[BreachExchange] Court Allows Company to Surreptitiously Monitor Former Employee’s Social Media Account to Support its Trade Secrets Claim

[Destry Winant]

https://www.jdsupra.com/legalnews/court-allows-company-to-surreptitiously-34987/

A federal court of appeals recently found that there was nothing wrong
with a company monitoring a departed employee’s Facebook account and
using that information to pursue a trade secrets claim against four
former employees.

In Scherer Design Group, LLC v. Ahead Engineering LLC, the employer
accessed former employee Daniel Hernandez’s account by using software
that allowed the company to access Hernandez’s deleted browser history
and his password-protected social media without detection, and
additional software that allowed the employer to monitor Hernandez’s
Facebook activity even after he had left the company. After gaining
access to Hernandez’s Facebook account, the company reviewed his
Facebook messages daily for two months and obtained information to
support claims of trade secret misappropriation, improper interference
with the company’s customers and breach of the four former employees’
duty of loyalty while employed at the company.

Interestingly, Hernandez claimed that he had logged out of his
Facebook account before he returned the company’s laptop computer. In
other words, he argued that the company had affirmatively “hacked”
into his Facebook account to retrieve the information.

Hernandez asserted that the company was guilty of “unclean hands” and
should not be able to use the evidence it had uncovered against him
and the other departed employees. (The unclean hands doctrine is an
equitable defense that prohibits a party that is seeking relief from
benefitting from its own bad acts.).

But the U.S. Court of Appeals for the Third Circuit ruled that because
the departed employees’ alleged violations predated the company’s
alleged hacking (along with some other factors), the unclean hands
doctrine did not apply. The court allowed the injunction against the
company’s former employees from contacting former clients to stand,
despite the company’s surreptitious monitoring.

Takeaways: This decision is helpful to employers, but employers should
proceed with caution if faced with such a situation. First, the Third
Circuit covers federal courts located in Delaware, New Jersey,
Pennsylvania and the United States Virgin Islands. Second, the
decision was decided by a three-judge panel … and by a 2-1 vote.

An action item for employers is to review your company’s electronic
communications policy, as well as its other policies addressing
confidential company information. The policies should expressly
address an employee’s expectations, both during and after employment.

Litigation surrounding the misappropriation of trade secrets and
confidential information and other unfair competition is increasing.