\n<\/p>\n
A recent federal district court ruling serves as an important reminder that a former employee may be held liable for trade secret misappropriation even if the alleged trade secrets are not physically or electronically taken by the departing employee, but instead retained only in memory.<\/p>\n
<\/span><\/p>\n On November 20, 2024, Citibank NA (\u201cCiti\u201d) applied for a temporary restraining order in the Northern District of California against two of its former private bankers, John Mitchell and Benjamin Carr, who joined a competitor. Citi presented evidence that Carr ran searches for five specific clients on Citi\u2019s customer management platform shortly before his resignation, and Mitchell solicited one of Citi\u2019s high-value clients using Citi\u2019s confidential client account information retained in his memory. Citi presented evidence that Mitchell emailed a Citi client approximately one month after his resignation to solicit the client to move his account on the same date that the client\u2019s multi-million-dollar certificate of deposit matured. Mitchell\u2019s email stated, among other things, that the deposit rates he could offer through his new employer are \u201cbetter than Citi\u201d and that he thought this was \u201cespecially relevant given [the client\u2019s] high cash position.\u201d In opposition, Carr and Mitchell asserted that Citi did not establish a protectable trade secret and they presented undisputed testimony that they did not take, copy, or photograph any documents or files when they left Citi. <\/p>\n Judge Charles R. Breyer in the Northern District of California issued a temporary restraining order against Mitchell, but not Carr. The ruling enjoined Mitchell from using, disclosing, or transmitting for any purpose Citi\u2019s \u201cbooks, records, documents, and information\u201d pertaining to Citi, its clients, or its employees, and ordered Mitchell to return to Citi any such files in whatever form within 24 hours. In support of the temporary restraining order, the court found Citi would likely succeed in proving trade secret misappropriation against Mitchell as evidenced by his email solicitation to Citi\u2019s client using information retained in his memory, but that Carr\u2019s pre-resignation searches were not sufficient to establish a likelihood of success on the merits. On December 6, 2024, the parties submitted a stipulated preliminary injunction that mostly maintains the status quo <\/em>of the terms of the temporary restraining order pending the parties\u2019 arbitration regarding Citi\u2019s request for a permanent injunction.<\/p>\n There are two significant takeaways from the court\u2019s ruling. First, non-public information regarding the details of a clients\u2019 specific financial holdings and investments, such as whether a client holds a \u201chigh cash position\u201d and when client accounts are set to mature, are protectable trade secrets. Second, whether Mitchell retained or took any documents, writings, or records from his employment with Citi \u201cis not dispositive to Citi\u2019s trade-secrets claim\u201d because, \u201cCalifornia law protects against the misappropriation of trade secrets, which covers improper \u2018use\u2019 of trade secrets and which does not require the retention of physical documents or records.\u201d Thus, while trade secrets cases often feature \u201csmoking gun\u201d evidence establishing the taking or physical retention of company trade secret information, such evidence is not required to prove trade secret misappropriation. Under California law, trade secret information need not be in writing and may be held in an employee\u2019s memory. See e.g., Morlife, Inc. v. Perry <\/em>(1997) 56 Cal.App.4th 1514, 1522 \u2013 23.<\/p>\n\n","protected":false},"excerpt":{"rendered":" A recent federal district court ruling serves as an important reminder that a former employee may be held liable for trade secret misappropriation even if the alleged trade secrets are not physically or electronically taken by the departing employee, but instead retained only in memory. On November 20, 2024, Citibank NA (\u201cCiti\u201d) applied for a […]<\/p>\n","protected":false},"author":1,"featured_media":60892,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[97],"tags":[7622,531,33808,824,21167,6594,19974,20553,15580,6886,14962,2209,6075,9792,3300],"dealstore":[],"offerexpiration":[],"class_list":["post-60891","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal","tag-act","tag-california","tag-defendants","tag-digital","tag-evidence","tag-information","tag-misappropriation","tag-physical","tag-prove","tag-required","tag-retention","tag-secret","tag-secrets","tag-trade","tag-uniform"],"yoast_head":"\n