The Duty of Confidentiality and the Choice of Law
The District of Rhode Island answered an interesting question recently: which jurisdiction's law should define the duty of confidentiality owed to an employee's Italian-based former employer? 1
Here, the plaintiff asserted two relevant causes of action: (1) breach of confidential relationship; and (2) trade secret misappropriation under the Rhode Island Uniform Trade Secret Act (RIUTSA). The court analyzed both causes of action independently but came to the same conclusion: Italy's duty of confidentiality controlled here.
In making this decision, the court first looked to the contractual relationship that led to the duty of confidentiality and found that Italy is the favored jurisdiction under all applicable tests for a contract-based claim. The employment relationship was negotiated, consummated, performed and terminated entirely in the employer's country, Italy.
And even though the employee was domiciled in Rhode Island at the time of the alleged breach, applying Rhode Island law "would upset the 'justified expectations' of the parties and inject unpredictability into a defined relationship." Similarly, while the conduct causing the alleged breach arguably occurred in Rhode Island, the place of injury was in Italy.
In looking specifically at the RIUTSA, the court found that it would be odd for the law of Rhode Island – a jurisdiction neither party had any connection to before the alleged misappropriation – to define a duty arising from employment in Italy.
Having decided that the substantive law of Italy will apply, the court ventured into construing the "baroque mosaic of Italian law," including the Italian civil law system, the national collective bargaining agreement (NCBA), and two separate civil code articles related to confidentiality and loyalty.
While certainly interesting, this blog will save its analysis of that mosaic for a later post. The court did note as a postscript that although "the contours of Rhode Island's implied duty differ slightly in form, its scope is fundamentally congruent with the duty under Italian law arising from [the] employment relationship."
1 Alifax Holding SpA v. Alcor Sci. Inc., 357 F. Supp. 3d 147 (D.R.I. 2019).