Background
Wilbur-Ellis Company sued four former employees for breach of duty of loyalty, misappropriation of trade secrets under the Defend Trade Secrets Act and Nebraska Trade Secrets Act, and tortious interference. The employees resigned and began working for a competitor, Simplot, while still receiving pay from Wilbur-Ellis for two weeks. The district court denied Wilbur-Ellis’s discovery motions and granted summary judgment to the employees on most claims, except for a narrow subset of the duty of loyalty claim regarding the two weeks of dual employment. The parties later jointly dismissed that narrow claim, and the district court treated the case as finally disposed of for appeal purposes.
The court’s reasoning
The Eighth Circuit reviewed the district court’s discovery rulings for abuse of discretion and the summary judgment order de novo. The court affirmed the denial of discovery motions because Wilbur-Ellis failed to follow local rules requiring a conference before filing motions to compel and sought overly broad third-party discovery without identifying specific trade secrets. Regarding the merits, the court found Wilbur-Ellis failed to provide admissible evidence that the employees misappropriated trade secrets, as the employer’s disclosure was too general and did not prove improper acquisition. The court also held that the employees’ plan to compete while still employed did not breach their duty of loyalty because there was no evidence of substantial hindrance to the employer’s business. Finally, the court found the tortious interference claim failed due to a lack of probative evidence linking specific acts to harm.
Wilbur-Ellis has not provided sufficient evidence in support of its duty of loyalty claims to survive summary judgment.
Opinion at 16
What it means going forward
The decision reinforces the requirement for employers to identify trade secrets with particularity before seeking discovery and clarifies that employees may plan to compete while still employed without breaching their duty of loyalty unless their actions cause substantial harm to the employer.