On August 29, 2023, the First Circuit affirmed a ruling from the United States District Court for the District of Massachusetts that Allstate Insurance agents misappropriated trade secrets when they retained spreadsheets that contained confidential information. Allstate Ins. Co. v. Fougere, 79 F.4th 172 (1st Cir. 2023). Significantly, the First Circuit rejected the argument that the spreadsheets could not be trade secrets because most of the information within them is publicly available.

Allstate brought this action against two former “scratch agents” who were based in Massachusetts. When the two agents joined Allstate, they entered into “exclusive agency” agreements, which prohibited them from soliciting, selling, or servicing insurance from other insurance companies without the company’s approval. However, Allstate received reports that they were sharing confidential information with competing insurance companies. Allstate then terminated both agents.

After their terminations, Allstate demanded that the agents return all confidential information they acquired to the company. However, other insurance agents who worked with the agents after they left Allstate informed Allstate that the former agents were using spreadsheets that included “names, addresses, phone numbers, email addresses, renewal dates, types of insurance policies, and premiums paid by insurance customers” to solicit new customers. Allstate filed suit against the agents alleging breach of contract and trade secret claims, including claims of misappropriation under Massachusetts common law and the Defend Trade Secrets Act (“DTSA”).

The agents argued that: the information contained in the spreadsheets did not constitute trade secrets; even if the spreadsheets did, the company was not the owner of the documents and the information; and summary judgment was inappropriate because there was no evidence that they used improper means to acquire the information.

The First Circuit rejected all these arguments. First, it held that the spreadsheets did constitute trade secrets under Massachusetts common law and the DTSA, because even if they contained publicly available information, the spreadsheets could only be replicated at immense difficulty. The argument that the spreadsheets were the property of the agents also failed, because of the executive agency agreements that the agents signed when they joined the company, which provided that any confidential information acquired by the agents while working with the company – such as the customer and policy information contained in the spreadsheets – is “wholly owned by [Allstate].” This decision is quite favorable to employers faced with situations where misappropriated information consists of some publicly available information that could only be replicated with significant difficulty.

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Photo of David Gobel David Gobel

David R Gobel is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

David Gobel earned his J.D at USC Gould School of Law, where he was a Senior Citations Editor of the USC Journal of

David R Gobel is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

David Gobel earned his J.D at USC Gould School of Law, where he was a Senior Citations Editor of the USC Journal of Interdisciplinary Law, and part of the executive committee of USC’s Music Law Society. Prior to law school, David worked as a research executive for a marketing research firm in New York.

Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.