Wolfspeed, a Durham-based silicon carbide semiconductor business, has plenty on its plate these days amid media reports of an impending bankruptcy reorganization. While such a filing would be aimed at a short(ish) judicial stay, the Business Court has one of a typically longer variety before it with Wolfspeed suing over the departures, and alleged trade secret misappropriations, of two R&D employees.
In Wolfspeed, Inc. v. Van Brunt, 2025 NCBC 19, the dispute centers on the departure of Scott Allen and Edward Van Brunt to industry competitor On Semi Conductor Corporation. The motions to dismiss of Onsemi and its new employees resulted in an interesting mix for Wolfspeed – being called out by the Court for a notably overbroad non-compete clause, but also benefitting from generous treatment of its tortious interference and trade secret allegations which allowed them to avoid Rule 12(b) dismissal.
Judge Robinson readily agreed that Wolfspeed’s non-compete covenant with Van Brunt well exceeded a permissible scope. It barred Van Brunt from working for a competitor in a defined territory “as an employee, consultant, agent, contractor or in any other capacity.” Id. ¶ 45. That, the Court noted, “restrict[ed] Van Brunt’s employment opportunities without regard to whether [he] is employed in a similar position at that business or the services he provides at that business are the same as or similar to those he provided at Wolfspeed.” Id. ¶ 46 (citing VisionAIR, Inc. v. James, 167 N.C. App. 504, 509 (2004) (barring covenant that prevented employee “from doing even wholly unrelated work at any firm similar to [the employer].”))
Wolfspeed fared considerably better with defendants’ challenges to its tortious interference and trade secret misappropriation claims.
Wolfspeed maintaining its interference with contract claims is notable because of the lenient bar applied to its allegations that the interference was wrongful. The Court found Wolfspeed’s claims against Onsemi and Allen “sufficient at this stage” because they alleged that the interference “was neither justified nor privileged.” Id. ¶¶ 66, 69. That’s seemingly more generous than some other recent Business Court decisions in the tortious interference realm, and reflects some tension about how far “notice” pleading gets a party for such claims. For instance, in Prometheus Grp. Enters., LLC v. Gibson, 2023 NCBC 23 (N.C. Super. Ct. Mar. 21, 2023), the Business Court considered a similar allegation that a competitor had “knowingly induced [the employee] to violate his [Employment Agreement] with Prometheus without justification.” There, Judge Earp noted that “[c]onclusory allegations are not enough[,]” and that “[i]n testing the sufficiency of a complaint, the court ignores the conclusions and looks to the facts.” Prometheus, ¶ 67 (quoting Myrtle Apartments, Inc. v. Lumbermen’s Mut. Casualty Co., 258 N.C. 49, 51 (1962).
Wolfspeed’s trade secret misappropriation claim also survived Rule 12(b), and highlights pleading opportunities for plaintiffs to get these claims into discovery. The Court deemed as “minimally sufficient” the “information and belief” allegation that Van Brunt accessed, attempted to access, or had access to Wolfspeed confidential data after he began work at Onsemi. The Court particularly noted that Van Brunt still had custody of a Wolfspeed laptop for the first two days of his work at Onsemi. That timing sequence of hiring and laptop custody by Van Brunt also was enough for Wolfspeed to maintain trade secret claims against Onsemi. Wolfspeed, ¶¶ 75-77. On brief, Wolfspeed had argued it could meet its burden to show acts of misappropriation by alleging it happened or by “provid[ing] other sufficient evidence of misappropriation to raise an inference of actual acquisition or use of its trade secrets.” Am. Air Filter Co., Inc. v. Price, 2017 WL 485517, *8 (N.C. Super. Ct. Feb. 3, 2017).
Worth Noting
- The Court rejected a “breach of loyalty” claim against Van Brunt, who was identified in the complaint as a “research scientist.” Noting there is no separate tort for breach of loyalty by an at-will employee, the Court nonetheless examined from a fiduciary duty lens whether that claim was adequately pled. The Court said no, where there were no allegations that Van Brunt was an officer or exercised any dominion or control over Wolfspeed. Id. ¶¶ 89-90.
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