News & Events

Court Allows Company to Surreptitiously Monitor Former Employee’s Social Media Account to Support its Trade Secrets Claim

A federal court of appeals recently found that there was nothing wrong with a company monitoring a departed employee’s Facebook account and using that information to pursue a trade secrets claim against four former employees.

In Scherer Design Group, LLC v. Ahead Engineering LLC, the employer accessed former employee Daniel Hernandez’s account by using software that allowed the company to access Hernandez’s deleted browser history and his password-protected social media without detection, and additional software that allowed the employer to monitor Hernandez’s Facebook activity even after he had left the company. After gaining access to Hernandez’s Facebook account, the company reviewed his Facebook messages daily for two months and obtained information to support claims of trade secret misappropriation, improper interference with the company’s customers and breach of the four former employees’ duty of loyalty while employed at the company.

Interestingly, Hernandez claimed that he had logged out of his Facebook account before he returned the company’s laptop computer. In other words, he argued that the company had affirmatively “hacked” into his Facebook account to retrieve the information.

Hernandez asserted that the company was guilty of “unclean hands” and should not be able to use the evidence it had uncovered against him and the other departed employees. (The unclean hands doctrine is an equitable defense that prohibits a party that is seeking relief from benefitting from its own bad acts.).

But the U.S. Court of Appeals for the Third Circuit ruled that because the departed employees’ alleged violations predated the company’s alleged hacking (along with some other factors), the unclean hands doctrine did not apply. The court allowed the injunction against the company’s former employees from contacting former clients to stand, despite the company’s surreptitious monitoring.

Takeaways: This decision is helpful to employers, but employers should proceed with caution if faced with such a situation. First, the Third Circuit covers federal courts located in Delaware, New Jersey, Pennsylvania and the United States Virgin Islands. Second, the decision was decided by a three-judge panel … and by a 2-1 vote.

An action item for employers is to review your company’s electronic communications policy, as well as its other policies addressing confidential company information. The policies should expressly address an employee’s expectations, both during and after employment.

Litigation surrounding the misappropriation of trade secrets and confidential information and other unfair competition is increasing. Butler Snow’s Labor and Employment Group can assist in the drafting of policies to best position your company if it faces such a situation.