The WG team led by Shahrokh Sheik and Jamison Gilmore secured a major defense victory for its clients in a federal lawsuit accusing our clients of stealing trade secrets, breach of fiduciary duties, false advertising, breach of contract, conversion, and more, brought by a former business partner (the “Plaintiff”).
After more than a year of contested litigation and less than five weeks before trial, the Plaintiff tried to withdraw its case “without prejudice”- meaning it could re-file at any time. Plaintiff’s request to be able to essentially have a “do-over” came after aggressive litigation tactics, such as propounding over twenty discovery instruments and a dispositive motion. WG responded surgically to Plaintiff’s failed litigation tactics and adamantly opposed and eventually persuaded the Court to dismiss the case WITH PREJUDICE.
The distinction between dismissal with and without prejudice can sound technical, but it has major implications from a litigation and leverage standpoint. A dismissal without prejudice leaves the Plaintiff free to bring the claims again. Here, given that we asserted the claims were knowingly false, dismissal with prejudice was critical. A dismissal with prejudice bars refiling those same claims. One can mean a temporary break from litigation and a start-over; the other provides finality.
Why this is a Significant Win for Our Clients
Plaintiff accused our clients of misappropriating confidential business information and engaging in false advertising, alongside breach of contract, breach of duty and other claims.We challenged the merits of the claims and maintained the accusations were knowingly false and made as part of a years long conspiracy to steal their trade secrets. That conspiracy apparently included an attempted company takeover with fabricated sale documents, aiding and abetting the kidnapping of his son, relentless defamatory attacks to destroy our clients’ reputation in the industry, etc.
Accordingly, we initiated a related state court lawsuit accusing the former partner and his accomplices of fraudulently obtaining control of the company and using that control to pursue retaliatory litigation. Specifically, we realized, and strategically brought to the Court’s attention at every turn, that Plaintiff’s true objective here was to use the subpoena power to access our clients’ trade secrets being held in their new company. This is because immediately after commencing suit, Plaintiff issued a third-party subpoena in Utah to obtain our clients’ trade secrets. We commenced a separate federal lawsuit in Utah and defended that pursuit in parallel with the federal case in Los Angeles. All this to demonstrate the aggressive and multi-prong attack by Plaintiff to continue the misappropriation and disparagement campaign against our clients.
Keeping the Focus on Evidence Despite the Relentless Tactics but Plaintiff
Plaintiff and its counsel engaged in substantial obstructive tactics including false attacks and meritless motion practice in a sort of war of attrition. As a result, we dealt with repeated disputes over discovery, third-party subpoenas, deposition arrangements, and access to sensitive business information. We challenged what we viewed as a fundamental imbalance: Plaintiff aggressively pursued information from our clients and third parties while failing to provide adequate answers about the factual basis for its own claims, such as: what information was supposedly taken? When and how was it accessed? What linked it to Noa? What evidence supported the claimed harm?
Through substantial motions and hearings, we secured a court order mandating the former partner’s in-person appearance. After he failed to appear and a series of failed efforts, and less than five weeks before trial, Plaintiff filed a motion to dismiss its case without prejudice. WG opposed the request asserting that our clients should not be left to defend the same federal claims again after investing more than a year and substantial resources in the case. We placed the deposition testimonies, the outstanding evidentiary deficiencies, and the history of the dispute before the Court. We argued that the case was knowingly baseless and that an unconditional dismissal would allow Plaintiff to simply start over.
In the end, the Court ordered Plaintiff’s federal claims dismissed with prejudice, and he specifically ordered that any discovery conducted in the case could be used by us in the related state proceeding and any future litigation arising from the same facts. Accordingly, we intend to use the relevant and damning information obtained to prosecute the state court action. We also used the dismissal to demonstrate to the Utah court the baseless and knowingly false nature of the federal case, and we are waiting for dismissal of the Utah action accordingly.
The WG Approach
This case reflects an important part of our approach to business litigation: remain focused on the evidence, prepare to test the claims, and evaluate every proposed resolution against the client’s long-term interests. Here, the objective was not merely to end the federal action. It was to prevent our clients from being left exposed to a restart of the same federal claims after the time and expense required to confront them.
Congratulations to our clients and the WG litigation team for the resolve required to reach this result.Prior results do not guarantee a similar outcome.