Paul Peter Nicolai
Triple Damages Against Employees
Updated: Sep 13, 2021
The Massachusetts Supreme Judicial Court (“SJC”) recently made clear that Chapter 93A applies to employees who misappropriate their employer’s proprietary information during their employment and then use that information to their benefit in the marketplace.
An employer spent over twenty years amassing an electronic database of information that gave it a competitive edge in providing legal services to clients in the field of asbestos litigation. In 2016, a group of attorney employees took the proprietary materials by downloading them onto thumb drives and removing them from the employer’s offices. They did this while still employed. They then used those materials to start a new firm. The former employer sued the ex-employees and their firm. A jury found in favor of the former employer on all claims except 93A which allows for tripling damages.
The employer appealed the trial judge’s jury instruction telling the jury that Chapter 93A did not apply to anything the defendants did while still employed. The SJC agreed this instruction was incorrect and prejudicial and remanded for a new trial on that count. The SJC explained that while Chapter 93A generally does not apply to disputes arising from an employment relationship, that does not mean an employee may never be liable to an employer under that statute. The SJC said that where an employee misappropriates the employer’s proprietary materials during the course of employment and uses the stolen materials in the marketplace, the conduct is not purely an internal matter. It is a marketplace transaction that may give rise to a claim under Chapter 93A.
The fact that they were employees when they stole the data does not shield them from liability under Chapter 93A if they subsequently used the stolen materials to compete with their former employer.
Why This is Important…Whether Chapter 93A applies against employees who steal information has been the subject of conflicting case law. This new decision makes it clear when triple damages can be imposed based on employee action against the employer’s interests.