In a recent case, the District Court for the Western District of Virginia found in favor of an employer when a former employee downloaded, without permission, over a thousand files containing employer trade secret and confidential information from his company-issued tablet onto a personal hard drive to form a competing business. The court found that the employer’s claims of conversion, violation of the Defend Trade Secrets Act, and breach of the Virginia Computer Crimes Act, based on this unauthorized download of confidential information, was sufficient to survive the motion to dismiss phase. For employers who have similarly faced employees stealing confidential information, this case shows that theft of confidential information by an employee is a violation of the employer’s rights.
TK Elevator Corp. v. Shropshire
TK Elevator Corp. (“TKE”) is a nationwide elevator sales and repairs company. William Shropshire worked for TKE from 2011 until he resigned in 2021. In December 2020, Shropshire formed his own competing elevator repair company, Integral Elevator (“Integral”). On January 19 and 20, 2021, a month before resigning from TKE, Shropshire downloaded, without permission, over a thousand files containing TKE “confidential and trade secret information” from his company-issued tablet onto a personal hard drive. The downloaded information included confidential construction drawings and wiring instructions, links for downloading each job’s proprietary software, and bills of materials containing shipping and packing lists for each job. Additionally, Shropshire’s wife, who also worked at TKE, e-mailed him a report containing confidential information about TKE’s scheduled jobs with specific customers.
Shropshire resigned from TKE on February 26, 2021 and told TKE he was considering performing elevator inspections, which TKE did not do as part of its operations. However, Shropshire had already been operating his competing company, Integral, for over two months.
TKE hired a third-party investigator to conduct a forensic analysis of Shropshire’s tablet and discovered the files Shropshire had downloaded. TKE filed suit against Shropshire, arguing conversion, violation of the Defend Trade Secrets Act, and breach of the Virginia Computer Crimes Act.
To make a successful claim for conversion in Virginia, a plaintiff must allege that a defendant wrongfully exercised dominion or control over its property “in denial of the plaintiff’s right, or inconsistent with it.” The court here found that TKE’s allegations that Shropshire stole its electronic data are sufficient to state a plausible conversion claim, because TKE alleged Shropshire downloaded computer files and programs TKE owned, without authorization or permission. The court also upheld TKE’s claims that Shropshire violated the Defend Trade Secrets Act (“DTSA”) and Virginia Computer Crimes Act (“VCCA”), and denied Shropshire’s motion to dismiss these claims.
What Does TK Elevator Corp. v. Shropshire Mean for Employers?
In TK Elevator Corp. v. Shropshire, the court found in favor of the former employer, at the motion to dismiss phase, for claims based on Shropshire’s theft of TKE’s trade secrets. This case is a basic example of the type of claims employers similarly situated may be able to make against employees who, without authorization, download company trade secrets for personal use. This case shows that if an employee wrongfully exercises control over an employer’s property, misappropriates an employer’s trade secrets, or uses a computer or computer network to make an unauthorized copy of computer data, programs, or software, the employer’s rights have been violated. If you have similarly faced recent employee theft, experienced counsel at General Counsel, P.C. can help you become knowledgeable about your rights, as well as help you protect those rights.
If you need more guidance or information, contact the employment law experts at General Counsel, PC today at 703-782-3266. Attorneys at General Counsel, PC are specialized in labor and employment law and have experience working with business owners across Virginia, specifically in Fairfax County, Arlington, Loudoun County, and Prince William.