129 F. Supp. 3d 336
E.D. Va.2015Background
- IDM (Integrated Direct Marketing, LLC) sued former employee Drew May and his new employer Merkle, Inc., alleging misappropriation of confidential information and trade secrets, breach of contract, fiduciary duty, conversion, tortious interference, and unjust enrichment; IDM sought injunctive relief and damages.
- May worked for IDM until March 11, 2014, joined Merkle shortly thereafter, and retained a large number of IDM files on a personal external hard drive; forensic analysis showed files remained and some were deleted on multiple occasions after litigation began.
- IDM identified discrete alleged misappropriations: Google Brazil pricing, fuzzy-matching/CDI techniques (Alteryx), a "blank middle name" CDI fix for Dell, vendor lists/pricing for Samsung, a New Business Trigger workflow, and other alleged disclosures to third parties.
- Defendants argued (a) IDM failed to identify trade secrets with requisite particularity; (b) no evidence defendants used or benefited from IDM information; (c) some claims are preempted by the Arkansas Trade Secrets Act; and (d) procedural discovery failures by IDM impeded its case.
- The court struck IDM’s damages experts for untimeliness, found violations of local rules in IDM’s summary-judgment responses, and concluded that much of IDM’s evidentiary support (including a late Slater declaration) was insufficient or inconsistent with deposition testimony.
- Ruling: Merkle wins summary judgment on all counts against it; May wins summary judgment on all counts except conversion (Count III) which proceeds to trial for liability only (nominal damages/injunctive relief possible). IDM’s spoliation motion denied; limited sanctions awarded to IDM for a false affidavit statement by May (attorney fees, forensic costs).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants misappropriated trade secrets (ATSA/VUTSA/NCTSPA) | May disclosed and Merkle used IDM trade secrets (pricing, CDI methods, vendor lists) to win business | IDM failed to identify particular trade secrets; no evidence of use or benefit by defendants | Summary judgment for both defendants on trade-secret counts; IDM failed to show identifiable trade secrets or use/damages |
| Whether Arkansas Trade Secrets Act preempts IDM's common-law tort claims | Preemption should await factual determination whether information is trade secret | ATSA preempts tort claims based on misappropriation of trade secrets | Court declined to resolve preemption now; resolved claims on merits—no trade secrets shown so preemption not dispositive |
| Conversion of IDM’s data (Count III) | IDM seeks conversion remedy for May’s retention/removal of IDM files | May argued preemption/insufficient damages; also challenges treating electronic data as converted property | Conversion claim survives against May on liability; actual damages stricken for lack of proof — IDM limited to nominal damages and possible injunctive relief |
| Spoliation and sanctions for deletions and false affidavit | IDM sought adverse inference or default and monetary sanctions for deletions and false affidavit | Defendants argued deletions were recoverable and no spoliation warranting adverse inference; contested affidavit context | Court found one false statement in May’s affidavit and awarded IDM fees/forensic costs; denied spoliation remedies (no loss of evidence sufficient for adverse inference) |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard and burden on movant)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (circumstantial-evidence standard to survive summary judgment)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (standard for genuine issue of material fact)
- Thompson Everett, Inc. v. Nat’l Cable Adver., L.P., 57 F.3d 1317 (4th Cir.) (courts must draw reasonable inferences for nonmoving party)
- Assurance Data, Inc. v. Malyevac, 286 Va. 137 (Virginia confidentiality/noncompete enforceability principles)
- R.K. Enter., LLC v. Pro-Comp Mgmt., Inc., 356 Ark. 565 (Arkansas interpretation of ATSA preemption)
- Wal-Mart Stores, Inc. v. P.O. Mkt., Inc., 347 Ark. 651 (ATSA requires reasonable secrecy measures; six-factor Saforo analysis)
- Cardinal Freight Carriers, Inc. v. J.B. Hunt Transp. Servs., Inc., 336 Ark. 143 (doctrine of inevitable disclosure in Arkansas)
- ConAgra, Inc. v. Tyson Foods, Inc., 342 Ark. 672 (trade-secret status required for inevitable-disclosure injunction)
- Infinity Headwear & Apparel, LLC v. Coughlin, 447 S.W.3d 138 (Ark. Ct. App.) (questions about treating electronic data as subject of conversion)