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Attorneys Defend HR Outsourcing Against DTSA Claim

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Key Facts

  • The federal Defend Trade Secrets Act statute, effective since May 2016, supplements state statutory schemes that protect trade secrets

The Situation

Mintz client HR Outsourcing, Inc. has been involved in an ongoing trade secrets case pending in the US District Court for the Central District of California. As part of this litigation, TriNet, a competitor in the staffing space, brought a Defend Trade Secrets Act (DTSA) claim against HR Outsourcing alleging trade secret misappropriation. The federal DTSA statute supplements state statutory schemes that protect trade secrets. But since the law has only been in effect since May 2016, litigants have yet to receive significant guidance from the federal courts concerning its scope and application.

The Approach

Our team of California-based employment lawyers noticed defects in the plaintiff’s pleading and calculated that raising these defects at the outset would focus the court on the lack of a factual basis of support for the plaintiff’s claim. (Early on in the litigation, Mintz defeated the plaintiff’s attempt to secure a preliminary injunction arising from essentially the same set of facts.)

The Outcome

Federal District Court Judge Andre Birotte Jr. confirmed that DTSA should be interpreted in light of general trade secret law and the requirement that litigants plead a “short and plain statement” of their claims. By alleging that broad categories of general business materials were “trade secrets,” TriNet rendered its claim “unintelligible” and failed to shed light on the trade secret allegedly misappropriated. The court said the complaint was so “incoherently drafted” it wasn't feasible to evaluate anything else about it. While granting TriNet leave to amend its complaint, it dismissed its claim, increasing the likelihood our client will prevail.

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