IP Law Daily, TRADE SECRETS—N.C.: North Carolina Supreme Court reinstates insurance agency’s trade secrets case, (May 27, 2026)

By Brian Craig, J.D.

The trial court erred in granting summary judgment on claims for misappropriation of trade secrets, the Computer Fraud and Abuse Act, and deceptive trade practices.

Concluding that a reasonable jury could find that client lists constitute protectable trade secrets, the North Carolina Supreme Court has reinstated a misappropriation of trade secrets case brought by an independent insurance agency, Relation Insurance, Inc., against a competing insurance agency founded by a former employee. The North Carolina Supreme Court held that the North Carolina Business Court (Business Court) erred in granting summary judgment on claims for misappropriation of trade secrets, the Computer Fraud and Abuse Act, and deceptive trade practices concerning use and access to client lists (Relation Insurance, Inc. v. Pilot Risk Management Consulting, LLC, No. 68A25 (N.C. Sup. Ct. May 22, 2026)).

Relation Insurance, Inc. (Relation) is an independent insurance agency and broker in North Carolina. As an intermediary, Relation negotiates, places, and services the insurance coverage best suited to meet the specific needs of each policyholder. In 2020, a former employee of Relation who worked as a producer left Relation and formed a new insurance agency, Pilot Risk Management Consulting, LLC (Pilot). Several other employees thereafter also left Relation and joined Pilot. Before doing so, the employees forwarded various documents from their business email accounts to their personal email accounts, including customer lists. Relation sued Pilot and the former employees in the North Carolina state court, including claims for misappropriation of trade secrets under federal and North Carolina law, computer trespass under both federal and state law, breach of employment agreements, deceptive trade practices, and other related claims. The Business Court granted summary judgment in favor of Pilot dismissing several claims. Relation appealed to the North Carolina Supreme Court.

Trade secrets. The North Carolina Supreme Court concluded that the misappropriation of trade secrets claims must be decided by a jury. The misappropriation of trade secrets claims were brought under both the federal Defend Trade Secrets Act and the North Carolina Trade Secrets Protection Act, which uses the same six factors in determining whether information constitutes a trade secret. The court found that Relation submitted sufficient evidence showing that the client list and the client renewal list can constitute trade secrets. Both documents are Excel spreadsheets containing various information about the clients. Relation presented evidence that the company's computer systems were password protected, which created a genuine issue of material fact as to the extent of measures taken to guard the secrecy of the client list. The panel considered an affidavit from an insurance brokerage industry expert, explaining that insurance brokerages spend significant amounts of time and money to develop their client lists. This evidence created a genuine issue of material fact regarding the amount of effort or money expended in developing the list. There are genuine issues of material fact as to whether the client lists constitute a trade secret, the court found. Therefore, the panel reversed the decision of the Business Court granting summary judgment that the client lists are not a protectable trade secret.

Non-solicitation agreements. The North Carolina Supreme Court also held that a jury must decide the factual issues in the breach of non-solicitation clauses of employment agreements. The court remanded the case to the Business Court because there are evidentiary disputes regarding the size and scope of Relation and its affiliated members.

Computer Fraud and Abuse Act. Next, the North Carolina Supreme Court reversed the decision of the Business Court in granting summary judgment on the Computer Fraud and Abuse Act (CFAA) claims alleging computer trespass. The trial court erred by granting summary judgment and in concluding that former employees had not accessed information “without authorization” or accessed information in a manner that exceeded authorized access. The North Carolina Supreme Court remanded the case to the Business Court to determine where and how the adverse inference might apply to the factual defects after determining spoliation of evidence.

Deceptive trade practices. Finally, the North Carolina Supreme Court reversed the decision of the Business Court on the deceptive trade practices claims because the Business Court granted summary judgment in a “Clarifying Order” without a written opinion. The statute that established the Business Court requires the Business Court to issue a written opinion in connection with any order granting or denying a motion for summary judgment. In this case, the Business Court summarily granted summary judgment on the deceptive trade practices claims without a written opinion. The North Carolina Supreme Court remanded the case to the Business Court to issue a written opinion on the deceptive trade practices claims.

The Case is No. 68A25.

Judge: Barringer, T.

Attorneys: Kip D. Nelson (Fox Rothschild LLP) for Relation Insurance, Inc. Gavin J. Reardon (Beacon Legal PLLC) for Pilot Risk Management Consulting, LLC.

Companies: Relation Insurance, Inc.; Pilot Risk Management Consulting, LLC

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