California Court Considers Customer Lists, LinkedIn Contacts, in Trade Secrets Case
A federal district court for the Central District of California has issued a detailed decision regarding customer lists and LinkedIn contacts in ruling on cross-motions for summary judgment in the trade secrets dispute captioned Cellular Accessories For Less, Inc. v. Trinitas, LLC, No. CV 12-06736 DDP, including a surprising ruling that LinkedIn contacts might be considered trade secrets under California law. The defendant, Trinitas, is a Texas business founded by David Oaks, a former employee of Cellular Accessories, based in California. As an employee of Cellular, Oaks signed an Employment Agreement and a Statement of Confidentiality generally promising not to use or disclose proprietary or confidential information of Cellular.
Oaks’ employment with Cellular was terminated in December of 2010. Shortly before he left, he emailed himself over 900 business contacts in an ACT file as well as certain other business, purchasing and strategic information regarding specific clients. Oaks also “maintained his LinkedIn contact information after his termination.”
Cellular filed suit in California alleging violation of the California Trade Secrets Act (“CUTSA”), along with several common law claims. Both sides moved for summary judgment.
In analyzing first the ACT customer list, the Court noted that, in California as well as many other states, a customer list “may constitute a protectable trade secret” but “such lists are not automatically trade secrets, because many customer lists contain no information which is not easily discoverable through public sources.” Where the employer has expended time and effort identifying customers with particular needs or characteristics, the list can be a trade secret. In Trinitas, as is typical in these cases, the defendant alleged that, “anyone can easily get extensive information about Fortune 1000 companies through a standard internet search.” Plaintiff, in response, asserted that “Cellular hires and pays employees who are tasked with cold-calling companies and working their way past the ‘gatekeepers’ to reach the right procurement officer.” Under the evidence provided, the court in Trinitas ruled that a genuine issue of material fact existed as to whether the customer lists could be a trade secret.
Next, the court reached a similar conclusion as to Oaks’ LinkedIn account. Oaks argued that LinkedIn contacts would have been viewable to any other contact he had on LinkedIn. Plaintiff argued that LinkedIn information is only available to the degree the user chooses to share it. Oaks did not provide evidence as to whether his account was publicly viewable. The Court declined to “take judicial notice of the functions of LinkedIn” and held that a genuine issue of material fact existed as to whether the account was a trade secret without delving further into how LinkedIn operates. There is no indication as to whether Oaks argued that his LinkedIn account was not property of Cellular in the first place.
The ruling is remarkable considering thousands of employees probably terminate employment and maintain LinkedIn accounts every day. It remains for a future decision, either in this litigation or another, to look at this question more carefully and to clarify whether LinkedIn contacts can ever be considered a trade secret.
The judge in Trinitas also dismissed several common law claims as preempted by CUSTA and dismissed a breach of contract claim for lack of damages. The decision is a useful one for any party engaged in a dispute about customer lists under California law and has garnered attention for its ruling regarding the social media site LinkedIn.