New Jersey Superior Court Finds the Recently-Enacted New Jersey Trade Secrets Act Does Not Preempt Common Law Claims

In an opinion dated December 7, 2012, a New Jersey Superior Court judge in Bergen County considered an issue of first impression relating to the recently-enacted New Jersey Trade Secrets Act (“NJTSA”). In SCS Healthcare Marketing LLC v. Allergan USA Inc. et al., defendant Allergan sought to dismiss numerous common law claims brought by plaintiff SCS, arguing that SCS’s statutory claim for misappropriation of trade secrets under the NJTSA preempted its common law claims. SCS filed suit alleging that Allergan misappropriated marketing contractors’ trade secrets relating to a proprietary technology portal. Specifically, SCS alleges that Allergan revealed its proprietary and confidential information to a rival health care marketing company, thereby violating state laws relating to unfair competition, disclosure and trade secrets.

In addition to its NJTSA claim, SCS’s suit involves common law claims for, inter alia, misappropriation of confidential information, trespass to chattels, tortious interference, unfair competition and civil conspiracy. Allergan argued that these claims should be dismissed as they are based on the same common set of facts and occurrences on which SCS bases its claim for misappropriation under the NJTSA, and therefore specifically preempted by N.J.S.A. 56:15-9(b), which provides that, “This act shall supersede conflicting tort, restitutionary, and other law of this State providing civil remedies for misappropriation of a trade secret.”

Judge Harry G. Carroll considered and rejected Allergan’s preemption argument, ruling that the New Jersey State Legislature had specifically modified the language of the Uniform Trade Secrets Act relating to preemption when it adopted the NJTSA. More specifically, the judge determined that the legislature altered the proposed statutory language to ensure that preemption would not occur. In particular, subsection (a) of N.J.S.A. 56:15-9 which expressly provides that the rights, remedies and prohibitions of the NJTSA are “in addition to and cumulative of” any other right, remedy or prohibition provided under the common law or statutory law of this state and that “nothing within its provisions shall be construed to deny, abrogate or impair such a right, remedy or prohibition…” While the judge noted that subsections (a) and (b) were not the “model of clarity,” he rejected the defendant’s attempt to read subsection (b) in isolation, and concluded the statutory scheme reflects the New Jersey legislature’s intent that the rights and remedies afforded under the Trade Secrets Act be cumulative, rather than restrictive, of the rights and remedies provided under the common law. Accordingly, the Court denied the Allergan’s motion to dismiss SCS’s common law claims, rejecting the argument that the claims are preempted by the NJTSA.

The Court’s thorough analysis of the statutory language and legislative intent is noteworthy as there is little jurisprudence relating to the newly-enacted NJTSA. The Court’s decision to permit SCS to pursue its common law and statutory claims will undoubtedly be well received by plaintiffs seeking to protect various types of confidential information as it permits them to assert a statutory claim of misappropriation of trade secrets while simultaneously asserting common law claims to protect confidential information which may not meet the definition of a trade secret.

Gibbons P.C. will continue to monitor this decision and those of other New Jersey courts as the body of law relating to the New Jersey Trade Secrets Act continues to develop.

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