Proof allowed in case by marketing firm against former employees said to have misused confidential information

About this case:

• Citation:
  [2023] CSOH 22
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Clark

Defenders Kyle Thomson, Laura Lochhead and Michelle Hodge were formerly employees of the first pursuer, Pursuit Marketing Ltd, which along with second pursuer Your Shortlist Ltd were subsidiaries of another company. Having abandoned a claim of damages against the defenders, the pursuers sought interdict preventing disclosure of confidential information and the return of documents and information by the first two defenders.

The case was heard by Lord Clark in the Outer House of the Court of Session. Bowen KC and Brown, advocate, appeared for the pursuers. Whyte, advocate, appeared for the first defender, Bradley, advocate, for the second, and Kennedy, advocate, for the third.

Reasonable conclusion

The defenders’ contracts of employment contained a restrictive covenant obliging them not to work for a competitor or entice away other employees of the first pursuer for a period of six months. Additionally, they were obliged not to use or disclose any confidential information about the business affairs of the first pursuer or any of its business conducts, or remove any confidential documents, and delete any confidential information they still held upon request. It was averred that the defenders had access to the electronic information and databases maintained for each subsidiary of the pursuers’ parent company.

It was averred that a number of employees of the first pursuer, including the defenders, had gone to work for a competitor following the expiration of the non-compete clause. That competitor was launching a business service almost identical to that of the second pursuer. A settlement was reached by the pursuers with that company and two other former employees, who had been originally listed as the fourth to sixth defenders in the present action.

For the pursuers it was submitted that there was expert evidence that it was reasonable to conclude that the first defender had copied confidential files to another destination, while on the last day of her employment the second defender had copied an information sheet regarding a partner of the second pursuer, Sage. There was no reason for the pursuers to have previewed particular files on particular dates other than to have copied them to an external device.

Counsel for the defenders sought to challenge the relevancy and specification of the pursuers’ case. It was argued that there was no obligation of confidentiality in relation to the second pursuer, and that it was for them to identify with reasonable precision the range of information it sought to protect. In relation to the third defender specifically, she was never exposed to company secrets owing to her junior status and limited decision-making authority.

Dependent on proof

In his decision, Lord Clark said of the case against the first and second defenders: “The fact that there is no contract, or other commercial arrangement, between the second pursuer and the first or second defenders does not preclude breaches of clauses 20.1 and 27. These clauses refer to confidential information about any of the first pursuer’s business contacts or relating to the first pursuer, its customers or suppliers, or any third party. The pursuers aver that all staff are assigned to work on the business of the subsidiaries and are given access to the electronic information and databases which are maintained for each of the subsidiaries on the Group IT System.”

He continued: “I do not accept that the court will be unable to find any reasonable apprehension of future harm by the first and second defenders to the pursuers, that decision being largely dependent upon what is proved about the conduct averred. The fact that copied information (if copying is proved to have occurred) has not actually been used or disclosed will no doubt be relevant to consideration at proof as to whether there remains a real apprehension of use or disclosure. The criticisms of the expert evidence can also only properly be dealt with at the proof.”

Turning to the case against the third defender, Lord Clark noted: “It is not said that she accessed the Group IT System or previewed and copied any specific information or data. No case is made against the third defender for the return or deletion of specific information. While it is averred that she had access to certain commercially sensitive information, there is no more than an apprehension that she had actually used and disclosed such information.”

He concluded: “Those parts of the pursuers’ case against the first and second defenders founded upon alleged removal of specific information, and the duties to return and delete it, are not bound to fail. That is principally because there are averments of accessing and copying previewed information which could be proved to be confidential. There is also a relevant case that such copying can provide a basis for interdict against use or disclosure of other identified confidential information, as a threatened breach. But the case based upon use or disclosure having actually occurred cannot succeed.”

The case therefore proceeded to proof with the action against the third defender dismissed.