AGI SureTrack v. OPISystems — Court Recommends Adverse Inference Sanctions for Spoliation of Agricultural Trade Secrets

Background

AGI SureTrack develops BinManager, a cloud-based grain storage management system with proprietary software, sensors, and controls used to monitor temperature and moisture in grain bins. AGI alleged that OPISystems, its direct competitor, hired several former AGI employees — including Adam Weiss, AGI’s former VP of Global Technology and Controls, as OPI’s new CTO — and then used AGI’s stolen source code to develop competing products.

The case centers on a former AGI software engineer, Timothy Penrod, who allegedly stored AGI’s BinManager source code on a personal flash drive and laptop, backed up copies to his personal Microsoft OneDrive account, and then used that code while working as a contractor for OPI. AGI contended that OPI’s CTO, Weiss, knew about Penrod’s possession of AGI’s code from the start and directed him to use it in OPI’s BinManager integration project.

Discovery was contentious. Over two years of disputes, OPI repeatedly delayed producing its own source code, and AGI eventually moved for sanctions alleging that OPI had failed to preserve critical evidence — including the very source code that AGI claimed was stolen.

The Court’s Holding

Magistrate Judge Birr granted the sanctions motion in part and recommended that the district court grant an adverse inference instruction for spoliation. The court found that OPI had a duty to preserve evidence relating to AGI’s trade secret claims once litigation was reasonably anticipated, and that OPI failed to meet that duty with respect to key source code and electronic records.

The court’s analysis focused on the chain of custody of AGI’s proprietary code: Penrod stored it on personal devices without authorization, used it in OPI’s development work, and the evidence was not properly preserved when litigation became imminent. The court found that OPI’s failure to preserve this evidence was sufficiently culpable to warrant an adverse inference — meaning the jury at trial may be instructed to presume that the destroyed or lost evidence would have been favorable to AGI’s claims.

Key Takeaways

• Companies that hire competitors’ employees must implement litigation holds and evidence preservation protocols immediately — failing to preserve source code and electronic records that may contain misappropriated trade secrets can result in severe sanctions.
• When a former employee brings proprietary materials from a prior employer on personal devices, the hiring company’s knowledge of those materials creates a heightened duty to preserve them as evidence.
• An adverse inference instruction in a trade secret case can be devastating at trial: the jury may presume that the destroyed source code would have shown misappropriation.
• Agricultural technology is an increasingly active area for trade secret litigation as farm-tech companies compete for market share in precision agriculture and grain management systems.

Why It Matters

This decision is a cautionary tale for any company in a competitive industry that hires talent from rivals. When employees arrive with flash drives, personal laptops, or cloud accounts containing a former employer’s proprietary code, the hiring company faces immediate legal exposure — and its response to that exposure matters. OPI’s failure to preserve evidence it knew or should have known was relevant to AGI’s claims will now potentially shift the burden at trial. For trade secret practitioners, the decision also illustrates the growing importance of electronic evidence management in a world where source code can be trivially copied and stored on personal cloud accounts.