Key Takeaways

• Misappropriation by new management-level employees of their former employers’ trade secrets may expose their new employer to a trade secret misappropriation claim.
• Employers should insulate themselves from confidential or proprietary information that new hires may have from a former employer.

In Harley Marine NY, Inc. v. Moore, 1:23-cv-163 2024 WL 532496 (N.D.N.Y. Feb. 9, 2024), plaintiff Harley Marine NY, Inc. (“HMNY”), a marine transportation operator, alleged that Captain Moore, who was under a confidentiality agreement with HMNY, left HMNY and took with him confidential and proprietary electronic files for the apparent benefit of himself and his new employer Carver Marine Steel Works LLC, d/b/a Carver Companies (“Carver”). HMNY sued both Moore and Carver for trade secret misappropriation under the Defend Trade Secrets Act (“DTSA”).

Carver moved to dismiss the DTSA claim, arguing that Carver did not participate in any misappropriation, or even know that Captain Moore had engaged in any misappropriation. In response, HMNY argued that Captain Moore accessed and downloaded HMNY’s trade secrets at least three times after termination and after he had started working at Carver. HMNY argued that Carver was also liable for misappropriation under an agency theory because Moore was a high-level Carver employee.

The federal district court in Albany, New York agreed with HMNY and denied Moore’s motion to dismiss. The court held that Captain Moore’s alleged improper acquisition of HMNY’s trade secrets could be imputed to his new employer, Carver, on an agency theory, as Moore “function[ed] as a general manager at Carver.” The court emphasized that the alleged misappropriation occurred while Moore was a management-level employee of Carver, as opposed to an employee who misappropriated trade secrets before being hired.

While HMNY’s DTSA claim withstood the motion to dismiss, it remains to be seen whether HMNY will ultimately succeed in its claim against Carver.

If you have any questions regarding the information covered in this blog, please contact John Baranello, Valeria Castanaro, Michelle Cho, or your primary attorney at Moses Singer.