Judge Rakoff Shoots Down eDiscovery Trade Secrets Case
Tuesday, July 11, 2017
Posted by: ACEDS Marketing Team
Extract from Gabe Friedman's article "Judge Rakoff Shoots Down eDiscovery Trade Secrets Case" posted on Big Law Business
In the booming world of e-discovery services, having a sales team with strong client relationships can mean everything.
Or at least for LDiscovery, it was worth about $24 million — which is the sum in bonuses and other potential payments it offered to entice four sales agents, who defected from competitor DTI Global, which subsequently filed a lawsuit seeking an injunction to prevent the hires.
Earlier this week, a federal judge in Manhattan rejected DTI’s arguments that the sales team had misappropriated key trade secrets, such as its e-discovery clients’ purchasing needs, and denied its motion for a preliminary injunction.
“Business apparently is booming – and so too are providers’ efforts to protect what they believe is their proprietary information regarding customer contracts, strategies, and the like,” U.S. District Judge Jed Rakoff wrote in a 30-page opinion that found DTI was unlikely to succeed on any of its claims.
Rakoff added later in the opinion, “The Court, however, is unpersuaded that LDiscovery has done anything improper by entering into these agreements with the Individual Defendants, let alone that the Individual Defendants have breached the applicable terms of their agreements with DTI.”
In April, DTI filed its lawsuit against the four salesman and LDiscovery, claiming they misappropriated trade secrets, interfered with client relationships and breached their contracts. A key claim is that the sales team improperly took customer lists from DTI, including information about those customers’ discovery needs.
In court documents filed in the case, the sales team argued they departed because they regarded DTI as a “low-cost” provider, which would harm their reputation with clients, and they wanted to work for a company with document review centers in Washington, D.C. and Canada.
The judge held a three-day evidentiary hearing on the preliminary injunction motion in June. Last week, he dismissed the claims against LDiscovery and granted the individual defendants’ motion to move the case to a private arbitration.
Read the full article here