It’s a fact pattern that repeatedly arises in trade secret cases: a company hires someone who has a confidentiality agreement with their former employer. Just before (or shortly after) being hired, the individual emails confidential information from their former employer to individuals at their new job. The former employer files suit against the individual, but also asserts a claim for tortious interference with contractual relations against the new employer.
When presented with a fact pattern like this in the post-Iqbal and Twombly age, it is imperative that the plaintiff explicitly allege in their complaint that the new employer did more than merely receive the confidential information at issue. If not, the plaintiff runs the very substantial risk of their tortious interference claim being dismissed at the outset of the case. This scenario is precisely what happened in the case of HI Technology Corp. and Interactive Communications International, Inc. v. Roderick J. Kersch and NationsBenefits, LLC, U.S. District Court, Northern District of Georgia (Atlanta), Case No. 1:21-cv-03468-TWT.
In HI Technology, Georgia District Court Judge Thomas W. Thrash Jr. held that a former employer’s complaint did not sufficiently allege—as a matter of Georgia law—that an employee’s new employer had tortiously interfered with that employee’s employment agreement with his former employer by merely accepting emails that contained the former employer’s confidential information. Accordingly, Judge Thrash granted the new employer’s motion to dismiss.
In its complaint, HI Technology alleged that its former employee, Kersch, unlawfully communicated with NationsBenefits executives about HI Technology’s vendors while still employed by HI Technology, in direct violation of his employment agreement. The complaint also alleged that NationsBenefits’ executives permitted the sharing of this confidential information. In his opinion, Judge Thrash held that these actions, even if true, were insufficient to state a viable cause of action:
“Even construing [the] allegations in the Plaintiffs’ favor, none of the actions taken by the NationsBenefits executives reach the level of fraud or misrepresentation, and the plaintiffs do not identify any confidential information used by those individuals. The Plaintiffs allege that the NationsBenefits executives ‘repeatedly permitted Kersch to send Plaintiff’s confidential information’ to them. But these allegations do not allege any use of that information or other improper actions undertaken by the executives; instead, these allegations merely describe actions taken by Kersch and the executives’ failure to preemptively prevent such emails from being sent.”
Under Georgia law, a claim of tortious interference with contractual relations requires (1) improper action or wrongful conduct, (2) purposeful malice or intent to injure, (3) inducement to breach contractual obligations, and (4) resulting damage. Based on this standard, Judge Thrash held that because HI Technology failed to allege any improper use of its confidential information, fraud or misrepresentation by NationsBenefits or its staff, HI Technology’s claim of tortious interference failed as a matter of Georgia law:
“While use of confidential information could constitute improper action, the Plaintiffs merely allege that NationsBenefits engaged in ordinary business behavior that was facilitated by an employee in violation of his contract. Ultimately, the Plaintiffs’ allegations either concern actions taken solely by Kersch or actions by NationsBenefits that imply mere collaboration with an individual in breach of his contractual obligations. These allegations are insufficient under Georgia law.”
The HI Technology decision is an excellent reminder that when drafting a claim for tortious interference with contractual relations (especially in Georgia) it is imperative to allege more than the new employer merely received confidential information from the new employee. Receipt alone is unlikely to constitute “improper action or wrongful conduct, purposeful malice or intent to injure.” Instead, the claim should assert factual allegations that the new employer was an active—not just passive—participant in inducing the individual defendant to breach their agreement with their former employer.