Total Staffing Solutions, Inc. v. Staffing, Inc.
2023 IL App (1st) 220533 (2023)
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Rule of Law:
Customer and pricing information does not constitute a trade secret under the Illinois Trade Secrets Act if it is not sufficiently secret and is readily ascertainable through proper means, such as being provided directly by the customers themselves.
Facts:
- Mary Brazier, Thomas Kelly, and Jose Simental were former employees of Total Staffing, a temporary staffing agency.
- As employees, they had access to Total Staffing's customer and employee information, which was stored in password-protected databases named Ultra 32 and Act!.
- Craig Kelly, the president of Total Staffing who was also Thomas's brother and Mary's son, passed away in January 2018.
- Shortly after Craig Kelly's death, Thomas Kelly and Mary Brazier resigned from Total Staffing in February 2018 amid disagreements with new management.
- The day after resigning, Thomas Kelly and Mary Brazier incorporated a competing staffing agency, Staff Illinois, and were later joined by Jose Simental.
- Staff Illinois began providing services to seven of Total Staffing's former customers, including Hometown Bagel.
- The officer of Hometown Bagel, Marty Lally, testified that his company was already dissatisfied with Total Staffing's service and only remained a client due to his personal friendship with the deceased Craig Kelly.
- Hometown Bagel voluntarily provided Staff Illinois with its temporary employees' pay and bill rates; other former clients also provided this information directly to Staff Illinois upon being solicited.
Procedural Posture:
- Total Staffing Solutions, Inc. filed a complaint against Staffing, Inc., Mary Therese Brazier, Thomas Kelly, and Jose Simental in the Circuit Court of Cook County, Illinois.
- The complaint included counts for violation of the Illinois Trade Secrets Act, the Consumer Fraud and Deceptive Business Practices Act, and tortious interference with a prospective economic advantage.
- After a bench trial, the circuit court entered a final judgment in favor of all defendants and against Total Staffing on all remaining counts.
- Total Staffing, as the plaintiff-appellant, appealed the trial court's judgment to the Appellate Court of Illinois, First District.
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Issue:
Does customer information, such as client identities, needs, pay rates, and bill rates, qualify as a trade secret under the Illinois Trade Secrets Act when that information is not physically taken by former employees and is readily obtainable from the customers themselves?
Opinions:
Majority - Justice C.A. Walker
No, such customer information does not qualify as a trade secret under these circumstances. The court found that Total Staffing’s customer and employee information was not 'sufficiently secret' to warrant protection under the Illinois Trade Secrets Act. The evidence demonstrated that the information was easily obtainable, as customers like Hometown Bagel freely provided pay rates and bill rates to Staff Illinois. Furthermore, Total Staffing itself did not treat the information as confidential when it provided a list of employee names and rates to Hometown Bagel upon request. The defendants' success stemmed from their general skills, industry knowledge, and relationships developed over their tenure, which is permissible, rather than from the misappropriation of confidential data. Therefore, the defendants engaged in lawful competition, and without a protectable trade secret, there can be no misappropriation.
Analysis:
This decision reinforces the high bar for classifying customer information as a trade secret in Illinois, emphasizing that the core requirement is actual secrecy. It distinguishes between an employee's permissible use of general skills and relationships versus the unlawful taking of 'confidential particularized plans.' The ruling serves as a caution to employers that merely storing information in a secured database is insufficient; they must also consistently treat the information as secret in practice. This case solidifies the lawful competition privilege, affirming that former employees may fairly compete for clients, especially when those clients are dissatisfied and voluntarily switch providers.
