RLM Communications, Inc. v. Amy Tuschen

U.S. Court of Appeals7/28/2016

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PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-2351

RLM COMMUNICATIONS, INC.,

Plaintiff - Appellant,

v.

AMY E. TUSCHEN; ESCIENCE AND TECHNOLOGY SOLUTIONS, INC.,

Defendants - Appellees.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Louise W. Flanagan,
District Judge. (5:14−cv−00250−FL)

Argued: March 24, 2016 Decided: July 28, 2016

Before KING, DIAZ, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge Diaz wrote the opinion, in
which Judge King and Judge Harris joined.

ARGUED: R. Jonathan Charleston, THE CHARLESTON GROUP,
Fayetteville, North Carolina; Coy E. Brewer, Jr., COY E. BREWER,
JR., ATTORNEY AT LAW, Fayetteville, North Carolina, for
Appellant. Michael Coghlan Lord, WILLIAMS MULLEN, Raleigh,
North Carolina, for Appellees. ON BRIEF: Jose A. Coker, Dharmi
B. Tailor, THE CHARLESTON GROUP, Fayetteville, North Carolina,
for Appellant.
DIAZ, Circuit Judge:

After working for six years at RLM Communications, Inc.,

Amy Tuschen resigned and joined a competitor, eScience and

Technology Solutions, Inc. Although RLM and eScience had

offices just a few miles from each other, RLM did not initially

object to Tuschen’s move. Later, however, RLM discovered that

eScience was planning to bid against it on a government contract

very similar to one that Tuschen had managed during her tenure

at RLM. RLM also learned that Tuschen was soliciting her former

RLM colleagues to join eScience in the event her new employer

won the contract.

RLM brought multiple claims against eScience and Tuschen,

alleging principally that Tuschen breached a covenant not to

compete and unlawfully took confidential information from RLM

and shared it with eScience. After discovery, the district

court granted summary judgment to eScience and Tuschen on all of

RLM’s claims. Because the covenant not to compete was not

enforceable and RLM failed to present sufficient evidence that

Tuschen took or shared RLM’s confidential information, we

affirm.

2
I.

A.

RLM is a government contractor specializing in services

such as cyber security, information technology, information

assurance (i.e., managing the various risks associated with an

organization’s information and data systems), and management

support. On June 5, 2007, Tuschen signed an offer letter from

RLM, accepting a position as a Training and Development

Representative. In this role, Tuschen was to provide

instruction at the U.S. Army Leader College of Information

Technology at Fort Gordon, Georgia. On her first day of work,

Tuschen executed two more documents: a Confidentiality Agreement

and a Covenant Not to Compete (the “Noncompete”). 1

Over the next six years, RLM promoted Tuschen several

times, ultimately making her Director of Information Assurance.

One of Tuschen’s responsibilities in this position was to manage

an information-assurance contract with the U.S. government (the

“Contract”). The Contract was set to expire on June 30, 2014,

at which time the government was to rebid the services as a new

contract (the “Follow-on Contract”). About a year before the

Contract expired, Tuschen gave RLM two weeks’ notice of her

resignation. Prior to departing, she copied several files

1 We discuss these agreements in more detail below.

3
related to the Contract from her employer-issued laptop computer

onto a CD, which she gave to her successor, Dennis Yelverton.

Before Tuschen’s departure, RLM learned that she planned to

join eScience, a competing federal contractor with an office

just down the street from RLM. Not only did RLM not object to

Tuschen’s plan to work for eScience, but it gave her $1,000 in

gift cards and a “giant bouquet of roses” as parting gifts.

J.A. 257.

Within days of resigning from RLM, Tuschen began working

for eScience as its Director of Cyber and IT Solutions. At

eScience, she was charged with helping the company develop a bid

for the Follow-on Contract and with reaching out to former

colleagues at RLM to secure their services should eScience win

the Follow-on Contract. She contacted several RLM employees for

this purpose.

Meanwhile, the government issued its request for proposals

for the Follow-on Contract in May 2014. This led to some

technical jockeying between RLM and eScience over how large a

company would be permitted to serve as prime contractor. The

original request for proposals assigned the Follow-on Contract a

North American Industry Classification System (NAICS) code that

had the effect of enabling eScience to bid as prime contractor

but disqualifying the larger RLM. But the day after the request

for proposals was released, the government amended it, assigning

4
a different NAICS code that would allow RLM to bid as prime

contractor.

Seeking to avoid competition from larger firms such as RLM,

eScience appealed to the U.S. Small Business Administration,

which reinstated the original NAICS code. It was a fleeting

victory: RLM, which could participate in a bid as a

subcontractor rather than as prime contractor, was part of the

team that won the Follow-on Contract.

B.

RLM filed suit in North Carolina state court against

Tuschen and eScience, seeking a temporary restraining order

(“TRO”) and asserting nine claims: (1) breach of contract

(related to the Noncompete); (2) breach of contract (related to

the Confidentiality Agreement); (3) unfair and deceptive trade

practices; (4) tortious interference with contractual relations;

(5) misappropriation of trade secrets; (6) unjust enrichment;

(7) civil conspiracy; (8) preliminary and permanent injunction;

and (9) conversion. The state court granted the TRO, and

Tuschen and eScience removed to federal court, where they moved

to dismiss all claims.

The district court converted their motion to dismiss into a

motion for summary judgment to be supplemented after discovery.

RLM quickly moved for a TRO and a preliminary injunction (as

relevant here). The district court granted a TRO on the same

5
terms set forth in state court, but soon after replaced it with

a preliminary injunction based in part on the parties’ consent.

It also converted the request for a preliminary injunction into

a motion for a permanent injunction.

In November 2014, the district court granted Tuschen and

eScience’s motion for summary judgment on all claims and denied

RLM’s motion for a permanent injunction. RLM Commc’ns, Inc. v.

Tuschen, 66 F. Supp. 3d 681 (E.D.N.C. 2014).

This appeal followed.

II.

We review the district court’s grant of summary judgment de

novo, viewing the facts in the light most favorable to RLM, the

nonmovant. See Askew v. HRFC, LLC, 810 F.3d 263, 266 (4th Cir.

2016). We may affirm “on any legal ground supported by the

record and are not limited to the grounds relied on by the

district court.” Jackson v. Kimel, 992 F.2d 1318, 1322 (4th

Cir. 1993). Summary judgment is warranted where “there is no

genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). Because we are sitting in diversity, addressing matters

of North Carolina law, we apply governing North Carolina law or,

if necessary, predict how the Supreme Court of North Carolina

would rule on an unsettled issue. See Askew, 810 F.3d at 266.

6
On appeal, RLM has abandoned its unjust-enrichment claim.

We address the remaining issues in the following order: breach

of the Noncompete, breach of the Confidentiality Agreement,

misappropriation of trade secrets, conversion, tortious

interference with contractual relations, unfair and deceptive

trade practices, civil conspiracy, and permanent injunction.

III.

First, RLM faults the district court for granting summary

judgment on its claim that Tuschen breached the terms of the

Noncompete. The district concluded that the Noncompete was

invalid for lack of consideration. Tuschen, 66 F. Supp. 3d at

693. In RLM’s view, however, the Noncompete was part of the

larger employment contract, and so employment itself was the

consideration. Moreover, RLM argues, even if the Noncompete was

a separate contract requiring separate consideration, it recited

adequate consideration, promising that RLM would give Tuschen

access to “company private information.” Appellant’s Br. at 28.

In Tuschen and eScience’s view, the Noncompete was not part of

the employment contract, and the recited consideration was

illusory because RLM never promised to provide Tuschen access to

the company private information. In the alternative, they argue

that the Noncompete is impermissibly broad.

7
Because we agree with Tuschen and eScience that the

Noncompete is overbroad, we do not address the consideration

issues. 2

Covenants not to compete are disfavored in North Carolina.

See Kadis v. Britt, 29 S.E.2d 543, 546 (N.C. 1944); VisionAIR,

Inc. v. James, 606 S.E.2d 359, 362 (N.C. Ct. App. 2004). They

are valid only if they are “(1) in writing; (2) made a part of

the employment contract; (3) based on valuable consideration;

(4) reasonable as to time and territory; and (5) designed to

protect a legitimate business interest of the employer.” Farr

Assocs., Inc. v. Baskin, 530 S.E.2d 878, 881 (N.C. Ct. App.

2000). The restrictions on an employee’s future employment

“must be no wider in scope than is necessary to protect the

business of the employer.” Manpower of Guilford Cty., Inc. v.

Hedgecock, 257 S.E.2d 109, 114 (N.C. Ct. App. 1979).

More specifically, “restrictive covenants are unenforceable

where they prohibit the employee from engaging in future work

that is distinct from the duties actually performed by the

employee.” Med. Staffing Network, Inc. v. Ridgway, 670 S.E.2d

321, 327 (N.C. Ct. App. 2009); see also Copypro, Inc. v.

2
Similarly, we do not reach the issue of whether the
Noncompete violates public policy as expressed by Executive
Order Number 13495 (Jan. 30, 2009). See Appellees’ Br. at 45-
46.

8
Musgrove, 754 S.E.2d 188, 192 (N.C. Ct. App. 2014) (“[W]e have

held on numerous occasions that covenants restricting an

employee from working in a capacity unrelated to that in which

he or she worked for the employer are generally overbroad and

unenforceable.”).

The Noncompete, in relevant part, provides as follows:

While I, the Employee, am employed by Employer, and
for 1 years/months afterward, I will not directly or
indirectly participate in a business that is similar
to a business now or later operated by Employer in the
same geographical area. This includes participating
in my own business or as a co-owner, director,
officer, consultant, independent contractor, employee,
or agent of another business.

J.A. 37.

The restriction on Tuschen’s future employment is largely

unmoored from RLM’s legitimate business interests. Even

ignoring for a moment the bar on indirect participation in

similar businesses, the Noncompete is overly broad by preventing

direct participation in similar businesses. Tuschen is not

merely prohibited from working for RLM’s competitors in a

position like the one she held at RLM. She may also not mow

their lawns, cater their business lunches, and serve as their

realtor. See Hartman v. W.H. Odell and Assocs., Inc., 450

S.E.2d 912, 920 (N.C. Ct. App. 1994) (finding a covenant

unenforceable where it “would appear to prevent plaintiff from

9
working as a custodian for any ‘entity’ which provides

‘actuarial services’” (quoting the record)).

And if RLM were to take up software development as a new

line of business (i.e., “a business . . . later operated by

Employer”), Tuschen would be barred from working as a sales

representative for a nearby software developer. See VisionAIR,

606 S.E.2d at 363 (striking down a restriction on selling

software when sales work was “unrelated to that which [the

employee] did for [the employer]”). The ban on indirect

participation could have even more startling consequences: if

Tuschen has retirement accounts invested in mutual funds, she

may have to monitor their holdings to be sure she is not

investing in companies similar to RLM. See id.

Such a broad prohibition on future employment (let alone

investment) cannot be justified by RLM’s legitimate business

concerns. “With everything Tuschen knew . . . in her leadership

positions,” RLM asserts, “she could singlehandedly affect RLM’s

future in terms of its ability to bid on and secure upcoming

contracts.” Appellant’s Br. at 34. Assuming this is true

(despite RLM’s beating out eScience for the Follow-on Contract),

RLM’s legitimate business interests fall well short of

justifying the Noncompete’s prohibitions.

Instead of focusing on employment that raises the risk that

Tuschen will use knowledge obtained from RLM to RLM’s detriment,

10
the Noncompete targets the similarity of a new employer to RLM.

That is not a sufficient limiting factor for a covenant not to

compete. See Henley Paper Co. v. McAllister, 117 S.E.2d 431,

434 (N.C. 1960) (holding that a covenant was overbroad where it

barred a salesman of “fine” paper products from “‘either

directly or indirectly’ engaging ‘in the manufacture, sale or

distribution of paper or paper products’”); Kinesis Advert.,

Inc. v. Hill, 652 S.E.2d 284, 294 (N.C. Ct. App. 2007) (“We have

previously held that a covenant-not-to-compete is ‘overly broad

in that, rather than attempting to prevent [the former employee]

from competing for [] business, it requires [the former

employee] to have no association whatsoever with any business

that provides [similar] services.’” (quoting Hartman, 450 S.E.2d

at 920)). Simply put, the Noncompete is overly broad and cannot

be enforced as written. 3

RLM encourages us to take up North Carolina’s “blue-pencil”

doctrine and strike the offending language. Appellant’s Br. at

35-36. Under this doctrine, a court “may choose not to enforce

a distinctly separable part of a covenant in order to render the

provision reasonable.” Hartman, 450 S.E.2d at 920. But North

Carolina’s blue-pencil rule “severely limits what the court may

do to alter” an overly broad covenant not to compete. Id.

3
We do not reach the question whether the Noncompete is
reasonable as to time and territory.

11
“[W]hen an agreement not to compete is found to be

unreasonable, . . . the court is powerless unilaterally to amend

the terms of the contract.” Beverage Sys. of the Carolinas, LLC

v. Associated Beverage Repair, LLC, 784 S.E.2d 457, 461 (N.C.

2016). We therefore cannot rewrite the Noncompete to save it

from its fatal flaws. Moreover, even if we assume blue-

penciling were appropriate in this case, we do not see how it

would help RLM. RLM suggests that we strike the term

“indirectly,” but we have already explained that a prohibition

limited to direct participation in a similar business is

overbroad.

Because the Noncompete is unenforceable and cannot be

mended by blue-penciling, the district court properly dismissed

the associated claim for breach of contract.

IV.

RLM’s second breach-of-contract claim alleges that Tuschen

violated the terms of the Confidentiality Agreement. The

district court granted summary judgment, finding the cited

consideration illusory. We assume without deciding that the

Confidentiality Agreement was valid and affirm on the

alternative ground that RLM has failed to put forth sufficient

evidence of breach.

12
In relevant part, the Confidentiality Agreement reads as

follows: “While I am employed by Employer and afterward, I will

not, except in performing my duties, remove or copy any

confidential information or materials or assist anyone in doing

so without Employer’s written permission.” J.A. 39. In the

Verified Complaint, RLM alleges that the breach occurred when

“Tuschen disclosed confidential information acquired during her

employment with RLM.” J.A. 23. On appeal, RLM has pivoted to a

new theory: Tuschen breached the Confidentiality Agreement

merely by copying confidential information without permission

and not in performance of her duties.

Tuschen readily admits that before she left RLM, she copied

confidential information regarding the Contract from her

employer-issued laptop onto a CD without written permission.

The question is whether she did so “in performing [her] duties.”

According to Tuschen, she made the CD to gather all of the

files relevant to the Contract in “a single, one-stop source of

information that [her successor, Dennis Yelverton,] would not

otherwise have.” J.A. 258. Although Tuschen knew that RLM

would retain the laptop and all of the information in it, she

believed the CD would ease the transition for Yelverton. She

also testified that she gave the only copy to Yelverton, and RLM

has conceded it has no evidence to the contrary.

13
Tuschen has also presented evidence that (1) Yelverton

lacked access to many of the files on the CD and her computer

was to be sent to a different office and would not be

immediately available to Yelverton; (2) before she created the

CD, RLM’s Vice President of IT Services and Solutions had

similarly created a CD for his successor when he resigned, and

there had been no “Corporate pushback,” J.A. 428; (3) no one at

RLM objected upon learning that Tuschen had made the CD;

(4) “[t]he CD was used extensively to access the information on

it to manage the Contract following Ms. Tuschen’s resignation,”

J.A. 429; and (5) Yelverton, upon his own resignation, “passed

the CD to the incoming Program Manager as well as providing a

copy of the CD to the Senior Program Manager,” J.A. 434.

RLM provides no evidence to contradict Tuschen’s contention

that she created the CD to ease the transition for Yelverton.

Nonetheless, RLM asserts that nobody told Tuschen to create the

CD, and doing so was not a common practice at RLM. In most

workplaces, however, such an employee would be lauded for her

initiative, rather than accused of wrongdoing. Something more

is required to raise an inference that Tuschen, as RLM’s

Director of Information Assurance and the person responsible for

managing the Contract, was not performing her duties when she

made the CD for her successor.

14
Because RLM has not shown a genuine issue of fact that

Tuschen breached the Confidentiality Agreement, we affirm the

grant of summary judgment as to this claim.

V.

RLM’s misappropriation-of-trade-secrets claim is similar to

its claim for breach of the Confidentiality Agreement. Here,

RLM alleges not only that Tuschen created the CD, but also that

she kept a copy for herself and shared confidential information

with eScience.

A.

In North Carolina, “‘[m]isappropriation’ means acquisition,

disclosure, or use of a trade secret of another without express

or implied authority or consent, unless such trade secret was

arrived at by independent development, reverse engineering, or

was obtained from another person with a right to disclose the

trade secret.” N.C. Gen. Stat. § 66-152. The misappropriation

statute also sets out a scheme for shifting the burden of

production:

Misappropriation of a trade secret is prima facie
established by the introduction of substantial
evidence that the person against whom relief is sought
both:
(1) Knows or should have known of the trade
secret; and
(2) Has had a specific opportunity to acquire it
for disclosure or use or has acquired, disclosed, or

15
used it without the express or implied consent or
authority of the owner.
This prima facie evidence is rebutted by the
introduction of substantial evidence that the person
against whom relief is sought acquired the information
comprising the trade secret by independent
development, reverse engineering, or it was obtained
from another person with a right to disclose the trade
secret. This section shall not be construed to
deprive the person against whom relief is sought of
any other defenses provided under the law.

Id. § 66-155.

The first prong of the prima facie case plainly requires

that the defendant “[k]nows or should have known of the trade

secret.” Id. The second prong provides two alternatives,

requiring that the defendant “[1] has had a specific opportunity

to acquire [the trade secret] for disclosure or use or [2] has

acquired, disclosed, or used it without the express or implied

consent or authority of the owner.” Id. (emphasis added). At

first blush, this second prong appears to allow a plaintiff to

show either that the defendant had an opportunity to acquire

trade secrets or that the defendant in fact acquired them

without permission.

But there is a problem with this reading. To understand

why, it is first important to note the effect of a trade-secrets

prima facie case in the context of summary judgment.

Interpreting the phrase “prima facie evidence” in another

statute, the Supreme Court of North Carolina has explained that

“prima facie evidence means, and means no more, than evidence

16
sufficient to justify, but not to compel an inference” of the

fact in question. Home Fin. Co. of Georgetown v. O’Daniel, 74

S.E.2d 717, 721 (N.C. 1953) (citing N.C. Gen. Stat. § 44-38.1(a)

(repealed 1967)). Prima facie evidence “furnishes evidence to

be weighed, but not necessarily to be accepted, by the jury. It

simply carries the case to the jury for determination, and no

more.” Id. Therefore, a prima facie case of misappropriation

permits a plaintiff to survive summary judgment. See Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986); Collingwood

v. Gen. Elec. Real Estate Equities, Inc., 376 S.E.2d 425, 427

(N.C. 1989).

In the employment context, if knowledge and opportunity

suffice for a prima facie case of misappropriation, then an

employer can state a prima facie case against its employee

merely by showing that it gave the employee access to its trade

secrets. The employer can therefore force such an employee to

go to trial on a misappropriation claim—unless the employee can

rebut the prima facie case. Unfortunately, the statute does not

clearly address rebuttal in a case such as this one, where the

employee claims that she never acquired or used trade secrets at

all. The statute provides three grounds for rebutting the prima

facie evidence, but all grounds assume that the employee has in

fact acquired the trade secrets: “prima facie evidence is

rebutted by the introduction of substantial evidence that the

17
person against whom relief is sought acquired the information

comprising the trade secret by independent development, reverse

engineering, or it was obtained from another person with a right

to disclose the trade secret.” § 66-155. If these grounds were

exclusive, an absurd result would follow: Every employee in

North Carolina who had access to her employer’s trade secrets

but did not acquire them would have to go to trial to fend off

the employer’s claim of misappropriation.

B.

We do not think the Supreme Court of North Carolina, which

has not had occasion to consider the meaning of the statute,

would adopt such an interpretation. See State v. Hunt, 591

S.E.2d 502, 503 (N.C. 2003) (“[W]here a literal interpretation

of the language of a statute will lead to absurd results, or

contravene the manifest purpose of the Legislature, as otherwise

expressed, the reason and purpose of the law shall control and

the strict letter thereof shall be disregarded.” (quoting Mazda

Motors of Am., Inc. v. Sw. Motors, Inc., 250 S.E.2d 250, 253

(N.C. 1979))).

Nor do other North Carolina courts appear to have

interpreted the statute this way. Instead, when determining

whether a prima facie case exists, North Carolina courts

generally look for proof of more than a mere opportunity to

misappropriate; they require evidence that the defendant

18
actually acquired or used trade secrets. See, e.g., Modular

Techs., Inc. v. Modular Sols., Inc., 646 S.E.2d 864, at *4 (N.C.

Ct. App. 2007) (unpublished) (“[E]ven assuming that at least

some of the information to which [the employee] had access

qualifies as trade secrets, plaintiff [employer] has not

introduced substantial evidence that [the employee] acquired the

information for disclosure or use, or disclosed or used the

information.”); Static Control Components, Inc. v. Summix, Inc.,

No. 1:08CV928, 2012 WL 1379380, at *7 (M.D.N.C. Apr. 20, 2012)

(granting summary judgment to a defendant–competitor where the

employer could show that an employee had access to its trade

secrets but could not make the further showing that the employee

shared them with the competitor); Amerigas Propane, L.P. v.

Coffey, No. 14 CVS 376, 2015 WL 6093207, at *13 (N.C. Super. Ct.

Oct. 15, 2015) (finding no prima facie case because the employer

“has not offered evidence that [the employee] accessed or

downloaded customer information from [the employer’s] computer

database in connection with his departure from the company”);

cf. Sunbelt Rentals, Inc. v. Head & Engquist Equip., L.L.C., 620

S.E.2d 222, 229 (N.C. Ct. App. 2005) (holding that a prima facie

case of misappropriation was established where a competitor

hired employees from an employer and immediately expanded into

the employer’s territory, taking a large chunk of the employer’s

business); Byrd’s Lawn & Landscaping, Inc. v. Smith, 542 S.E.2d

19
689, 693 (N.C. Ct. App. 2001) (finding that a prima facie case

was established where an employee who had access to his

employer’s confidential cost-history information on customer

contracts resigned and started a competing business that

underbid the employer on several contracts). But see Barr-

Mullin, Inc. v. Browning, 424 S.E.2d 226, 230 (N.C. Ct. App.

1993) (“[A] prima facie case of misappropriation exists since

defendant Browning helped to develop the COMPU–RIP software

during his employ with plaintiff and Browning had access to

copies of the COMPU–RIP source code prior to his resignation.”).

At least two potential interpretations of the statute would

produce results consistent with those of the North Carolina

courts, and we think the Supreme Court of North Carolina would

adopt one of them.

1.

First, a more sensible—if less grammatically obvious—

reading of the second prong of the prima facie case is

available. As we have pointed out, the second prong of the

prima facie case presents two alternate scenarios for a

plaintiff to prove: Either the defendant “has had a specific

opportunity to acquire [the trade secret] for disclosure or use

or has acquired, disclosed, or used it without the express or

implied consent or authority of the owner.” § 66-155. The

final phrase—“without the express or implied consent or

20
authority of the owner”—may be read to apply only to the second

scenario; but one could also reasonably read it to apply to the

first.

Thus, in the first scenario the plaintiff would have to

show that the defendant “[h]as had a specific opportunity to

acquire [the trade secret] for disclosure or use . . . without

the express or implied consent or authority of the owner.” Read

this way, the employer would have to prove not merely that its

employee had access to trade secrets, but also that the employee

abused such access—the employer would have to show knowledge and

an unauthorized opportunity to acquire or use trade secrets.

Cf. Ridgway, 670 S.E.2d at 329 (finding a prima facie case where

an employer proved that its employee accessed confidential files

“with unusual frequency” shortly before attending a meeting with

a competitor). Although this is perhaps not the most natural

reading of the statute, it would avoid the problem outlined

above and produce results consistent with decisions of North

Carolina courts.

2.

Alternatively, a second interpretation would accept our

original reading of the prima facie case, permitting an employer

to show mere knowledge and opportunity. As we have noted, the

grounds set out in the statute for rebutting the prima facie

case do not assist an employee who wishes to rebut by arguing

21
that she never acquired or used any trade secrets at all. But

because the statute does not expressly limit a defendant to

these grounds for rebuttal—indeed, section 66-155 states that

“[t]his section shall not be construed to deprive the person

against whom relief is sought of any other defenses provided

under the law”—we may infer the existence of another ground for

rebuttal that would avoid the absurd result outlined above.

If a defendant’s opportunity to steal trade secrets may

give rise to an inference of misappropriation, we think the

defendant rebuts the inference by showing that the circumstances

surrounding the opportunity were not suspicious. In the

employment context, if an employee can show that the opportunity

was provided with the consent of the employer—as will often be

the case—then an inference of misappropriation is no longer

justified. The burden of production then shifts back to the

employer to show evidence sufficient to raise an inference of

actual acquisition or use. The practical effect of this burden

shifting, of course, is that an employer accusing an employee of

misappropriation will often gain little benefit from making a

prima facie case based on opportunity. Instead, the framework

will collapse into the question whether the employer has

sufficient evidence of misappropriation to raise an inference of

actual acquisition or use of its trade secrets. Here again,

22
this result is generally consistent with the practice of the

North Carolina courts.

3.

To summarize: we conclude that the Supreme Court of North

Carolina would adopt one of the two interpretations of section

66-155 we have discussed. Both produce a rule sufficient to

resolve this case: When an employer brings a misappropriation

claim against an employee, admitting that the employee had

authorized access to its trade secrets at all relevant times,

the employer must raise an inference of actual acquisition or

use of trade secrets to survive summary judgment.

We note finally that this rule is consistent with the

parties’ views of the law, and that neither raised the meaning

of section 66-155 as an issue in their briefs. See, e.g.,

Appellant’s Br. at 17-18 (noting that Tuschen “had access to all

of the documents and information,” but arguing that RLM should

have survived summary judgment because it had raised “a

compelling circumstantial inference that a copy of the CD was

taken by Tuschen and used by her and eScience”); Appellees’ Br.

at 19 (arguing that summary judgment was warranted because RLM

could not raise an inference that Tuschen made an extra copy of

the CD for herself or took the information stored on it).

23
C.

The rule we have just stated applies straightforwardly to

this case. RLM admits it gave Tuschen access to its trade

secrets, and it does not claim she ever accessed them without

authorization. On either of our interpretations, these facts

would prevent an inference of misappropriation from Tuschen’s

access alone: on the first, RLM fails to state a prima facie

case, and on the second, though RLM states the prima facie case,

Tuschen successfully rebuts it. RLM’s burden, then, is to raise

an inference of misappropriation, relying on circumstantial

evidence if necessary. GE Betz, Inc. v. Conrad, 752 S.E.2d 634,

649 (N.C. Ct. App. 2013).

RLM has admitted “[it] doesn’t have any” evidence “that Ms.

Tuschen retained any of the information on the CD,” J.A. 169,

and we have already explained (in affirming the dismissal of

RLM’s claim that Tuschen breached the Confidentiality Agreement)

why Tuschen’s creation of the CD cannot raise an inference that

she retained trade secrets. 4

4 RLM’s reliance on Ridgway to urge a different result is
misplaced. There, the employer put forth evidence that the
employee “accessed [the employer’s] ‘game plan’ and other
confidential documents from [the employer’s] network with
unusual frequency” just prior to a meeting with a competitor.
670 S.E.2d at 329 (emphasis added). RLM has no comparable
evidence that Tuschen’s creation of the CD was suspicious.

24
Nevertheless, RLM contends that after hiring Tuschen,

eScience underwent an “unexplained leap in technical capacity”

that permits an inference of misappropriation. Appellant’s Br.

at 18. RLM cites Static Control Components, Inc. v. Darkprint

Imaging, Inc., 200 F. Supp. 2d 541, 545-46 (M.D.N.C. 2002),

which found “strong circumstantial evidence” of misappropriation

where an aftermarket-toner distributor alleged that a competitor

developed new toner product lines unusually quickly after hiring

five of its employees. But unlike in Darkprint, where the

evidence was undisputed that the competitor developed new

products similar to the distributor’s soon after hiring its

employees, id., RLM’s evidence fails to raise a genuine issue of

fact as to whether eScience made a “leap in technical capacity.”

Its sole evidence is that eScience had never bid on the Contract

before Tuschen joined, but afterward it was able to bid on the

Follow-on Contract. We do not think submitting a bid,

particularly an unsuccessful one, represents the same sort of

“leap in technical capacity” described in Darkprint. 5

5
RLM also contends that, during discovery, Tuschen produced
a document “virtually identical” to one on the CD. Appellant’s
Br. at 20. (RLM does not contend the document itself contains
trade secrets.) But Tuschen testified she received the document
from a third-party source and RLM has no evidence to suggest
otherwise. While a fact finder could conclude that Tuschen
acquired the document from RLM rather than the third-party, this
would provide negligible evidence that she also acquired
documents containing trade secrets.

25
D.

Because RLM has not produced sufficient evidence to permit

an inference of misappropriation, summary judgment was properly

granted on the trade-secrets claim.

VI.

RLM’s conversion claim is easily dispatched based on the

analysis above. In North Carolina, conversion is “an

unauthorized assumption and exercise of the right of ownership

over goods or personal chattels belonging to another, to the

alteration of their condition or the exclusion of an owner’s

rights.” Peed v. Burleson’s, Inc., 94 S.E.2d 351, 353 (N.C.

1956) (quoting 89 C.J.S., Trover & Conversion § 1). For the

reasons set forth above, RLM’s evidence does not make a genuine

issue of its allegation that “Tuschen took RLM’s confidential

and proprietary information on a CD.” Appellant’s Br. at 23.

VII.

RLM next contests the district court’s grant of summary

judgment on its claim against eScience for tortious interference

with contractual relations. The tort has four elements:

First, that a valid contract existed between the
plaintiff and a third person, conferring upon the
plaintiff some contractual right against the third
person. Second, that the outsider had knowledge of
the plaintiff’s contract with the third person.
Third, that the outsider intentionally induced the

26
third person not to perform his contract with the
plaintiff. Fourth, that in so doing the outsider
acted without justification. Fifth, that the
outsider’s act caused the plaintiff actual damages.

Peoples Sec. Life Ins. Co. v. Hooks, 367 S.E.2d 647, 649-50

(N.C. 1988) (quoting Childress v. Abeles, 84 S.E.2d 176, 181-82

(N.C. 1954)). In explaining the fourth prong, the Supreme Court

of North Carolina has stated that “competition in business

constitutes justifiable interference in another’s business

relations and is not actionable so long as it is carried on in

furtherance of one’s own interests and by means that are

lawful.” Id. at 650 (holding that a competitor is not liable

for tortious interference for hiring employees away from an

employer and placing them in competition with the employer, so

long as the competitor was motivated by competition rather than

malice).

The district court correctly relied on Hooks, explaining

that “[t]here is no genuine issue of fact that plaintiff and

defendant [eScience] are competitors in the same field, and that

[eScience] hired Tuschen to work on government contracts similar

to those that she worked on with plaintiff.” Tuschen, 66 F.

Supp. 3d at 694. Because the record discloses no evidence that

eScience was motivated by anything other than competition, its

interference with Tuschen and RLM’s employment contract was

justified and summary judgment was therefore appropriate.

27
VIII.

RLM’s remaining claims all rely in one way or another on

claims we have already found meritless. First, RLM bases its

claim for unfair and deceptive trade practices on its claims for

misappropriation and tortious interference. See Appellant’s Br.

at 49-50. Because we have held that those claims lack merit, so

does this one. Second, civil conspiracy requires “an underlying

claim for unlawful conduct,” Sellers v. Morton, 661 S.E.2d 915,

922 (N.C. Ct. App. 2008) (quoting Toomer v. Garrett, 574 S.E.2d

76, 92 (N.C. Ct. App. 2002)), and none remains. Finally, RLM’s

request for a permanent injunction is unwarranted because there

is no basis on which to enjoin Tuschen or eScience.

IX.

For the foregoing reasons, we affirm the district court’s

judgment.

AFFIRMED

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RLM Communications, Inc. v. Amy Tuschen

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