of us that are can shred
most trade secret allegations, get the tort claims dismissed and kick your tail
if you wander off the reservation. Just
saying. Maybe I am sounding arrogant and
grandiose here. In fact, I know I
am. But it is based on experience and
results, which makes it at least half true, in my opinion. As always, if you think I missed something,
drop me a line and I am always happy to revise a post.
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