Hartford Steam Boiler Inspection & Ins. Co. v. Campbell
| Decision Date | 31 March 2021 |
| Docket Number | No. 4:20-cv-00117-SEB-DML,4:20-cv-00117-SEB-DML |
| Parties | THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY, Plaintiff, v. MICHAEL CAMPBELL, KIAH JACOBS, ONECIS INSURANCE COMPANY, Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
Plaintiff The Hartford Steam Boiler Inspection and Insurance Company ("HSB") initiated this action on June 1, 2020, charging Defendants with violations of the Defend Trade Secrets Act, 18 U.S.C § 1836; the Indiana Uniform Trade Secrets Act, Ind. Code. § 24-2-3-1, breach of contract, and various other business-related torts. Now before the Court is Defendants' Motion to Dismiss, [Dkt. 8], filed pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth herein, this motion is granted in part and denied in part.
HSB's complaint presents the following recitation of facts, which we accept as true in ruling on Defendants' Motion to Dismiss.1
HSB is "engaged in the business of equipment breakdown insurance and other specialty insurance coverages, inspection services, lost reduction and engineering-based risk management for businesses, homes and farms." The majority of HSB's clients include manufactures and sellers of various "pressure-retaining vessels such as air tanks, propane tanks, boilers, and other such industrial machines." In serving these clients, HSB provides third-party inspection and related services to its commercial clients. HSB assists its clients in avoiding losses while also providing to them insurance to allow for the prompt recovery of those losses that do occur. This industry is highly competitive; indeed, HSB aggressively competes with equipment breakdown insurance providers, such as Defendant OneCIS Insurance Company ("OneCIS"), "throughout the United States and beyond."
To provide high quality services to its clients, HSB expends considerable resources training its "Authorized Inspectors," who join HSB first as "Authorized Inspector Trainees." Prior to becoming Authorized Inspectors, trainees must receive a "Commission" from the "National Board of Boiler and Pressure Vessel Inspectors ("Board"). Receiving a Commission requires each trainee to satisfy the Board's educational, experience, employment, and examination prerequisites. This processtypically takes six months to complete. In addition, candidates seeking a Commission must successfully complete the National Board Authorized Inspector Course and pass the Authorized Inspector Commission Exam. HSB reimburses its trainees for all reasonable expenses incurred while they pursue their Commissions. In total, HSB typically invests $80,000 to recruit, hire, and train each individual trainee before he or she can begin generating billable work on HSB's behalf. Even after an Authorized Inspector Trainee attains Commission, HSB continues to train and develop its inspectors for endorsements and specialized qualifications.
Once promoted, Authorized Inspectors are charged with developing and maintaining HSB's customer relationships. To ensure its customers' needs are satisfied, HSB assigns an Authorized Inspector to each customer to address that customer's service needs for the duration of its relationship with HSB. The Authorized Inspectors are often the customers' primary point of contact at HSB. Accordingly, HSB encourages its Authorized Inspectors to develop close relationships with customers.
In performing their duties, Authorized Inspectors are required to maintain detailed logs for each customer, referred to as "Bound Diaries," cataloging certain activities (e.g., inspections, reviews, and other services) that the Authorized Inspector has performed for that customer. HSB believes that the Bound Diaries contain and constitute confidential and trade secret information which is of substantial proprietary value to HSB. The Bound Diaries explicitly and conspicuously state that the information contained therein is HSB's property and is for internal use only. The Bound Diaries further admonish that the information may not be reproduced or distributed without HSB's written permission.
In addition to the Bound Diaries, HSB maintains an electronic database, referred to as "ESIS" (Engineering Services Information System), which tracks additional proprietary data concerning HSB's confidential customer-specific services. The data housed in ESIS is likewise the property of HSB. HSB ensures the confidentiality of such information by requiring a password to access ESIS. Further, as the information on ESIS is highly confidential once an employee accesses this database through an authorized password, the employee's access is limited to information relevant to that employee and his/her customers.
HSB maintains that its Bound Diaries and ESIS database provide HSB "a distinct business advantage over its competitors, and both contain and constitute proprietary, confidential and trade secret information." If a competitor were to unlawfully gain access to HSB's proprietary information contained within either the Bound Diaries or the ESIS database, or if these competitors were to improperly hire away HSB's inspectors to capitalize on existing relationships between these inspectors and HSB's customers, HSB alleges that it would lose the competitive advantage that it has created, built, and developed in its 150 years of operation.
On February 15, 2013, HSB hired Defendant Michael Campbell (Mr. Campbell) as an Authorized Inspector Trainee. From this date until his resignation from HSB on May 8, 2020, Mr. Campbell directly serviced more than 100 HSB clients. During the course of Mr. Campbell's employment with HSB, HSB devoted substantial resources to training him and providing him with industry experience and expertise.
HSB hired Defendant Kiah Jacobs ("Mr. Jacobs") as an Authorized Inspector Trainee on October 14, 2015. Mr. Jacobs directly serviced more than 50 HSB clients during his employment with HSB until his resignation on April 3, 2020. Similar to Mr. Campbell, Mr. Jacob was the recipient of substantial resources invested by HSB in the form of training and experiences.
In their respective positions, Mr. Campbell and Mr. Jacobs (collectively, the "Individual Defendants") were responsible for communicating with HSB's current and potential customers and facilitating their utilization of HSB's services. HSB "placed a high level of trust and confidence" in the Individual Defendants, granting to each of them unique credentials for access to HSB's confidential, proprietary, and trade secret information contained in the ESIS.
As conditions of their employment, the Individual Defendants entered into employment agreements with HSB. These agreements contained the following covenant:
That for a period of six months after termination of employment with the Company, when said termination is occasioned by the Employee, the Employee will not accept employment in any of the states, commonwealths, territories or possessions of the United States of America; or from any company or organization whose corporate headquarters is located within the states, commonwealths, territories or possessions of the United States of America, if such employment is offered because of the knowledge, skill or credentials obtained as a result of the aforementioned training.
[Dkt. 9, Exh. A, the "Restrict Covenant Agreement"). In sum, the Individual Defendants agreed not to accept any competitive employment anywhere in the United States for a period of six months following their employment with HSB, if suchemployment was offered because of the knowledge, skill, or credentials obtained through HSB's specialized training.
Because Mr. Jacobs was granted additional access to highly confidential and proprietary information belonging to HSB, he also entered into a "Proprietary Information and Invention Assignment Agreement" ("PIIAA"). Pursuant to the PIIAA, Mr. Jacobs agreed that he would not use or disclose to anyone not affiliated with HSB any confidential, proprietary or trade secret information obtained through his employment with HSB at any time, without HSB's express permission. Mr. Jacobs promised to maintain HSB's trade secrets and other confidential information with "strict secrecy." Section 2b of the PIIAA specifically provides:
(a) At the termination of your employment, or at any other time as may be requested, all memoranda, diaries, notes, records, drawings, sketches, plans or other documents (whether in hard copy or electronic format) relating, directly or indirectly to Confidential Information are to be delivered to [the Company] without retaining any copies, notes or excerpts of such documents.
[Comp. ¶ 44].
On February 7, 2020, Mr. Campbell submitted his notice of resignation to HSB, explaining that he was leaving the company to care for his ailing parents. In actuality, he was leaving HSB to join its competitor, OneCIS. Indeed, he had accepted his position with OneCIS just one day before the submission of his notice of resignation. His last day of employment with HSB was May 8, 2020.
One month later, on March 12, 2020, Mr. Jacobs submitted his notice of resignation, identifying April 3, 2020 as his final day of employment. Mr. Jacobslikewise had accepted employment with OneCIS. However, he had also concealed this fact, instead indicating that he was resigning from HSB to pursue the creation of a fireworks company.
Shortly after Mr. Campbell's departure from HSB in May 2020, the company conducted a preliminary review of the messages stored on Mr. Campbell's HSB-issued cell phone. HSB's review of Mr. Campbell's phone messages revealed that, simultaneously with accepting OneCIS's offer of employment, Mr. Campbell had notified Jerry Byers, OneCIS's Director of Southeastern Region, that he and Mr. Jacobs had...
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