It’s an issue that comes up time and time again in trade secret cases: a company hires someone who has a non-disclosure agreement with their former employer. Just before (or just after) being hired, the individual emails confidential information from their previous employer to people at their new job. The previous employer files a lawsuit against the individual, but also asserts claims for unauthorized interference in the contractual relationship against the new employer.
In light of such a post-Iqbal and Twombly state of affairs, it is imperative that the plaintiff expressly alleges in his complaint that the new employer received more than just the confidential information in question. If this is not the case, the plaintiff runs the very significant risk that his claim for tortious interference will be dismissed at the very beginning of the proceedings. Exactly this scenario is in the case of HI Technology Corp. and Interactive Communications International, Inc. v. Roderick J. Kersch and NationsBenefits, LLC, United States District Court, Northern District of Georgia (Atlanta), Case No. 1:21, espoused -cv-03468-TWT.
In HI Technology, Georgia District Court Judge Thomas W. Thrash Jr. ruled that a former employer’s complaint did so Not sufficiently allege – under Georgian law – that an employee’s new employer tortiously interfered with that employee’s employment contract with his previous employer by merely accepting e-mails containing confidential information from the former employer. Accordingly, Judge Thrash granted the new employer’s request for termination.
In its complaint, HI Technology alleged that its former employee, Kersch, unlawfully communicated with NationsBenefits executives about HI Technology’s suppliers while he was still employed by HI Technology, in direct breach of his employment contract. The complaint also alleged that NationsBenefits executives allowed the disclosure of this confidential information. In his opinion, Judge Thrash held that those actions, even if true, were insufficient to provide a valid cause of action:
“Even construct [the] Allegations in favor of the plaintiffs, none of the actions taken by NationsBenefits executives amount to fraud or misrepresentation, and the plaintiffs fail to identify confidential information used by those individuals. The plaintiffs allege that NationsBenefits executives “repeatedly allowed Kersch to send them confidential information from the plaintiff.” But these allegations do not allege that this information was used or other improper actions were taken by management; Instead, these allegations merely describe actions taken by Kersch and the failure of executives to proactively prevent such emails from being sent.”
Under Georgian law, a claim for tortious interference with contractual relationships requires (1) improper action or wrongful conduct, (2) willful malicious intent or intent to infringe, (3) incitement to breach a contractual obligation, and (4) damages resulting therefrom. Based on that standard, Judge Thrash ruled that HI Technology’s tort claim failed under Georgian law because HI Technology failed to assert misuse of its confidential information, fraud or misrepresentation by NationsBenefits or its employees:
“While using confidential information could constitute an improper act, plaintiffs merely allege that NationsBenefits engaged in ordinary business conduct encouraged by an employee in breach of his contract. Ultimately, the plaintiffs’ allegations relate to either acts taken solely by Kersch or to acts by NationsBenefits that imply mere cooperation with a person in breach of their contractual obligations. These claims are insufficient under Georgian law.”
HI Technology’s decision is an excellent reminder that when drafting a lawsuit for tort interference with contractual relationships (particularly in Georgia), it is imperative to allege more than that the new employer merely received confidential information from the new employee Has. Reception alone is unlikely to constitute “improper action or wrongful conduct, willful malice or intent to injure”. Instead, the lawsuit was intended to make factual allegations that the new employer was an active—not just a passive—participant in inducing the individual defendant to break his agreement with his previous employer.
