United States: When Are Employee Files Relevant In Non-Compete Litigation?

During the course of non-compete litigation, a party may seek to obtain the employment files of the adverse party. The situation typically arises when an employer seeks to enforce a non-compete agreement against a former employee and the employee, in an effort to build his or her defense, serves a request for production on the employer seeking certain employee files. This issue was addressed by the United States District Court for the Middle District of Florida in Moore v. Lender Processing Service, Inc., et al., C.A. No. 3:12-cv-205-J-UATCMCR (M.D. Fla. June 5, 2013). The plaintiff in Moore was a former employee who brought a breach of contract and declaratory judgment action against her former employer following her termination. The employment agreement at the center of the dispute contained a non-compete clause which the employee argued was invalid due to the employer's breach of the agreement. Opinion at *1.

As part of its defense to the non-compete action, the employer argued that the employee was terminated for cause "due to a persistent failure to perform duties consistent with a commercially reasonable standard of care and also due to willful neglect of her duties." Opinion at *1. During the course of discovery, the former employee sought the production of nine employees' personnel files. The employee argued that seven of the nine files were relevant to show the pretextual nature of the employer's decision to terminate the employee. Id. at *2. By that, the employee believed production of the employee files would show that these seven employees engaged in the same conduct that she engaged in, however, they were not terminated but instead remained with the company. According to the employee, her performance was merely a pretext and not the real reason for her termination. Id.

The employer in Moore opposed production of the seven employee files, arguing that the information contained in the files was confidential and not relevant to the litigation. Id. According to the employer, how it treated other employees (whether by firing them or not for similar conduct) had no relevance on the issue of whether the employer breached the employment agreement. Id.

The court began its analysis by citing to Federal Rule of Civil Procedure 26(b)(1) which provides that "[p]arties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense ..." The court noted that it should construe relevancy "broadly to encompass any matter that bears on, or that reasonably could lead to other matter[s] that could bear on, any issue that is or may be in the case." Opinion at *2, quoting Oppenheimer Fund, Inc., v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380 (1978), citing Hickman v. Taylor, 329 U.S. 495, 501, 67 S.Ct. 385 (1947).

Turning first to the employer's argument, the court in Moore noted that there was some appeal to the notion that what the employer did with other employee's had no relevance to a breach of contract action. However, under Florida law "[i]f a written contract is ambiguous or obscure in its terms, so that the contractual intention of the parties cannot be understood from a mere inspection of the instrument, extrinsic evidence of the subject matter of the contract, of the relations of the parties to each other, and of the facts and circumstances surrounding them when they entered into the contract may be received to enable the court to make a proper interpretation of the instrument." Opinion at *2., citing Larsen v. AirTran Airways, Inc., 8:07-CV-00442-T-17TBM, 2009 WL 1076035, *10 (M.D. Fla. Apr. 21, 2009)(further citations omitted).

The court in Moore granted the employee's motion to compel production of the seven employee files, finding that the requested materials were relevant to the litigation. Opinion at *3. In doing so, the court recognized a scenario whereby certain provisions of the employment agreement were ambiguous and extrinsic evidence would be admissible to "assist in determining the intent of the parties." Id. citing Gulf Cities Gas Corp. v. Tangelo Park Service Co., 253 So.2d 744, 748 (Fla. 4th DCA 1971)(holding that "[w]here the language of a contract is ambiguous or unclear as to a particular right or duty, the court may receive evidence extrinsic to the contract for the purpose of determining the intent of the parties at the time of the contract.")

The last point considered by the court in Moore was whether the files should be produced given the employer's contention that they contained confidential information. Opinion at *3. The court agreed with the employer that materials that are confidential are subject to a heightened standard of relevance. Further, the court must consider the rights of non-parties (the seven employees) when deciding whether the information contained within their files is relevant. Id., citing Hatfield v. A. Nursetemps, Inc., 5:11-CV-416-OC-10TBS, 2012 WL 1326120, *4 (M.F. Fla. Apr. 17, 2012). Yet even applying a heightened standard of relevance for discovery information contained in personnel files, the court still found that the employee had met her burden and that the materials should be produced. Id.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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