IP Law Daily, TRADE SECRETS—N.D. Ill.: Summary judgment largely denied in insurance sales trade secrets dispute, (Aug 25, 2023)

By Kevin M. Finson, J.D.

Disputes between former and current insurance company employers of salespeople could not be resolved on summary judgment because a reasonably jury could believe either side’s factual allegations.

Neither Allstate Insurance Company nor a competitor, Ameriprise Financial Services, Inc., was entitled to summary judgment in a dispute over the misappropriation and use of customer lists allegedly brought to Ameriprise by former Allstate salespeople, the U.S. District Court in Chicago has held. Evidence which a jury could reasonably believe existed on either side of most of the issues in the case (Allstate Insurance Co. v. Ameriprise Financial Services, Inc., August 18, 2023, Seeger, S.).

Allstate Insurance Company and its subsidiaries (Allstate) employed independent contractors, who were subject to non-disclosure and non-solicitation agreements, to sell insurance plans. Several of these contractors over a period of years left Allstate’s employment and began working for Ameriprise Financial Services, Inc., (Ameriprise), a wealth management firm. The parties disputed whether Ameriprise was a competitor to some or all of the Allstate companies. Allstate alleged that these independent contractors brought confidential information to Ameriprise which Ameriprise used, and brought suit, asserting claims for violation of the Defend Trade Secrets Act as well as tortious interference and unfair competition under state law. After discovery, both sides moved for summary judgment on all claims. The court began by admonishing both parties for unnecessarily prolonging litigation with unhelpful scorched earth behavior such as disputing at tremendous length unimportant facts, noting that “flamethrowers could not have improved the level of scorching.”

Trade secrets. The parties disputed both the existence of and the misappropriation of the claimed secrets, which amounted to customer lists and data. Ameriprise routinely required new contractors to bring commission reports and other documents showing their earnings at prior workplaces, but claimed that it strictly forbade them from including identifiable client information. Allstate alleged that Ameriprise not only encouraged the disclosure of client information but actually asked new contractors to bring their old work computers in so that Ameriprise could search them for useful data.

The court held that Allstate had particularly identified the claimed secrets as to client information, but also made allegations about its own business practices which were too vague to be claimed as secrets. Ultimately, the court held that a reasonably jury could believe either side’s version of events in which Allstate either did nor did not reasonably protect its data and in which Ameriprise either did or did not actually use any of Allstate’s claimed secrets.

The court granted summary judgment in favor of Ameriprise on Allstate’s trade secrets claims based of vague business practices allegations, but otherwise denied both sides’ motions. With certain exceptions based on the enforceability of the non-solicitation provisions where certain contractors were located, the court also denied summary judgment on the state law claims because a reasonable jury could find for either side.

The Case is No. 1:17-cv-05826.

Attorneys: J. Scott Humphrey (Benesch, Friedlander, Coplan & Aronoff LLP) for Allstate Insurance Co., Allstate Life Insurance Co., and Allstate Financial Services, LLC. Briana Sue Al Taqatqa (Dorsey & Whitney LLP) for Ameriprise Financial Services, Inc.

Companies: Allstate Insurance Co.; Allstate Life Insurance Co.; Allstate Financial Services, LLC; Ameriprise Financial Services, Inc.

Cases: TechnologyInternet TradeSecrets IllinoisNews