Integrated Direct Marketing, LLC v. May, 495 S.W.3d 73

Integrated Direct Marketing, LLC (IDM) provides data-driven marketing services and uses proprietary/confidential electronic data and techniques.
Drew May was IDM’s executive vice president for Data Integration from Jan 2012 until his termination in Mar 2014; he signed a confidentiality agreement.
IDM alleges May copied over 300 files of confidential/proprietary data to a personal external hard drive and then joined competitor Merkle, Inc. in May 2014.
IDM sued May (and Merkle) in federal court asserting claims including conversion (against May), trade-secret violations, breach of contract and fiduciary duty, and others.
The federal district court granted summary judgment to defendants on all claims except conversion, certified the question whether intangible electronic data (not a trade secret) can be converted under Arkansas law, and asked the Arkansas Supreme Court for a controlling answer.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether intangible property (electronic data), standing alone and not a trade secret, can be the subject of conversion under Arkansas law	IDM: electronically stored data is property and conversion should extend to it; denying conversion for electronic data but allowing it for paper is illogical	May: Arkansas law does not recognize conversion of intangible property; conversion claims are preempted by the Arkansas Trade Secrets Act or by federal Copyright law	Arkansas Supreme Court: Yes — intangible property such as electronic data can be converted if defendant’s conduct is in denial of or inconsistent with the owner’s rights; ATSA and Copyright Act did not preempt conversion here

Car Transp. v. Garden Spot Distributors, 305 Ark. 82, 805 S.W.2d 632 (establishes conversion as exercise of dominion over property in violation of owner’s rights)
Hatchell v. Wren, 363 Ark. 107, 211 S.W.3d 516 (conversion requires wrongful dominion; intent to control goods, not conscious wrongdoing)
Ford Motor Credit Co. v. Herring, 267 Ark. 201, 589 S.W.2d 584 (conversion recognized in Arkansas common law)
Thomas v. Westbrook, 206 Ark. 841, 177 S.W.2d 931 (conversion principles under Arkansas law)
Godwin v. Churchman, 305 Ark. 520, 810 S.W.2d 34 (held complaint alleging copying of diskettes along with taking tangible goods stated a conversion claim)
Thyroff v. Nationwide Mut. Ins. Co., 864 N.E.2d 1272 (N.Y. court held electronic records may be subject to conversion)
Kremen v. Cohen, 337 F.3d 1024 (9th Cir. decision holding intangible property—domain name—may support conversion under California law)
Infinity Headwear & Apparel, LLC v. Coughlin, 447 S.W.3d 138 (Ark. App. decision declined to create a new cause of action for conversion of electronic data)