DTSA as a Shoe Horn for Contract and Employment Law Claims

I expect that an important result of the Defend Trade Secrets Act (DTSA) will be the creation of supplemental federal jurisdiction over contract and employment disputes that are otherwise a matter of state law decided by state courts.  The majority of trade secret lawsuits also involve breach of contract and/or employment law claims – with the breach serving as the requisite ‘improper means,’

The DTSA provides federal district courts with original jurisdiction of the new federal claim of trade secret misappropriation.  Once a federal cause of action is established, the court will also “have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a).   Where, as above, the breach of contract or employment duty wrapped into the factual tale of trade secret misappropriation then a court would likely find the supplemental jurisdiction requirements met.   The statute goes on to give district courts deference to “decline to exercise supplemental jurisdiction” in certain situation.  28 U.S.C. § 1367(c).

As we move toward more contract cases in Federal Courts, it will be interesting to see the extent that large corporations next push for federalizing of contract law.


10 thoughts on “DTSA as a Shoe Horn for Contract and Employment Law Claims

  1. 6

    So, did anyone go through the exercise of seeing how this could be used on Google employees? The 24 year-old engineer against now federal laws and Google employment law. This isn’t going to hurt innovation in the least—sure.

    1. 5.1

      Hear hear. This sounds to me like a solution in search of a problem, which means it is simply the federal expansionism you cite.

  2. 4

    Hey for once patent blogging gives me a juicy factoid for the HR and recruiting communities. I don’t think this is on the peoplez radar yet, but sure enough, it probably federalizes a chunk of employment law.

    1. 4.1

      Not quite.

      While this may add another layer there too, there is no federal pre-emption and state to state variations may very well have their impacts, based on case by case details.

      1. 4.1.1

        (to be clear, any additional layer would have to come from additional laws,** not yet present – this one won’t do that)

        **even perhaps for some federal common law to develop in some non-statutory domain… 😉

  3. 3

    The Fed. Cir. has already repeatedly ignored the requirement of the long-standing Sup. Ct. requirement of Erie v. Tompkins to apply state contract law in Federal Courts.

  4. 2

    “Large corporations next push [will be] for federalizing of contract law.”

    Like the UCC?

    1. 2.1

      Kind of – but without the state by state implementation options and controls.

      Cali-what? 😉

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