Confidentiality Breach and Unfair Dismissal Law

Milestone 1
I. Introduction
As an intern at the legal department of Greene’s Jewelry Wholesale, I am convinced that the company does indeed have significant strengths in as far as its legal claim is concerned. This is more so the case given that Jennifer Lawson did indeed sign a confidentiality agreement whereby she made a commitment to keep any information gathered relating to the creation of Ever-Gold secret. It is important to note that she never signed a ‘not to compete’ agreement. This, however, has no connection to the issue at hand because Jennifer has not necessarily established an enterprise that seeks to compete with Greene’s Jewelry. On the other hand, when it comes to the legal defense of the company, it would be prudent to note that Greene’s Jewelry position would be weak. The subsequent sections of this text not only analyze the facts and laws relevant to the scenario presented, but also evaluate the various facts to be determined. Cases that support the position of Greene’s Jewelry will also be highlighted.
II. Client’s Case
A. Facts and Laws
Jennifer has been sued by Greene’s Jewelry for breach of the confidentiality agreement she signed. In the said confidentiality agreement, Jennifer made a commitment not to share any information gathered in the course of her employment, relating to the processes that Greene’s Jewelry uses to create and develop Ever-Gold, with a third party. Following her dismissal from the company, Jennifer unintentionally left with a letter detailing Ever-Gold’s secret creation process. She should have returned the said letter the moment she noticed she had it. Further, in search of new employment, she proceeded to place a call to Howell Jewelry World - one of Greene’s Jewelry main competitors - and proclaim she had confidential information in relation to the creation of Ever-Gold. Following her signing of the formal employment contract at Howell, Jennifer handed over the letter detailing Ever-Gold’s secret creation process to Howell’s hiring manager.
In basic terms, it should be noted that from a legal perspective, breach of a confidentiality agreement is deemed to have occurred in those instances whereby an employee discloses material information, such as a trade secret, that they had committed not to disclose. More specifically, in the words of Bagley (2012), “an individual misappropriates a trade secret when he or she (1) uses or discloses the trade secret of another or (2) learns of a trade secret through improper means” (333). It is therefore clear that in the presented scenario, Jennifer did indeed disclose the trade secret of Greene’s Jewelry. It is on this basis that Greene’s Jewelry sues this particular former employee for breach of the confidentiality agreement. Following the enactment of the Defend Trade Secrets Act of 2016, Greene’s Jewelry is in a strong position to pursue a civil suit under federal law. According to Chociey (2018), this particular law “grants a trade secret’s owner the right to sue in federal court for “trade secret” “misappropriation” if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce…”
Jennifer has also countersued Greene’s Jewelry for wrongful termination. As it has already been pointed out in the introductory section of this text, we might not be in a strong position to defend ourselves against this particular countersuit. This is more so the case given the specific provisions of the Worker Adjustment and Retraining Notification Act of 1988, i.e. the so called WARN Act. Although the case study does not specifically state the number of employees to be affected by the downsizing, we could make the comfortable assumption that given the number of persons presently under the employ of Greene’s Jewelry, the downsizing would affect at least 50 persons. This is an important consideration given that for the WARN Act to be applicable, the planned layoffs ought to affect a minimum of 50 employees at a specific employment site. In basic terms, the WARN Act requires that employers with more than 100 employees to give an advance notification of not less than 60 days to employees in relation to closure of operations or layoffs (U.S. Department of Labor, 2020). More specifically, according to the U.S. Department of Labor (2020), “advance notice gives workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain other jobs, and if necessary, to enter skill training or retraining…” In the presented scenario, Jennifer was instructed to clear out her desk immediately. There was no 60-day notice advanced.
B. Precedent
In Hallmark Cards, Inc. v. Janet L. Murley (2013), the defendant (Murley) parted ways with the plaintiff (Hallmark Cards) and was paid a total of $735,000 as the severance package. It is important to note that as Hallmark’s marketing vice-president, Murley had come across and was indeed in possession of some confidential information regarding the operations of the company. The said information was inclusive of, but was not limited to, market research and business plans. Upon the payment of the severance highlighted above, Murley amongst other things agreed to dispose-off any confidential documents and ensure that the company’s confidential information was not disclosed to any third party. Years later, the defendant got hired by a company by the name RPG as a consultant. For the said consulting work, she was offered a total of $125,000. Following her employ, she passed-on key Hallmark documents (and information) to RPG. Hallmark initiated a lawsuit upon its learning of the said developments. According to Peacock (2013), “the jury returned a verdict in Hallmark's favor for $860,000 - equal to her severance pay plus her consulting fee with RPG.”
In Chestnut v. Stone Forest Indus. Inc. (1993), the defendant initiated a mass layoff as a consequence of its assessment of the prevailing business conditions. In this case, changes in market dynamics dictated that for Stone Forest Industries Inc. to remain in business, it had to lay-off a total of 81 employees. The affected employees brought a class action suit pursuant to the WARN Act. They indicated that the company did not afford them the mandated 60-day notice. On its part, Stone Forest Industries Inc. pointed out that the said layoffs were necessitated by unforeseeable business conditions. It thus sought to escape liability under the said Act. In the final analysis, the court made a finding to the effect “that the defendant qualifies for the exception set forth in section 2102(b) (2) (A)” (Justia, 2020).
C. Facts to be Determined
For Greene’s Jewelry claim under the Defend Trade Secrets Act of 2016 to be successful, the company must be able to demonstrate that Jennifer did indeed engage in what could be deemed ‘misappropriation.’ Towards this end, there are a few considerations that would be of great relevance in as far as the said misappropriation is concerned. To begin with, Greene’s Jewelry ought to be in a position to indicate that indeed Jennifer disclosed a trade secret which was by its nature confidential. Further, Greene’s Jewelry should also demonstrate that the former employee did have an obligation of confidence in relation to the said trade secret. Greene’s Jewelry could also show that Jennifer did not have authorization to either disclose or share the trade secret. Our pursuit of a claim for breach would further be buttressed by proof that Greene’s Jewelry has indeed suffered some business damage or loss as a consequence of the said disclosure.
In as far as Jennifer’s countersuit is concerned, it would be prudent to note that there are several exceptions that we could invoke in our defense. As the U.S. Department of Labor (2020) indicates, exceptions to WARN Act do indeed exist “when layoffs occur due to unforeseeable business circumstances, faltering companies, and natural disasters.” These are some of the facts that ought to be established on this front. Was the downsizing a consequence of unforeseeable business circumstances? In the present case study, the reason for the said downsizing has not been indicated.
References
Bagley, C.E. (2012). Managers and the Legal Environment: Strategies for the 21st Century (7th ed.). Mason, OH: Cengage Learning.
Chociey, E.F. (2018). The Defend Trade Secrets Act of 2016: An Overview and Analysis of the Statute Establishing a Federal Civil Cause of Action for Trade Secret Misappropriation and Notable Case Law to Date. Retrieved from https://www.lexology.com/library/detail.aspx?g=a6c6cf8f-5d89-4cbd-9c64-82ca38e53006
Justia (2020). Chestnut v. Stone Forest Industries, Inc., 817 F. Supp. 932 (N.D. Fla. 1993). Retrieved from https://law.justia.com/cases/federal/district-courts/FSupp/817/932/1459432/
Peacock, W. (2013). Breach of Contract, Confidential Info Leak Case: Hallmark Prevails. Retrieved from https://blogs.findlaw.com/eighth_circuit/2013/01/hallmark-prevails-in-breach-of-contract-confidential-info-leak-case.html
U.S. Department of Labor (2020). Plant Closings and Layoffs. Retrieved from https://www.dol.gov/general/topic/termination/plantclosings