First Circuit Says Customer List Containing Public Information Is a Trade Secret

On August 29, 2023, the U.S. Court of Appeals for the First Circuit gave an encouraging sign to employers seeking to protect their customer lists from use or disclosure by former employees. In Allstate Insurance Company v. Fougere, the Court held that a customer list containing some publicly-accessible information was a protectable trade secret under both state and federal law.

The case involves two former Allstate exclusive agents who allegedly failed to return all confidential business information to Allstate upon their termination. The employees had signed exclusive agency agreements with Allstate, which contained an express requirement that they return all confidential information to Allstate when their employment relationship ended. In the lawsuit, Allstate contends that the employees breached this agreement to return confidential information in part by retaining spreadsheets that contained a list of customers along with detailed identifying information and data about the history of their relationship with Allstate. The District Court held that these spreadsheets constituted Allstate’s confidential trade secret information and granted summary judgment accordingly. The former employees appealed that decision to the U.S. Court of Appeals for the First Circuit.

The First Circuit affirmed the District Court’s decision that the customer lists qualified as trade secrets. The Court reasoned that “the inclusion of some information in compilations which could have been obtained from public sources does not mean the compilations were not trade secrets… when it would have been immensely difficult to collect and compile it in the form in which it appeared in the compilation.” Although much of the information was technically in the public domain, as a practical matter “it would be difficult, if not impossible, to develop the spreadsheets” independently. Thus, the trade secret value lies not in the content of any one piece of information, but rather in the effort Allstate made to compile, organize, and maintain the customer lists.

This expansive view of what qualifies as a trade secret should be reassuring to employers concerned about protecting sensitive databases, spreadsheets, and other compilations from misappropriation by former employees. Even if much of the information is public, the effort put into the creation and maintenance of the material can create a protectable trade secret under state and federal law.


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