Business Court allows trade secrets case to proceed

Where a group of employees resigned in unison to join a competitor, claims for misappropriation of trade secrets, tortious interference with contractual relationships, and unfair or deceptive trade practices against the competitor survived a motion to dismiss, a Business Court judge has ruled, dismissing some claims against individuals.

In March 2024, 22 members of asset management firm Barings LLC’s Global Private Finance Group resigned in unison to join Corinthia Global Management Limited, a fledgling competitor.

Barings alleged that the departing employees took its trade secrets and other confidential information at Corinthia’s direction. In addition, Barings claimed that Corinthia conspired with Ian Fowler, the former leader of the Global Private Finance Group, and Kelsey Tucker, who had served as head of global operations, in orchestrating the departure.

During his employment with Barings, Fowler signed an agreement that contained restrictions on the solicitation of the company’s employees and clients and the use and disclosure of its confidential information. Tucker was bound by similar contractual terms.

According to Barings, the departing employees delayed their resignations to collect cash bonuses for 2023 and to gather confidential information to take with them, including Barings’ benefit plans, compensation structure and new client intake and onboarding forms and policies.

In the days leading up to their departure, some of the employees allegedly made unusual requests for confidential policies and documents and were filmed leaving the Barings office carrying stuffed duffel bags and large stacks of papers and files.

After Barings filed its complaint — which included a request for emergency injunctive relief — Corinthia returned over 100 documents containing confidential information.

Corinthia, Fowler and Tucker separately moved to dismiss the complaint.

Special Superior Court Judge for Complex Business Cases Adam M. Conrad granted the motions in part and denied them in part.

Barings’ claims against all three defendants for misappropriation of trade secrets survived, the court found, applying North Carolina law over Corinthia’s argument that English law governed the claim.

Barings identified the trade secrets at issue, including valuation and risk management policies, compensation information and responses to investor due diligence questionnaires, and each trade secret was allegedly among the documents returned by Corinthia.

“These descriptions are not vague or conclusory, as Corinthia contends,” Conrad wrote. “They identify with specificity what Corinthia is accused of misappropriating — namely, distinct groups of information contained within a defined set of documents.”

While Corinthia insisted the information was too generic or widely known to deserve trade secret protection, it needed discovery to provide support for this position, the court said.

“The rest of Corinthia’s arguments — that Barings has not alleged any acts of misappropriation or any resulting harm — are also meritless,” the court added. “Taken as true, the allegations show that Corinthia possessed Barings’s trade secrets without its consent, used that information to establish itself in the marketplace, and returned the information only after this litigation began. That is sufficient to plead both misappropriation and resulting harm.”

The allegations against Fowler and Tucker were deficient, however, as the complaint contained no allegations that they improperly acquired, used or disclosed any trade secrets.

Similarly, Barings’ tortious interference with contract claim survived against Corinthia and failed against Fowler and Tucker.

With regard to Corinthia, the complaint alleged that it “obtained and held signed resignation letters months before the departing employees left Barings; that confidentiality and nonsolicitation restrictions are ‘common conditions of employment’ in the industry; that Corinthia purported to condition each ‘employee’s start date on the expiration of any applicable restriction’; and that Corinthia ‘sought and obtained confidential information’ from these employees,” among other assertions.

On the other hand, “[a]t no point does the amended complaint allege, in anything other than conclusory terms, that Fowler and Tucker personally induced any employee to breach a contract with Barings.”

As the court determined that the complaint adequately stated claims against Corinthia for trade secret misappropriation and tortious interference, these claims provided suitable predicates for Barings’ conspiracy claim.

“Taken as true, the allegations show that Corinthia, Fowler and Tucker ‘entered into a knowing agreement among each other to commit the torts,’ ‘the conspiracy occurred from at least August 2023 through March 2024,’ and the purpose of the conspiracy was to accelerate the launch of Corinthia’s business by raiding Barings’s employees and confidential information,” the court said. “These allegations are supported by other allegations tending to show that Fowler coordinated his resignation with more than twenty employees and that Tucker actively recruited members of the Global Private Finance Group while identifying to Corinthia some of the confidential information that they might possess.”

The court dismissed the breach of contract claims against Fowler and Tucker, finding that the allegations they breached their employment agreements were conclusory and lacked factual support. Conrad did keep constructive fraud and breach of fiduciary duty claims against Fowler alive, however, as the facts alleged “could give rise to an inference that Fowler’s actions went beyond mere preparations to compete and contravened his duties of good faith and loyalty.”

Dixie T. Wells of Ellis & Winters in Greensboro, who represented Barings, did not respond to a request for comment.

Neither did the attorneys for the defendants — Raleigh attorney Michael C. Lord of Williams Mullen, who represented Corinthia; Greg C. Ahlum of Johnston, Allison & Hord in Charlotte, who represented Fowler; and Raleigh-based Douglas W. Hanna of Fitzgerald Hanna & Sullivan, who represented Tucker.

The case is Barings LLC v. Fowler, No. 24CV012798-590.