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Arizona Supreme Court Rules on Arizona Trade Secrets Act Preemption

Posted by Roscoe J. Mutz | Dec 09, 2014 | 0 Comments

In Orca Communications Unlimited, LLC v. Noder, 2014 WL 6462438, a much anticipated decision published on November 19, 2014, the Supreme Court of Arizona held that the Arizona Uniform Trade Secrets Act (“AUTSA”) only preempts civil remedies based on misappropriation of a “trade secret” (as defined by AUTSA) and does not displace common law claims based on misappropriation of confidential information that does not fall within the statutory definition of “trade secret.”

AUTSA's preemption provision “displaces conflicting tort, restitutionary and other laws of this state providing civil remedies for misappropriation of a trade secret, [but]…does not affect…other civil remedies that are not based on misappropriation of a trade secret.”  A.R.S. § 44-407.  At issue in Orca is whether the drafters of AUTSA intended for it to displace all common law claims based on misappropriation of information or only common law claims based on the misappropriation of “trade secrets.”  Because nothing in the language of AUTSA suggests that the legislature intended to displace any cause of action other than one for misappropriation of a “trade secret,” the Arizona Supreme Court held that the latter interpretation applies.

However, a national split of authority remains with respect to the preemption issue.  With the Orca opinion, Arizona joins a minority of state courts adopting a “plain language” or narrow preemption interpretation.  A majority of courts interpreting the same provision in Orca held that it preempts all common law tort claims based on misappropriation of information, regardless of whether that information rises to the level of a trade secret.

The Court in Orca declined to discuss or define what type of confidential information is not a “trade secret.” Additionally, despite citing to multiple authorities suggesting the availability of such a claim, the Court did not decide whether Arizona recognizes a common law claim for unfair competition, as alleged in Orca's complaint. The Court remanded the case to the superior court for further proceedings. Farhang & Medcoff, PLLC has extensive experience in labor and employment matters, including special expertise in legal issues involving trade secrets, proprietary information, and protection of confidential information.  If you have any legal needs related to your business, please contact Farhang & Medcoff—we are ready to protect your interests.

About the Author

Roscoe J. Mutz

Roscoe Mutz is an associate attorney with a broad litigation background, including...

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