Court Ruling Allows CU Trade Secrets Lawsuit to Move Forward
A Florida federal judge ruled last month that the $2.3 billion Grow Financial Federal Credit Union has alleged sufficient facts to pursue a lawsuit that the $1.8 billion GTE Financial Federal Credit Union and an employee allegedly misappropriated Grow’s trade secrets and other confidential and proprietary information under state and federal laws.
U.S. District Judge James S. Moody Jr., however, dismissed Grow’s claims that GTE and its employee, Erica Pierson Holliday, allegedly violated federal and state computer fraud and abuse laws.
“We are pleased with the decision made by Judge James Mooney to allow the lawsuit filed by Grow Financial to move forward against GTE Financial and Erika Pierson,” Grow Financial said in a prepared statement through its lawyers. “We believe that the protection and security of member data is the most essential business practice in the credit union industry and employees should be held to the highest standard of ethical and trustworthy behavior.”
Although lawyers for GTE and Pierson did not respond to CU Times request for comments, GTE Financial continued to deny Grow Financial’s allegations.
In a Sept. 19 court filing, GTE said any information it received that belonged to Grow was provided by Holliday because she had the authority to provide that information to GTE or any other credit union that would request such information.
In a lawsuit filed in May in federal court, the Tampa-based Grow accused a former credit union employee, Holliday, of jumping ship to a new job with GTE. She allegedly took with her reams of confidential files, proprietary reports and trade secrets, which included personal information of Grow members. What's more, the credit union also alleged these documents were taken unlawfully at the request of a GTE employee who used to work for Grow as well.
Although GTE of Tampa admitted some documents were taken by Holliday, none of them contained proprietary or any personal member information. In addition, GTE contends that the information the former Grow employee disclosed was part of the normal information sharing practices utilized by Grow, GTE and other credit unions in the area.
Richard Salazar, a Tampa lawyer who is representing GTE, asked a judge to dismiss four of the nine alleged violations claimed by Grow. G. Wrede Kirkpatrick, a Tampa attorney, who is representing Holliday, asked a federal judge to toss the entire lawsuit because it does not meet the legal standards of providing factual allegations and that federal rules “demand more than an “unadorned, the defendant-unlawfully-harmed-me accusation.”
But in his ruling, Judge Moody pointed out that Holliday allegedly emailed or printed out dozens of reports and other documents, many of which contained confidential and or proprietary Grow information and copied the trade secrets without the credit union’s consent or authorization.
“The (Grow Financial) complaint included a specific example of a proprietary ‘Dealer Scorecard’ that Holliday provided to GTE Financial, which Holliday and GTE Financial then used and continue to use,” Judge Moody wrote. “In sum, at this stage, Grow Financial has alleged sufficient facts to plausibly state a cause of action.”
In addition, Judge Moody refused to dismiss other Grow Financial claims of conversion and unfair competition and civil conspiracy against GTE Financial and Holliday.
On Aug. 23, 2016 James Esner, GTE's assistant vice president of indirect lending, contacted Holliday. She was working as Grow's underwriting supervisor.
Esner asked her to search Grow's secure computer system and to send him the credit union's customized lending strategy materials and its internal procedures and processes for loan applications.
Holliday, who worked from her home, allegedly emailed a copy of those documents to her personal email address and then forwarded them to Esner, according to Grow Financial’s lawsuit.
Before joining GTE in April 2016, Esner served as Grow's underwriting manager from 2011 to March 2016. During that time, Holliday reported directly to Esner. He was not named as a defendant in this lawsuit.
About a week after contacting Holliday, Esner asked her to send him Grow's dealer scorecard, a document that enables credit unions to assess the performance of auto dealers they work with. Again, Holliday allegedly sent the dealer scorecard to her personal email and then forwarded it to Esner, according to the lawsuit.
On Sept. 20, Holliday submitted her two-week notice that she was leaving the credit union. But she didn't say anything about landing a new job at GTE. In the days leading up to Sept. 20 and through Oct. 7, her last day on the job at Grow, Holliday emailed from her credit union email to her personal email dozens of reports and other documents.