Tank Connection, LLC v. Haight

161 F. Supp. 3d 957, 2016 U.S. Dist. LEXIS 15103, 2016 WL 492751
CourtDistrict Court, D. Kansas
DecidedFebruary 8, 2016
DocketCase No. 6:13-cv-01392-JTM
StatusPublished
Cited by5 cases

This text of 161 F. Supp. 3d 957 (Tank Connection, LLC v. Haight) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tank Connection, LLC v. Haight, 161 F. Supp. 3d 957, 2016 U.S. Dist. LEXIS 15103, 2016 WL 492751 (D. Kan. 2016).

Opinion

MEMORANDUM AND ORDER

J. THOMAS MARTEN, JUDGE

Plaintiff Tank Connection, LLC, brought this action against a former employee, John Haight, claiming that when [959]*959Haight left its employment and went to work for a competitor he improperly took confidential information from Tank Connection’s computer files. Plaintiff asserts claims for breach of contract, violation of the Kansas Uniform Trade Secrets Act, breach of a common law duty of loyalty, and violation of the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030. Haight denies the allegations. The matter is now before the court on Haight’s motion for summary judgment, which argues there is no genuine issue as to any material fact and that Haight is entitled to judgment as a matter of law on all claims. (Dkt. 152).

I. Uncontroverted Facts

The court finds the following facts to be uncontroverted for purposes of the motion for summary judgment.

Tank Connection designs, manufactures,' installs and services above-ground storage tanks. John Haight began working for Tank Connection in 2008. He had no prior experience in the industry. Haight signed a “Non-Disclosure Agreement” on July 28, 2008, pursuant to which he promised: “That I personally shall observe the strictest secrecy with respect to all proprietary information that I have been exposed to,” and “[tjhat I personally will not disclose to third parties the materials mentioned above unless prior written consent is given by TANK Connection.” He was also given an employee handbook. The parties did not have a non-compete agreement.

In the normal course of employment at Tank Connection, employees (including Haight) regularly accessed the company’s servers both through on-site computers and remotely through secured connections. Employees’ access normally and regularly included reading information in the public shared folders' on the servers and copying documents to computer hard drives and portable flash drives (also referred to as thumb drives or USB devices). Tank Connection knew of such conduct and consented to it. Some of the flash drives used by Haight belonged to Tank Connection and some belonged to Haight. Haight’s job involved frequent travel with a laptop computer and flash drives and he often took these items home at night.

Tank Connection had about 300 employees. Each employee’s computer was password protected. Access to data on the server was controlled by user-account privileges (Microsoft Active Directory). The user accounts were set up with standard authentication practices including user name and password.

Haight’s position with Tank Connection was International Sales Manager. Throughout his employment, Haight and other employees accessed Tank Connection’s server on a regular basis and downloaded information on flash drives as was necessary in the performance of their duties.

Tank Connection shared some information with its customers without having them sign a non-disclosure agreement. Some of the information that Tank Connection now claims as confidential would have been known to its customers, such as pending jobs, pricing information, and customer purchasing history. The information shared with customers did not include Tank Connection’s pricing margins, equity partner information, employee bonus information, corporate strategy, staff meeting notes, personnel files, and business plans with detailed financial information.

Haight testified that a “head hunter” contacted him about a month before he left Tank Connection and, as a result, he began discussions with a competitor, USA Tank Sales & Erection Company (“USA Tank”), about working for that company. On August 22, 2013, Haight received several emailed documents from USA Tank, including that company’s vision statement, dental plan summary, employee benefits [960]*960brochure, and non-disclosure and non-compete agreements. On August 23, 2013, Haight received an email from USA Tank setting forth its compensation package. On or about September 6, 2013, USA Tank emailed Haight a conditional offer for employment as Director of International Sales & Business Development. The offer was effective up until September 23, 2013.

By September 11, 2013, USA Tank had established a company email address and cell phone number for Haight. That information was emailed to Haight on September 12, 2013, at 7:55 a.m.

On the morning of September 12, 2013, Haight attempted to renegotiate his compensation and terms of employment with Tank Connection. After those negotiations failed, Haight submitted his resignation around 8:30 a.m. Haight testified that he had drafted his resignation letter on his home computer a day or two earlier. Haight left his Tank Connection laptop computer in his office along with several flash drives. (Dkt. 151 at 3).1 These items have been in the possession of Tank Connection or its expert since Haight left Tank Connection’s employment.

Tank Connection contacted Haight several days after his resignation and told him that all company property should be returned. In response, Haight deleted any and all remaining Tank Connection information from his personal flash drives, collected any items in his possession that could be considered property of Tank Connection, including promotional materials and three company flash drives, and placed those items in a paper bag. He gave the bag to a Tank Connection employee to return to the company. Haight had also previously returned another company flash drive, making a total of at least four that he returned within a few days of his resignation.

Tank Connection searched the laptop and the four flash drives returned by Haight prior to sending these items to a forensic expert. Tank Connection hired forensic expert Lanny Morrow, of BED, LLP, to examine the laptop used by Haight during his employment with Tank Connection to see if it contained “evidence of data harvesting.” In the course of that examination Morrow also reviewed the four flash drives that Haight turned in after his resignation.

Haight brought four additional flash drives to his deposition on November 21, 2013. Two of these drives were Haight’s personal property and two were given to Haight by his new employer, USA Tank. These four flash drives were subsequently examined by John Mallery, a computer forensic specialist agreed upon by the parties.2 Mallery also examined the hard drive of the computer that Haight used in his new employment with USA Tank. The examination of the hard drive showed no evidence of any Tank Connection proprietary information.

Tank Connection generally attempted to keep the following information confidential: pending major projects (“Hot Lists”);3 [961]*961pricing margins and goals; equity partner information; detailed customer lists with purchasing history and other information; employee bonus information; corporate strategy; staff meeting notes; and personnel files. This information helps Tank Connection to compete and could potentially be used by competitors to Tank Connection’s detriment.

Tank Connection also used computer programs for design and pricing. The programs are not well explained in the briefs, but as their names suggest they were apparently used by Tank Connection to design and price tank systems.

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Bluebook (online)
161 F. Supp. 3d 957, 2016 U.S. Dist. LEXIS 15103, 2016 WL 492751, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tank-connection-llc-v-haight-ksd-2016.