Labor & Employment Law Daily Wrap Up, TORT CLAIMS—Utah Sup. Ct.: Summary judgment in favor of counseling service provider reversed for lack of damages from alleged misappropriation, (Aug 21, 2025)

By Kevin M. Finson, J.D.

A trial court’s award of partial summary judgment against a counseling service provider which had hired therapists from a competitor was reversed because the competitor was unable to show damages arising from the alleged misappropriation of trade secrets.

A counseling service provider was not entitled to summary judgment on its claims for misappropriation of trade secrets under Utah law brought against a competitor that had hired the plaintiff’s counselors, the Utah Supreme Court has held. Even if misappropriation were proven, the plaintiff did not present a legally sufficient theory of damages, beyond mere speculation. The evidence did not show that defendant had used trade secret information to solicit the plaintiff’s patients, but rather the patients followed their therapists to their new clinic. The trial court’s summary judgment ruling was reversed (Military and Veteran Counseling Center, LLC v. Feller Behavioral Health PLLC, No. 20240505 (Utah Sup. Ct. Aug. 14, 2025)).

Military and Veteran Counseling Center, LLC, d/b/a Freedom Counseling (Freedom), was a counseling provider which employed four individuals as therapists. The four employees signed non-compete, non-solicitation, and confidentiality agreements. These individuals eventually left their employment with Freedom and began working for another counseling provider, Feller Behavioral Health, PLLC (FBH). When the four therapists moved to FBC, at least 49 clients followed them.

Freedom brought suit against FBH, alleging that FBH had violated Utah’s Uniform Trade Secrets Act (UUTSA) by obtaining protected trade secret information from the therapists. The trial court granted summary judgment in favor of Freedom, finding that the client information (which consisted of client names coupled with insurance information) constituted a trade secret and that FBH had misappropriated that information, leaving for trial only the issues of whether FBH’s misappropriation was willful and malicious and the calculation of damages. The court denied FBH’s motion for summary judgment of non-liability.

FBH sought interlocutory appeal of the summary judgment decision.

Summary judgment. The Utah Supreme Court found that Freedom had failed to present a legally viable theory of damages. To succeed on a UUTSA claim, a plaintiff must show use of a trade secret that damages the plaintiff.

Freedom presented a damages theory of actual loss, and did not attempt to make a claim based on FBH’s gain. The court found that there was no evidence in the record from which a reasonable jury could find, without undue speculation, that the misappropriation of trade secrets caused any financial harm to Freedom. While Freedom lost clients to FBH, there was no indication that those clients went to FBH because FBH obtained their names and insurance information and used to solicit them. Rather, the evidence showed only that the clients followed their therapists. The record also showed that, however detailed the information received by FBH actually was, it only sought the number of patients each therapist had and whether the therapists were credentialed with the insurers used by those patients. In at least one case FBH was satisfied with a list of patient initials rather than full names, for example.

Because there was no connection between the alleged misappropriation and actual damages, the Supreme Court reversed the trial court’s grant of partial summary judgment to Freedom and its denial of summary judgment to FBH.

The Case is No. 20240505.

Judge: Pohlman, J.

Attorneys: Freyja Johnson and Emily Adams (Adams Law Firm, PC) for Military and Veteran Counseling Center, LLC d/b/a Freedom Counseling. Mark D. Tolman (Parsons Behle & Latimer PLC) for Feller Behavioral Health PLLC.

Companies: Military and Veteran Counseling Center, LLC d/b/a Freedom Counseling; Feller Behavioral Health PLLC

Cases: TortClaims StateLawClaims UtahNews