Ervin Smith Advertising Public Relations v. Ervin

Raj PagariyaCase Summary

Termination of authorised access when an employee acts against the employer's interests

Ervin Smith Advertising Public Relations v. Ervin
In the United States District Court for the District of Nebraska
Case Number 8:08CV459
Before District Judge Camp
Decided on February 03, 2009

Relevancy of the Case: Termination of authorised access when an employee acts against the employer’s interests

Statutes and Provisions Involved

  • The Federal Rules of Civil Procedure (Rule 9(b), 12(b))
  • The Nebraska Revised Statutes § 59-801
  • The Computer Fraud and Abuse Act, 18 U.S.C. § 1030

Relevant Facts of the Case

  • The plaintiff filed the instant complaint against six defendants on October 13, 2008. This complaint alleges twelve separate causes of action.
  • Before the first and second defendants (“Ervin brothers”) resigned, the plaintiff employed them as executive designers. However, during their employment with the plaintiff, the Ervin brothers formed their own company, Ervin Group, as a competing advertising agency. After the resignation, they now work solely for their company.
  • According to the plaintiff, the Ervin brothers enjoyed positions of substantial trust and confidence. They had access to confidential information and trade secrets of the plaintiff. During their employment, they also interacted with numerous customers of the plaintiff.
  • Before their resignation, they emailed confidential information, trade secrets, and copyrighted documents to their home computers for their personal gain. They also diverted some job offers from the plaintiff’s customers to their company.

Prominent Arguments by the Counsels

  • In the defendants’ motion to dismiss, the defendants’ counsel argued that the court should dismiss the plaintiff’s third, fifth, sixth, and twelfth claims as it failed to state the claim on which relief can be granted. Further, the defendants were employees when they were employees at the plaintiff’s company when they accessed the computers.
  • The plaintiff’s counsel asserted that the defendants’ actions constituted an unlawful conspiracy in restraint of trade.

Opinion of the Bench

  • In Nebraska, a director or any other corporate officer cannot acquire an interest adverse to the corporation’s. However, only individuals with management authority owe the corporation a fiduciary duty. The plaintiff has failed to show that the Ervin brothers held any management authority.
  • However, the plaintiff has pled all the facts necessary to establish that the defendants’ actions led to restraint of trade. Further, the plaintiff has sufficiently demonstrated that the defendants’ actions constituted deceptive trade practices.
  • The defendants destroyed the agency relationship by accessing and appropriating the protected information for their own personal gain and against their employer’s interest.

Final Decision

  • The court granted the defendants’ motion to dismiss in part and denied it in part.