Why would any lawyer think that his Joint Defense Agreement, entered into with a co-defendant, was protected from production by the attorney-client privilege? Well, the lawyer for one of the Defendants in AP Atlantic, Inc., v. Crescent University City Venture, LLC, 2017 NCBC 48 did, but his position was rejected by NC Business Court
I’m a business litigator in North Carolina, with Brooks Pierce McLendon Humphrey & Leonard, LLP.
I grew up in New York, went to college there (at Union College in Schenectady), and then came to North Carolina to law school at UNC-Chapel Hill. I clerked for United States District Judge Frank Bullock of the U.S. District Court for the Middle District of North Carolina after graduating, and then joined Brooks Pierce.
You probably don’t think much, when you are noticing a deposition, about where it should take place. Ideally, you probably want it to happen in your own office.
The NC Rule of Civil Procedure on depositions, Rule 30, says that the notice of deposition "shall state the time and place for taking the deposition." …
Going pro se in the NC Business Court is a bad idea. At least it was for the Plaintiff in Gillespie v. Majestic Transport, Inc., 2017 NCBC 43 who saw his claims dismissed (without prejudice) for failing to comply with the Court’s discovery orders and was ordered to pay attorneys’ fees to the Defendant.…
The parties to Security Camera Warehouse, Inc. v. Bowman, 2017 NCBC 38, had been adverse to each other in a previous lawsuit (not in the Business Court), which they settled. Security Camera released Bowman, one of its former owners, from all claims in that settlement. But during the settlement negotiations which resulted in…
It’s not very often that I see a fee application in a settled class action in the Business Court that doesn’t strike me as requesting approval of an overpayment for a less than successful result. Those are most often in the settlement of merger class action in which the only benefit for the class was…
Thinking of filing a Motion to Compel in the NC Business Court? You might want to file it before the close of the discovery period, even though there is no Business Court Rule establishing a deadline for doing so.
That’s because there might be a "secret rule," based on Judge Robinson’s (unpublished) Order last week…
The lawyers in Baker v. Bowden, 2017 NCBC 30, decided this week by Judge Robinson, were negotiating a settlement agreement by email. The Plaintiff thought that it had a deal. When the Defendant balked, the Plaintiff moved the Business Court to enforce the settlement.
The Plaintiff, whose lawyer had sent an email to…
Business Court Judges don’t have to issue written Opinions in cases granting Preliminary Injunctions. (G.S. § 7A-45.3 limits the obligation to issue a written Opinion to rulings rendered per NCRCP 12, 56, 59, and 60). But even so, new Business Court Judge Conrad chose a case granting a Preliminary injunction (Addison Whitney, LLC v. Cashion, 2017 NCBC 23) to be his first published (numbered) Opinion.
The Plaintiff, Addison Whitney, is a branding company. Among other things, it creates product names, and has done so for a number of famous companies, It came up with "Outlook" for Microsoft and "Escalade" for Cadillac. It has a specialty in creating names for new drugs from pharmaceutical companies.
Addison Whitney sued the Defendants — all of whom had formerly held top positions at Addison Whitney — after they left en masse and started a competing company. Several of the Defendants had signed "Confidential Information and Unauthorized Disclosure Agreements" and "Employee Confidentiality Agreements." One Defendant had signed an Employee Confidentiality Agreement which contained a non-compete provision. The other Defendants had not signed any document containing a non-compete.
What Were The Trade Secrets?
Addison Whitney argued that it had three separate categories of trade secret information.
First, it said that it had "created a database that contains information regarding drug product characteristics for nearly 4,000 drug products on the market.” This was a mix of publicly accessible information and of information that was "not publicly available and chosen based on the ‘professional judgment’ of Addison Whitney employees." Op. ¶18. This database was password-protected.
Second, Addison Whitney maintained 246 case studies of work it had done for particular clients which contained non-public information regarding its work and sometimes the confidential information of clients. These were also password protected.
Finally, Addison Whitney kept its client and prospective client information on SalesForce, a "customer relationship management program." Addison Whitney put non-public information about clients’ buying habits and upcoming product into SalesForce. Only a limited number of Addison Whitney employees had access to its SalesForce platform.
Addison Whitney said that each of these three categories of trade secret information gave it a "competitive advantage." Judge Conrad ruled that all of these types of information are entitled to trade secret protection.. As to the client information, he said that North Carolina courts "routinely hold that such information is protectable as a trade secret". Op. ¶35 (citing Drouillard v. Keister Williams Newspaper Servs., Inc., 108 N.C. App. 169, 174, 423 S.E.2d 324, 327 (1992); Computer Design & Integration, LLC v. Brown, 2017 NCBC LEXIS 8 at *27–28).
Establishing Misappropriation Of A Trade Secret
Since the Defendants, as former employees, had legitimate access to the Plaintiff’s trade secrets, the existence of access and opportunity to acquire them was insufficient to establish misappropriation.
Relying on Judge Bledsoe’s recent opinion in Am. Air Filter Co. v. Price, 2017 NCBC LEXIS 9, at *23, Judge Conrad held that:
there must be substantial evidence (1) that the wrongdoer accessed the trade secret without consent, or (2) of misappropriation resulting in an inference of actual acquisition or use of the trade secret.
Access without consent can be shown by "showing that an employee continued to access trade secrets after receiving a job offer from a competitor and then later accepted the offer" Op. ¶39.
The "relevant inquiry," per Judge Conrad, was "when Defendants’ plan to resign and to open their own competing business became sufficiently concrete to render continued access to trade secrets unauthorized." Op. ¶39.
Since the Defendants told others at the company in December 2016 that they were planning to resign, Judge Conrad ruled that was the point after which their trade secret access became unauthorized.
After that point, they obtained copies of the case studies, a list of clients with open opportunities, and a list of prospective clients. They also accessed a number of other documents both before and after resigning. These included accessed "client brand guidelines, market research, linguistic reports, naming strategy briefs, and client strategy presentations.” Op. ¶25.
If I asked you if you were familiar with Rule 13(f) of the NC Rules of Civil Procedure, I’m betting that you would respond with a glassy stare and a slack jaw. That Rule deals with a counterclaim that you should have made in your Answer, but which you left out. It says that…
Do you really have to rush to Court to obtain an injunction for a misappropriation of trade secrets? Maybe not. But for an injunction enforcing a non-compete agreement, maybe yes. The Plaintiff in American Air Filter Co. v. Price, 2017 NCBC 9 didn’t get its non-compete enforced (partly due to its delay in filing …