Employer Wins $7.5M in Competition Case

Recently, Judge Catherine C. Blake of the United States District Court District of Maryland awarded $7.5 million to Modern Remodeling, INC (MRI) in a jury verdict as part of an unfair competition and restrictive covenant case. Generally, MRI had alleged breaches of the duty of loyalty against the defendants. In general, these defendants included a former partner, sales manager, four former sales employees, and their new competing businesses. Earlier, a U.S. District Court in New York upheld a salary negotiation defense that excused wage disparities.

Background of the Case

The plaintiff, MRI, is a general contractor offering insurance restoration. Basically, a former partner of the plaintiff planned a new business to compete with MRI while still employed with the latter. In sum, the plaintiff alleged that the partner stole documents, allowed unauthorized company computer access, and solicited MRI employees. Subsequently, many MRI employees, constituting the defendants, left the contractor in early 2019. In effect, this move allegedly negatively impacted MRI’s revenue stream and profits.

Modern Remodeling, Inc. v. Tripod Holdings, LLC, et al.

On May 10th, 2019, MRI sued the defendants, which included new competing businesses. Specifically, these competing businesses were High Mark Construction, LLC, Strong Wall Construction, LLC, and Tripod Holdings, LLC. Basically, the suit alleged unfair competition, as well as the following:

• breach of the duty of loyalty,
• tortious interference with contract and prospective business relations,
• breach of contract,
• civil conspiracy,
• unjust enrichment,
• conversion, and
• violations of the federal Computer Fraud and Abuse Act of 1986.

Jury Decides on Unfair Competition and Other Claims

Indeed, MRI prevailed on all accounts after a four-week jury trial and a day of deliberations. Subsequently, the jury verdict awarded the employer a $7.5 million settlement. In summary, the settlement constituted:

• $6.1 million in lost profits,
• around $700,000 in various compensatory damages, and
• $665,000 in punitive damages.

Employer Takeaways

In conclusion, the jury’s verdict indicates federal protections for employers against unfair competition and breaches of contract among business partners. Indeed, specifics of this case may help businesses prove future claims of unfair competition or breaches of contract. Finally, employers may access additional court documents regarding this case for their own research.