Simply making a copy of computer files not sufficent grounds for revoking fired worker's severance, court rules

The Supreme Judicial Court today ordered a small Boston software company to pay a fired vice president severance and accumulated vacation time it tried to rescind when it discovered he'd copied company files to an online backup service before he was fired.

Eventmonitor, Inc., initially dismissed Anthony Leness "without cause," which under his contract meant they owed him severance money and the value of unused vacation days. But the company changed that to "with cause," after a forensic examination of laptop showed he'd used his personal credit card to create an account with Carbonite, uploaded all his files to it and then didn't return those files to the company or delete them when he was terminated.

In its ruling, the state's highest court allowed as how that might not have been the brightest thing.

But it agreed with a lower court that his action did not rise to a "material breach" of his employment contract because the company failed to show that the copying had led to any sort of actual damages to the company - the company produced no evidence Leness had given the data to a competitor or used them for his own benefit; that, in fact, it appeared he had done absolutely nothing at all with the files other than copying them to the cloud.

This makes his action fundamentally different than if he had, say, taken, or "defalcated" money from the company, the court said.

The judge found, and the finding is supported by the evidence, that Leness did not misuse or deprive EventMonitor of its proprietary information. Leness merely retained a copy of the information under circumstances that had no impact on EventMonitor's use of its proprietary information, or on the value of that information. If Leness had disclosed or used the information, his actions might have allowed a competitor to offer a similar product without substantial development costs, reduced the standing of the company in the eyes of its clients, or provided a competitor with information about EventMonitor's customers, any one of which possibly could have resulted in a loss of revenue.

The court did give EventMonitor a small victory: It ruled that, based on his contract, Leness could not recover his attorney's fees from the company.