A Federal District Court recently refused to dismiss a complaint for lack of subject matter jurisdiction because, among several state law claims, the plaintiff – the individual defendant’s former employer – also asserted a claim under the Federal Computer Fraud and Abuse Act (CFAA). In NouvEON Tech. Partners, Inc. v. McClure, No. 3:12-CV-633-FDW-DCK, 2013 U.S. Dist. LEXIS 29208 (March 5, 2013), a North Carolina Federal District Court denied defendants’ Rule 12(b)(1) motion to dismiss, for lack of subject matter jurisdiction, a myriad of state law claims filed by NouvEON against its former employee (McClure) and her new employer (Smarter Systems).
At the Gibbons Second Annual Employment & Labor Law Conference last week, one panel discussion addressed the National Labor Relation Board’s (“NLRB”) recent activity, and offered a list of topics to watch in 2013. This blog post contains the highlights from that discussion as related to employer policies. Of prime interest in our predictions for 2013 is the “recess appointment” issue. Just three weeks ago, the District of Columbia Court of Appeals in Canning v. NLRB, No. 12-1115 (D.C. Cir. Jan. 25, 2013) held that three 2012 recess appointments of officers to the NLRB by President Obama were unconstitutional because they lacked the “Advice and Consent” of the Senate and were not authorized by the Constitution’s Recess Appointments Clause.
New Jersey Court Finds Violation of Computer Related Offenses Act and Other Unlawful Conduct, Ordering Disgorgement of Profits, Attorneys’ Fees and Punitive Damages
In B&H Securities, Inc. v. Duane Pinkey et al., the New Jersey Superior Court found that former employees taking computer files from – and using the files to unfairly compete with – their employer violated the Computer Related Offenses Act, N.J.S.A. 2A:38A-1 et seq. (“CROA”), and breached other common law and contractual obligations. The Court awarded actual damages, based on plaintiff B&H’s lost profits of $737,087.00, as well as punitive damages of $100,000 and attorneys’ fees under the CROA.
Employers must use an updated form in order to comply with the Fair Credit Reporting Act (“FCRA”), which covers background checks for job applicants and existing employees. The new form is for use effective January 1, 2013. No other provisions of the FCRA have changed. The FCRA Regulates the Use of Consumer Information – The FCRA regulates the use of consumer information. Consumer Reporting Agencies (“CRAs”) compile consumer information into detailed “consumer reports,” which may be used by employers for hiring and retention decisions. Employers also may conduct their own investigative consumer reports, which are covered by the Act as well. The FCRA provides notice and authorization requirements for the use of consumer reports and investigative consumer reports.
The federal government continues to take aim at those who violate trade secrets rights. On December 28, 2012, the Theft of Trade Secrets Clarification Act of 2012 (S. 3642) became law, expanding the definition of trade secrets under the Economic Espionage Act (EEA). In addition, as previously reported in a Gibbons IP Law Alert blog, the President is expected to sign legislation recently passed by Congress that triples the damages for a violation of trade secrets protection laws and provides technical changes to patent applications and protections. Also worthy of note is an 82-page report from the U.S. Department of Justice issued last month detailing federal enforcement efforts concerning trade secrets theft.
As we near the end of the year, now may be a good time to dust off your employee manual and training programs! An annual review of policies is a good best practice that can save your company both time and money in the long run. For instance, have you considered revising your policies or offering trainings in areas that have been the focus of recent legal activity such as: social media, confidentiality, reasonable accommodations, or bullying.
New Jersey District Court Enjoins Former Financial Services Employee from Taking Customer Information
In a case to be noted by financial services entities that are signatories to the “Protocol for Broker Recruiting,” a New Jersey District Court issued a preliminary injunction to a financial services employer, Ameriprise Financial Services, Inc. (“plaintiff”) to prevent a former financial advisor employee from retaining certain client information that he downloaded from his computer prior to his departure from plaintiff. Plaintiff was a party to the “Protocol for Broker Recruiting” that prescribes a method for a departing employee to retain certain client information when leaving for another financial services institution. To grant the injunction, the Court found that plaintiff showed it likely would succeed on its underlying breach of contract claim, it would suffer immediate irreparable harm absent the injunction, defendant would not suffer harm if enjoined, and the injunction favors the public’s interest. The Court essentially decided that if the Protocol is not followed in the first instance, a departing financial representative’s subsequent compliance is tainted and insufficient to withstand subsequent legal challenge.
The Computer Fraud and Abuse Act (“CFAA”) is a federal law that, in part, makes it a crime to access a computer in an unauthorized manner. In the employment context, the statute has proven valuable in protecting confidential and proprietary information that employees can access on their employers’ electronic systems. Recent decisions by the United States Courts of Appeals for the Ninth and Third Circuits emphasize the breadth of the CFAA’s application to the workplace.
New Jersey Supreme Court Holds That Employees Disciplined for Stealing Confidential Company Documents in Support of Discrimination Claims Can Sue for Unlawful Retaliation
The New Jersey Supreme Court has just announced a new test under which an employer may be held liable for unlawful retaliation when taking action against an employee who misappropriates and uses confidential company documents against the employer in support of a discrimination claim. Those who believe that simplicity is a virtue will not have their minds changed by the New Jersey Supreme Court’s decision in Quinlan v. Curtiss-Wright Corporation, in which the Court, by a 5-2 majority, established a complex and confusing seven-part “balancing test” for determining whether an employee’s wrongful taking of company documents nevertheless constitutes “protected activity” under the New Jersey Law Against Discrimination (the “LAD”). Applying this test, the Court held that the plaintiff in Quinlan could have been terminated for the wrongful taking of documents, but should not have been terminated for her attorney’s use of one of the documents at a deposition.
In this technology age, employees increasingly make personal use of workplace electronic communications applications. The legal ramifications of such personal use – and how employers can create policies that balance the right to monitor the workplace with employees’ expectations of privacy – were examined in an informative panel discussion, “Electronic Communications Policies in the Wake of Stengart and Quon” during Gibbons P.C.’s Fourth Annual E-Discovery Conference on October 28, 2010.