In this exclusive two-part interview with Staffing Talk, David Gee speaks at length with Jennifer Dugan, shareholder, Porter Scott, and the lead defense attorney for a small Sacramento County, California staffing company that prevailed in a re-trial of allegations leveled in a lawsuit by industry giant Aerotek Inc.
A little background first.
Aerotek accused The Johnson Group staffing company – started by former Aerotek employee Christopher Johnson – of trade secret misappropriation, client solicitation and breach of contract.
The suit was filed after former Aerotek employee Michael Ponce was hired by The Johnson Group. Aerotek claimed that The Johnson Group and Ponce misappropriated Aerotek’s clients and client contact information in violation of the Uniform Trade Secrets Act and in breach of Ponce’s employment agreement with Aerotek.
Although initially claiming damages over $1 million, Aerotek ultimately cited $320,000 in “lost profits” at trial. The Johnson Group and Ponce primarily defended against the claims by bringing in clients who repeatedly testified they were not unlawfully solicited by Ponce.
The Johnson Group and Ponce also argued the clients chose who they wanted to do business with, and that they simply liked Ponce better than his replacement at Aerotek because of Ponce’s skills and professionalism.
The Johnson Group and Ponce also aggressively attacked Aerotek’s embellished “lost profits” for the period of 2008-2010, which were based on estimates and speculation rather than actual empirical data that was available to Aerotek for those years.
After a pair of trials, a Sacramento County jury recently ruled that The Johnson Group and former Aerotek employee Michael Ponce did not unlawfully misappropriate or solicit any of Aerotek’s clients nor unlawfully disclose any of Aerotek’s trade secret information. Aerotek was entirely defeated in this latest re-trial.
Staffing Talk: Tell us about the trade secret component of the trial.
Jennifer Duggan: We stipulated that the three customers at issue at the time of trial were in fact trade secrets under the California Trade Secret Act. They met the essential elements of being a prior contact with an open job order 180 days prior. So we acknowledged they were a trade secret.
ST: Yet when you spoke to jurors in the hallway after the verdict you found that wasn’t the part of the case they were giving the closest consideration or deference to.
JD: The Plaintiff’s counsel kept referring to this as ‘the secret formula for Coke’ and the jurors rejected that. They were like, ‘Look this wasn’t the formula to Coke, this wasn’t some super secret information at all.’ What Aerotek had was simply contact information for someone at an engineering company that they knew were willing to engage a staffing company. But all they had was a name, a phone number and an address, and not a ton of other proprietary information. The jury never really had to decide specifically whether or not this was a trade secret.
ST: What do you think they would have decided had they been given the question?
JD: I think they definitely would have wanted to hear about specifics such as whether our client had inside pricing information, or special rotating contract data so he would know when staffing or employment agreements with Aerotek were expiring and so on. The jury would have presumably looked for something more than just, ‘Hey, so and so is the hiring manager at Company X and this is their name and this is their address.’
ST: What was at the heart ofAerotek’s argument? Was it that your client “learned the staffing business” on their dime, and that he can’t now go out and be a competitor? Or is it something else?
JD: Aerotek sort of argued about how ‘we trained you and turned over this book of business only to have you turn on us.’ But they didn’t really advance the argument of ‘we taught you how to do this and you can’t take that with you.’ Their argument was more along the lines of ‘but for your employment here at Aerotek, you wouldn’t have known these people and wouldn’t have had these relationships and therefore you can’t contact them. We own the relationship, we own the contact and you can’t go there.’
In Part 2 of this exclusive interview, we’ll hear from Jennifer on why they continued with the case even after they determined their client couldn’t continue to pay, and whether or not it’s really over.