Okay For Employees to Steal Trade Secrets? Apparently Yes, Sometimes It Is

Here’s an interesting employment update from law firm Fisher & Phillips to do with a case (Joyce Quinlan v. Curtiss-Wright Corporation) in which the New Jersey Supreme Court “addressed the question of whether an employee may take confidential documents from his or her employer for the purpose of helping in the prosecution of a discrimination claim.”

When is it okay for an employee to steal trade secrets?

“Quinlan worked for Curtiss-Wright for approximately twenty years when she was passed over for a promotion by a male employee whom she believed to be less qualified. In her role as the Executive Director of Human Resources, Quinlan had access to many employee files. She began to review these files looking for evidence to support her claim that Curtiss-Wright engaged in a pattern of widespread gender discrimination. She collected 1,800 pages of documents, some of which contained employees’ confidential personal information, including Social Security numbers and salary information. Some time later, Quinlan was given another document concerning the job performance of the male employee whom she believed had been wrongfully promoted. She gave all of these documents to her lawyers, and needless to say, the parties had widely different opinions on whether she should be permitted to use them in litigation against the company. After learning that her pilfering of documents was an ongoing affair, Curtiss-Wright terminated her, and she amended her complaint to assert a claim for retaliation…

…the Supreme Court upheld the jury verdict and punitive damages awarded in favor of Quinlan. In doing so the Court observed a fine line. Curtiss-Wright could terminate Quinlan for the act of taking documents, but it could not terminate for her for using them in her claim against the company.

In a scathing dissent, Justice Albin criticized what he saw as a “hair-splitting distinction made by the majority…that defies ordinary understanding.” According the Justice Albin, the majority’s holding “sends a disturbing signal to both the business community and the bar that employee theft may actually pay.”

The majority opinion was reached after a painstaking review of analogous federal decisions. It underscores the lesson that employers should not assume that they can terminate an employee for taking documents in support of a discrimination claim. Employers may feel uncertain about their authority under these circumstances, but the New Jersey Supreme Court believes employees are on equally uncertain ground because they “run the significant risk” that their conduct will be found unprotected by the courts.” Read the entire analysis»

*Additional analysis of Quinlan v. Curtiss-Wright:

Employee’s Taking of Confidential Information Can Be a Protected Activity Under the New Jersey Law Against Discrimination (by Cole Schotz):

“In reaching its ruling, the Supreme Court attempted to balance the respective interests of both plaintiffs asserting LAD claims and employers. The Court set forth seven factors to be considered by trial courts to determine whether the taking and dissemination of a document is protected: (1) how the employee obtained the document; (2) what the employee did with the document; (3) the nature and content of the document at issue; (5) the circumstances of the disclosure and whether it was unduly disruptive to the employer; (6) the employee’s expressed reason for copying the document as opposed to requesting it through discovery; and (7) how the court’s decision impacts the public policy embodying LAD and the effect permitting or precluding the use of the documents will have on balancing the legitimate rights of both employers and employees…” Read on»

Court-Sanctioned Employee Theft, or a Workable 7-Part Test to Resolve Employee Taking of Confidential Documents? (by Kevin O’Connor, Peckar & Abramson):

“The New Jersey Supreme Court’s December 2, 2010 decision in Quinlan v. Curtiss-Wright, 204 N.J. 239 (2010) has spurred much debate among legal commentators about whether the New Jersey Supreme Court has opened a Pandora’s Box and sanctioned employee theft of documents. In Quinlan, the Court ruled that Joyce Quinlan, an employee of Curtiss-Wright, engaged in protected conduct in copying confidential data in the workplace and feeding it to her attorney for use in her ongoing discrimination lawsuit. A close review of the decision shows that the legal commentators have likely overreacted, and that Quinlan provides a workable, 7-part test to be applied in determining whether an employee’s theft of documents in the workplace can constitute protected activity under state employment statutes. The decision most certainly should prompt employers to closely analyze their workplace handbooks and be sure to keep close tabs on, and clearly mark and limit disclosure of, confidential data…” Read on»

New Jersey Supreme Court: Plaintiff-Employees Can Copy and Compile Confidential Documents to Support Their Lawsuits (by Fox Rothschild):

“Given the broad, reaching implications of this decision, employers should exercise caution in taking an adverse employment action against an employee who has complained of discrimination against the company either through internal procedures or a formal complaint. The decision makes it clear employees are generally safe copying and using an employer’s confidential documents if the employee acquires the documents in the normal course of his or her responsibilities, delivers them only to counsel or law enforcement and does not unduly disrupt the employer’s business in the process…” Read on»

When Employee Disloyalty is Protected by Law (by John Sarno):

“It is important to note that in both of these cases, the employer had policies in place that when violated would have justified the employee’s discharge for cause. However, the disloyal conduct of misusing company property and copying and using confidential documents against the employer were found to be legally protected. Thus, the discharge is in theory legal but the information obtained from the disloyal conduct can be used to further a discrimination case. Thus, New Jersey law encourages employees, including HR managers, to take the big risk of being fired for disloyalty. Presumably, that risk would be based on the employee’s belief that they have a valid discrimination case to bring against the employer after they are fired…” Read on»

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