Facts

Plaintiff Hecny Brokerage filed suit against defendants OEC Logistics and OEC Shipping, after it hired four former employees of the Hecny entities. Immediately after their departure from Hecny, they contacted and solicited customers who had been doing business with Hecny and persuaded a number of them to switch to the OEC companies.

PLAINTIFF'S CONTENTIONS:
Plaintiffs claimed that they were the owners of certain protected trade secret information such as compilations of customer contact information, product specifications, customer handling procedures, customer rates, and customer-specific harmonized tariff codes. They claimed that the defendants used this information to compete unfairly.

One of the former employees also signed a buy-ou" agreement for her interest in the profits of Hecny Brokerage. The agreement had a covenant not to compete, which Hecny contended she breached by working at OEC Logistics. Plaintiffs contended that the former employee with the buy-out agreement committed fraud by not advising them that at the time of signing the buy-out agreement, she was already working for a competitor and the other defendants were aiders and abettors to that fraud.

They also contended that the former employee with the buy-out agreement breached her fiduciary duty to Hecny by certain actions including working for a competitor and that the other defendants were aiders and abettors to that breach of fiduciary duty.

DEFENDANT'S CONTENTIONS:
Defense disputed that Callado and Sopko solicited former customers. Although four employees left Hecny, only two were sued (Sopko and Callado).

Two of the former Hecny employees had been fired and two of them left Hecny because of intolerable working conditions. Defendants denied that they misappropriated any of the information from plaintiffs and, further, that any of the alleged information or lists are trade secrets, as they are all publicly available, owned by the customers, have no independent economic value, and are constantly changing.

Defendants also claimed that they competed fairly and that Hecny's decline in sales was due to Hecny's own business practices and the economy in general.

The former employee defendant with the buy-out agreement contended that the covenant not to compete was illegal and therefore unenforceable and that, in any event, she was induced to sign the buy-out agreement by means of economic duress.

Settlement Discussions

Defendants made CCP 998 offers of $250,000 to each plaintiff. The last settlement demand was $2.7 million. At trial, plaintiffs sought $7.3 million through their damages expert. Defendants objected as the expert's previous report showed a lower amount, and the court agreed, revising the claimed damages to $3.8 million, which included, $2.3 million in lost profits and $1.5 million in lost market value.

Result

Defense verdict for all defendants on all causes of action.

Other Information

According to defense, non-compete was held illegal on summary adjudication. FILING DATE: March 29, 2010.

Deliberation

four days

Poll

12-0 on damages; 12-0 on trade secret; 9-3 on intentional misrepresentation; 12-0 on negligent misrepresentation; 10-2 on concealment; 9-3 on breach of fiduciary duty.

Length

26 days