Complaint says Former Employees Misappropriated Trade Secrets to Open Competing Pharmacy

On Friday in the Eastern District of Pennsylvania, KBS Pharmacy Inc. filed a complaint against two former employees and a spouse of one of the former employees, alleging that the defendants misappropriated confidential KBS information in order to recruit patients to transfer their services to the defendants’ competing pharmacy.

Defendants Jigar Patel and Christine Crager were employed by KBS for nearly a decade as lead pharmacist and pharmacy technician, respectively, both overseeing daily operations at the pharmacy, according to the complaint. Because their roles gave them access to KBS’s confidential and proprietary information, they both executed agreements that prohibited them from misappropriating such information.

Patel expressed interest in buying the pharmacy in 2018, the complaint said. The plaintiff alleged, however, that while discussing the terms of the potential purchase with KBS owner Kaushal Patel, the defendants were using their access at KBS to download patients’ confidential information and convince patients to leave KBS, while recruiting them as clients of the pharmacy that Jigar Patel and his wife, Sima Patel, were planning to open; during this time, Kaushal Patel did not know of the defendants’ plans and was under the impression that his employee would be acquiring KBS.

On May 8, 2020, Jigar Patel gave his two weeks’ notice to Kaushal Patel, informing him of his intent to leave his position at KBS  — and that he and his wife would be opening a pharmacy down the road. Defendant Crager resigned through a text message shortly thereafter, the complaint said.

Within four days, Jigar and Sima Patel opened Smart Choice Pharmacy “less than 100 yards” from KBS, employing Crager, and, within six weeks, nearly 70% of KBS’s customer base requested that their pharmacy records be transferred to Smart Choice, according to the complaint.

“Unbeknownst to the Plaintiff, Jigar Patel, and Crager had already downloaded from Plaintiff’s computer equipment client and customer (information) including their names and phone numbers; contacted customers had them execute authorizations to transfer their medical records and prescription needs to this new ‘pharmacy’ and solicited Plaintiff’s employees to join them,” the complaint alleged. “In fact, a forensic analysis of Plaintiff’s computer system has established that Jigar accessed Plaintiff’s confidential software and data. Jigar then downloaded, onto a USB drive, Plaintiff’s confidential customer information and prescription information.”

The plaintiff argued that this alleged conduct was an intentional interference with KBS’s customer base through misappropriation of trade secrets, violations of the former employees’ confidentiality agreements, and acquisition of confidential patient information. Among the other causes of action against the defendants were violations of the Computer Fraud and Abuse Act, breach of fiduciary duty, and unfair trade practices.

KBS is seeking monetary and punitive damages and injunctions to bar the defendants from engaging in their alleged competing business for one year.

Harty Law Group PLLC is representing the plaintiff.