On May 2nd, 2022, the political journalism group POLITICO shocked the country by posting an initial draft majority opinion written by Justice Samuel Alito purportedly circulated inside the United States Supreme Court.1 The significance of this particular appeal, Thomas E. Dobbs v. Jackson Women’s Health Organization, et. al,2 which the draft opinion relates to, is that its holding would overrule the long-standing precedent of Roe v. Wade.3 It is unclear at this time how POLITICO came into possession of this draft.
The Supreme Court issued a press release on May 3rd, clarifying that the Justices routinely circulate draft opinions and that while the document is authentic, it does not represent a decision by the Court or a final position of any member of the Court.4 Chief Justice Roberts referred to the leak as a “singular and egregious breach of [the] trust that is an affront to the Court and the community of public servants who work here.”5 Chief Justice Roberts indicated he directed the Marshal of the Court to launch an investigation into the source of the leak. There are likely fewer than 50 people, including the Justices, with access to a draft opinion like the one leaked.6
It appears that this is the first time in history that a full draft opinion of the Supreme Court has been leaked. While the Court maintains a high level of secrecy and confidentiality, it is not unaccustomed to information escaping the Court. This goes back as far as 1852, when the outcome of a case was reported by the New York Tribune ten days before the court issued its decision.7 Another example of such a significant leak was in 1973 when the Roe v. Wade ruling was leaked to Time Magazine hours before the opinion was published.8 Typically, though, inside information that has escaped from the Court usually relates to things like information as to how certain Justices are leaning and predictions about the Court’s likely decision.
There is speculation that the leak might have come from one of the Court’s clerks, given their access to such drafts.9 In addition to a breach of trust, such a leak by a clerk would also be a breach of a binding contractual duty. Clerks are required to sign confidentiality agreements before they begin their tenure at the Supreme Court.10 While the terms of these confidentiality agreements are not publicly known, they would certainly prohibit leaking a full draft opinion, in addition to prohibiting discussions about deliberations over cases, and more general matters such as the duties and responsibilities that justices have assigned to their clerks.11
Similarly, the repercussions and blowback of the violation of such an agreement is largely unknown. Certainly, an employee of the Court or clerk might be terminated if they are revealed as the source of the leak. Chief Justice Warren Burger is credited with creating the “20-second rule,” whereby any clerk caught talking to a reporter would be fired in 20 seconds.12 Larry Hammond, the clerk who leaked the Roe v. Wade decision in 1973, confessed to Justice Powell that he was the source of the leak and offered his resignation.13 That decision was leaked by Hammond confiding in a law school acquaintance, who happened to be a staff reporter for Time.14 Justice Berger declined to terminate Hammond despite his breach of confidentiality.15 Given that clerks and staff sign these confidentiality agreements, the question is posed: what is the legal remedy when its provisions are breached?
Non-Disclosure Agreements
What is a confidentiality or non-disclosure agreement (“NDA”)? An NDA is a contract entered into between two parties, often in the context of employment where an employee enters into an NDA with its employer. In the employment context, an employee that enters into an NDA agrees that any confidential information obtained throughout the course of their employment will be maintained confidential and not disclosed or disseminated to any outside parties. These are frequently used in tech industries where products, patents, and information are especially secretive, but also are commonly used in nearly every industry. For example, nearly every company has an incentive to keep its customer and prospective customer lists, pricing, and costs confidential to maintain competitive advantages.
To be enforceable, an NDA, like any other contract, must generally be supported by independent consideration (benefit or value to the employee). Although continued employment may be enough consideration for an NDA that is strictly limited to restrictions on the disclosure of confidential and trade secret information, if additional post-employment restrictions are included, such as non-compete or customer non-solicitation provisions, additional consideration is usually required. Moreover, some states allow NDAs to prohibit the disclosure of confidential information for an indefinite period of time, but other states require time limitations on confidentiality restrictions. Careful drafting of NDA agreements is critical to ensure compliance with Minnesota or other laws and the enforceability of those agreements.
The scope of information subject to the NDA will vary from agreement to agreement and will depend largely on how the agreement defines key terms such as “confidential information.” Confidential information is typically defined broadly but will in almost all cases include a company’s customer lists, profit margins, and other financial information, proprietary sales and marketing information, contracts and bids, trade secrets, and inventions. Essentially, expect that any information that would be valuable to other companies or individuals that is not publicly available will be covered by an NDA.
Breaches of Non-Disclosure Agreements
Allegations of breaches of NDAs typically are made when an employee, who signed an NDA, has left the company, and begins working for a competitor. If confidential information has been disclosed, what are the rights of the aggrieved company?
Often, a company that believes its confidential information has been disclosed or will be disclosed will consider seeking injunctive relief through the courts. Injunctive relief is a remedy sought by parties whereby they seek that the court order the opposing party to do, or not do, some action. Parties often seek temporary injunctive relief at the outset of the case to prevent harm while litigation is ongoing. Injunctions are generally considered “extraordinary relief,” meaning it is difficult to succeed in getting an injunction from the court without a clear showing of irreparable harm if the injunction were to be denied. Accordingly, evidence supporting the breach or concern of future disclosure will be important in deciding whether to proceed with this route.
Whether injunctive relief is granted or denied, a party claiming an NDA was violated may still proceed to seek monetary damages. To be entitled to damages, a plaintiff generally must also meet its burden in proving that it has actually incurred cognizable damages.16 Damages cannot be the product of speculation or mere guess. Damages can be supported by reasonable estimates, which are based in fact, and are not required to be proven with certainty.17 Appropriate items of damages for an aggrieved employer to pursue would be: (i) the costs of investigating the dissemination of information, the extent of the theft, and where the information as transmitted; (ii) lost profits or decreased revenue; and (iii) attorneys’ fees (particularly if included by the employer in the contract if it is required to enforce the agreement).
Violation of Minnesota or Federal Law
In addition to breaching an enforceable NDA, an employee, other individual, or company who uses confidential information obtained by nefarious purposes could be violating Minnesota or federal law by doing so, giving rise to additional claims that the company can assert. Some of these claims may also give a company an ability to seek damages from other individuals or companies who were not a party to the NDA but who are improperly benefitting from their information and secrets.
The Minnesota Trade Secrets Act (“MTSA”) provides one such remedy. The MTSA allows claims against an individual or company for improper acquisition, disclosure, or use of a trade secret.18 “Trade secret” has a specific definition under the MTSA and must be information that is valuable because it is not generally known and cannot be readily ascertained by other persons who it would be valuable to.19 The trade secrets must also be subject to efforts to maintain their secrecy.20 If a claim under the MTSA can be established, damages can include actual damages, attorney’s fees, and if willful and malicious, exemplary damages of up to two times the amount of actual damages.21
Other potential claims arise under federal statutes including the Defend Trade Secrets Act (“DTSA”)22, passed in 2016, and the Computer Fraud and Abuse Act (“CFAA”).23 Claims under the DTSA are similar to those under the MTSA, including the definition of what constitutes a trade secret and including available remedies for violations. If an employee misappropriates trade secrets by unauthorized access to a computer, a claim under the CFAA would be appropriate. Damages under the CFAA vary from other trade secret claims, but would include expenses of investigating breaches, fixing problems caused by unauthorized access, and loss of business. DTSA claims can be powerful because they allow an employer to sue the employee in federal court; however, certain disclosures must be included in the NDA in order to give employers the full benefit of the DTSA. Given the numerous types of claims available, an attorney who has experience in handling claims can advise whether to file such claims in federal court or state court.
Practical Considerations
There are many important practical considerations for companies to consider. As an employer, careful drafting of an NDA is paramount to ensure that it is binding under Minnesota law. Consulting with an experienced employment law attorney is also key in order to ensure the enforceability of the agreement and that the processes and timing of implementing these agreements with new hires are sufficient.
What should a company do if it believes that a non-compete agreement is being violated or confidential information is being used by a competitor? Bringing an experienced litigator in is crucial at the early stages of these disputes to trigger a proper investigation, place the employee and their new employer on notice of potential liability and their obligations to preserve evidence, and, where necessary, seek injunctive relief to prevent further harm to the company’s business and property as early as possible.
FMJ attorneys are here to help. If you have questions about non-disclosure agreements or any of the above information, please contact Shannon McDonough at shannon.mcdonough@fmjlaw.com.
Footnotes
[1] “Read Justice Alito’s initial draft abortion opinion which would overturn Roe v. Wade” (May 2, 2022), POLITICO, available at https://www.politico.com/news/2022/05/02/read-justice-alito-initial-abortion-opinion-overturn-roe-v-wade-pdf-00029504.
[2] 945 F.3d 265 (5th Cir. 2019).
[3] 410 U.S. 113 (1973).
[4] Press Release, U.S. Supreme Court (May 3, 2022), https://www.supremecourt.gov/publicinfo/press/pressreleases/pr_05-03-22.
[5] Id.
[6] Jana Shortal, “It’s damaging’: Expert discusses significance of Supreme Court leak, KARE 11 (May 3, 2022), available at https://www.kare11.com/article/news/local/breaking-the-news/first-time-in-history-expert-discusses-significance-supreme-court-roe-v-wade-draft-leak/89-6b65f884-b77d-4f76-91a1-4465643e3daa.
[7] Andrew Chung, “Leaked draft abortion ruling a major blow to Supreme Court, experts say” (May 4, 2022), Reuters, available at https://www.reuters.com/world/us/leaked-draft-abortion-ruling-major-blow-supreme-court-experts-say-2022-05-03/.
[8] Shortal, supra note 6.
[9] Roy Strom, “SCOTUS Clerks have everything to lose as leak probe launches” (May 3, 2022), available at https://news.bloomberglaw.com/us-law-week/scotus-clerks-have-everything-to-lose-as-leak-probe-launches.
[10] Mark C. Miller, Law Clerks and their influence at the US Supreme Court: Comments on Recent Works by Peppers and Ward, Law & Social Inquiry (2014), at 3-4.
[11] Id.
[12] Strom, supra note 9.
[13] James D. Robenalt, “The 1973 Roe v. Wade decision also was leaked to the press,” The Washington Post (May 2, 2022).
[14] Id.
[15] Id.
[16] Snyder v. Minneapolis, 441 N.W.2d 781 (Minn. 1981).
[17] Crittenden v. Whippoorwill Ranch Campground, Inc., 406 N.W.2d 624 (Minn. App. 1987).
[18] Minn. Stat. § 325C.01, subd. 3.
[19] Id., subd. 5.
[20] Id.
[21] Minn. Stat. § 325C.03-.04.
[22] 18 U.S.C. § 1831 et. seq.
[23] 18 U.S.C. § 1030 et. seq.
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