Tort – Trade secret/defamation suit against former employee may proceed

Where plaintiffs plausibly alleged their former employee took trade secret information, used it to compete against them and defamed one of them, the former employee’s motion to dismiss was denied.

Background

MST & Associates Inc. and Rue Enterprises LLC allege that Brenda Withrow and her company, Medical Equipment Solutions LLC, or MES, took client information from MST. They have filed a five-count complaint against Withrow and MES. Defendants have moved to dismiss four of the counts.

DTSA

To plausibly plead a claim under the Defend Trade Secrets Act, owners must allege “(1) the existence of a trade secret, (2) the trade secret’s misappropriation, and (3) that the trade secret implicates interstate or foreign commerce.” Withrow and MES argue that the complaint fails to allege that MST took reasonable measures or that the information had independent economic value, as required to constitute a “trade secret.” The court disagrees.

The plaintiffs alleged that “Withrow worked for MST” and that MST ‘instructed it employees to keep all customer information strictly confidential.” Drawing all reasonable inferences in favor of the plaintiffs, one could infer that MST instructed Withrow to maintain secrecy around customer information.

MST and Rue also allege that “most other employees did not have access to the records” because Withrow “was tasked with maintaining them.” Although it fails to use the words “need-to-know,” this allegation suggests that MST only gave customer records to those, like Withrow, who needed to know about the records to perform their jobs. At this stage, such an allegation sufficiently pleads the existence of reasonable measures.

MST and Rue also sufficiently allege that the information at issue had economic value. First, “lists of past, present, and prospective clients . . . is necessarily the kind of information that is not freely shared with the public or with competitors.” Further, as described above, the plaintiffs allege that MST took reasonable steps to ensure that only the individuals who needed customer information received it. Accordingly, a person would likely not have “independently” discovered the information.

VCCA

The Virginia Computer Crimes Act, or VCCA, provides a civil remedy for “[a]ny person whose property . . . is injured by reasons of a violation of [the VCCA].” Such a violation may include “computer trespass,” which occurs when a “person, with malicious intent, or through intentionally deceptive means and without authority” either (1) erases computer data or (2) uses a computer or computer network to make an unauthorized copy of computer data.

The complaint adequately alleges that Withrow erased computer data by “delet[ing] all data from her company-issued phone,” resulting in the permanent loss of certain records. Further, the complaint alleges that Withrow made copies of private customer data by forwarding emails to her private email account. As a result, MST and Rue adequately pleaded a claim for computer trespass.

Defamation

In Virginia, defamation requires the “(1) publication of (2) an actionable statement with (3) the requisite intent.” “The requisite intent for defamation involving a private person is essentially negligence-that the defendant ‘either knew [the statement] to be false, or believing it to be true, lacked reasonable grounds for such belief, or acted negligently in failing to ascertain the facts on which the publication was based.’”

MST and Rue allege that Withrow knew her statement to the Inova Alexandria employee that MST was not paying its bills was false, which meets the intent element at this stage. Indeed, MST and Rue allege facts from which one can reasonably infer she knew the statement was false.

For example, they allege Withrow managed “customer accounts” and maintained records of MST’s client interactions. One can reasonably infer that Withrow learned from the client records that she maintained whether MST timely paid its debts.

Tortious interference

Under Virginia law, tortious interference with business relations has four elements: “(1) the existence of a valid contractual relationship or business expectancy; (2) the putative interferer’s knowledge of the relationship or expectancy; (3) an intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resulting damage to the plaintiff.” Defendant contest the first element.

MST and Rue sufficiently allege ongoing contractual relationships. For example, the complaint states that “MST has contracts with a variety of hospital systems and medical facilities across the Commonwealth and in the surrounding states, including, but not limited to: Inova Health System.” Further, the complaint details emails in which current customers, including at least one contractor, extend business offers to MST.

Defendants’ partial motion to dismiss denied.

MST & Associates Inc. v. Withrow, Case No. 3:25-cv-540, Jan. 20, 2026. EDVA at Richmond (Gibney Jr.). VLW 026-3-028. 10 pp.