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SAMUEL GOLDNER,", "paragraph_id": "para_5" }, { "text": "Plaintiffs - Appellants,", "paragraph_id": "para_6" }, { "text": "v.", "paragraph_id": "para_7" }, { "text": "GABRIEL MAYER; BEAU WALKER; JOSEPH MATTHEW QUEEN; HELIOS", "paragraph_id": "para_8" }, { "text": "RISK SOLUTIONS, LLC,", "paragraph_id": "para_9" }, { "text": "Defendants - Appellees.", "paragraph_id": "para_10" }, { "text": "Appeal from the United States District Court for the Eastern District of North Carolina, at", "paragraph_id": "para_11" }, { "text": "Raleigh. Terrence W. Boyle, District Judge. (5:24-cv-00057-BO-RJ)", "paragraph_id": "para_12" }, { "text": "Argued: October 22, 2025 Decided: November 18, 2025", "paragraph_id": "para_13" }, { "text": "Before AGEE, THACKER, and RICHARDSON, Circuit Judges.", "paragraph_id": "para_14" }, { "text": "Reversed and remanded by published. Judge Thacker wrote the opinion, in which Judge", "paragraph_id": "para_15" }, { "text": "Agee and Judge Richardson joined.", "paragraph_id": "para_16" }, { "text": "ARGUED: Dylan Michael Bensinger, MCGUIREWOODS, LLP, Charlotte, North", "paragraph_id": "para_17" }, { "text": "Carolina, for Appellants. David L. Pardue, PIERSON FERDINAND, Atlanta, Georgia,", "paragraph_id": "para_18" }, { "text": "for Appellees. ON BRIEF: Jonathan Y. Ellis, Raleigh, North Carolina, Brian A. Kahn,", "paragraph_id": "para_19" }, { "text": "Zachary L. McCamey, Elizabeth P. Briand, MCGUIREWOODS LLP, Charlotte, North", "paragraph_id": "para_20" }, { "text": "Carolina, for Appellants. Brian D. Stoltz, Atlanta, Georgia, Scott E. Bayzle, Andrew P.", "paragraph_id": "para_21" }, { "text": "Tabeling, PARKER POE ADAMS & BERNSTEIN LLP, Raleigh, North Carolina, for", "paragraph_id": "para_22" }, { "text": "Appellees.", "paragraph_id": "para_23" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 1 of 12", "paragraph_id": "para_24" }, { "text": "2", "paragraph_id": "para_25" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 2 of 12", "paragraph_id": "para_26", "court_paragraph": 2 }, { "text": "3", "paragraph_id": "para_27" }, { "text": "THACKER, Circuit Judge:", "paragraph_id": "para_28", "court_paragraph": 3 }, { "text": "The question in this appeal is whether Samuel Sherbrooke Corporation", "paragraph_id": "para_29" }, { "text": "(“Sherbrooke”) and Samuel Goldner (“Goldner,” and with Sherbrooke, “Appellants”)", "paragraph_id": "para_30" }, { "text": "sufficiently pled their Defend Trade Secrets Act (“DTSA”) claim against Gabriel Mayer,", "paragraph_id": "para_31" }, { "text": "Beau Walker, and Joe Queen (collectively, “Appellees”).", "paragraph_id": "para_32" }, { "text": "We conclude that they did because the Complaint plausibly alleges that Sherbrooke", "paragraph_id": "para_33" }, { "text": "owned a trade secret that it took reasonable measures to secure and that Appellees", "paragraph_id": "para_34" }, { "text": "misappropriated that trade secret.", "paragraph_id": "para_35" }, { "text": "Therefore, we reverse the district court’s decision dismissing their Complaint.", "paragraph_id": "para_36" }, { "text": "I.", "paragraph_id": "para_37" }, { "text": "On June 5, 2018, Sherbrooke was incorporated as a captive insurance company in", "paragraph_id": "para_38" }, { "text": "North Carolina. As a captive insurance company, Sherbrooke insures only its “captive,”", "paragraph_id": "para_39" }, { "text": "which are nursing homes and other entities owned by Goldner’s company, Goldner Capital", "paragraph_id": "para_40" }, { "text": "Management. Sherbrooke has only three shareholders -- Goldner, who is the majority", "paragraph_id": "para_41" }, { "text": "shareholder, and Mayer and Queen, who are each minority shareholders. These three", "paragraph_id": "para_42" }, { "text": "shareholders elected themselves as Sherbrooke’s directors. Goldner stepped away from day", "paragraph_id": "para_43" }, { "text": "to day operations of Sherbrooke, so Mayer and Queen “assumed and performed all", "paragraph_id": "para_44" }, { "text": "operations of Sherbrooke as the primary officers.” J.A. 13.1 “[A]s directors, officers, and", "paragraph_id": "para_45" }, { "text": "minority shareholders, . . . Mayer and . . . Queen had complete, total, and formidable", "paragraph_id": "para_46" }, { "text": "managerial control over Sherbrooke since its formation and incorporation.” Id.", "paragraph_id": "para_47" }, { "text": "1 Citations to the “J.A.” refer to the Joint Appendix filed by the parties in this appeal.", "paragraph_id": "para_48" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 3 of 12", "paragraph_id": "para_49" }, { "text": "4", "paragraph_id": "para_50" }, { "text": "Goldner hired Walker as Sherbrooke’s Chief Technology Officer in March 2022.", "paragraph_id": "para_51", "court_paragraph": 4 }, { "text": "According to the Complaint, Walker’s “responsibilities included designing, creating, and", "paragraph_id": "para_52" }, { "text": "maintaining proprietary software (the ‘Proprietary Software’) for the exclusive use of", "paragraph_id": "para_53" }, { "text": "Sherbrooke and its related entities.” J.A. 17. “The Proprietary Software enabled", "paragraph_id": "para_54" }, { "text": "Sherbrooke to, among other things, incorporate and utilize medical records to project and", "paragraph_id": "para_55" }, { "text": "predict risk values in pricing individual covered incidents more effectively.” Id. at 18. “In", "paragraph_id": "para_56" }, { "text": "addition, the Proprietary Software is used by Sherbrooke to more accurately price insurance", "paragraph_id": "para_57" }, { "text": "contracts for both existing and potential customers to provide competitive and profitable", "paragraph_id": "para_58" }, { "text": "insurance policies for Sherbrooke and its customers.” Id. And, the Proprietary Software", "paragraph_id": "para_59" }, { "text": "“provides additional services to Sherbrooke, which produce enormous economic value due", "paragraph_id": "para_60" }, { "text": "to its secrecy and proprietary nature.” Id.", "paragraph_id": "para_61" }, { "text": "Relevant here, the Complaint alleges that each of the Appellees was required to sign", "paragraph_id": "para_62" }, { "text": "an employment contract. The employment contracts contained the following", "paragraph_id": "para_63" }, { "text": "confidentiality agreement:", "paragraph_id": "para_64" }, { "text": "[The employee] shall not, at any time hereafter, disclose", "paragraph_id": "para_65" }, { "text": "Confidential Information to any Person or use or exploit", "paragraph_id": "para_66" }, { "text": "Confidential Information for any purpose other than for the", "paragraph_id": "para_67" }, { "text": "benefit of the [Sherbrooke] thereof in the regular course of his", "paragraph_id": "para_68" }, { "text": "engagement and within the scope of his authority and", "paragraph_id": "para_69" }, { "text": "responsibility (a) without the prior written authorization or", "paragraph_id": "para_70" }, { "text": "consent of [Sherbrooke], (b) unless such Confidential", "paragraph_id": "para_71" }, { "text": "Information is already known by Employee prior to the time", "paragraph_id": "para_72" }, { "text": "such Confidential Information is acquired by Employee in the", "paragraph_id": "para_73" }, { "text": "course of his engagement,(c) unless such Confidential", "paragraph_id": "para_74" }, { "text": "Information is already known by the Person to whom", "paragraph_id": "para_75" }, { "text": "disclosure is made prior to the time of disclosure by Employee,", "paragraph_id": "para_76" }, { "text": "or (d) if, and to the extent, disclosure is required by applicable", "paragraph_id": "para_77" }, { "text": "law, subpoena or other compulsory legal process, or an order", "paragraph_id": "para_78" }, { "text": "of a court or governmental agency, commission or other", "paragraph_id": "para_79" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 4 of 12", "paragraph_id": "para_80" }, { "text": "5", "paragraph_id": "para_81" }, { "text": "authority; provided that, in such case, if permitted by law, such", "paragraph_id": "para_82", "court_paragraph": 5 }, { "text": "legal process or order, Employee shall promptly notify", "paragraph_id": "para_83" }, { "text": "[Sherbrooke] of such required disclosure so that [Sherbrooke]", "paragraph_id": "para_84" }, { "text": "may oppose such disclosure or seek a protective order or other", "paragraph_id": "para_85" }, { "text": "confidential treatment of such Confidential Information.", "paragraph_id": "para_86" }, { "text": "J.A. 13 (first alteration supplied, remaining alterations in original).", "paragraph_id": "para_87" }, { "text": "Each employment contract also included an “Inventions Provision,” which stated,", "paragraph_id": "para_88" }, { "text": "any invention, idea, design, process, system, procedure,", "paragraph_id": "para_89" }, { "text": "improvement, development or discovery (an “Invention”)", "paragraph_id": "para_90" }, { "text": "conceived, created, made or developed by Employee, alone or", "paragraph_id": "para_91" }, { "text": "with others, (a) during the Term or (b) during the balance of", "paragraph_id": "para_92" }, { "text": "the Restricted Period, if such Invention incorporates, is derived", "paragraph_id": "para_93" }, { "text": "from, or is based upon any Confidential Information, and, in", "paragraph_id": "para_94" }, { "text": "either case, that is applicable to the business of [Sherbrooke],", "paragraph_id": "para_95" }, { "text": "whether or not patentable or registrable, shall become the sole", "paragraph_id": "para_96" }, { "text": "and exclusive property of [Sherbrooke].", "paragraph_id": "para_97" }, { "text": "J.A. 14–15 (alterations in original).", "paragraph_id": "para_98" }, { "text": "The Complaint alleges that “[a]ny property that [Appellee] Walker created during", "paragraph_id": "para_99" }, { "text": "or related to his employment as CTO of Sherbrooke, including but not limited to the", "paragraph_id": "para_100" }, { "text": "Proprietary Software, is the confidential and exclusive property of Sherbrooke.” J.A. 18.", "paragraph_id": "para_101" }, { "text": "It further alleges, “[t]his Proprietary Software is—and always has been—the confidential", "paragraph_id": "para_102" }, { "text": "property of Sherbrooke. Sherbrooke has used all commercially reasonable measures to", "paragraph_id": "para_103" }, { "text": "ensure that the Proprietary Software remains confidential and provides unique value to", "paragraph_id": "para_104" }, { "text": "Sherbrooke.” Id.", "paragraph_id": "para_105" }, { "text": "Appellants claim that Appellees violated their employment contracts and", "paragraph_id": "para_106" }, { "text": "misappropriated the Propriety Software. According to the Complaint, “in or around 2022,", "paragraph_id": "para_107" }, { "text": "[Appellee] Queen and [Appellee] Mayer began preparations to create a corporate entity to", "paragraph_id": "para_108" }, { "text": "compete with Sherbrooke and its corporate affiliates. At some time thereafter, [Appellee]", "paragraph_id": "para_109" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 5 of 12", "paragraph_id": "para_110" }, { "text": "6", "paragraph_id": "para_111" }, { "text": "Walker joined this scheme.” J.A. 18. “Upon information and belief, [Appellee] Walker—", "paragraph_id": "para_112", "court_paragraph": 6 }, { "text": "in coordination with [Appellee] Queen and [Appellee] Mayer—is actively using", "paragraph_id": "para_113" }, { "text": "confidential property of Sherbrooke, including but not limited to the Proprietary Software", "paragraph_id": "para_114" }, { "text": "to assist with operating this new competing insurance entity.” Id. at 19.", "paragraph_id": "para_115" }, { "text": "Goldner learned about Appellees’ “coordinated effort to undermine Sherbrooke and", "paragraph_id": "para_116" }, { "text": "its related corporate entities,” in December 2023, and immediately took steps to terminate", "paragraph_id": "para_117" }, { "text": "Appellees’ employment and also to remove Mayer and Queen as directors of Sherbrooke.", "paragraph_id": "para_118" }, { "text": "J.A. 20. But, the Complaint alleges that Mayer and Queen “refused to relinquish control", "paragraph_id": "para_119" }, { "text": "over Sherbrooke and its assets, including liquid, tangible, intangible, and other assets.” Id.", "paragraph_id": "para_120" }, { "text": "at 21.", "paragraph_id": "para_121" }, { "text": "On January 30, 2024, Appellants sued Appellees in the Eastern District of North", "paragraph_id": "para_122" }, { "text": "Carolina, alleging, in addition to various state law claims related to corporate malfeasance,", "paragraph_id": "para_123" }, { "text": "that Appellees misappropriated Sherbrooke’s trade secrets in violation of the DTSA.", "paragraph_id": "para_124" }, { "text": "Appellees later moved for judgment on the pleadings pursuant to Federal Rule of Civil", "paragraph_id": "para_125" }, { "text": "Procedure 12(c). After a hearing, the district court entered a written order granting", "paragraph_id": "para_126" }, { "text": "Appellees’ motion for judgment on the pleadings as to the DTSA claim and declining to", "paragraph_id": "para_127" }, { "text": "exercise supplemental jurisdiction over all of the remaining state law claims.2", "paragraph_id": "para_128" }, { "text": "Appellants timely filed this appeal.", "paragraph_id": "para_129" }, { "text": "2 Appellants do not challenge the district court’s order dismissing the state law", "paragraph_id": "para_130" }, { "text": "claims.", "paragraph_id": "para_131" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 6 of 12", "paragraph_id": "para_132" }, { "text": "7", "paragraph_id": "para_133" }, { "text": "II.", "paragraph_id": "para_134", "court_paragraph": 7 }, { "text": "We review the district court’s grant of judgment on the pleadings de novo. See", "paragraph_id": "para_135" }, { "text": "Williamson v. Prime Sports Marketing, LLC, 101 F.4th 302, 309 (4th Cir. 2024). In doing", "paragraph_id": "para_136" }, { "text": "so, we apply the same standard applicable to motions to dismiss pursuant to Federal Rule", "paragraph_id": "para_137" }, { "text": "of Civil Procedure 12(b)(6). Conner v. Cleveland Co., 22 F.4th 412, 416 (4th Cir. 2022).", "paragraph_id": "para_138" }, { "text": "That is, we accept the well pled facts “as true and draw[] all reasonable inferences in", "paragraph_id": "para_139" }, { "text": "[Appellants’] favor.” Id. (citation omitted). “[T]hose allegations must be sufficient to", "paragraph_id": "para_140" }, { "text": "support ‘a claim to relief that is plausible on its face.’” Sysco Machinery Corp. v. DCS", "paragraph_id": "para_141" }, { "text": "USA Corp., 143 F.4th 222, 228 (4th Cir. 2025) (quoting Ashcroft v. Iqbal, 556 U.S. 662,", "paragraph_id": "para_142" }, { "text": "678 (2009)). “A plausible claim to relief demands more than an unadorned, the defendant-", "paragraph_id": "para_143" }, { "text": "unlawfully-harmed-me accusation.” Id. (cleaned up). “When it is a claim for trade secret", "paragraph_id": "para_144" }, { "text": "misappropriation under the DTSA . . . it demands plausible allegations both that the", "paragraph_id": "para_145" }, { "text": "plaintiff possessed a valid trade secret and that the trade secret was misappropriated.” Id.", "paragraph_id": "para_146" }, { "text": "(cleaned up).", "paragraph_id": "para_147" }, { "text": "III.", "paragraph_id": "para_148" }, { "text": "To state a viable DTSA claim, a plaintiff must plausibly allege that (1) it owns a", "paragraph_id": "para_149" }, { "text": "trade secret; (2) the trade secret was misappropriated; and (3) the trade secret implicates", "paragraph_id": "para_150" }, { "text": "interstate or foreign commerce. See Sysco Machinery Corp. v. DCS USA Corp., 143 F.4th", "paragraph_id": "para_151" }, { "text": "222, 228–29 (4th Cir. 2025).", "paragraph_id": "para_152" }, { "text": "A.", "paragraph_id": "para_153" }, { "text": "Pursuant to the DTSA, information is a trade secret if (1) its owner “has taken", "paragraph_id": "para_154" }, { "text": "reasonable measures to keep [it] secret” and (2) it “derives independent economic value”", "paragraph_id": "para_155" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 7 of 12", "paragraph_id": "para_156" }, { "text": "8", "paragraph_id": "para_157" }, { "text": "from its secrecy. 18 U.S.C. § 1839(3). The district court determined that Appellants failed", "paragraph_id": "para_158", "court_paragraph": 8 }, { "text": "to plausibly allege they took reasonable measures to protect the secrecy of the Proprietary", "paragraph_id": "para_159" }, { "text": "Software. On appeal, Appellants argue they did sufficiently plead the secrecy element", "paragraph_id": "para_160" }, { "text": "because they pled that Appellees were required to sign the employment contract which", "paragraph_id": "para_161" }, { "text": "included the confidentiality agreement and Invention Provision. And they argue that they", "paragraph_id": "para_162" }, { "text": "sufficiently connected those provisions to the Proprietary Software. We agree.", "paragraph_id": "para_163" }, { "text": "The Complaint makes clear that the “Proprietary Software is—and always has", "paragraph_id": "para_164" }, { "text": "been—the confidential property of Sherbrooke.” J.A. 18. It also alleges that the", "paragraph_id": "para_165" }, { "text": "employment contract specified that employees “shall not, at any time hereafter, disclose", "paragraph_id": "para_166" }, { "text": "Confidential Information.” Id. at 13. And it alleges that the Invention Provision provided,", "paragraph_id": "para_167" }, { "text": "“any invention, idea, design, process, system, procedure, improvement, development or", "paragraph_id": "para_168" }, { "text": "discovery (an ‘Invention’) conceived, created, made or developed by Employee” through", "paragraph_id": "para_169" }, { "text": "their employment “shall become the sole and exclusive property of [Sherbrooke].” Id. at", "paragraph_id": "para_170" }, { "text": "14–15. Taking these allegations as true, we have no trouble concluding that the Complaint", "paragraph_id": "para_171" }, { "text": "sufficiently alleges that the Proprietary Software, which was “confidential property,” was", "paragraph_id": "para_172" }, { "text": "treated as confidential information under the employment contract.", "paragraph_id": "para_173" }, { "text": "Appellees argue that the Complaint fails to make this connection because the facts", "paragraph_id": "para_174" }, { "text": "pled do not allow us to “know[] whether, for example, the ‘Proprietary Software’ uses open", "paragraph_id": "para_175" }, { "text": "source code which is already publicly available (and, thus, could not be confidential as a", "paragraph_id": "para_176" }, { "text": "matter of law) . . . . As such, it is impossible to know if the alleged confidentiality provision", "paragraph_id": "para_177" }, { "text": "would apply (or whether it would even be enforceable).” Response Br. at 11. But this", "paragraph_id": "para_178" }, { "text": "argument requires too much. Appellants did not need to prove anything. They only needed", "paragraph_id": "para_179" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 8 of 12", "paragraph_id": "para_180" }, { "text": "9", "paragraph_id": "para_181" }, { "text": "to plausibly allege that the Proprietary Software was covered by the confidentiality", "paragraph_id": "para_182", "court_paragraph": 9 }, { "text": "provision, which was a reasonable measure intended to keep it secret. Appellants did so", "paragraph_id": "para_183" }, { "text": "here.", "paragraph_id": "para_184" }, { "text": "Even still, Appellees argue that the existence of a confidentiality provision alone is", "paragraph_id": "para_185" }, { "text": "not sufficient as a matter of law to demonstrate reasonable efforts to maintain secrecy. At", "paragraph_id": "para_186" }, { "text": "this stage of the proceedings, we disagree, and the Ninth Circuit has concluded similarly.", "paragraph_id": "para_187" }, { "text": "In InteliClear, LLC v. ETC Glob. Holdings, Inc., the Ninth Circuit held, “[c]onfidentiality", "paragraph_id": "para_188" }, { "text": "provisions constitute reasonable steps to maintain secrecy.” 978 F.3d 653, 660 (9th Cir.", "paragraph_id": "para_189" }, { "text": "2020). True, plaintiffs often allege that they did more than simply require a signed", "paragraph_id": "para_190" }, { "text": "confidentiality agreement to maintain secrecy. See e.g., dmarcian, Inc. v. dmarcian Europe", "paragraph_id": "para_191" }, { "text": "BV, 60 F.4th 119, 142 (4th Cir. 2023) (finding a likelihood of success on the merits in the", "paragraph_id": "para_192" }, { "text": "context of a preliminary injunction and noting that the plaintiff had “taken steps to keep", "paragraph_id": "para_193" }, { "text": "such information secret through security measures restricting access to the source code and", "paragraph_id": "para_194" }, { "text": "requiring confidentiality agreements from employees” (emphasis supplied)); Ahern", "paragraph_id": "para_195" }, { "text": "Rentals, Inc. v. EquipmentShare.com, Inc., 59 F.4th 948, 956 (8th Cir. 2023) (finding that", "paragraph_id": "para_196" }, { "text": "plaintiff sufficiently plead reasonable steps where it alleged it “requires its employees to", "paragraph_id": "para_197" }, { "text": "sign detailed non-disclosure, non-solicitation, and non-competition agreements,” and", "paragraph_id": "para_198" }, { "text": "alleged that “its employees must comply with strict social media, internet, and email", "paragraph_id": "para_199" }, { "text": "policies that prohibit employees from disclosing or otherwise publishing trade secrets”", "paragraph_id": "para_200" }, { "text": "(cleaned up)); Allstate Ins. Co. v. Fougere, 79 F.4th 172, 192–93 (1st Cir. 2023) (finding", "paragraph_id": "para_201" }, { "text": "Plaintiff took “multiple steps towards protecting the information” where it required a", "paragraph_id": "para_202" }, { "text": "signed exclusive agency agreement that identified which information was confidential,", "paragraph_id": "para_203" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 9 of 12", "paragraph_id": "para_204" }, { "text": "10", "paragraph_id": "para_205" }, { "text": "granted access only to certain agents, used password protection, and revoked access upon", "paragraph_id": "para_206", "court_paragraph": 10 }, { "text": "employment termination). But that does not mean they are required to allege more, and", "paragraph_id": "para_207" }, { "text": "we see no reason to create such a requirement.", "paragraph_id": "para_208" }, { "text": "Trade secrets take many forms and what may constitute “reasonable measures” must", "paragraph_id": "para_209" }, { "text": "be considered in light of the nature of the trade secret and the context in which it exists.", "paragraph_id": "para_210" }, { "text": "See In the Matter of Innovative Const. Sys., Inc., 793 F.2d 875, 884–85 (7th Cir. 1986) (“In", "paragraph_id": "para_211" }, { "text": "asking whether particular efforts were reasonably adequate under the circumstances, the", "paragraph_id": "para_212" }, { "text": "jury is called upon in part to exercise their common-sense judgment in determining whether", "paragraph_id": "para_213" }, { "text": "additional measures were necessary to guard the secrecy of the formulas. . . . What may be", "paragraph_id": "para_214" }, { "text": "reasonable measures in one context may not necessarily be so in another.”). At the pleading", "paragraph_id": "para_215" }, { "text": "stage, then, it is sufficient that Appellants allege they protected the Proprietary Software", "paragraph_id": "para_216" }, { "text": "by requiring employees to sign the confidentiality agreement and Invention Provision", "paragraph_id": "para_217" }, { "text": "contained in the employment contract.3", "paragraph_id": "para_218" }, { "text": "B.", "paragraph_id": "para_219" }, { "text": "Having concluded that Appellants plausibly allege the existence of a trade secret,", "paragraph_id": "para_220" }, { "text": "we next consider whether they plausibly allege that Appellees misappropriated it. Relevant", "paragraph_id": "para_221" }, { "text": "here, the DTSA defines misappropriation as the “disclosure or use of a trade secret of", "paragraph_id": "para_222" }, { "text": "another” without consent by a person who, at the time of the use, “knew or had reason to", "paragraph_id": "para_223" }, { "text": "3 Appellees argue that the Complaint fails to allege that every person who had access", "paragraph_id": "para_224" }, { "text": "to the Proprietary Software was required to sign the employment contract. We reject that", "paragraph_id": "para_225" }, { "text": "argument because we can reasonably infer from the Complaint that the employment", "paragraph_id": "para_226" }, { "text": "contract applied to all employees.", "paragraph_id": "para_227" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 10 of 12", "paragraph_id": "para_228" }, { "text": "11", "paragraph_id": "para_229" }, { "text": "know that the knowledge of the trade secret was . . . acquired under circumstances giving", "paragraph_id": "para_230", "court_paragraph": 11 }, { "text": "rise to a duty to maintain the secrecy of the trade secret.” 18 U.S.C. § 1839(5).", "paragraph_id": "para_231" }, { "text": "The only question before us is whether the Complaint plausibly alleges that", "paragraph_id": "para_232" }, { "text": "Appellee’s disclosed or used the trade secret. Appellees argue it does not because, in their", "paragraph_id": "para_233" }, { "text": "view, the Complaint only includes a single conclusory allegation that they “[are] actively", "paragraph_id": "para_234" }, { "text": "using” the Proprietary Software to operate their new competing insurance company. J.A.", "paragraph_id": "para_235" }, { "text": "19. Not so.", "paragraph_id": "para_236" }, { "text": "As explained above, the Complaint alleges that Walker was hired as Sherbrooke’s", "paragraph_id": "para_237" }, { "text": "Chief Technology Officer for the purpose of “designing, creating, and maintaining” the", "paragraph_id": "para_238" }, { "text": "Proprietary Software. J.A. 17. The Complaint further alleges that “[t]he Proprietary", "paragraph_id": "para_239" }, { "text": "Software enabled Sherbrooke to, among other things, incorporate and utilize medical", "paragraph_id": "para_240" }, { "text": "records to project and predict risk values in pricing individual covered incidents more", "paragraph_id": "para_241" }, { "text": "effectively.” Id. at 18. And it alleges that the Proprietary Software “is used by Sherbrooke", "paragraph_id": "para_242" }, { "text": "to more accurately price insurance contracts for both existing and potential customers to", "paragraph_id": "para_243" }, { "text": "provide competitive and profitable insurance policies for Sherbrooke and its customers.”", "paragraph_id": "para_244" }, { "text": "Id. Additionally, the Complaint includes the following allegations:", "paragraph_id": "para_245" }, { "text": "49. Upon information and belief, in or around 2022, Defendant", "paragraph_id": "para_246" }, { "text": "Queen and Defendant Mayer began preparations to create a", "paragraph_id": "para_247" }, { "text": "corporate entity to compete with Sherbrooke and its corporate", "paragraph_id": "para_248" }, { "text": "affiliates. At some time thereafter, Defendant Walker joined", "paragraph_id": "para_249" }, { "text": "this scheme.", "paragraph_id": "para_250" }, { "text": "50. The purpose of this competing corporate entity is to provide", "paragraph_id": "para_251" }, { "text": "insurance policies to, among other companies, nursing", "paragraph_id": "para_252" }, { "text": "facilities across the United States. Therefore, Director and", "paragraph_id": "para_253" }, { "text": "Officer Defendants intend to directly compete for the same", "paragraph_id": "para_254" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 11 of 12", "paragraph_id": "para_255" }, { "text": "12", "paragraph_id": "para_256" }, { "text": "companies or entities that Sherbrooke has always used as", "paragraph_id": "para_257", "court_paragraph": 12 }, { "text": "clients.", "paragraph_id": "para_258" }, { "text": "55. Upon information and belief, Defendant Walker—in", "paragraph_id": "para_259" }, { "text": "coordination with Defendant Queen and Defendant Mayer—is", "paragraph_id": "para_260" }, { "text": "actively using confidential property of Sherbrooke, including", "paragraph_id": "para_261" }, { "text": "but not limited to the Proprietary Software to assist with", "paragraph_id": "para_262" }, { "text": "operating this new competing insurance entity.", "paragraph_id": "para_263" }, { "text": "Id. at 18–19.", "paragraph_id": "para_264" }, { "text": "Each of these allegations is relevant to Appellants’ misappropriation claim, and", "paragraph_id": "para_265" }, { "text": "together they tell the story of the alleged misappropriation. Much more than a bare", "paragraph_id": "para_266" }, { "text": "allegation of “use,” the Complaint explains that Walker created the Proprietary Software", "paragraph_id": "para_267" }, { "text": "and Queen and Mayer were shareholders, directors, and officers of Sherbrooke, such that", "paragraph_id": "para_268" }, { "text": "they knew about the Proprietary Software. The Complaint alleges that all three Appellees", "paragraph_id": "para_269" }, { "text": "created a competing business and used the Proprietary Software to assist that competing", "paragraph_id": "para_270" }, { "text": "business, rather than Sherbrooke. In the context of this alleged Propriety Software, we find", "paragraph_id": "para_271" }, { "text": "these allegations sufficient to state a claim for misappropriation. After all, what does one", "paragraph_id": "para_272" }, { "text": "do with a stolen competitive pricing software except “use” it, as alleged in this case, “to", "paragraph_id": "para_273" }, { "text": "assist with operating this new competing insurance entity”? J.A. 19.", "paragraph_id": "para_274" }, { "text": "IV.", "paragraph_id": "para_275" }, { "text": "At the pleading stage of the proceedings, Appellants are required to do no more than", "paragraph_id": "para_276" }, { "text": "plead facts sufficient to plausibly allege that Appellees misappropriated their trade secret.", "paragraph_id": "para_277" }, { "text": "Because we readily conclude that Appellants have done so, we reverse the district court’s", "paragraph_id": "para_278" }, { "text": "order dismissing the DTSA claim and remand for further proceedings.", "paragraph_id": "para_279" }, { "text": "REVERSED AND REMANDED", "paragraph_id": "para_280" }, { "text": "USCA4 Appeal: 24-2173 Doc: 48 Filed: 11/18/2025 Pg: 12 of 12", "paragraph_id": "para_281" } ], "word_count": 2880, "cites": [ "556 U.S. 662", "101 F.4th 302", "22 F.4th 412", "143 F.4th 222", "143 F.4th\n222", "978 F.3d 653", "60 F.4th 119", "59 F.4th 948", "79 F.4th 172", "793 F.2d 875" ], "cited_by": [], "sha256": "cf2cab718e3a592a0c333186e97cb49f4040d0329414a415a5c4c55331528186", "source_url": "https://www.govinfo.gov/content/pkg/USCOURTS-ca4-24-02173/pdf/USCOURTS-ca4-24-02173-0.pdf", "fetched_at": "2026-09-28T06:10:50.669+00:00", "canonical": "https://legal.exploreworldai.com/ai/judgments/us/ca4-24-2173-2025-11-18", "risk_graph": "https://legal.exploreworldai.com/api/public/v1/risk?id=us:ca4-24-2173-2025-11-18", "relations_graph": "https://legal.exploreworldai.com/api/public/v1/relations?id=us:ca4-24-2173-2025-11-18", "changes": "https://legal.exploreworldai.com/api/public/v1/us-praxis/changes", "agent": "https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:ca4-24-2173-2025-11-18", "verification": { "stored_sha256": "cf2cab718e3a592a0c333186e97cb49f4040d0329414a415a5c4c55331528186", "recomputed_sha256": "cf2cab718e3a592a0c333186e97cb49f4040d0329414a415a5c4c55331528186", "intact": true, "checked_at": "2026-10-12T02:28:38.290Z" } }, "hash": "sha256:ec8c80364bb4d515ea49c31afec3f353aaa1bd21ac0ded582ef7ac821af15c60", "version": "legal-2026-10-11", "expires": "2026-10-13T00:00:00.000Z", "dependency": { "index_version": "legal-2026-10-11+legal-2026-10-11+2026-10-11T20:37:51", "content_hash": "sha256:ec8c80364bb4d515ea49c31afec3f353aaa1bd21ac0ded582ef7ac821af15c60", "revalidate_after": "2026-10-12T03:28:38.442Z", "max_copy_age_seconds": 3600, "policy": "revalidate-required; attribution-preferred", "changelog": "https://legal.exploreworldai.com/api/public/v1/dependency", "verify": "https://legal.exploreworldai.com/api/public/v1/verify", "stale_copy_invalid": true }, "canonical": "https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca4-24-2173-2025-11-18", "follow": [ { "rel": "risk", "href": "https://legal.exploreworldai.com/api/public/v1/risk?id=us:ca4-24-2173-2025-11-18" }, { "rel": "relations", "href": "https://legal.exploreworldai.com/api/public/v1/relations?id=us:ca4-24-2173-2025-11-18" }, { "rel": "agent", "href": "https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:ca4-24-2173-2025-11-18" }, { "rel": "obligations", "href": "https://legal.exploreworldai.com/api/public/v1/obligation-chain" }, { "rel": "changes", "href": "https://legal.exploreworldai.com/api/public/v1/whats-new?jurisdiction=us" } ], "disclaimer": "Source reference with official identifier. 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