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Case Results: Trade Secret Theft

Below is a list of some of the cases the firm has handled, not a complete list, and is not a guaranty of future results.

ReadyLink HealthCare v. Lewis, Brisbois, Bisgaard & Smith, LLP
$9 Million

The defendant law firm charged its client almost $5 million in legal fees while handling four sophisticated trade secrets and business cases. None of the four cases went well for the client, despite the fact the client paid millions of dollars of attorneys’ fees. The client hired Klein & Wilson to handle the malpractice case against former counsel, one of the largest law firms in the United States. After a two-month jury trial, the jury awarded Klein & Wilson‘s client every penny it requested on its breach of contract and malpractice claims and awarded the defendant law firm nothing on its cross-claims. The case drew significant attention from the California legal community, and the Los Angeles Daily Journal ran a front-page story about this case. Lewis Brisbois Ordered to Pay Millions of Dollars for Overbilling.

Doe Corporation v. Roe Corporation
$4.1 Million

Klein & Wilson represented a securities brokerage firm victimized by a raid. Klein & Wilson proved that departing brokers plotted with their new firm to steal a confidential database that was indispensable to launching their new firm. Klein & Wilson also proved the departing brokers and their new firm engaged in a conspiracy to destroy evidence.

A special master held an evidentiary hearing to determine whether it should enter terminating sanctions against defendants based on destruction of evidence. It was obvious to everyone after the first three days of testimony the brokers were going to lose. So, several of the brokers settled the case for a seven-figure sum before there was a court award against them. The three primary wrongdoers proceeded to the conclusion of the evidentiary hearing. As expected, the special master recommended terminating sanctions. After receiving the special master’s report, the trial judge engaged in a comprehensive review of the hearing and an independent analysis of the evidence. He agreed with the referee and entered judgment against the remaining brokers. The client’s total recovery was $4,158,102.

Doe Corporation v. Roe Law Firm
$1.25 Million

Klein & Wilson brought a legal malpractice action against one of the largest and most prominent law firms in California for its mishandling of a “bet-the-company” trade secrets case and its failure to recognize serious conflicts of interest. At the time Klein & Wilson accepted the case, the law firm was demanding approximately $500,000 from the client. Klein & Wilson settled the case on the eve of trial for $725,000 with the law firm agreeing to write-off its entire bill of almost $500,000.

Project FasTags, Inc. v. Fascenelli
$1 Million

Klein & Wilson represented a partner in the breakup of a lucrative partnership. In addition to various breach of fiduciary duty claims, Klein & Wilson represented the client in claims of copyright and trademark violation. Klein & Wilson was able to achieve a settlement resulting in a payment to its client of just over $1 million . In addition, the client retained control of the business.

Doe Corporation v. Roe Corporations

In 2004 through 2006, Klein & Wilson settled a number of related copyright infringement cases against major garment manufacturers and some of the largest retailers in the world for $535,000 . All these cases stemmed from infringement of Klein & Wilson‘s client’s copyrighted fabric designs.

HUB Int’l Ins. Servs. v. Morales
Five years after selling an insurance brokerage firm, our client left plaintiff, a massive, multi-national insurance brokerage firm, for a better opportunity with another brokerage firm. The brokerage firm sued, alleging our client breached the covenant not to compete in his buy/sell agreement and that all our clients conspired to misappropriate plaintiff’s trade secrets. Although our clients did nothing wrong, plaintiff aggressively pursued its claims. It did not go well for plaintiff. After we defeated plaintiff’s request for a preliminary injunction, we moved this case into binding arbitration. After a three-day evidentiary hearing, the arbitrator ruled in favor of our clients. We then won a motion for over $200,000 in attorneys’ fees. Klein & Wilson defeated plaintiff’s motion to vacate the arbitration award. We converted the arbitration award into a final judgment and won a second motion for attorneys’ fees. Finally, Klein & Wilson defeated plaintiff’s appeal, and the appellate court awarded appellate costs to our clients.

Klein & Wilson Wins Terminating Sanctions
An inventor hired Klein & Wilson to handle a trade secrets case. When Klein & Wilson was retained, the case was on the verge of being dismissed at the pleading stage. Klein & Wilson immediately restructured the claims to survive pleading challenges and aggressively pursued discovery against defendant. After a year of pursuing discovery against an uncooperative defendant, the court granted Klein & Wilson’s motion for terminating sanctions.

Direct Media Communications, Inc. v. DMS Marketing Inc., et al.
(Plaintiff Verdict)
Klein & Wilson represented a prominent mailing house that did niche work for the insurance industry. One of the client’s employees left the company and joined a competitor. After joining the competitor, the former employee started contacting former customers. Klein & Wilson‘s obstacle in proving the client’s trade secrets case was explaining why the client’s business was unique, even though the defense claimed the client was just a “mailing house,” without any trade secrets. Klein & Wilson worked with the client to explain the unique nature of its business and prevailed at trial. The client recovered virtually all of its damages as well as punitive damages and attorneys’ fees. Most importantly, the client won an injunction prohibiting the competitor from doing business with the client’s key accounts and prohibiting the competitor from using the client’s key vendors.

Doe Corporation v. Roes
Klein & Wilson represented the former president and sales manager of a company who attempted to buy the stock of their former employer in a management buyout. The employer terminated Klein & Wilson‘s clients and simultaneously brought an action against the clients for violations of the Uniform Trade Secrets Act and a breach of fiduciary duty as to one of the clients. The clients were originally represented by a prominent law firm, but the prior law firm was unable to prevent the imposition of an injunction in a case where no injunction should have been issued had the matter been handled appropriately.
After Klein & Wilson took aggressive depositions of the principals of the former employer, the case settled. Pursuant to the agreement, the case against Klein & Wilson‘s clients was dismissed, the injunction dissolved, and Klein & Wilson‘s clients received a $100,000 cash settlement for back vacation pay and attorneys’ fees.

American Reprographics Company v. Brazo
American Reprographics Company v. Crisp Enterprises, Inc.

Klein & Wilson‘s client was accused of raiding plaintiff’s business and hiring away approximately 50 employees, as well as soliciting dozens of customers who had formerly used plaintiff as a reprographics service. This case could have destroyed Klein & Wilson‘s client, which had grown dramatically until the lawsuit. Klein & Wilson was able to find insurance coverage for the client and was instrumental in achieving a settlement that saved the company and helped it move forward on its tremendous growth.

Cisco Sales Corporation v. Price Point Mail Order, Ltd.
Klein & Wilson represented a corporation and an executive in a claim by plaintiff that the executive stole trade secrets and used them to benefit his new employer. After Klein & Wilson completed the deposition of the plaintiff’s chief executive officer, the plaintiff decided to settle the case on terms that were extremely favorable for Klein & Wilson‘s client.

Doe Corporation v. Doe Corporation

Klein & Wilson represented a credit report reseller (“Client”) against a competitor which claimed the Client misappropriated trade secrets, interfered with customer contracts, unfairly competed, and caused the competitor to lose approximately $8 million in profits. The competitor contended the Client obtained the competitor’s secrets from the competitor’s attorney and former employees, who left the competitor’s employment to work for the Client. After the competitor proved it lost hundreds of customers to the Client, Klein & Wilson obtained testimony from the competitor’s former sales agents, proving the competitor employed unfair business practices to persuade hundreds of the Client’s customers to move over to the competitor. The competitor’s “unclean hands” was so significant, that it reduced its demand to only $200,000. At the same time, Klein & Wilson pursued the Client’s insurance carriers for bad faith and ultimately settled the case in a manner which cost the Client nothing. Klein & Wilson was also successful in having the majority of the Client’s fees and costs reimbursed.

Gutierrez v. Gutierrez
(Defense Judgment)

Klein & Wilson represented defendant Ruben Gutierrez in an action filed by Ruben’s brother Ignacio. Ignacio was represented by Downey Brand, Sacramento’s largest law firm. Ruben and Ignacio had a successful ice cream manufacturing business. In order to meet customers’ demands, Ruben and Ignacio decided to purchase a building in which to conduct their manufacturing operation. The bank required a partnership agreement before it would lend money to purchase the building. Accordingly, the brothers signed a partnership agreement which contained a 10 year covenant not to compete which was triggered if one of the brothers voluntarily withdrew from the partnership. Approximately two weeks after the brothers signed the partnership agreement, they decided to terminate their partnership over differences which had been festering for years. The brothers then signed a dissolution agreement which did not contain a covenant not to compete but did contain an integration clause stating the dissolution agreement contained all the terms of the brothers’ final agreement. Ignacio paid Ruben $1 million for the business. After Ruben started a new business which threatened Ignacio’s success, Ignacio sued Ruben for damages and an injunction, alleging that Ruben withdrew from the partnership and was, therefore, bound by the covenant not to compete. Klein & Wilson filed several motions to end the lawsuit on the grounds the dissolution agreement was integrated and the parol evidence rule barred a jury from considering the covenant not to compete in the partnership agreement. The trial court denied the motions and the case proceeded to trial. The jury awarded Ignacio significant damages, and the trial court entered a permanent injunction prohibiting Ruben from manufacturing and selling ice cream in California. Klein & Wilson appealed the judgment, and the Fifth District Court of Appeal reversed. The Court of Appeal agreed with Klein & Wilson‘s analysis of the parol evidence rule and ordered the trial court to enter judgment for Ruben and vacate the injunction.

Paleteria La Michoacana, Inc. v. Peña

Klein & Wilson represented the former employee of a large ice cream company which alleged that Klein & Wilson‘s client took the employer’s customer list and formed a competing company. By the time the employee retained Klein & Wilson, the court had already entered a preliminary injunction against the employee, preventing him from soliciting business from over 700 customers in California. Klein & Wilson immediately filed and won a motion to disqualify the employer’s counsel because it had previously represented the employee in another case, creating a conflict of interest. Klein & Wilson then conducted discovery which persuaded the employer’s new attorney the case had no merit. Subsequently, Klein & Wilson negotiated a settlement whereby his client paid nothing, the employer dismissed the case with prejudice, and the injunction was dissolved.

Roanja Planning, d.b.a. Westside Door & Moulding v. Farzad Halavi, d.b.a. Halco Construction, et al.

Klein & Wilson‘s client was sued for fraud, restraint of trade, and unfair business practices arising out of a failed construction project. Klein & Wilson filed a demurrer challenging plaintiffs’ claims. Right before the hearing, plaintiffs dismissed Klein & Wilson‘s client from the case with prejudice.

STM Wireless, Inc. v. Aljaff

Klein & Wilson represented a technology company that believed its former employee stole trade secrets. The employee contended he had been treated unfairly while employed at the technology company. Klein & Wilson achieved a favorable settlement for the client by resolving all employment and trade secret issues.

Tropicale Foods, Inc. (d.b.a. Helados Mexico) v. Helados La Mexicana, Inc.

Klein & Wilson filed an action for trademark infringement and unfair competition to protect its client’s trademark “Helados Mexico.” Klein & Wilson settled the case by persuading the defendant to stop selling products with the name “Helados La Mexicana” on them and to change its corporate name.