In the world of non-compete and trade secret disputes, the doctrine of inevitable disclosure has long been a point of controversy and confusion. Simply put, inevitable disclosure means exactly what it sounds like. In the non-compete context, the theory goes like this: Employee works for Company A. Employee is exposed to confidential information and/or trade secrets during his time at Company A. Employee leaves Company A to go work for a direct competitor, Company B, in a similar position. Jim will inevitably disclose that confidential information, so he should be prevented from working for Company B.
There are lots of problems with the doctrine of inevitable disclosure. It requires making a number of questionable assumptions. We first must assume that the employee remembers whatever information he was exposed to. We then have to assume that the employee doesn’t just recall that information, but knows how to put it to use in his new job. Finally, we have to assume the employee will actually do it. This might sound plausible in theory, but it often does not play out this way in practice.
In many instances, plaintiffs in non-compete cases attempt to dress up any corporate materials as valuable, confidential, proprietary information. Don’t get me wrong. Sometimes confidential information really is at stake. For instance, maybe the company has a new product in development and the plans are being kept under wraps. That would count as confidential information in my book. But often, the allegedly confidential information at issue non-compete cases is not nearly that special. It’s some strategic corporate planning document, filled with a bunch of buzzwords. It’s some non-earth shattering best practices. It’s a proposal given to a customer (that the customer is then free to show to other companies in order to get a better deal). But let’s assume that the employee did have access to some information that really was valuable and confidential. Even then, inevitable disclosure is still a suspect doctrine. Often, the employee was merely exposed to the information.
I have seen dozens of cases where a company alleged that an ex-employee knew top secret corporate information because that employee had been on an email list (along with dozens of other employees). In other instances, it’s because that employee received copies of a strategic plan (that he probably never read and simply discarded).
For these reasons, I am hesitant to create a presumption that an employee exposed to confidential information necessarily will commit that information to memory, take it with him when he leaves the company and then unfairly use it to benefit a competitor. If there is evidence that the employee stole company documents and materials and took them with him on his way out the door, then we are in a completely different ballgame. Stealing actual copies of company proposals, plans or databases shows bad faith, suggests the materials are truly valuable, and is a concrete instance of misappropriation and attempted unfair competition. But if that isn’t the case, and we are purely in the realm of exposure to information, recollection of it and inevitable disclosure— I don’t buy it.
Even Florida courts, which are generally friendly to non-compete plaintiffs, have not embraced the doctrine of inevitable disclosure. To be clear, Florida courts haven’t rejected it either. The issue is still very much in play. See Proudfoot Consulting Co. v. Gordon, 576 F.3d 1223, 1236 (11th Cir. 2009) (noting that inevitable disclosure is an “uncertain issue of law”).
Looking outside of Florida, the Georgia Supreme Court recently rejected the inevitable disclosure doctrine in the trade secret context. See Holton v. Physician Oncology Servs., LP, S13A0012, 2013 WL 1859294 (Ga. May 6, 2013). In other words, the court held that a plaintiff cannot state a claim for trade secret misappropriation by arguing that a person was exposed to trade secrets. We will hve to wait and see whether this carries over to the non-compete context. After all, there is a difference between holding that a trade secret misappropriation claim cannot be based on inevitable disclosure and holding that inevitable disclosure cannot jusyify enforcement of a non-compete agreement.
Jonathan Pollard is a trial lawyer and litigator based in Fort Lauderdale, Florida. He focuses his practice on cases involving non-compete disputes, antitrust and business torts. He represents clients in Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Jupiter, Fort Myers, Tampa, and Orlando.