On November 19, 2014, the Arizona Supreme Court decided that confidential information which does not rise to the level of a trade secret, A.R.S. § 44-401 et seq., may still be protected from disclosure by tort law. Orca Communications Unlimited, LLC v. Noder, ___ Ariz. ___, ___ P.3d ___ (Ariz. 2014). The Arizona Supreme Court settled a conflict between the result reached by the Arizona Court of Appeals, Orca Communications Unlimited, LLC v. Noder, 233 Ariz. 411, 314 P.3d 89 (Ariz. App. 2013), and decisions in the U. S. District Court in Arizona. Firetrace USA, LLC v. Jesclard, 800 F. Supp. 2d 1042, 1049-50 (D. Ariz. 2011). Protection of information not qualifying as a trade secret is not preempted by the Arizona Trade Secrets Act. The Arizona legislature did not intend the Arizona Trade Secrets Act to limit protection only to information qualifying as a trade secret.
Contracts Protecting Confidential Information. Employers often seek to prevent disclosure of confidential information by contract, using a Non-Disclosure Agreement to do so. The terms of a Non-Disclosure Agreement must be reasonable and impose no greater restraint than necessary to protect the confidential information. In a portion of the Orca case not appealed the Court of Appeals held the Non-Disclosure Agreement included in the scope of protection information that was not confidential and was overbroad. An employer "cannot deem by fiat all information [an employee] acquired through her employment 'confidential.' [The employer] has no protectable interest in public information." Orca Communications Unlimited, LLC v. Noder, 314 P.3d at 95 (Ariz. App. 2013).  A prohibition on use of all information amounts to an unreasonable restriction against competition and is unenforceable.Id.
Tort Law Protecting Confidential Information. In Orca, the Court of Appeals had specifically recognized that tort claims can arise independent of a Non-Disclosure Agreement and be separately enforced. The Court of Appeals permitted claims to proceed for breach of the covenant of good faith and fair dealing, breach of fiduciary duty, tortuous interference with business expectancies and unfair competition. The Arizona Supreme Court only addressed the tort claim of unfair competition. Under Arizona law, a tort claim for taking or using confidential information is only preempted if the claim is "based on misappropriation of a trade secret." A.R.S. § 44-407(A). The legislature did not intend the statute to preempt civil remedies that are not based on misappropriation of a trade secret. Confidential information should not lose common law protection based on legislative action unless that intent is explicit and clear.
Protected trade secrets are broadly defined for the ultimate purpose of promoting fair competition. See Enterprise Leasing Co. v. Ehmke, 197 Ariz. 144, 151, 3 P.3d 1064, 1071 (App. 1999). Trade secret protection, however, is not necessarily the only tort broad enough to protect against misuse of confidential information.See Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 970 P.2d 954, 956 (Az. App. 1998) (the purpose of unfair competition doctrine, including “misappropriation”, is to prevent business conduct "contrary to honest practice in industrial or commercial matters"). Status as an employee creates a fiduciary duty of confidentiality that survives the termination of employment and extends to information the does not satisfy the requirements for protection as a trade secret. Restatement (Second) of Agency§§ 395, 396. The Arizona Trade Secrets Act does not limit protection only to confidential information qualifying as a trade secret.
The Arizona Supreme Court ruling in Orca leaves two ways to protect confidential information in Arizona: a narrowly written contract provision (for example, a Non-Disclosure Agreement); or a tort claim that is not within the broad definition of a trade secret. Likewise the Supreme Court ruling in Orca leaves two ways to protect trade secrets in Arizona: a narrowly written contract provision (for example, a Non-Disclosure Agreement); or a trade secret misappropriation claim.