Judge and Jury Clear Financial Firm of Poaching and Trade Secrets Claims
Financial analytics firm Novantas, Inc. and two individual defendants closed out 2017 with a victory, securing the dismissal of claims by rival First Manhattan Consulting Group LLC, which accused them of competing unfairly by poaching First Manhattan’s employees in order to steal its trade secrets. The result demonstrates the need for plaintiffs in such cases to be able to prove with specificity which trade secrets were taken or threatened by the defendants’ conduct.
The Complaint alleged that Novantas engaged in a “pattern and practice of poaching” First Manhattan’s employees, including defendants Peter Gilchrist and Andrew Frisbie in 2014, to gain access to First Manhattan’s confidential information. These individuals, who were officers of First Manhattan, were subject to contractual confidentiality and employee non-solicitation obligations. First Manhattan asserted causes of action for breach of contract against the individuals, for tortious interference with contract and unfair competition against Novantas, along with a misappropriation of trade secrets claim against all defendants.
The case went to trial in Supreme Court, New York County. Justice Barry Ostrager declined to submit the misappropriation claim to the jury, because the information presented by First Manhattan at trial did not appear to the Court to be a trade secret, and there was no testimony concerning trade secrets. In its verdict, the jury unanimously found no liability on any of the other claims. On December 19, 2017, the Court dismissed First Manhattan’s claims.
For practitioners, this outcome is a useful reminder that trade secret misappropriation claims require in-depth understanding of the client’s business, detailed allegations in pleadings of the legally required elements of a misappropriation claim and, at trial, a full presentation regarding the wrongdoing and what specific information was taken and how the plaintiff has been damaged.