Labor & Employment Law Daily Wrap Up, TORT CLAIMS—W.D. Wash.: Trade secret verdict intact for Silver Fern Chemical Inc., (Aug 31, 2026)

By Carolin Dennis, B.Sc., LL.B., LL.M.

Former employees misappropriated trade secrets by taking their former employer’s confidential compilation of customer information to work at a rival company.

The federal district court in Seattle, Washington, denied the renewed motion for judgment as a matter of law brought by three former employees and their new employer because Silver Fern Chemical Inc. demonstrated that they misappropriated its trade secret confidential compilation of customer information. The district court ruled that the jury’s finding that the former employees committed breach of contract and misappropriated trade secrets causing damage to Silver Fern Chemical Inc. and that the misappropriation was willful and malicious was supported by substantial evidence (Silver Fern Chemical, Inc. v. Lyons, No. 2:23-cv-00775-TL (W.D. Wash. Aug. 25, 2026)).

Background. Silver Fern Chemical Inc. (plaintiff) sued his former employees Scott Lyons, Troy Kinto, King Holmes, its rival Ambyth Chemical Company and its President Rowland Morgan (collectively, defendants) alleging trade secret misappropriation. On December 18, 2025, the jury reached a unanimous verdict, finding that: (1) Plaintiff had established by a preponderance of the evidence that all defendants misappropriated Plaintiff’s trade secret under the Washington Uniform Trade Secrets Act (WUTSA) and federal Defend Trade Secrets Act (DTSA); (2) Plaintiff had established by a preponderance of the evidence that Lyons, Kinto, and Holmes (former employees) were liable for breach of contract against Plaintiff; (3) Plaintiff had not established by a preponderance of the evidence that the defendants committed tortious interference with business expectancy; and (4) Plaintiff had not established by a preponderance of the evidence that Morgan and Ambyth Chemical Company had committed tortious interference with business relationships and contracts. The jury awarded the plaintiff $1,916,137.00 in damages for the misappropriation-of-trade-secrets claims. While the jury also found Lyons, Kinto, and Holmes had breached their respective confidentiality agreements, they awarded no additional damages for this violation. On January 22, 2026, the defendants moved for judgment as a matter of law under Rule 50(b). The defendants also moved for a new trial as an alternative to their motion for judgment as a matter of law.

Trade secret misappropriation. The plaintiff asserted it had one trade secret—its confidential compilation of customer information that consisted of customer names, customer contact information, customer product requirements, and vendors who meet customer product requirements. At trial, Sam King, the plaintiff’s co-founder and co-owner, testified in detail about this compilation of information that was contained within the plaintiff’s private and password protected Chempax and eChempax systems. The district court noted that in their motion, the defendants did not dispute that the plaintiff password-protected servers, put barriers between individual salespersons’ deal sheets, and required Holmes, Lyons, and Kinto to sign confidentiality agreements. The district court determined that although the identity of some of the plaintiff’s customers may have been public, looking at the evidence in light most favorable to the plaintiff, the jury’s finding that the plaintiff proved its compilation of customer information was unique as well as valuable because it was unknown to others and, therefore, a trade secret was supported by substantial evidence.

Additionally, given the fact that misappropriation can be proven through circumstantial and direct evidence, the district court found that the evidence presented at trial did not lead to only one reasonable conclusion in favor of the defendants. Therefore, the jury’s finding that the defendants misappropriated trade secrets and caused the plaintiff damage by misappropriating trade secrets was supported by substantial evidence.

Breach of contract. The defendants argued that the confidentiality agreements for Lyons and Holmes did not cover information that is known to the public or competitors, and that Kinto’s agreement carved out an exception for legacy customers. Additionally, the defendants argued that the plaintiff’s breach of contract claim also failed because it did not prove damages due to the former employees’ alleged actions. However, the plaintiff showed that its customer compilation included much more than just the identities of the customers. Further, it also showed through direct and circumstantial evidence that the former employees used such information at Ambyth. The district court noted that the former employees did not identify any evidence from trial that tends to indicate that they did not breach their confidentiality agreements through the relationships with the plaintiff’s former customers. The district court also noted that there was evidence that the former employees worked together to plan their departure from the plaintiff, take the plaintiff’s confidential information, and use it at Ambyth. Therefore, the jury’s finding that the former employees’ committed breach of contract is supported by substantial evidence.

Willful and malicious. The defendants asserted that they used information generally available to competitors. However, the district court found that the former employees planned their departure months in advance, but only notified Sam and Lisa King the morning of their departure. They also deleted emails they sent and received, thus ridding a paper trail of what was happening. The plaintiff was a small company where the former employees made up half of the sales team, were the most senior salespersons, and losing them so abruptly was a big deal leaving the plaintiff with monumental damage control to deal with. Therefore, the jury’s finding that the former employees acted willfully and maliciously was not plain error, and was also supported by substantial evidence.

Accordingly, the district court denied the defendants’ renewed motion for judgment as a matter of law. Additionally, as the defendants did not make any new arguments for why they must be granted a new trial and incorporated the arguments they made in support of their motion for judgment as a matter of law the district court denied the defendants’ motion for a new trial.

The Case is No. 2:23-cv-00775-TL.

Judge: Lin, T.

Attorneys: Kaleigh Boyd (McNaul Ebel PLLC) for Silver Fern Chemical Inc. Jennifer Callahan Berry (Ogden Murphy Wallace PLLC) for Scott Lyons.

Companies: Silver Fern Chemical Inc.

Cases: TortClaims ContractClaims WashingtonNews