Labor & Employment Law Daily Wrap Up, TORT CLAIMS—E.D. Va.: Food distributor’s trade secret claims against former salesman and rival survive dismissal, (Aug 21, 2026)

By Saurabh Kashyap, B.A., M.A., LL.B., LL.M.

Alleged copying, unauthorized access, and disclosure of confidential customer and pricing information plausibly supported trade secret misappropriation claims.

A food distributor can proceed with federal and Virginia trade secret claims alleging that a longtime salesman took confidential customer and pricing information to a competitor and continued accessing the distributor’s sales system after leaving. A federal district court in Virginia found that Sysco Hampton Roads, Inc. adequately alleged that compilations of customer, pricing, purchasing, rebate, and other business information qualified as trade secrets and that a former salesman and competitor, Performance Food Group, Inc. (PFG), misappropriated them. The court also allowed Sysco’s related contract, fiduciary-duty, computer-crime, tortious-interference, and business-conspiracy claims to proceed. However, it dismissed Sysco’s Computer Fraud and Abuse Act (CFAA) claim because the complaint did not adequately allege at least $5,000 in qualifying statutory loss (Sysco Hampton Roads, Inc. v. Winchester, No. 2:25-cv-00732-MSD-RJK (E.D. Va. Aug. 18, 2026)).

Employee departure. Sysco, a distributor of food and related products, employed Cole Winchester in its sales department for more than a decade. His position gave him access to confidential information concerning customers, business strategies, operations, pricing, costs, margins, rebates, incentives, customer preferences, and purchasing habits. Winchester also entered into protective-covenant agreements requiring him to refrain from using or disclosing confidential information in a manner harmful to Sysco. The agreements additionally restricted certain competitive employment and customer solicitation for 18 months after his departure.

Before leaving Sysco in September 2025, Winchester communicated several times with PFG, a competing foodservice and food-distribution company serving customers in Virginia, Maryland, and North Carolina, and ultimately accepted a job there. Sysco alleged that PFG had previously recruited its employees and obtained confidential information through departing personnel.

According to the amended complaint, after accepting PFG’s offer but while still employed by Sysco, Winchester told customers that he was moving to PFG and sent customer lists, customer documents, purchasing information, and internal reports to his personal email account. He allegedly forwarded at least some information to his future supervisor, PFG’s vice president of sales.

The alleged conduct continued after Winchester joined PFG. For more than a month, he allegedly used credentials obtained while working for Sysco to access Sysco’s proprietary “Shop” sales platform hundreds of times. Those accesses allegedly provided information concerning 19 customers, including order histories, customer-specific product lists, and detailed pricing information. Sysco claimed that Winchester transferred information outside the Shop interface.

Sysco also alleged resulting customer losses. One customer stopped placing orders with Sysco on Winchester’s first day at PFG. Another longtime customer later shifted its business to PFG after PFG presented pricing, rebate, and incentive information that Sysco alleged was suspiciously close to its own terms. Sysco sent Winchester and PFG a cease-and-desist letter in October 2025 and filed suit the following month.

An earlier version of Sysco’s Defend Trade Secrets Act (DTSA) claim had been dismissed because Sysco had not sufficiently alleged that its asserted information remained secret from customers and suppliers or that those parties had confidentiality obligations. The court declined supplemental jurisdiction over the remaining state-law claims. Sysco subsequently amended its complaint, prompting the new dismissal motions.

Trade secrets. The amended allegations cured the deficiencies in Sysco’s DTSA claim. Under Samuel Sherbrooke Corp., Ltd. v. Mayer, 159 F.4th 252, 256 (4th Cir. 2025), to state a claim, Sysco had to plausibly allege ownership of a trade secret, misappropriation, and a connection to interstate or foreign commerce.

The court concluded that Sysco adequately alleged protectable compilations of information. Although customers necessarily knew information concerning their own transactions, Sysco alleged that its pricing and incentive arrangements were uniquely structured for individual customers. A customer’s knowledge of its own pricing therefore did not disclose Sysco’s pricing arrangements with other customers. Sysco also alleged that some customers and a large portion of its suppliers were subject to confidentiality or nondisclosure agreements and that Shop users were required to maintain confidentiality. Those measures plausibly showed reasonable efforts to preserve secrecy.

The information also plausibly derived independent economic value from secrecy. Sysco alleged that it used the information to maintain and expand customer relationships and efficiently source products, while a competitor possessing it could improve its ability to take customers from Sysco. Such a competitive advantage was sufficient at the pleading stage.

Misappropriation was likewise adequately pleaded. Winchester allegedly copied confidential information to his personal email account contrary to his confidentiality obligations and accessed Shop without Sysco’s authorization. The court concluded that acquiring trade secrets through such improper means could constitute DTSA misappropriation.

The claim also survived against PFG. Winchester’s alleged conduct began shortly after he accepted employment with PFG, supporting an inference that PFG acquired information by inducing him to breach his confidentiality obligations. Independently, PFG allegedly used Sysco’s confidential information to solicit customers. Drawing reasonable inferences for Sysco at the dismissal stage, those allegations plausibly supported direct liability. The analogous claim under the Virginia Uniform Trade Secrets Act also survived.

Related claims. The court also refused to dismiss Sysco’s breach-of-contract and fiduciary-duty claims against Winchester. In particular, the fiduciary claim did not merely duplicate contractual obligations. Virginia common law independently imposes duties on employees arising from their relationship of trust and confidence with an employer, and an express agreement adding contractual duties did not eliminate those baseline obligations. Sysco alleged that Winchester breached those duties by diverting customers and mishandling confidential information.

Sysco’s tortious-interference claim against PFG also survived. Among other allegations, Sysco claimed that PFG knew Winchester’s employment would violate his noncompetition obligation and nevertheless hired him. Sysco sufficiently alleged resulting harm by identifying a customer formerly managed by Winchester that shifted part of its business to PFG after PFG offered lower prices.

Similarly, the business-conspiracy claim could proceed. Sysco plausibly alleged that Winchester and PFG reached an agreement before his employment with PFG and intentionally acted to undermine Sysco’s customer relationships. Tortious interference and breach of fiduciary duty could supply the independently unlawful conduct necessary for a Virginia business-conspiracy claim.

CFAA claim. The defendants prevailed only on Sysco’s CFAA claim. Although Sysco alleged that Winchester accessed Shop without authorization, a civil CFAA plaintiff must establish a qualifying statutory loss, including at least $5,000 where the claim relies on the applicable statutory threshold.

Sysco alleged losses exceeding $5,000 from investigating Winchester’s access and taking legal action against him. The problem was that CFAA “loss” can include reasonable costs incurred in responding to and investigating unauthorized access, but not costs incurred in prosecuting the resulting CFAA litigation. Sysco combined its investigative and litigation expenses without identifying how much was attributable to each. The court therefore could not plausibly infer that qualifying losses, excluding litigation expenses, independently reached $5,000.

Accordingly, the court dismissed the CFAA claim against both defendants but denied their motions as to all remaining claims.

The Case is No. 2:25-cv-00732-MSD-RJK.

Judge: Davis, M.

Attorneys: Donald Burke (Willkie Farr & Gallagher) for Sysco Hampton Roads, Inc. Kevin Edward Martingayle (Bischoff Martingayle) for Cole Winchester.

Companies: Sysco Hampton Roads, Inc.

Cases: TortClaims StateLawClaims VirginiaNews