Sutter O’Connell Wins Defense Verdict in “Bet-the-Company” Litigation

Posted on April 24th, 2015 by J. Britt PhillipsJ. Britt Phillips

In a case tried in Hickman County, Tennessee, Sutter O’Connell attorneys Britt Phillips and Chris Schroeck successfully defended the founders of Mojo Feet, LLC against claims they breached a covenant not to compete, misappropriated trade secrets, and intentionally interfered with the business relationships of Sole Supports, Inc.  The two founders of Mojo Feet are former executives of Sole Supports who founded a competing business.  Both companies manufacture and sell custom foot orthotics.  The lawsuit, and the injunctive and monetary relief requested, threatened the very existence of the new company.

Early on in the case, the focus was on the sufficiency of consideration for the noncompetition agreements based on the Tennessee Supreme Court’s holding in Central Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28 (Tenn. 1984).  In expedited depositions conducted just 24 days after Mojo Feet was served with process, we began developing the proof which would ultimately convince a jury that the agreements were void for lack of consideration.

The claim for misappropriation of trade secrets was brought under the Tennessee Uniform Trade Secrets Act, T.C.A. 47-25-1701 et. seq.  The Plaintiff alleged the executives had taken, and were using, large lists of customers and contacts acquired from their former employer.  These allegations were denied.  But, in order to prove Plaintiff’s claims were without merit, we engaged in aggressive discovery to unearth the Plaintiff’s practices of protecting its client information.  We also uncovered a number of irregularities in Plaintiff’s records.  The jury ultimately found Plaintiff’s failure to use reasonable measures to protect its contact lists prevented them from qualifying as trade secrets.  As a result, the jury didn’t even consider whether they were misappropriated or misused.

Finally, the jury found that to the extent Defendants interfered with Plaintiff’s business relationships, they had done so lawfully.  We are proud to have represented Mojo Feet, LLC and its founders, and to have protected their rights to compete in the marketplace.

Perhaps the most impressive aspect of this hard fought win occurred post-verdict. The court permitted the parties to separately interview the jury. When the defense team entered the room the jury erupted in applause.