The California Uniform Trade Secrets Act does not require evidence of a defendant’s physical or digital retention of trade secret information to prove misappropriation of trade secrets.
Citibank NA (Citi) filed a temporary restraining against two of its former bankers, John Mitchell, and Benjamin Carr who had joined a competitor on November 20, 2024. Citi presented evidence that Carr searched for five specific clients in Citi’s Customer Management Platform shortly before his resignation. Mitchell then solicited a high-value Citi client using confidential Citi client account information that he had stored in his memory. Citi presented evidence that Mitchell sent an email to a Citi customer approximately one month after he resigned to ask the client to transfer his account at the same time as the client’s multimillion-dollar certificate deposit matured. Mitchell’s email stated that the deposit rates that he could offer his new employer were “better than Citi”, and that this was “especially important given
the high cash position.” Carr and Mitchell argued that Citi had not established a trade secret that could be protected, and they provided undisputed testimony stating that they did take, copy or photograph any documents when they left Citi. Judge Charles R. Breyer of the Northern District of California issued temporary restraining orders against Mitchell but not Carr. The ruling prohibited Mitchell from using, disclosing or transmitting Citi’s “books and records, documents and information” for any purpose, including to its clients or employees. It also ordered Mitchell to return any such files, in whatever format, to Citi within 24 hours. The court ruled that Citi would be able to prove trade secret misappropriation if Mitchell used information from his memory to email Citi’s client. Carr’s searches before his resignation were not enough to establish a likelihood for success on the merits. On December 6, 2024, the parties submitted a stipulated preliminary injunction that mostly maintains the status quo of the terms of the temporary restraining order pending the parties’ arbitration regarding Citi’s request for a permanent injunction.
There are two significant takeaways from the court’s ruling. Trade secrets include non-public details about a client’s specific financial holdings or investments, including whether the client has a “high” cash position and when their accounts are due to mature. Second, whether Mitchell kept or took any writings, documents, or records during his employment with Citi, “is not determinative to Citi’s claim for trade-secrets” because “California’s law protects against misappropriation of Trade Secrets, which covers improper “use” of Trade Secrets and does not require that physical documents or records be retained.” California law allows trade secret information to be stored in an employee’s mind and does not require it to be written down. See, e.g., Morlife, Inc., v. Perry (1997, 56 Cal.App.4th 1504, 1522 – 23.[the client’s])
