On the heels of an appellate decision providing employees a virtual how-to manual to misuse and exploit confidential employer documents and safely provide them to a competitor, New Jersey's Supreme Court reversed course last week by suggesting that employees do not have competing rights to confidential employer documents in commercial or business disputes.
Executive Summary: On the heels of an appellate decision providing employees a virtual how-to manual to misuse and exploit confidential employer documents and safely provide them to a competitor, New Jersey's Supreme Court reversed course last week by suggesting that employees do not have competing rights to confidential employer documents in commercial or business disputes. State v. Saavedra (June 23, 2015), clarifies when a sweeping multi-part test should be used to determine when an employee may remove and retain confidential employer documents. That test should be limited to where the employee engages in self-help to further her prosecution of an affirmative claim against the employer brought under New Jersey's Law Against Discrimination ("LAD"). This ruling should minimize the impact of Spencer Sav. Bank SLA v. McGrover (App. Div. March 5, 2015), which now arguably misapplied the same multi-part analysis to find a departing employee did not breach his duty of loyalty to his former employer after he absconded with documents asserted to be confidential and proprietary. For a more detailed discussion of this decision, please see our June 25, 2015 Alert, Appellate Decision Teaches New Jersey Employees How To Remove Confidential Documents and Trade Secrets from Employers.
The latest case in this rapidly developing area concerns former employee Ivonne Saavedra, who admittedly misappropriated hundreds of confidential documents—including originals—from her employer's files. According to Saavedra, her theft was justified because the documents allegedly supported her employment discrimination lawsuit and she purportedly feared the documents would be destroyed before she could obtain them through normal pretrial discovery processes.
In an unusual move, her employer reported the issues to the county prosecutor and Saavedra eventually was indicted for theft and official misconduct. Saavedra moved to dismiss the indictment based upon the same multi-part test used in McGovern, namely that her right to engage in self-help by secretly removing confidential employer documents immunized her from criminal prosecution. In affirming denial of Saavedra's motion to dismiss the indictment, the Supreme Court appeared to dial back the applicability of the multi-part balancing test to one specific issue: "whether an employee's conduct in taking documents from his or her employer for use in a discrimination claim—and in using those documents in pursuit of that claim—is protected activity for purposes of the employee's claim when the employer takes adverse employment action against the employee."
Employers' Bottom Line: Saavedra reaffirms that the Supreme Court does not "endorse" employee self-help, including unauthorized misappropriation or outright theft of confidential employer documents. Remarkably, however, the Court again refused to outright prohibit such misconduct. Instead, this latest decision reminds employers they walk a tightrope when making everyday personnel decisions: employees can legitimately be fired for taking a confidential document but the same employee is legally protected for taking and using the same document in furtherance of a LAD claim. Exercising caution when disciplining employees who misappropriate confidential documents will help avoid possible retaliation claims. It is equally important for employers to remain vigilant in implementing confidentiality policies and other security protocols to reduce the risk of unauthorized disclosure of confidential information or trade secrets.
If you have questions regarding this Alert or other labor or employment related issues, please contact the author, Mark A. Saloman, msaloman@fordharrison.com, who is a partner in our Berkeley Heights, New Jersey office. You may also contact the FordHarrison attorney with whom you usually work.