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Posts Tagged ‘United States district court’

Southern District Requires Plaintiffs in CUTSA Case to Post $800,000 Bond for Fees and Costs Pursuant to California Code of Civil Procedure § 1030

In Bond on September 26, 2010 at 12:25 pm
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The United States District Court for the Southern District of California required plaintiffs in a UTSA case to post an $800,000 bond for fees and costs, pursuant to California Code of Civil Procedure section 1030.  Gabriel Technologies Corporation v. Qualcomm Incorporated, No. 08 CV 1992 MMA (POR), Slip Copy, 2010 WL 3718848 (S.D. Cal. Sept. 20, 2010).

The action arose out of events related to technology licenses and related joint ventures between Plaintiffs and their predecessor in interest, and Defendants.  Id *1.  In the Fourth Amended Complaint, Plaintiffs assert claims for: (1) Breach of the Amended and Restated License Agreement; (2) Correction of Inventorship (pursuant to 35 U.S.C. § 256); (3) Declaratory Judgment of Ownership Interest in the Patents (pursuant to 28 U.S.C. § 2201); and (4) Misappropriation (pursuant to Cal. Uniform Trade Secrets Act). Id. *2. Defendants filed a motion for a cost bond under California Code of Civil Procedure section 1030. Id. The Court also has authority under Civil Local Rule 65.1.2(a) to require Plaintiffs to post a bond “where authorized by law and for good cause shown.” Read the rest of this entry »

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Third Circuit Affirms Award of Damages in Misappropriation of Trade Secrets Case and Denial of Recovery on Injunction Bond After Employee’s Partial Success on Appeal

In Customer lists, Employee Mobility, Injunction Bond, Third Circuit on September 20, 2010 at 6:52 am
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The United States Court of Appeals for the Third Circuit affirmed the district court’s award of damages against employees on a claim brought by their former employer for, inter alia, misappropriation of trade secrets.  Latuszewski v. Valic Financial Advisors, Inc., No. 08-1511, 2010 WL 3582434 (3rd Cir. Sept. 15, 2010).   Former employer, VALIC Financial Advisors, Inc., bought claims against former employees Gary Latuszewski and James Rogan alleging breach of contract, breach of fiduciary duty, misappropriation of trade secrets, and tortious interference with contract. Id. *1. Employees appealed arguing that this award was in error and also that the District Court erred in declining to award them damages under VALIC’s injunction bond after this court vacated part of the District Court’s temporary injunction against them. Id. Read the rest of this entry »

Chief Judge Easterbrook Pointedly Denies Motion to Seal AT&T Mobility’s and Google’s Documents for Lack of Trade Secret Contention

In Motions to Seal on September 10, 2010 at 5:31 pm
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Chief Judge Easterbrook of the U.S. Court of Appeals for the Seventh Circuit pointedly denied a motion to seal documents in In re Specht, 2010 WL 3494676, No. 10-2823, — F.3d —-, 2010 WL 3494676 (7th Cir. Sept. 8, 2010).  As part of its opposition to plaintiff’s petition for writ of mandamus in which plaintiff sought recusal of the district court judge.  Id. *1.  Google and AT & T Mobility were asked to respond to the petition, and asked the Third Circuit to seal their indemnity agreement and other documents.  The court refused: “If Google and AT & T wanted to keep the documents’ terms secret, they should not have proffered them in response to Specht’s motion.” Id. *4. Read the rest of this entry »

Eighth Circuit Upholds 2-Year Restrictive Covenant

In Eighth Circuit, Restrictive Covenants on August 16, 2010 at 10:18 am

The U.S. Court of Appeals for the Eighth Circuit considered an appeal from a judgment following a bench trial, in Mayer Hoffman McCann, P.C. v. Barton, et al., No. 09-2061,  — F.3d —-, 2010 WL 3155177 (8th Cir. Aug. 11, 2010).  The district court granted judgment to Plaintiff Mayer Hoffman McCann, P.C. (“MHM”) , awarding MHM permanent injunctive relief and $1,369,921 in liquidated damages.  Defendant appellant appealed, contending, among other things, that enforcement of the restrictive covenants is contrary to Missouri law.  The Eighth Circuit rejected these contentions and affirmed the judgment of the district court.

Mayer Hoffman McCann, P.C. is national certified public accounting (CPA) firm. MHM sued its former employees and shareholders-Thomas L. Barton, Anthony W. Krier, James N. Stelzer, and John C. Walter (collectively, “appellants”), all CPAs licensed by the State of Minnesota-to enforce restrictive covenants contained in contractual agreements between the appellants and MHM.  Following a bench trial, the district court granted judgment to MHM, awarding MHM, inter alia, permanent injunctive relief.

As part of a stock repurchase agreement, Appellants agreed that for the “Post-Employment Restrictive Period,” a period of two years following the termination of their employment, they would not: (1) solicit, directly or indirectly, or attempt to solicit MHM’s clients or otherwise interfere with MHM’s relationship with its clients, or (2) solicit MHM’s employees. Appellants further agreed not to copy, disseminate, or use MHM’s confidential information at any time.

Appellants asserted that the restrictive covenants are unreasonable in scope and, therefore, unenforceable.  The court rejected this argument, holding that the two year restrictive covenant “has been found reasonable under the “overwhelming weight of case authority” and was “reasonable under Missouri law”.  Id. *10 (citing Missouri Alltype Fire Prot. Co. v. Mayfield, 88 S.W.3d 120, 123 (Mo. Ct. App. 2002)).

Although the restrictive covenants in this case are not restricted geographically, Missouri law recognizes that a customer restriction may substitute for an explicit geographical restriction. See Schott, 950 S.W.2d at 623-24, 627 (concluding that a two-year restriction on CPAs soliciting their former employer’s customers, or doing any accounting work for them, was enforceable, without a geographical restriction, because “the covenant does not prevent employees from practicing in any particular geographical area, it merely prohibits them from soliciting employer’s clients”); Mills v. Murray, 472 S.W.2d 6, 11-12 (Mo. Ct. App. 1971) (determining that a three-year restrictive covenant was reasonable, even absent a geographical restriction, because the former employee was only restricted from soliciting his former employer’s clients such that he could even “conduct a competing business at [his former employer’s] doorstep as soon as [he] left [his former employer’s] service”). As the Schott Court observed, where “the specificity of limitation regarding the class of person with whom contact is prohibited increases, the need for limitation expressed in territorial terms decreases.” 950 S.W.2d at 627 (quoting Seach v. Richards, Dieterle & Co., 439 N.E.2d 208, 213 (Ind. Ct. App. 1982)). Under Schott and Mills, the restrictive covenant at issue here is not unenforceable, even though it lacks a geographical restriction, because it only prohibits appellants from soliciting MHM clients-not from performing services for MHM’s clients whom the appellants did not solicit. Furthermore, even if the restrictive covenant completely barred the appellants from doing any accounting work for MHM clients, the appellants would still be free to provide accounting services to all non-MHM clients anywhere. Therefore, the scope of the restrictive covenants at issue here is reasonable under Missouri law.

Judges and Attorneys

Before Judge Raymond Gruender, Judge Bobby E. Shepherd of the Eighth Circuit Court of Appeals and Hon. John A. Jarvey, United States District Judge for the Southern District of Iowa, sitting by designation.

The trial court judge was Hon. Gary A. Fenner, United States District Judge for the Western District of Missouri.

Kay Nord Hunt, argued, Minneapolis, MN (Phillip A. Cole, Robert Kent Sellers, Michael Jat Abrams, Diane M. Odeen, Hudson, WI, on the brief), for Appellant.

John C. Aisenbrey, argued, Kansas City, MO (Patricia Konopka, Robin K. Carlson, on the brief), for Appellee.

By CHARLES H. JUNG

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