On May 23, 2024, the U.S. District Court for the Western District of Pennsylvania dismissed a trade secret misappropriation claim for failure to identify a trade secret. The case is titled Vertical Bridge REIT, LLC v. Everest Infrastructure Partners, Inc., Case No. 23-1017 (W.D. Pa. 2024).

Allegations. PlaintiffVertical Bridge (“VB”) and its related entities own and operate towers that are rented to telecommunications tenants like cell phone companies and TV stations. The towers are located on land that VB has leased, or obtained an easement on, from landowners. In 2023, VB sued Everest Infrastructure Partners and a related entity (collectively, “Everest”). Everest competes with VB in the telecommunications tower industry, entering into similar agreements as VB with both landlords and telecom subtenants. VB alleged Everest was violating the Defend Trade Secrets Act (“DTSA”) and the Pennsylvania Uniform Trade Secrets Act (“PUTSA”) by using confidential information about the price of VB’s land leases to purchase VB’s landlords’ rights in their property by promising them future profits, and then substantially increasing VB’s rent payments. This, VB argued, would eventually require VB to decommission its towers and abandon the sites, allowing Everest to take over the towers. VB alleged that the pricing information in its leases with its landlords were a protected trade secret that Everest was misappropriating in order to enter into its own contracts that were more beneficial to the landlords. (VB also brought claims for violations of the Lanham Act and torts claims.)

Ruling. The court found nothing in the pleadings to indicate Everest had engaged in wrongdoing. The Court dismissed the complaint in its entirety, albeit without prejudice, but expressing heavy skepticism of VB’s claims.

More specifically, the Court found that VB had not adequately pled the existence of any trade secret. It noted that “it is unclear: whether the [trade secret] information in question is solely the price of rent; whether the same price-term and price-structure information the VB Plaintiffs seek to protect now was disclosed in predecessor-in-interest contracts that lacked any confidentiality provision (even if the contract was later amended to include a confidentiality clause), or whether the information in question was disclosed in offer letters to landlords without any non-disclosure agreement in place.” Opinion at 19-20. Without more information, the Court was “unable to determine—with sufficient precision—what information the VB Plaintiffs have sought to protect.” Id. at 20.

For example, as to some of its contracts, VB had argued that its purportedly secret price terms were protected by implied confidentiality agreements between VB and its landlords during their prior negotiations. The court rejected this argument. The court noted that while confidentiality agreements do not necessarily need to be explicit to be effective, VB’s alleged extra-contractual requests that landlords keep pricing terms confidential were not sufficient for the court to draw an inference that the landlords had confidentiality obligations to VB.

For other contracts at issue, the court found that VB did not provide sufficient information for the court to understand whether the information at issue had ever been disclosed to a third party, such as additional parties to landlords’ and VB’s contract negotiations or predecessors-in-interest to VB’s contracts. The court noted that a disclosure would not necessarily be fatal to VB’s claims, but that “greater particularity in pleadings is necessary for the Court to evaluate what exactly the various VB Plaintiffs have sought to protect and whether they can plead adequate secrecy to plausibly allege the existence of a trade secret.” Id. at 22.

Implications. The court’s rulings regarding deficiencies in VB’s complaint show the need for a plaintiff to identify the nature of the trade secret, how it has been protected from disclosure, and how it has been misappropriated.

Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice.

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice. Steven’s national practice focuses on defending companies in federal and state courts and arbitration against claims of: discrimination, retaliation and harassment, including claims brought by high-level executives; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations (including class, collective and PAGA actions).

Illustrating his versatility, Steven has successfully handled bench and jury trials in multiple jurisdictions (e.g., Illinois, California, Florida and Texas); defended one of the largest Illinois-only class actions in the history of the federal courts in Chicago; and prevailed following his oral arguments before the Seventh Circuit and state appellate courts. Steven brings his litigation experience to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He was also named as One of the Top 10 Impactful Labor & Employment Lawyers in Illinois for 2023 by Business Today. He is a Fellow of the College of Labor and Employment Lawyers. Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Chambers also reports that “He is someone who can navigate the twists and turns of litigation without difficulty. Steven is great with brief-writing, crafting arguments, and making sure the client is always happy.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC, and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

Photo of Pinchos Goldberg Pinchos Goldberg

Pinny Goldberg is a senior counsel in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and…

Pinny Goldberg is a senior counsel in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and in pre-litigation negotiations. Matters he works on include discrimination and harassment, wage and hour, wrongful discharge, whistleblowing and retaliation, covenants not to compete, breaches of fiduciary duty, unjust enrichment, and tort and contract claims.

In addition to handling litigation and dispute resolution, Pinny regularly advises clients on a wide variety of employment issues, including drafting, reviewing and revising handbooks and workplace policies. He also addresses questions and concerns related to hiring, wage and hour issues, employee leave, performance problems, terminations of employment, and separation agreements and releases.

Photo of Nicole O. Swanson Nicole O. Swanson

Nicole Swanson is an associate in the Litigation Department.

Nicole earned her J.D. from New York University School of Law, where she served as a Managing Editor of the Moot Court Board and was elected to the Order of Barristers. While at NYU…

Nicole Swanson is an associate in the Litigation Department.

Nicole earned her J.D. from New York University School of Law, where she served as a Managing Editor of the Moot Court Board and was elected to the Order of Barristers. While at NYU, Nicole externed with the Civil Division of the U.S. Attorney’s Office for the Southern District of New York.

Prior to law school, Nicole served as an AmeriCorps volunteer in Phoenix, Arizona, working with self-represented litigants in family court.

Nicole maintains an active pro bono practice. She volunteers with LIFT (Legal Information for Families Today) to provide family law consults, and serves as a member of LIFT’s junior board. She also supports the New York State Courts’ Pandemic Practices Working Group in its efforts to evaluate court policies adopted in response to COVID-19.