By Dylan B. Carp, Esq. of Jackson Lewis P.C.
Two recent cases from opposite coasts confirm that employees do not have an unfettered right to steal their employer’s documents notwithstanding the documents’ potential relevance to a whistleblower retaliation claim.
In West Hills Research and Development Inc. v. Wyles, Cal. Ct. App. 2d Dist. Case No. B255768 (July 17, 2015), when West Hills terminated Wyles, its former in-house counsel, he purloined financial and other company documents. Wyles contended that company officers had engaged in embezzlement, and that he took the documents to support a shareholder derivative suit challenging the wrongdoing. West Hills sued, contending Wyles took the documents to form a competing business and thereby misappropriated its trade secrets. Wyles moved to strike the lawsuit under California’s Anti-SLAPP (Strategic Lawsuit Against Public Policy) statute, contending his actions were protected because he took the documents for his intended lawsuit. The court of appeal held his actions were not protected by the Anti-SLAPP statute. The court noted Wyles took confidential information having nothing to do with his planned shareholder lawsuit, and that the gravamen of the company’s lawsuit was to challenge his taking and use of confidential information to form a competing business.
Perhaps a more dramatic case with a similar anti-theft holding is State v. Saavedra, 2015 N.J. Lexis 641 (2015). Saavedra sued the North Bergen Board of Education for discriminatory and retaliatory termination. During discovery, Saavedra produced hundreds of original and copied documents that she had taken from North Bergen during her employment. The documents included highly confidential student educational and medical records. When North Bergen reported the theft, Saavedra was indicted for official misconduct and theft. Saavedra moved to quash the indictment on the ground her actions were protected because she wanted the documents to support her lawsuit. The New Jersey Supreme Court held her activity was not protected and therefore the indictment was proper. The court reasoned that Saavedra had the right to obtain documents during discovery, and could obtain sanctions to the extent North Bergen failed to produce documents or destroyed them, but she did not have the right to simply take the documents in violation of the law. West Hills and Saavedra affirm the common sense principle that employers need not sit on their hands when employees steal their property, notwithstanding the employees’ claimed status as whistleblowers. At the same time, employers need to tread carefully in this circumstance, given the risk that an action taken against an employee who steals documents could itself give rise to a retaliation claim.
For additional information, please contact Dylan at CarpD@jacksonlewis.com or 415-796-5425.