Tuesday, September 05, 2006, 9/05/2006 07:58:00 AM

Trade Secrets and Fiduciary Duties (Pacer Req'd)

Two opinions in one case, Navigant Consulting, Inc. v. Wilkinson, 2006 WL 2422868 & -69 (N.D. Tex. Aug. 22, 2006), illustrate the connection between fiduciary duty and trade secrets claims in the context of departing employees. The background is fairly standard, two employees of plaintiff left and went on to compete with their former employer. This resulted in the usual host of claims including misappropriation of trade secrets, breach of fiduciary duty, and breach of contract. After a $4 million jury verdict against defendants, the court, the United States District Court for the Northern District of Texas, considered post-trial motions.

The court ruled first that the damages arising from the trade secrets claim were duplicative of those under the fiduciary duty claim and could not be awarded twice. The court, though, rejected defendants' contention that they shouldn't be punished for simply preparing to leave their employer. The breach of fiduciary duty, the court ruled, occurred before they left and included revealing confidential information of their employer -- the trade secrets -- to a third party.

In a separate opinion, the court dealt with the jury instruction on breach of fiduciary duty. The defendants objected to a charge that stated that an employee may, "but not always," secretly join with other employees in preparing to leave.

The court held that instruction was proper because employees, at least in Texas, may not solicit other employees to leave their employer nor conspire with other employees to misappropriate trade secrets.

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