Rel. Ins., Inc. v. Pilot Risk Mgmt. Consulting, LLC

• Court: Supreme Court of North Carolina
• Decided: May 22, 2026
• Docket: 68A25
• Status: Published
• Author: Justice Tamara Barringer

Opinion

IN THE SUPREME COURT OF NORTH CAROLINA

No. 68A25

Filed 22 May 2026

RELATION INSURANCE, INC. and RELATION INSURANCE SERVICES OF NORTH CAROLINA, INC.

v. PILOT RISK MANAGEMENT CONSULTING, LLC, PILOT FINANCIAL BROKERAGE, INC. d/b/a PILOT BENEFITS, KYLE SMYTHE, ROBERT CAPPS, LYNETTE KINNEY, EDWARD MILES GURLEY, SEAN KELLY, TYLER CROOKER, MICHELLE LINTHICUM, LINDA MICHELLE SNEED, TONI KING, and JOHNATHAN LANCASTER

Appeal pursuant to N.C.G.S. § 7A-27(a)(2) from an order and opinion entered

on 25 July 2024 and an order clarifying that order and opinion entered on

1 August 2024 by Judge Mark A. Davis, Special Superior Court Judge for Complex

Business Cases, in Superior Court, Guilford County, after the case was designated a

mandatory complex business case by the Chief Justice pursuant to N.C.G.S.

§ 7A-45.4(a). Heard in the Supreme Court on 18 September 2025.

Fox Rothschild LLP, by Kip D. Nelson and Ashley B. Chandler, for plaintiff- appellants.

Gavin J. Reardon and Amiel J. Rossabi for defendant-appellees.

BARRINGER, Justice.

For the reasons stated herein, we affirm in part, reverse in part, and remand

the Business Court’s orders for further proceedings not inconsistent with this opinion. REL. INS., INC. V. PILOT RISK MGMT. CONSULTING, LLC

Opinion of the Court

I. Background

Relation Insurance, Inc. is a holding company for Relation Insurance Services

of North Carolina, Inc. (collectively, plaintiffs or Relation). Relation Insurance, Inc.

has multiple subsidiaries located in other states. Relation Insurance Services of

North Carolina, Inc. operates out of an office in Greensboro, North Carolina.

According to its own contracts, Relation is an “independent insurance agency

and broker engaged in the business of the sale, marketing and provision of various

insurance products and services to individuals and institutional, governmental and

business clients[.]” As Relation’s president put it, Relation “serves as an intermediary

between insureds and insurance carriers.” As an intermediary, Relation negotiates,

places, and services the insurance coverage best suited to meet the specific needs of

each policyholder.

According to affidavits filed, salespersons at Relation are known as

“producers,” who “are individuals licensed to sell, service, and negotiate insurance

products and services, including insurance policies.” Meanwhile, “account managers”

at Relation are employees who “work alongside producers to manage client

relationships and service accounts in more of a customer service role.” Account

managers are salaried employees who do not rely on commission. The same is not

true of producers. The salary of producers is tied to commission—especially those

experienced producers who have built sizeable books of business. Historically,

Relation’s compensation models increased alongside the size of a producer’s book of

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business.

However, by 2019, Relation shifted its commission rate model for producers.

Rather than varying the rate based upon the size of the producer’s book of business,

Relation implemented “a standard 25/40% split.” Yet, in implementing its new

commission model, Relation failed to inform all the producers of the change.

Relation’s failure to inform gave rise to discontent among its employees. At the

Greensboro office, Relation employees lodged complaints about the company’s lack of

transparency and overburdensome workload.

In early 2020, defendant Kyle Smythe, who at the time was employed as a

Relation producer, left Relation. Smythe formed a new insurance agency, defendant

Pilot Risk Management Consulting, LLC (Pilot Risk). Smythe, defendant Robert A.

Capps III, and defendant Lynette Kinney are members of Pilot Risk. In addition,

Capps and Kinney are “part-owners” of defendant Pilot Financial Brokerage, Inc.

d/b/a Pilot Benefits (Pilot Benefits).1 By March 2020, Pilot began operations as “a

direct competitor of Relation” in the insurance agency business.

Soon after Pilot opened its doors, Relation filed a prior lawsuit in Superior

Court, Guilford County (the Smythe Lawsuit). Relation brought claims against

Smythe for breach of his employment agreement, tortious interference, and unfair

and deceptive trade practices. On 4 September 2020, the trial court entered an

1 For purposes of this opinion, Pilot Risk and Pilot Benefits are collectively designated

as “Pilot.”

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interlocutory order dismissing all of Relation’s claims in the Smythe Lawsuit, except

for the breach of employment agreement claim (the Smythe Order). On

11 March 2021, the Smythe Lawsuit was settled through a settlement agreement (the

Settlement Agreement). The Settlement Agreement was entered into with Relation

by Smythe, Capps, Kinney, and Pilot. Smythe, Capps, Kinney, and Pilot are named

defendants in this case.

Not long after Smythe left Relation, matters worsened for Relation’s

disgruntled employees. On 1 April 2020, Relation conducted a conference call for all

of its employees. On the call, Relation informed its employees that the company would

be instituting a freeze on all pay raises in response to the COVID-19 pandemic. This

new pay freeze ultimately triggered an exodus of Relation employees beginning in the

fall of 2021.

During this period, seven employees left Relation’s Greensboro office for Pilot.

These seven employees are the remaining defendants in this case: Edward Miles

Gurley, Sean Kelly, Tyler Crooker, Johnathan Lancaster, Michelle Linthicum, Linda

Michelle Sneed, and Toni King (collectively, the Former Employees). Gurley, Kelly,

Crooker, and Lancaster were employed as producers at Relation. Linthicum, Sneed,

and King were employed as account managers.

The Former Employees’ tenures with Relation differed, with some having

spent four years at the company and others as many as ten. Prior to beginning their

employment with Relation, each of the Former Employees signed an employment

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agreement (the Employment Agreements).2 The Employment Agreements contained

non-solicitation provisions, which prohibited the solicitation of Relation’s clients or

employees upon an employee’s departure from Relation.

The Former Employees transitioned from Relation to Pilot during

approximately a three-month period, which began in late 2021 and finished in early

2022. The first of the Former Employees to leave was Crooker, who resigned on

30 November 2021 and began working for Pilot on 3 December 2021. Sneed quickly

followed, resigning from Relation on 1 December 2021 and beginning at Pilot on

6 December 2021. King accepted a position with Pilot on 17 February 2022, even

though she did not resign from Relation until eight days later. Both Kelly and Gurley

accepted positions at Pilot on 18 February 2022 and resigned from Relation that same

day. Also on 18 February 2022, Linthicum resigned from Relation. Pilot hired

Linthicum three days later. On 25 February 2022, Relation terminated Lancaster.

Pilot assigned Lancaster a Pilot email address that same day.

During this three-month period of departures, the Former Employees sent

numerous messages to each other, as well as to their old Relation clients. In addition,

each Former Employee forwarded various documents from their Relation email

account to their personal email accounts, which Relation contends violated the

2 At the time that each Former Employee signed his or her employment agreement,

Relation Insurance, Inc. was known as “Ascension Insurance, Inc.” As such, the Employment Agreements use “Ascension Insurance, Inc.” rather than the present-day name of “Relation Insurance, Inc.”

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Employment Agreements and amounted to misappropriation of trade secrets in some

instances.

On 11 April 2022, plaintiffs filed their complaint, initiating the current action

in Superior Court, Guilford County, after which the case was designated a mandatory

complex business case. On 5 July 2022, defendants filed various counterclaims

against plaintiffs. After the close of discovery, the parties filed cross-motions for

partial summary judgment on 28 July 2023. Plaintiffs also filed a motion for adverse

inference on 31 August 2023.

On 12 July 2024, the Business Court filed its Order and Opinion on

Defendants’ Motion for Partial Summary Judgment, Plaintiff’s Motion for Partial

Summary Judgment, and Plaintiffs’ Motion for Adverse Inference at Summary

Judgment and Trial Based on Spoliation of Evidence (the Summary Judgment Order)

granting in part and denying in part the cross-motions for partial summary

judgment. See Rel. Ins., Inc. v. Pilot Risk Mgmt. Consulting, LLC, No. 22 CVS 4285,

2024 WL 3549145 (N.C. Super. Ct. July 12, 2024). In the Summary Judgment Order,

the Business Court additionally granted plaintiffs’ motion for adverse inference. Id.

at *15. Approximately two weeks later, on 1 August 2024, the Business Court filed

an Order Clarifying 12 July 2024 Order and Opinion (Clarifying Order) dismissing

several of plaintiffs’ other claims. Plaintiffs now appeal both orders.

As an initial matter, the orders did not dispose of all claims and defenses. As

such, plaintiffs appeal interlocutory orders. Veazey v. City of Durham, 231 N.C. 357,

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362 (1950) (“An interlocutory order is one made during the pendency of an action,

which does not dispose of the case, but leaves it for further action by the trial court

in order to settle and determine the entire controversy.”).

“The general rule is that ‘there is no right of immediate appeal from

interlocutory orders and judgments.’ ” Land v. Whitley, 388 N.C. 296, 298 (2025)

(quoting Goldston v. Am. Motors Corp., 326 N.C. 723, 725 (1990)). However, there are

exceptions to the general rule. See N.C.G.S. §§ 1-277, 7A-27(a)(3), (b)(3) (2025);

N.C.G.S. § 1A-1, Rule 54(b) (2025); see also Land, 388 N.C. at 298 (recognizing the

same).

The interlocutory orders, here, are appealable to this Court pursuant to

N.C.G.S. §§ 1-277(a) and 7A-27(a)(3), because the orders dismissed some of plaintiffs’

claims against certain defendants in full. The claims that remain will require a jury

to resolve issues of fact that will later implicate claims against those defendants the

court dismissed. This could lead to inconsistent verdicts. As such, the orders affect a

substantial right. See Hamby v. Profile Prods., LLC, 361 N.C. 630, 634 (2007) (“This

Court has recognized that a substantial right is affected if the trial court’s order

granting summary judgment to some, but not all, defendants create the possibility of

separate trials involving the same issues which could lead to inconsistent verdicts.”).

Given the interlocutory nature of plaintiffs’ appeal, our review is limited to

only those claims dismissed by the summary judgment orders and the motion for

adverse inference.

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II. Standard of Review

“The evidence proffered at summary judgment must be taken in the light most

favorable to the nonmovant.” Hinman v. Cornett, 386 N.C. 62, 65 (2024). “The moving

party has the burden of establishing the absence of any triable issue . . . by proving

that an essential element of the opposing party’s claim is nonexistent or by showing

through discovery that the opposing party cannot produce evidence to support an

essential element of his claim.” Zimmerman v. Hogg & Allen, Pro. Ass’n, 286 N.C. 24,

29 (1974).

“If the moving party meets this burden, the party who opposes the motion for

summary judgment must either assume the burden of showing that a genuine issue

of material fact for trial does exist or provide an excuse for not so doing.” Id. “If a

genuine issue of material fact does exist, the motion for summary judgment must be

denied[.]” Id.; see also N.C.G.S. § 1A-1, Rule 56(c) (2025). A trial court’s summary

judgment ruling receives de novo review. Hinman, 386 N.C. at 65.

III. Analysis

A. Motion for Adverse Inference

Shortly after the Former Employees left Relation for Pilot, Relation sent cease-

and-desist letters to each defendant. The letters included a preservation notice,

advising each individual defendant “to preserve any and all information relevant to

the facts surrounding the topics in this letter.” Plaintiffs then filed their complaint in

this action. Two days later, plaintiffs filed a motion for preliminary injunction. In that

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motion, plaintiffs requested that the Business Court order defendants to preserve all

data and materials stored on defendants’ various electronic devices.

The same day that the motion for preliminary injunction was filed, Linthicum

reset her cell phone. Throughout the following week, Smythe, Lancaster, Capps,

King, and Sneed also reset their cell phones. Two weeks after that, Gurley “wiped”

his personal computer. Then after that, Lancaster switched out the SIM card in his

cell phone. Kinney subsequently reset her phone.

At a discovery dispute conference, the Business Court informed the parties

that a forensic analysist in the field of information technology would be permitted to

conduct digital imaging of defendants’ electronic devices beginning on

25 October 2022. The prospect of digital imaging sparked more deletions by

defendants. Gurley reset his phone the same day as the conference. The next day,

Smythe and Crooker deleted cell phone data files from their laptop computers. Sneed

reset her laptop computer. Kelly reset his cell phone. Linthicum installed a new SIM

card on her phone. And files were deleted from Gurley’s laptop on two separate

occasions.

In response to the deletions, plaintiffs filed their motion for adverse inference

with the Business Court. The Business Court granted plaintiffs’ motion, finding that

plaintiffs had “met their burden of establishing that the [i]ndividual [d]efendants

intentionally destroyed or failed to preserve potentially relevant evidence despite

being aware of either actual litigation or the possibility of future litigation.” Rel. Ins.,

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Inc., 2024 WL 3549145, at *15. We do not disturb the Business Court’s grant of

plaintiffs’ motion for adverse inference. However, we do take issue with its

application to the Summary Judgment Order and Clarifying Order before us.

Under the spoliation of evidence rule, an adverse inference may be drawn

against a party who destroys relevant evidence. This Court has articulated the rule

as follows: “where a party fails to introduce in evidence documents that are relevant

to the matter in question and within his control, . . . there is a presumption or at least

an inference that the evidence withheld, if forthcoming, would injure his case.”

Yarborough v. Hughes, 139 N.C. 199, 208–09 (1905). “The rule is founded on a sort of

presumption that there is something in the evidence withheld which makes against

the party not producing it.” Id. at 209 (extraneities omitted). Application of the rule

provides “a significant fact for the consideration of the jury,” id. at 210, and “is classed

among the strongest circumstantial proofs” against the party that withholds evidence

in its possession, id. (citing Black v. Wright, 31 N.C. (9 Ired.) 447, 451–52 (1849)).

“The [adverse] inference is not mandatory, but lies within the province of the

trier of fact.” Sunset Beach Dev., LLC v. AMEC, Inc., 196 N.C. App. 202, 220 (2009).

Where the trial court finds that such an inference is appropriate, it is within that

court’s “broad discretion” to shape the contours of the inference’s application by jury

instruction. Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir. 1995);

N.C.G.S. § 1A-1, Rule 51 (2025). Herein lies the difficulty for this Court sitting in

review.

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The spoliation of evidence in this case is remarkable. As the forensic analysist

opined, “in his 35+ years of experience, he has never seen such extensive and

coordinated deletions of evidence across so many electronic devices as he discovered

in his forensic examination in this matter. The deletions have destroyed what the full

picture of data would have been in this case.” (Extraneities omitted.) Indeed, the

Business Court found as a fact that “there are multiple instances in the record of

[d]efendants deleting materials from their devices or completely ‘wiping’ their

devices[,]” with the subject matter of at least some of the deleted material “directly

address[ing] issues raised in this case.” Rel. Ins., Inc., 2024 WL 3549145, at *14.

The extensive spoliation of evidence renders meaningful review of many

factual questions in this case exceedingly difficult. After granting plaintiffs’ motion

for adverse inference, the Business Court failed to identify with specificity where and

how the inference should be drawn, leaving its scope unclear. As such, we remand

the issue of spoliation for the Business Court to clarify, with greater precision, its

application of the inference as to each claim. On remand, the Business Court should

provide the parties to this case with its adverse inference instruction and specifically

detail in its orders where the inference applies. With the Business Court’s

discretionary function more fully exercised, the parties (and if necessary, a court

sitting in review) will be better equipped to understand its application.

Mindful of the adverse inference issue, we now address the legal questions

properly presented on appeal.

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B. Misappropriation of Trade Secrets

Plaintiffs brought misappropriation of trade secrets claims under both the

federal Defend Trade Secrets Act (DTSA), 18 U.S.C. §§ 1832–1839, and the North

Carolina Trade Secrets Protection Act (NCTSPA), N.C.G.S. §§ 66-152 to 66-157

(collectively, the Acts). To bring a claim under the Acts, a claimant must sufficiently

demonstrate that the information constitutes a “trade secret” and that the trade

secret was subject to “misappropriation.”

1. Definition of “Trade Secret”

The DTSA defines a “trade secret” as follows:

all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—

(A) the owner thereof has taken reasonable measures to keep such information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.

18 U.S.C. § 1839(3).3

3 Moreover, the DTSA carves out information obtained by “reverse engineering, independent derivation, or any other lawful means of acquisition” from its trade secret definition. 18 U.S.C. § 1839(6)(B). This carve-out mirrors the NCTSPA definition.

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The NCTSPA defines a “trade secret” as follows:

business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that:

a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and

b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

N.C.G.S. § 66-152(3) (2025). In determining whether information constitutes a trade

secret, North Carolina and federal courts consider six factors:

(1) The extent to which the information is known outside the business; (2) the extent to which it is known to employees and others involved in the business; (3) the extent of measures taken to guard secrecy of the information; (4) the value of information to the business and its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could properly be acquired or duplicated by others.

Wells Fargo Ins. Servs. USA, Inc. v. Link, 372 N.C. 260, 278 (2019) (extraneities

omitted); see also TSG Finishing, LLC v. Bollinger, 238 N.C. App. 586, 591–92 (2014);

Sterling Title Co. v. Martin, 266 N.C. App. 593, 601 (2019); Area Landscaping, L.L.C.

v. Glaxo-Wellcome, Inc., 160 N.C. App. 520, 525 (2003); Combs & Assocs., Inc. v.

Kennedy, 147 N.C. App. 362, 369–70 (2001); State ex rel. Utils. Comm’n v. MCI

Telecomms. Corp., 132 N.C. App. 625, 634 (1999); Wilmington Star-News, Inc. v. New

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Hanover Reg’l Med. Ctr., 125 N.C. App. 174, 180–81 (1997); Allstate Ins. Co. v.

Fougere, 79 F.4th 172, 188 (1st Cir. 2023).

These factors derive from the First Restatement of Torts. See Restatement

(First) of Torts, § 757 (A.L.I. 1939). Rather than operating as a six-part test, the

factors serve as an instructive guide for ascertaining whether a trade secret exists.

See SCR-Tech LLC v. Evonik Energy Servs. LLC, No. 08 CVS 16632, 2011 WL

3209080, at *10 (N.C. Super. Ct. July 22, 2011); see also IVS Hydro, Inc. v. Robinson,

93 F. App’x 521, 527 (4th Cir. 2004) (unpublished); Learning Curve Toys, Inc. v.

PlayWood Toys Inc., 342 F.3d 714, 722 (7th Cir. 2003); In re Bass, 113 S.W.3d 735,

740 (Tex. 2003); Minuteman, Inc. v. Alexander, 434 N.W.2d 773, 777 (Wis. 1989);

Basic Am., Inc. v. Shatila, 992 P.2d 175, 184 (Idaho 1999).

The Business Court below noted that the parties had not identified “any

differences in the analysis to be applied to a claim under the DTSA as compared to

one under the NCTSPA.” Thus, the Business Court determined it proper to address

plaintiffs’ DTSA and NCTSPA claims “in tandem.” Rel. Ins., Inc., 2024 WL 3549145,

at *16. We agree with this approach and do the same. Indeed, “trade secret law varies

little from state to state and is generally governed by widely recognized authorities

such as the Restatement of Unfair Competition and the Uniform Trade Secrets Act.”

TianRui Grp. Co. v. Int’l Trade Comm’n, 661 F.3d 1322, 1327–28 (Fed. Cir. 2011).

As a preliminary matter, to even claim information is a trade secret, a plaintiff

must first “identify a trade secret with sufficient particularity so as to enable a

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defendant to delineate that which he is accused of misappropriating and a court to

determine whether misappropriation has or is threatened to occur.” Krawiec v.

Manly, 370 N.C. 602, 609–10 (2018) (quoting Washburn v. Yadkin Valley Bank & Tr.

Co., 190 N.C. App. 315, 326 (2008)). Once identified, courts will then determine

whether the requirements for a trade secret, as defined by statute, have been met.

Id. at 610.

Below, plaintiffs identified several documents with sufficient particularity to

bring their trade secrets claims. However, the Business Court found that three

documents did not qualify as protectable trade secrets under the Acts. Plaintiffs

appeal two of those documents: Gurley’s Customer List and the Client Renewal List.

Both documents are Excel spreadsheets containing various information about

plaintiffs’ clients. In other words, each constitutes a client list.

So long as the information meets each of the Acts’ statutory requirements,

client lists can qualify as a trade secret. Id. at 610; James B. Oswald Co. v. Neate, 98

F.4th 666, 676 (6th Cir. 2024). A client list, however, will not qualify as a trade secret

where the record indicates that the list could have been compiled “through public

listings such as trade show and seminar attendance lists.” Krawiec, 370 N.C. at 610

(quoting Combs & Assocs., 147 N.C. App. at 370). Similarly, a client list will also not

qualify as a trade secret where there is no evidence “that the company took any

special precautions to ensure the confidentiality of its customer information and any

information used to contact the clients would have been easily accessible . . . through

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a local telephone book.” Id. at 610–11 (extraneities omitted) (quoting NovaCare

Orthotics & Prosthetics E., Inc. v. Speelman, 137 N.C. App. 471, 478 (2000)).

That said, “the inclusion of some information in compilations which could have

been obtained from public sources does not mean the compilations [are] not trade

secrets . . . when it would have been immensely difficult to collect and compile it in

the form in which it appear[s] in the compilation.” Allstate Ins. Co., 79 F.4th at 189.

Whether certain information qualifies as a trade secret has repeatedly been

characterized as a case-specific, factual determination. See, e.g., Syntel Sterling Best

Shores Mauritius Ltd. v. The TriZetto Grp., Inc., 68 F.4th 792, 801 (2d Cir. 2023)

(“The existence of a trade secret . . . is ‘a fact-specific question to be decided on a case-

by-case basis.’ ” (quoting Oakwood Lab’ys LLC v. Thanoo, 999 F.3d 892, 906 (3d Cir.

2021))); Bimbo Bakeries USA, Inc. v. Sycamore, 39 F.4th 1250, 1261 (10th Cir. 2022)

(“Whether a compilation constitutes a trade secret is a fact-intensive inquiry.”);

Decision Insights, Inc. v. Sentia Grp., Inc., 311 F. App’x 586, 592 (4th Cir. 2009)

(unpublished) (“Whether or not a trade secret exists is a ‘fact-intensive question to be

resolved at trial.’ ” (quoting Hoechst Diafoil Co. v. Nan Ya Plastics Corp., 174 F.3d

411, 419 (4th Cir. 1999))); AvidAir Helicopter Supply, Inc. v. Rolls-Royce Corp., 663

F.3d 966, 971 (8th Cir. 2011) (“[T]he existence of a trade secret is a fact-intensive

inquiry.”); Learning Curve Toys, Inc., 342 F.3d at 723 (“[T]he existence of a trade

secret is not obvious; it requires an ad hoc evaluation of all the surrounding

circumstances.”).

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From this then it follows that plaintiffs’ trade secrets claims will fail at

summary judgment if there is no evidence from which a reasonable juror could have

found that the overall weight of the relevant six factors favors plaintiffs. With these

legal principles in mind, we evaluate the two client lists, which the Business Court

found did not qualify as protectable trade secrets.

a. Gurley’s Customer List

Gurley’s Customer List is an Excel spreadsheet containing the names and

addresses of ninety-eight Relation clients serviced by Gurley. The Business Court

summarily concluded that Gurley’s Customer List was not a trade secret. It reasoned,

“[t]he [c]ourt is unpersuaded that Gurley’s Customer List should be characterized as

a trade secret . . . [because] the basic compilation of client information found in

Gurley’s Customer List is not the type of compilation that is deserving of trade secret

protection.” Rel. Ins., Inc., 2024 WL 3549145, at *20. We disagree.

Regarding the first factor, defendants testified that no online source provided

those outside the business with a compilation of the clients serviced by plaintiffs.

Defendants attempt to rebut this testimony by focusing on the fact that the names

and addresses of the individual clients can be obtained online. However, this

misconstrues the identified trade secret. Gurley’s Customer List is a compilation of

ninety-eight Relation clients. There is no evidence that such a compilation is publicly

available or could have been compiled from public listings. As such, when construing

the evidence in the light most favorable to the non-moving party, plaintiffs have

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created a genuine issue of material fact as to the public availability of Gurley’s

Customer List. See Penalty Kick Mgmt. Ltd v. Coca Cola Co., 318 F.3d 1284, 1291

(11th Cir. 2003) (“The fact that some or all of the components of the trade secret are

well-known does not preclude protection for a secret combination, compilation, or

integration of the individual elements.” (extraneities omitted)).

Regarding the second and sixth factors, plaintiffs presented evidence that

Gurley could only recall three of his clients from memory. Defendants offered no

evidence that other employees would have known Gurley’s clients or had access to

the list. Accordingly, there is a genuine issue of material fact regarding the extent to

which the ninety-eight clients compiled on Gurley’s Customer List were known to

employees and others involved in the business and the ease or difficulty with which

the information could properly be acquired or duplicated.

Regarding the third factor, plaintiffs presented evidence that their company

computer systems were password protected. Defendants do not dispute this fact but

rather argue that “the lack of more significant measures is a factor that militates

against finding a trade secret.” Defendants’ argument ignores the summary judgment

standard. Plaintiffs’ evidence of password protection created a genuine issue of

material fact as to the extent of measures taken to guard the secrecy of its client list.

Regarding the fourth factor, plaintiffs have shown that most of Gurley’s new

clients at Pilot can be identified on Gurley’s Customer List. This clearly evinces a

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value of the list to the business and its competitors. As such, plaintiffs have created

a genuine issue of material fact as to the value of Gurley’s Customer List.

Regarding the fifth factor, plaintiffs presented an affidavit of an insurance

brokerage industry expert, explaining that “[b]rokerages spend significant amounts

of time and money to develop [their client lists].” Moreover, “[b]rokerages spend

significant time, expense, and resources compiling information, even while some

individual pieces of information may be found online or through other generally

available resources.” This evidence, combined with the fact that Gurley dedicated

nearly a decade to acquiring and developing relationships with his clients at Relation,

creates a genuine issue of material fact regarding the amount of effort or money

expended in developing the list.

In sum, when construing the evidence in the light most favorable to the

non-moving party, as we must do, there are genuine issues of material fact as to

whether Gurley’s Customer List constitutes a trade secret under the Acts. We reverse

the Business Court’s conclusion that Gurley’s Customer List cannot properly be

characterized as a trade secret at the summary judgment stage.

b. Client Renewal List

The Client Renewal List is an Excel spreadsheet containing thirty-seven

clients along with their associated insurance policy renewal dates for types of

insurance policies, including “Medical,” “Dental,” and “Ancillary.” The spreadsheet

was emailed by King from her Relation account to her personal Gmail account on

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18 February 2022—merely one day before she accepted her new position at Pilot. The

Business Court concluded that the Client Renewal List did not qualify as a

protectable trade secret, because “Relation has failed to demonstrate—based on the

case law discussed above—that the information contained in the Client Renewal List

is sufficient to warrant trade secret protection.” Rel. Ins., Inc., 2024 WL 3549145, at

*21. For reasons similar to those stated above, we disagree.

Regarding the first factor, plaintiffs presented affidavits stating that a

compiled list of Relation clients with their corresponding policy renewal dates cannot

be found online. Defendants again respond by arguing that the names and specific

policy renewal dates of individual clients can be obtained online. However, as made

clear above, “the inclusion of some information in compilations which could have been

obtained from public sources does not mean the compilations were not trade secrets.”

See Allstate Ins. Co., 79 F.4th at 189. Defendants have not adequately shown that the

Client Renewal List could easily be collected and compiled in the form in which it

appears. Accordingly, there is a genuine issue of material fact as to the extent to

which the information compiled in the Client Renewal List is known outside the

Regarding the second and sixth factors, plaintiffs have introduced evidence

tending to demonstrate that King emailed the Client Renewal List to her personal

email one day after she accepted her new role at Pilot. This conduct, at the very least,

creates a reasonable inference that information contained in the Client Renewal List

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is not well known to those involved in the industry and that information cannot be

properly acquired or duplicated by others with ease. As such, there is a genuine issue

of material fact as to the second and sixth factors.

Regarding the third factor, our analysis from Gurley’s Customer List controls.

To reiterate, defendants do not dispute that plaintiffs’ company computer systems

were password protected but rather argue that “the lack of more significant measures

is a factor that militates against finding a trade secret.” However, this argument

ignores the summary judgment standard. For that reason, there is a genuine issue of

material fact as to the extent of measures taken to guard the secrecy of its client lists.

Regarding the fourth factor, defendants maintain that the Client Renewal List

was created for mere individual convenience, not to be of value to Relation after an

employee’s departure. However, plaintiffs have presented evidence of the Client

Renewal List’s value. For instance, plaintiffs have shown that a substantial portion

of Lancaster’s new Pilot clients are listed on the Client Renewal List taken from

Relation. In addition, plaintiffs offered testimony illustrating the importance of

knowing each client’s renewal date, due to the industry being “very time-sensitive.”

As such, a genuine issue of material fact exists regarding the value of the Client

Renewal List.

Regarding the fifth factor, our analysis largely tracks that for Gurley’s

Customer List. Plaintiffs produced an affidavit of an insurance brokerage industry

expert, explaining that “[b]rokerages spend significant amounts of time and money

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to develop [their client renewal histories]” and “[c]lient renewal lists give brokerages

the ability to calendar and prioritize their employees’ activities, their interactions

with their clients, and their interactions with insurance companies.” The record

reflects that King worked approximately a decade for plaintiffs, presumably

developing her client relationships and maintaining those clients’ renewal histories.

Consequently, there is a genuine issue of material fact as to the amount of effort or

money expended in developing the information contained on the Client Renewal List.

In sum, when construing the evidence in the light most favorable to the

non-moving party, there are genuine issues of material fact as to whether the Client

Renewal List constitutes a trade secret under the Acts. We reverse the Business

Court’s summary judgment conclusion that the Client Renewal List is not a

protectable trade secret.

2. Definition of “Misappropriation”

Once properly classified as a trade secret under the Acts, it must then be

adequately shown that the trade secret was misappropriated. The misappropriation

definition under the DTSA differs slightly from that articulated under the NCTSPA.

Under the DTSA, “misappropriation” is defined as follows:

(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(B) disclosure or use of a trade secret of another without express or implied consent by a person who—

(i) used improper means to acquire knowledge of the

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trade secret;

(ii) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was—

(I) derived from or through a person who had used improper means to acquire the trade secret;

(II) acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or

(III) derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or

(iii) before a material change of the position of the person, knew or had reason to know that—

(I) the trade secret was a trade secret; and

(II) knowledge of the trade secret had been acquired by accident or mistake.

18 U.S.C. § 1839(5).

The NCTSPA, for its part, defines “misappropriation” as “acquisition,

disclosure, or use of a trade secret of another without express or implied authority or

consent, unless such trade secret was arrived at by independent development, reverse

engineering, or was obtained from another person with a right to disclose the trade

secret.” N.C.G.S. § 66-152(1) (2025). The NCTSPA then sets forth criteria to establish

a prima facie case of misappropriation. See N.C.G.S. § 66-155 (2025). Specifically,

§ 66-155 of the NCTSPA states:

Misappropriation of a trade secret is prima facie established by the introduction of substantial evidence that

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the person against whom relief is sought both:

(1) Knows or should have known of the trade secret; and

(2) Has had a specific opportunity to acquire it for disclosure or use or has acquired, disclosed, or used it without the express or implied consent or authority of the owner.

N.C.G.S. § 66-155.

In construing § 66-155(2), the Business Court explained:

Evidence that a former employee had access to, and therefore an “opportunity to acquire,” an employer’s trade secrets, without more, is not sufficient to establish a prima facie case of misappropriation. Rather the employer must establish either that the former employee accessed its trade secrets without authorization or provide other sufficient evidence of misappropriation to raise an inference of actual acquisition or use of its trade secrets.

Rel. Ins., Inc., 2024 WL 3549145, at *29 (quoting Am. Air. Filter Co. v. Price, No. 16

CVS 13610, 2017 WL 485517, at *8 (N.C. Super. Ct. Feb. 3, 2017)).

Plaintiffs dispute the Business Court’s reading of § 66-155. In their view, “a

prima facie case is established when an employee worked with and had access to a

trade secret during his employment.” Stated differently, in the employment context,

plaintiffs contend that all a claimant must show is that the employee had a specific

opportunity to acquire the trade secret and nothing more. We agree that the NCTSPA

encompasses a “specific opportunity to acquire,” but we disagree that the inquiry ends

there.

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By its plain terms, the NCTSPA encompasses both a specific opportunity to

acquire a trade secret and actual acquisition of a trade secret. That said, a specific

opportunity to acquire alone is not enough. To establish a prima facie case, the

specific opportunity to acquire must also be “without the express or implied consent

or authority of the owner.” N.C.G.S. § 66-155(2).

Upon initial observation, when reading § 66-155(2) it is not plainly obvious

whether the condition of “without the express or implied consent or authority of the

owner” attaches to the phrase “[h]as had a specific opportunity to acquire [the trade

secret] for disclosure or use[.]” However, this uncertainty is clarified upon consulting

the definition of misappropriation.

Misappropriation is defined as the “acquisition, disclosure, or use of a trade

secret of another without express or implied authority or consent[.]” N.C.G.S.

§ 66-152(1). Thus, the condition “without express or implied authority or consent”

clearly attaches to the phrase “acquisition, disclosure or use.”

When construing statutes, we are instructed that “[s]tatutes dealing with the

same subject matter must be construed in pari materia and harmonized, if possible,

to give effect to each.” Bd. of Adjustment of Swansboro v. Town of Swansboro, 334

N.C. 421, 427 (1993). Accordingly, to harmonize the two provisions and give effect to

the definition set forth in § 66-152(1), we must read § 66-155(2) as requiring both (i) a

specific opportunity to acquire and (ii) an absence of express or implied consent or

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authority to disclose or use the trade secret. Moreover, a common sense reading of

the statute likewise supports such an interpretation.

This, in turn, means that an employer cannot state a prima facie case against

its employee merely by showing that it gave the employee access to its trade secrets

at some point. Rather, an employer must show that the employee had the specific

opportunity to acquire the trade secret after the employer’s express or implied

consent or authority ceased to exist.

The Business Court’s construction of § 66-155(2) traces back to a Fourth Circuit

panel that was tasked with predicting how this Court would read our State’s

misappropriation statute. See RLM Commc’ns, Inc. v. Tuschen, 831 F.3d 190, 200

(4th Cir. 2016) (analyzing § 66-155(2) after observing, “the Supreme Court of North

Carolina . . . has not had occasion to consider the meaning of the statute”). The Fourth

Circuit concluded that § 66-155(2) requires “evidence that the defendant actually

acquired or used trade secrets.” Id. This conclusion, however, reads the phrase “[h]as

had the specific opportunity to acquire” out of the statute, in contravention with our

rules of statutory construction. See N.C. Dep’t of Corr. v. N.C. Med. Bd., 363 N.C. 189,

201 (2009) (“[W]e give every word of the statute effect, presuming that the legislature

carefully chose each word used.”).

The Fourth Circuit’s reading was shaped principally by its fear of an

undesirable outcome, rather than by the text itself. RLM Commc’ns, Inc., 831 F.3d at

200. In its view, if evidence of an opportunity to acquire were permissible, “[e]very

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employee in North Carolina who had access to her employer’s trade secrets but did

not acquire them would have to go to trial to fend off the employer’s claim of

misappropriation.” Id.

We take a different view. As explained above, mere access to a trade secret

alone is insufficient. There must also be an absence of express or implied consent or

authority at the time that the employee had a specific opportunity to acquire the trade

secret.

While our construction of § 66-155(2) differs slightly from that articulated by

the Fourth Circuit and the Business Court below, it functions in much the same way.

To illustrate, § 66-155(2) explicitly states that the opportunity to acquire the trade

secret must be a “specific opportunity.” N.C.G.S. § 66-155(2) (emphasis added).

Around the time that § 66-155 was enacted, The American Heritage Dictionary

defined “specific” to mean “[e]xplicitly set forth; particular; definite.” Specific, The

American Heritage Dictionary (New College ed. 1980). “Specific” is a limiting term.

As such, we are to give a narrow construction of what might be considered a specific

opportunity. See N.C. Dep’t of Corr., 363 N.C. at 201 (“[W]e give every word of the

statute effect . . . .”).

Our narrow construction of what qualifies as a “specific opportunity to acquire”

effectively mirrors the Business Court’s understanding of § 66-155(2). For example,

a “specific opportunity to acquire” “without express or implied consent or authority”

might include an identifiable instance of a defendant downloading or accessing a

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trade secret beyond the scope of that defendant’s tasks and duties or without express

consent.

This sort of evidence aligns with what courts have found sufficient to establish

a prima facie case of misappropriation. Contrast, e.g., Amerigas Propane, L.P. v.

Coffey, No. 14 CVS 376, 2015 WL 6093207, at *13 (N.C. Super. Ct. Oct. 15, 2015)

(holding that a prima facie case of misappropriation was not established where the

claimant “ha[d] not offered evidence that [the defendant-employee] accessed or

downloaded customer information from [the plaintiff’s] computer database in

connection with his departure from the company”), with, e.g., Med. Staffing Network,

Inc. v. Ridgway, 194 N.C. App. 649, 659 (2009) (holding that a prima facie case of

misappropriation was established where a defendant, just prior to joining a business

competitor, “accessed [the plaintiff’s] ‘game plan’ and other confidential documents

from [the plaintiff’s] network with unusual frequency”).

In short, the plain language of § 66-155(2) permits a claimant to establish a

prima facie case of misappropriation with substantial evidence of a specific

opportunity to acquire the trade secret—so long as that specific opportunity occurred

absent consent or authority of the owner. A specific opportunity must be a discrete,

identifiable instance of means to access the trade secret. Therefore, while our

construction of § 66-155(2) differs from that stated by the Business Court, it functions

much the same.

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Once a plaintiff establishes a prima facie claim, a defendant may rebut that

claim by introducing “substantial evidence” that the defendant “acquired the

information comprising the trade secret by independent development, reverse

engineering, or it was obtained from another person with a right to disclose the trade

secret.” N.C.G.S. § 66-155; see also 18 U.S.C. § 1839(6)(B).

a. Crooker’s Production Analysis

The Business Court dismissed plaintiffs’ NCTSPA and DTSA claims against

Crooker for retaining a paper copy of a document called “Crooker’s Production

Analysis.” The court reasoned that plaintiffs had not established a prima facie case

of misappropriation, because “there is no evidence that [Crooker] ever forwarded,

printed or accessed the document following his termination.” Rel. Ins., Inc., 2024 WL

3549145, at *30.

On appeal, plaintiffs cite evidence suggesting that Crooker “took [Crooker’s

Production Analysis] from Relation and had it during litigation to provide to his

attorney.” Thus, plaintiffs appear to argue that possession alone is sufficient to

establish a prima facie claim of misappropriation. Not so. By their plain terms, the

NCTSPA and DTSA require that the conduct be made without “consent or authority

of the [trade secret’s] owner,” N.C.G.S. § 66-155(2), or “by improper means,” 18 U.S.C.

§ 1839(5). Plaintiffs do not provide any evidence to suggest that Crooker acquired,

had a specific opportunity to acquire, or used the document without consent or

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authority. As such, the allegations and cited evidence on appeal would fall short of

establishing misappropriation.

Even still, the shortcomings related to Crooker’s Production Analysis stem

from a lack of evidence. As recognized above, the Business Court granted plaintiffs’

motion for adverse inference. The adverse inference specifically relates to factual

defects in plaintiffs’ claims. Therefore, to safeguard the Business Court’s full exercise

of its discretionary function, we reverse and remand the trade secrets claims related

to Crooker’s Production Analysis.

C. Breach of Non-Solicitation Clauses of Employment Agreements

In their complaint, plaintiffs asserted breach of contract claims against the

Former Employees for allegedly breaching the Non-Solicitation-of-Employees and

Non-Solicitation-of-Clients Provisions (collectively, Non-Solicitation Provisions or

Provisions) contained in the Employment Agreements.

On 13 April 2022, plaintiffs filed an emergency motion for preliminary

injunction (PI Motion) with the Business Court. In their PI Motion, plaintiffs

requested that the Business Court prohibit and restrain defendants from committing

any acts in violation of the Non-Solicitation Provisions.

The Business Court denied plaintiffs’ PI Motion, finding that the

Non-Solicitation Provisions were likely unenforceable as a matter of law. Then, in its

subsequent Summary Judgment Order, the Business Court explained “that the

analysis contained in its [order on plaintiffs’ PI Motion] remains legally correct.” Rel.

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Ins., Inc., 2024 WL 3549145, at *31. The Business Court later concluded, at the

summary judgment stage, that the Non-Solicitation Provisions in the Employment

Agreements are “unenforceable as a matter of law.” Id. at *32.

Plaintiffs appeal the Business Court’s conclusion that the Provisions are

unreasonably broad and therefore unenforceable. In plaintiffs’ view, the

Non-Solicitation Provisions are sufficiently narrow to only protect Relation’s

legitimate business interests.

The Non-Solicitation Provisions contained in each Former Employee’s

Employment Agreement are substantively identical. The only term that varies among

the Employment Agreements is the duration for which the restrictions apply: for

producers, the Non-Solicitation Provisions last two years; meanwhile, for account

managers, the Non-Solicitation Provisions last just one year. To illustrate the

Provisions’ material terms, we restate the relevant language from Linthicum’s

Employment Agreement.

The Non-Solicitation-of-Clients Provision provides, in pertinent part, that the

“Employee will not, either directly or indirectly:”

(i)(A) solicit, or attempt to solicit[,] the insurance or employee benefit plan business of any Client . . . ,

(B) solicit, or attempt to solicit[,] the insurance or employee benefit plan business of any Prospective Client . . . ,

(C) induce Clients to terminate, cancel, not renew or not place business with the Company or any other member of the Ascension Group,

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(D) induce Prospective Clients to terminate, cancel, not renew or not place business with the Company or any other member of the Ascension Group,

(E) perform insurance or benefits services of the type sold or provided by the Company or other member of the Ascension Group during the last twelve months of Employee’s employment with the Company on behalf of any Clients,

(F) perform insurance or benefits services of the type sold or provided by the Company or other member of the Ascension Group during the last twelve months of Employee’s employment with the Company on behalf of any Prospective Clients,

(G) supervise the performance of insurance or benefits services of the type sold or provided by the Company or other member of the Ascension Group during the last twelve months of Employee’s employment with the Company on behalf of any Clients, or

(H) supervise the performance of insurance or benefits services of the type sold or provided by the Company or other member of the Ascension Group during the last twelve months of Employee’s employment with the Company on behalf of any Prospective Clients. 4

The restrictions contained in the Non-Solicitation-of-Clients Provision are then

limited by the following terms: “The foregoing restrictions . . . shall apply only to those

Clients or Prospective Clients with whom Employee had material contact or about

whom Employee obtained Confidential Information during the last twelve (12)

months of Employee’s employment with the Company.”

4 As previously discussed, for present-day purposes, “Ascension Group” is now known

as “Relation Insurance, Inc.” The entity of Ascension Group never changed, just its name. As such, “Ascension Group” contained in the Employment Agreements is understood to as mean referring to Relation.

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The Employment Agreement defines “material conduct” as “interaction

between Employee and a Client or Prospective Client that was intended to further

the business relationship of the Company, or of any other member of the Ascension

Group.”

The Employment Agreement defines “Confidential Information” as “all

information of a confidential or proprietary nature . . . in any form or medium, that

relates to or results from the business . . . of the Company or of any other member of

the Ascension Group.” This definition explicitly extends to, “without limitation”:

(i) “Client and Prospective Client lists,” which include “identifying information”;

(ii) “information about and personnel files of employees of the Company or any other

member of the Ascension Group, former employees of the Company or any other

member of the Ascension Group”; and (iii) “any other information developed or used

by the Company or the Ascension Group that is not known generally to the public

and that gives the Company or any member of the Ascension Group an advantage in

the marketplace.”

The Non-Solicitation-of-Employees Provision provides, in pertinent part, that

“Employee will not, either on Employee’s own account or on behalf of any person . . .

or entity, recruit or solicit for employment, [or] attempt to recruit or solicit for

employment[,] . . . any employee of the Company or of any other member of the

Ascension Group.”

The restrictions contained in the Non-Solicitation-of-Employees Provision are

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then limited to those employees

(A) with whom Employee came into contact during Employee’s last twelve (12) months of employment with the Company or other member of the Ascension Group, or about whom Employee obtained Confidential Information during Employee’s last twelve (12) months of employment with the Company or other member of the Ascension Group, and (B) who is known by Employee at the time of such recruitment . . . to then be employed by the Company or any other member of the Ascension Group.

“Confidential Information” retains the same definition as that stated above.

1. Collateral Estoppel

Before turning to the merits of plaintiffs’ claims, defendants seek to invoke the

doctrine of collateral estoppel to estop plaintiffs from enforcing the Non-Solicitation

Provisions of the Employment Agreements. As their basis for invoking the doctrine,

defendants point to the Smythe Order—the interlocutory order in the Smythe

Lawsuit. The Smythe Order found that the restrictive covenants contained in

Smythe’s employment agreement “are too broadly written and are unenforceable . . .

as a matter of law.” The restrictive covenants contained in Smythe’s employment

agreement were substantially similar to those contained in the Former Employees’

Employment Agreements. The Smythe Order nevertheless denied Smythe’s motion

to dismiss the breach of contract claim on the grounds that another provision

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contained in the employment agreement was enforceable. The Smythe Lawsuit was

subsequently settled by the Settlement Agreement.

To assert defensive-use collateral estoppel, the following elements must be

established:

(1) a valid final judgment on the merits in a previous suit; (2) the later suit involves identical issues; (3) the issue was actually litigated in the prior suit and necessary to the judgment; (4) the issue was actually determined; and (5) the party to be collaterally estopped was a party or in privity with a party to the prior suit, who had a full and fair opportunity to litigate the issue in the earlier action.

In re A.D.H., 388 N.C. 578, 586 (2025).

Importantly, where a claim ends by settlement agreement, it cannot be said

that the relevant issues were actually litigated or necessary to the judgment. See

Arizona v. California, 530 U.S. 392, 414 (2000) (“In the case of a judgment entered by

confession, consent, or default, none of the issues [are] actually litigated.” (quoting

Restatement (Second) of Judgments § 27 (A.L.I. 1982))). Thus, “settlements ordinarily

occasion no issue preclusion (sometimes called collateral estoppel), unless it is

clear . . . that the parties intend their agreement to have such an effect.” Id.

The issues related to the Non-Solicitation Provisions contained in the Smythe

Order were ultimately resolved by the Settlement Agreement. The Settlement

Agreement contains no provisions expressing the parties’ intent to incorporate the

Smythe Order’s finding that his employment agreement’s non-solicitation provisions

were unenforceable. As such, defendants cannot establish that the unenforceability

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of the Non-Solicitation Provisions was actually litigated and necessary to the

judgment. Plaintiffs are not collaterally estopped from seeking enforcement of the

Provisions now.

2. Enforceability of Clauses

The enforceability of a contract’s covenants turns on five elements. The

covenant must be: “(1) in writing; (2) reasonable as to terms, time, and territory;

(3) made a part of the employment contract; (4) based on valuable consideration; and

(5) not against public policy.” Triangle Leasing Co. v. McMahon, 327 N.C. 224, 228

(1990).

The Business Court found that the Employment Agreements’ restrictive

covenants were unreasonable as to the terms, time, and territory as well as against

public policy. “The reasonableness of a [restrictive] covenant is a matter of law for the

court to decide.” Wells Fargo Ins. Servs., 372 N.C. at 267. The burden is on the party

seeking enforcement of a restrictive covenant to prove its reasonableness. Id.

On appeal, defendants maintain that the Non-Solicitation Provisions are

unenforceable for the same reasons articulated in Wells Fargo. Specifically,

defendants argue that two terms contained in the Non-Solicitation Provisions stretch

the restrictions too broadly—“Ascension Group” and “Confidential Information.”

In Wells Fargo, it was emphasized that the sheer scope of the company and its

affiliates rendered the non-solicitation provisions unreasonable. Id. at 268–69. The

opinion remarked that, according to publicly available data, “Wells Fargo employed

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over 269,000 full-time employees” and its subsidiaries included companies engaged

in business distinct from the business in which the defendant had been employed. Id.

at 269. In other words, in evaluating the enforceability of such provisions, great

weight is afforded to size and scope of the company and its affiliates where a

non-solicitation provision is tied to such entities. See also Med. Staffing Network, Inc.

v. Ridgway, 194 N.C. App. 649, 657 (2009) (concluding the restrictive covenants were

unenforceable where the provisions “foreclose[d] the solicitation of clients and

employees of . . . an unrestricted and undefined set of [the plaintiff’s] affiliated

companies that engage[d] in business distinct from the . . . business in which [the

defendant] had been employed”).5

The scope of each Former Employee’s Non-Solicitation Provision is directly tied

to “the Company or any other member of the Ascension Group.” To illustrate, the

Non-Solicitation-of-Employees Provisions provide that all Former Employees must

“not . . . recruit or solicit for employment” or “attempt to recruit or solicit for

employment . . . any employee of the Company or of any other member of the

Ascension Group.” The same is true for the Non-Solicitation-of-Clients Provisions.

The scope of each of these provisions expressly stretches across “the Company [and]

any other member of the Ascension Group” through the definition of “material

5 This approach mirrors the one taken in the non-compete restrictive covenant context

too. There our courts evaluate the reasonableness of a covenant based upon the geographic territory the restriction spans. Beverage Sys. of the Carolinas, LLC v. Associated Beverage Repair, LLC, 368 N.C. 693, 698 (2016).

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contact” and “Confidential Information.” Accordingly, it is critical for this Court to

possess facts regarding the size and scope of Relation and its affiliated members for

our legal analysis.

In its Summary Judgment Order, the Business Court believed that plaintiffs

had failed to identify the members of Relation Insurance. This consequently left the

Business Court with no information to understand the breadth of the Provisions. The

Business Court explained that the Non-Solicitation-of-Employees Provisions, as

written, “would foreclose the solicitation of an employee of any of [p]laintiffs’

unnamed affiliate companies, potentially precluding solicitation of employees who

are engaged in business activities wholly distinct from those as to which the Former

Employees had been engaged.” Rel. Ins., Inc., 2024 WL 3549145, at *32.

On appeal, plaintiffs cite to an “Organizational Chart” seemingly outlining all

of Relation Insurance Holdings, LLC’s subsidiaries to illustrate the size and scope of

the term “the Company or any other member of [Relation].” Based on this chart alone,

plaintiffs claim that “the identity of the employer entity and its operating subsidiaries

encompassed by the Former Employees’ [E]mployment [A]greements is not in

dispute.”

However, at oral arguments, plaintiffs reversed course, telling this Court that

there is a factual dispute as to the meaning and identity of Relation and its affiliated

members. Oral Argument at 57:20–57:40, Rel. Ins., Inc. v. Pilot Risk Mgmt.

Consulting LLC (No. 68A25) (N.C. May 22, 2026), https://www.youtube.com/watch?v=

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mb2vkq3YnMk (hereinafter Oral Argument). Plaintiffs insisted that such a factual

dispute “needs to be decided by a jury.” Oral Argument at 57:30–57:40. Defendants,

for their part, explained at oral arguments that plaintiffs created and produced the

Organizational Chart in discovery, thus constituting inadmissible hearsay. Oral

Argument at 34:47–35:20.

Based upon the record before us, we cannot determine whether the

Organizational Chart was ever properly presented to the Business Court. We also

cannot determine whether the Organizational Chart constitutes inadmissible

hearsay. As such, we remand this evidentiary dispute to the Business Court to

resolve. In doing so, we emphasize that the burden is on plaintiffs to prove the

reasonableness of their Non-Solicitation Provisions. Wells Fargo Ins. Servs., 372 N.C.

at 267. Further, Rule 56(e) requires affidavits supporting or opposing a motion for

summary judgment to “be made on personal knowledge, [and to] set forth such facts

as would be admissible in evidence, and . . . show affirmatively that the affiant is

competent to testify to the matters stated therein.” N.C.G.S. § 1A-1, Rule 56(e).

In sum, the breadth of each non-solicitation provision is linked to the size and

scope of Relation and its affiliated members. Wells Fargo underscores the importance

of a company’s size and scope to the legal enforceability of restrictive covenants where

those covenants explicitly tether their restrictions to the company. 372 N.C. at

268–69. We remand plaintiffs’ breach of contract claim (which seeks to enforce the

Non-Solicitation Provisions) to the Business Court, because there are evidentiary

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disputes regarding the size and scope of Relation and its affiliated members. In doing

so, we emphasize that plaintiffs bear the burden of proving the reasonableness of

their Non-Solicitation Provisions, and plaintiffs cannot oppose a summary judgment

motion based upon incompetent evidence, such as hearsay.

3. Blue-Pencil Doctrine

Finally, plaintiffs asked the Business Court, in the alternative, to apply the

“blue-pencil” doctrine to save their Non-Solicitation Provisions if the court were to

find those provisions to be unenforceable.

The blue-pencil doctrine is a doctrine in equity, designed to save a contract

where particular restrictions are deemed unreasonable and unenforceable. Welcome

Wagon Int’l, Inc. v. Pender, 255 N.C. 244, 248 (1961). It is a “kind of selective

enforcement” of various covenants contained in a single contract. 6 Richard A. Lord,

Williston on Contracts § 13:31 (4th ed. 2025). Generally, under the blue-pencil

doctrine, courts “will sever unreasonable, divisible portions and then enforce the

reasonable parts that remain, usually without rewriting the covenant by adding,

changing, or rearranging terms.” Id.

“North Carolina has adopted the ‘strict blue[-]pencil doctrine’ under which a

court cannot rewrite a faulty [restrictive covenant] but [instead] may enforce divisible

and reasonable portions of the covenant . . . .” Beverage Sys. of the Carolinas, LLC,

368 N.C. at 696; see also Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523, 528

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(1989) (“If the contract is separable, however, and one part is reasonable, the courts

will enforce the reasonable provision.”).

North Carolina’s strict application of the doctrine stems from our traditional

contract law rule that “[t]he courts will not rewrite a contract if it is too broad but

will simply not enforce it.” Whittaker Gen. Med. Corp., 324 N.C. at 528. In the

employment context, especially, this strict application makes practical sense as well.

As other courts have observed, “[f]or every agreement that makes its way to

court, many more do not.” Valley Med. Specialists v. Farber, 982 P.2d 1277, 1286

(Ariz. 1999). Overly broad restrictions can have an in terrorem effect on departing

employees. Id.; Hassler v. Circle C. Res., 505 P.3d 169, 177 (Wyo. 2022). Under a

liberal blue-pencil standard, employers are encouraged to create ominous covenants,

knowing that if the provisions are contested, courts will modify the agreement to

make it enforceable—all the while maintaining the added benefit that departing

employees may adhere to the onerous covenant without challenge.

To avoid this injustice, North Carolina courts will only blue-pencil an

unreasonable covenant that is “separable” or “divisible” from the reasonable,

enforceable covenant. Whittaker Gen. Med. Corp., 324 N.C. at 528; Beverage Sys. of

the Carolinas, 368 N.C. at 696. Only those separable or divisible covenants may be

fairly stricken out. This is rooted in the notion that a natural reading of such a

contract would indicate that the parties separately intended to agree to each

separable covenant. In other words, the agreement to one covenant is not influenced

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by the agreement to another. Therefore, maintaining the enforceability of a separate,

reasonable covenant preserves the parties’ contractual intent to the greatest extent

practicable while not altering the bargained-for exchange.

Below, the Business Court “decline[d] to consider application of the ‘blue[-]

pencil’ doctrine because Relation (as the party seeking application of the doctrine)

ha[d] not met its burden of demonstrating precisely how it c[ould], or should, be

applied on these facts.” Rel. Ins., Inc., 2024 WL 3549145, at *32. Plaintiffs, in their

reply brief to this Court, narrow their request for blue-penciling. Specifically,

plaintiffs ask that the “Ascension Group” term be rewritten as:

the Company or with any other member of the Ascension Group.

Further, plaintiffs request that the term “Confidential Information” be rewritten as:

During the Restriction Period, the foregoing restrictions . . . shall apply only to those Clients with whom Employee had Material Contact or about whom Employee obtained Confidential Information within twelve (12) months prior to the Termination Date.

On appeal, issues related to blue-penciling are reviewed de novo. See generally

Welcome Wagon Int’l, 255 N.C. at 248.

By our own count, plaintiffs’ request to blue-pencil only the “Ascension Group”

term results in striking at least forty-six separate clauses contained within various

provisions of just one of the seven total Employment Agreements. Simply stated,

plaintiffs are seeking to invoke the blue-pencil doctrine for interlineation deletions in

over forty different places throughout a single contract. As detailed above, North

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Carolina’s strict application of the blue-pencil doctrine does not allow courts to

surgically excise language. The provision sought to be removed must be separable or

divisible from the provision sought to be enforced. Since plaintiffs do not request blue-

penciling of a separable, divisible provision from an otherwise enforceable provision,

blue-penciling cannot apply. We remand the Non-Solicitation Provisions as they are

written.

D. Breach of the Settlement Agreement

At the Business Court, plaintiffs brought claims for breach of the Settlement

Agreement against Smythe, Capps, Kinney, and Pilot. The Settlement Agreement, in

relevant part, prohibited Pilot from soliciting any employee of Relation “through and

including” 31 March 2021. The Business Court found that its “review of the record

fails to reveal any evidence of solicitations of Relation employees by [Pilot] during the

period from 11 March 2021 and 31 March 2021.” Rel. Ins., Inc., 2024 WL 3549145, at

*38. Instead, the Business Court observed that “Relation has merely shown that

Crooker [and Pilot] were clients of the same attorney at the same time” and that there

were “several chance encounters between a Relation employee and one of the

Managing Members of [Pilot] in a public place.” Id. at *38–39.

Before this Court, plaintiffs argue that the Business Court improperly drew

factual inferences in favor of the moving party, defendants, rather than plaintiffs.

Moreover, plaintiffs explain that “the one reason there was not more evidence was

because of [d]efendants’ spoliation.”

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Plaintiffs’ arguments on appeal directly invoke the adverse inference issue that

the Business Court failed to identify with specificity. For the reasons articulated

above, we reverse and remand plaintiffs’ claim for breach of the non-solicitation-of

employees-clause of the Settlement Agreement for the Business Court to exercise its

discretionary function.

E. Unjust Enrichment

Below, plaintiffs brought an unjust enrichment claim against all defendants,

alleging defendants received plaintiffs’ confidential information, clients, and

employees and then intentionally leveraged that information for Pilot’s benefit. The

Business Court granted defendants’ motion for summary judgment as to the claim on

the grounds that plaintiffs’ claim for breach of the confidentiality provisions of the

Employment Agreements “encompasses the same subject matter as the unjust

enrichment claim.” Rel. Ins., Inc., 2024 WL 3549145, at *42. We affirm the Business

Court’s grant of summary judgment, but on alternative grounds.

A claim for unjust enrichment is “a claim in quasi contract or a contract implied

in law.” Booe v. Shadrick, 322 N.C. 567, 570 (1988). “The claim is not based on a

promise but is imposed by law to prevent an unjust enrichment.” Id. As such, “[i]f

there is a contract between the parties[,] the contract governs the claim and the law

will not imply a contract.” Id. To establish a claim for unjust enrichment, a plaintiff

must prove that: (1) the plaintiff conferred a benefit on another party; (2) the other

party consciously accepted the benefit; and (3) the benefit was not conferred

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gratuitously or by an interference in the affairs of the other party. Se. Shelter Corp.

v. BTU, Inc., 154 N.C. App. 321, 330 (2002) (citing Booe, 322 N.C. at 570).

Plaintiffs, on appeal, dispute which provision of the Employment Agreements

encompasses their unjust enrichment claim. Plaintiffs suggest that it is the

Non-Solicitation Provisions that pertain to their unjust enrichment claim, not the

confidentiality provisions of the Employment Agreements. On this basis, plaintiffs’

unjust enrichment claim may serve as an “alternative claim” if the Non-Solicitation

Provisions are deemed unenforceable. See Bandy v. Gibson, No. 16 CVS 456, 2017

WL 3207068, at *4 (N.C. Super. Ct. July 26, 2017) (recognizing that a claimant may

plead an express contract and a claim for unjust enrichment in the alternative).

Meanwhile, defendants argue that unjust enrichment “only applies where the

‘contract as a whole,’ rather than any ‘particular clause,’ is invalid.” In our view,

however, plaintiffs’ unjust enrichment claim fails for a more straightforward reason.

The underlying basis for plaintiffs’ unjust enrichment claim is that the Former

Employees took or wrongfully retained Relation’s clients, employees, and confidential

information and gave them to Pilot. However, a taking and transferring of another’s

property without permission is not a willing transfer. Accordingly, plaintiffs have not

shown that they “conferred” the benefits on defendants. See, e.g., KNC Techs., LLC v.

Tutton, No. 19 CVS 793, 2019 WL 6219035, at *14 (N.C. Super. Ct. Oct. 9, 2019)

(“Alleging merely that the [d]efendants have taken for themselves some benefit to

which [the] [p]laintiff believes it is rightfully entitled does not state a claim for unjust

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enrichment.”); Chisum v. Campagna, No. 16 CVS 2419, 2017 WL 5161978, at *11

(N.C. Super. Ct. Nov. 7, 2017) (explaining that there is no unjust enrichment claim

where a plaintiff “does not allege that he conferred any benefit on [the defendants],

but rather only that the [defendants] ‘received’ or ‘wrongfully retained’ benefits from

their alleged misconduct”).

Plaintiffs have not established a claim for unjust enrichment. Accordingly, we

affirm summary judgment as to this claim.

F. Computer Fraud and Abuse Act

Plaintiffs brought claims for computer trespass under both federal and state

law against the Former Employees. The Business Court granted the Former

Employees’ motion for summary judgment only as to plaintiffs’ federal law claim

brought under the Computer Fraud and Abuse Act of 1986 (CFAA). 18 U.S.C. § 1030.

The CFAA subjects to liability anyone who “intentionally accesses a computer

without authorization or exceeds authorized access” and thereby obtains computer

information. Id. § 1030(a)(2) (emphasis added).6 Based on its understanding of the

statutory language “exceeds authorized access,” the Business Court found that “there

is no evidence of any unauthorized access by the Former Employees.” Rel. Ins., Inc.,

2024 WL 3549145, at *44. Plaintiffs appealed.

6 In addition, civil actions under the CFAA are limited to actions where a party has

suffered a loss of at least $5,000 during a one-year period. 18 U.S.C. § 1030(c)(4)(A)(i)(I).

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On appeal, plaintiffs argue that their claim is “based on evidence that the

Former Employees exceeded the scope of the access they were provided, including

after their employment at Relation.” In plaintiffs’ view, evidence of access after

employment and continued use of confidential documents after employment falls

within the CFAA’s “exceeds authorized access” prohibition. We agree in part.

The Business Court relied upon Van Buren v. United States, 141 S. Ct. 1648

(2021), to discern the meaning of the phrase “exceeds authorized access.” In Van

Buren, a police sergeant in Georgia used his patrol-car computer to access the state

law enforcement computer database with his valid credentials. Id. at 1653. However,

the search he conducted was entirely unrelated to his police sergeant duties. Id.

Instead, the sergeant conducted his search to retrieve information about a particular

license plate number in exchange for money. Id.

The Supreme Court of the United States held that the improper search fell

outside the scope of the CFAA’s “exceeds authorized access” prohibition. Id. at 1662.

In construing the phrase “exceeds authorized access,” the Court adopted a “gates-up-

or-down inquiry.” Id. at 1658–59. Under this inquiry, courts need not determine

whether a defendant obtained information for an “improper purpose,” but instead

must analyze whether a defendant obtained the information on a computer system

or within an area of the computer system that is “off limits to him.” Id. at 1662.

While Van Buren’s “gates-up-or-down” test is instructive, the case does not

confront the distinct issue of post-employment access. However, the federal courts of

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appeals have had such occasions to confront the issue. Their cases are particularly

helpful to the arguments presented here.

United States v. Eddings, 161 F.4th 199 (3d Cir. 2025), a Third Circuit case,

directly addresses post-employment computer access under the CFAA. At the outset,

Eddings observed that the governing framework for post-employment conduct

typically turns on the CFAA’s “without authorization” prohibition rather than its

“exceeds authorized access” limitation. Id. at 201. Eddings then formulated a simple

standard for identifying “without authorization.” The Eddings standard provides

that, absent an applicable contract or policy, the employer must take some

“affirmative act” to rescind permission to access the employer’s computer. Id. at 206.

In essence, employee resignation alone is “not enough.” Id. at 205.

What, precisely, constitutes an “affirmative act” to rescind permission is not

conclusively defined. Indeed, “[s]o long as there is evidence the employer took some

step to rescind the employee’s permission, it is up to the jury to decide whether, as a

matter of fact, that action sufficed.” Id. at 209. Even so, certain acts have been

recognized as sufficient for revoking access, including the issuance of a cease-and-

desist letter, Facebook, Inc. v. Power Ventures, Inc., 844 F.3d 1058, 1067 (9th Cir.

2016); the revocation of login credentials, United States v. Nosal, 844 F.3d 1024, 1036

(9th Cir. 2016), overruled in part on other grounds by Lagos v. United States, 584 U.S.

577 (2018); and the firing of a former employee, United States v. Shahulhameed, 629

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F. App’x 685, 688 (6th Cir. 2015) (unpublished), cited with approval in Abu v. Dickson,

107 F.4th 508, 516 (6th Cir. 2024).

On appeal, plaintiffs point to three instances of Former Employees exceeding

authorized access to establish their CFAA claim. We address each in turn.

1. King’s Access of “Carrier Portals”

First, plaintiffs contend that King accessed Relation’s “carrier portals” and

“gave everyone at Pilot access to Relation’s account on a carrier’s website” after

leaving Relation. To substantiate this first allegation, plaintiffs cite to several

documents in the record clearly indicating that, on 26 April 2022, King logged into

her old Relation account to access a vendor portal, causing a series of security alerts

to Relation staff. The security alerts indicated that several other Pilot employees,

including Kinney, accessed the same Relation vendor portal. And significantly, King’s

access of the portal occurred nearly two months after Relation issued its cease-and-

desist letter to King and two weeks after plaintiffs filed their PI Motion in this matter.

Based on federal circuit precedent, the 1 March 2022 cease-and-desist letter to

King revoked her authorization to access old Relation accounts. Facebook, 844 F.3d

at 1067 (holding that “[a plaintiff] expressly rescinded . . . permission when [the

plaintiff] issued its written cease and desist letter to [the defendant]”). In fact, the

cease-and-desist letter explicitly directed King to “NOT . . . use . . . [or] transfer . . .

any Company property or confidential information you have stored on any mobile

device, computer, . . . or any other cloud-based storage program . . . including but not

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limited to any emails, production reports, customer lists, policy and contract renewal

and expiration dates and data.”

This instruction was sufficient to inform King that her access to Relation

property, including online accounts, had been revoked. As such, plaintiffs have

presented sufficient evidence that King’s access of and distribution of access to the

“carrier portals” was “without authorization” under the CFAA.

The Business Court erred in awarding defendant King summary judgment as

to plaintiffs’ CFAA claim against King on the basis that she had not accessed

information “without authorization.”

2. Crooker’s Access of “Expiration Lists”

Second, plaintiffs allege that Crooker took expiration lists by “impermissibly

accessing Relation’s computers.” To support this allegation, plaintiffs cite to

deposition testimony of Jill Zewalk, Relation’s Chief Operating Officer. Zewalk’s

testimony explained that Crooker “had taken some expiration lists” from Relation

“[b]efore he resigned from Relation.” She further testified that producers at Relation,

like Crooker, “didn’t have access to” the Relation database that held the expiration

lists. When asked why producers did not have access to the database, Zewalk replied,

“That’s just a Relation rule. Always has been.”

Based on Zewalk’s deposition testimony, it appears there is a genuine issue of

material fact as to existence of the “Relation rule” that supposedly barred producers,

like Crooker, from accessing the database containing the expiration lists. See Lowe v.

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Bradford, 305 N.C. 366, 370 (1982) (“The opposing party need not convince the court

that he would prevail on a triable issue of material fact but only that the issue

exists.”). If the existence of this Relation rule is proven, then Crooker’s access of the

expiration lists would constitute “exceeding authorized access,” as that particular

area of Relation’s computer system was seemingly off limits to him. See Van Buren,

593 U.S. at 396 (“[A]n individual ‘exceeds authorized access’ when he accesses a

computer with authorization but then obtains information located in particular areas

of the computer . . . that are off limits to him.”).

The Business Court erred in awarding defendant Crooker summary judgment

as to plaintiffs’ CFAA claim against Crooker on the basis that he had not accessed

information in a manner that “exceed[ed] authorized access.” (Alteration in original.)

3. Former Employees’ Emails and Screenshots

Finally, plaintiffs assert that all “Former Employees emailed confidential

documents to their personal email accounts and took screenshots of information from

Relation’s computers to use at Pilot.” Plaintiffs do not cite any record evidence to

support this assertion. Ordinarily, lack of record evidence would entitle the moving

party to summary judgment. See Lowe, 305 N.C. at 369 (“A party moving for summary

judgment may prevail if it meets the burden . . . of showing through discovery that

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the opposing party cannot produce evidence to support an essential element of his or

her claim.”).7

Nevertheless, the core infirmity in this CFAA allegation is an absence of

evidence. Once again, we encounter the Business Court’s spoliation of evidence

finding and this Court’s inability to determine where and how the adverse inference

might apply to the factual defects in this claim. Therefore, we conclude that the best

course of action here is to reverse and remand the issue. In our view, remand will

afford the Business Court the broadest latitude to exercise its discretionary function.

***

For these reasons, we reverse and remand the Business Court’s grant of

summary judgment as to plaintiffs’ CFAA claim against all Former Employees. In

addition, we recognize that civil liability under the CFAA is strictly limited to those

claims resulting in loss “aggregating at least $5,000 in value” during any “1-year

period.” 18 U.S.C. § 1030(c)(4)(A)(i)(I). As such, the Business Court must undertake

an additional inquiry as to the extent of loss resulting from the civil claims.

G. Clarifying Order

On 1 August 2024, the Business Court issued its Clarifying Order. The

Clarifying Order modified the previously entered Summary Judgment Order by

granting defendants summary judgment as to plaintiffs’ claims for tortious

7 In addition, it bears noting that plaintiffs’ assertion suggests access for an “improper

purpose” which falls squarely outside the CFAA as a matter of law. See Van Buren, 593 U.S. at 396.

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interference with business and contractual relations, tortious interference with

prospective economic advantage, and unfair and deceptive trade practices against

Kinney and Capps. The Clarifying Order further modified the previously entered

Summary Judgment Order by granting defendants summary judgment as to

plaintiffs’ same claims (with the exclusion of their unfair and deceptive trade

practices claim) against Pilot.

Despite its name, there is nothing “clarifying” about the order. The Clarifying

Order provides no legal analysis or legal basis for its grant of summary judgment as

to these claims.

In 2014, the North Carolina General Assembly enacted the Business Court

Modernization Act. An Act to Modernize the Business Court by Making Technical,

Clarifying, and Administrative Changes to the Procedures for Complex Business

Cases, to Streamline the Process of Corporate Reorganization Utilizing Holding

Companies, and to Establish a Business Court Modernization Subcommittee of the

Joint Legislative Economic Development and Global Engagement Oversight

Committee, S.L. 2014-102, § 2, 2014 N.C. Sess. Laws 621. The Act specifically

modified N.C.G.S. § 7A-45.3 to provide that “[t]he presiding Business Court Judge

shall issue a written opinion in connection with any order granting or denying a

motion under [N.C.]G.S. 1A-1, Rule . . . 56.” Id. at § 2, 2014 N.C. Sess. Laws at 622

(emphasis added); see N.C.G.S. § 7A-45.3 (2025).

The Clarifying Order granted defendants’ summary judgment motion

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pursuant to Rule 56 without written opinion in direct contravention of § 7A-45.3’s

plain text. Accordingly, we reverse and remand those claims for which the Business

Court summarily granted summary judgment. The presiding Business Court Judge

shall issue a written, reasoned opinion in connection with defendants’ summary

judgment motion.

IV. Conclusion

Based on the foregoing, we affirm the Business Court’s grant of summary

judgment as to plaintiffs’ unjust enrichment claim but reverse the Business Court’s

grant of summary judgment as to all other claims plaintiffs raised on appeal and

remand for further proceedings not inconsistent with this opinion.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

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