ITI seeks dismissal of TechAmerica lawsuit, calling claims ‘fatally flawed’

Jason Miller, executive editor, Federal News Radio

Jason Miller | April 17, 2015 5:52 pm

The IT Industry Council is calling the lawsuits by TechAmerica “fatally deficient” and “nebulous” and is asking the Superior Court of the District of Columbia to dismiss both actions against the association and against the three former TechAmerica officials who now work for ITI.

In briefs filed Nov. 27, ITI’s lawyer, Leslie Paul Machado of LeClairRyan detailed in two separate documents what he said are problems with TechAmerica’s claims filed Nov. 8 against ITI and three of its former employees: Trey Hodgkins, Pam Walker and Carol Henton. He said the claims do not meet the standards of law for several reasons.

“[T]he complaint fails these basic and fundamental rules: it repeatedly fails to allege facts sufficient to support the material elements of TechAmerica’s putative causes of action, instead relying upon recitations of the elements of a claim or omitting elements completely,” the documents stated.

TechAmerica sued ITI and three of four former employees who left to join the trade organization to launch a new public sector office. TechAmerica claimed breach of contract and is seeking $5 million in damages.

Hodgkins, Walker, Henton and Erica McCann left TechAmerica with little notice and allegedly tried to recruit 12 companies to pay $50,000 each to join ITI’s new IT Alliance for the Public Sector (ITAS).

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“We continue to believe this legal action is imprudent and a waste of resources that are best devoted to advancing policy on behalf of the sector,” said Dean Garfield, president of ITI, in an email to board members. “With that in mind, we intend to pursue a singular strategy of moving to resolve this matter quickly and efficiently. We would prefer to achieve that goal through settlement; however, to date, TechAmerica has rejected our overtures. As such, we intend to move expeditiously to seek a judicial resolution while remaining open to a settlement.”

Politico first reported the request for dismissal by ITI.

No wrongful conduct?

In the first suit against ITI, Machado said TechAmerica’s claim of tortious interference is problematic because it “fails to allege facts showing any intentional, wrongful conduct by defendants that interfered with TechAmerica’s relationship with its members.”

He said TechAmerica failed to show both improper interference or resulting damages from the former employees recruiting companies to join ITAS.

“[T]he complaint alleges only that one of the defendants (Ms. Henton) allegedly contacted TechAmerica members to inform them of her move to ITI, and to ask them to become members of ITI,” the document stated.

Machado also said the other most serious complaint, misappropriation of trade secrets, fails as well because TechAmerica did not show the information is valuable “due to it not being generally known to, and not being readily ascertainable by, proper means by another who can obtain economic value from its disclosure or use, and is the subject of reasonable efforts to maintain its secrecy.”

He wrote that the courts have ruled that the client lists of lobbyists are not trade secrets because the information is publicly available. Additionally, Machado wrote case law provides that such information must be protected by means such as passwords, physical locks, limited access or non-disclosure agreements.

TechAmerica, he said, did none of those, and its employee handbook, which all employees must sign, doesn’t make reference to trade secrets or other information that may be covered by confidentiality obligations.

More evidence coming

Shawn Osborne, TechAmerica’s president, said in an email statement on the request for dismissal that the evidence it found against Hodgkins, Walker and Henton and presented in the lawsuit is “just the tip of the iceberg.” Osborne also called ITI’s assertion that the three are not using any of the information in their new roles at ITAS “preposterous.”

“But the theft was not the only willfully unethical and illegal act by these employees. These individuals maliciously destroyed huge amounts of data from TechAmerica servers and computers, including data created by other TechAmerica team members. Each of these statements can be backed up with documented evidence,” he said. “We have shared much of this evidence with ITI and have offered to share the additional evidence recently uncovered in a good faith effort to bring this situation to a conclusion. Our invitation to look at the boxes of evidence we have uncovered remains open. We agree with Mr. Garfield, the industry is being harmed. But it’s being harmed because one industry representative is stealing IP from another.”

As for the lawsuits against Hodgkins, Walker and Henton, ITI’s lawyer stated, the claims are “based upon the faulty presumption that there is an employment contract or other agreement between them and TechAmerica that contains noncompete or non-solicitation provision. That is false. In fact, none of the individual defendants entered into any agreement or contract with TechAmerica that prevented them from approaching or soliciting its members, or from competing with TechAmerica for business. Indeed, TechAmerica does not assert that the individual defendants were bound by any non-compete or non-solicit provision. Instead, it claims that the individual defendants somehow breached various provisions of its employee handbook.”

Machado said as for the claim of tortious interference, TechAmerica did not show that the three former employees’ interference was by improper or through wrongful means, and that TechAmerica didn’t suffer any damages.

TechAmerica’s other serious claim that Hodgkins, Walker and Henton used “trade secrets” to recruit companies is “factually devoid.”

Machado said case law shows that “trade secret misappropriation claim requires a party to show the existence of a trade secret; and acquisition of the trade secret by improper means, or improper use or disclosure by one under a duty not to disclose.” He said TechAmerica failed to meet these standards in the lawsuit documents. Osborne made clear in an email to TechAmerica board members before the request for dismissal was filed that TechAmerica’s evidence against ITI and the three former employees was substantial.

“The four employees stole thousands of files from TechAmerica, used that information to launch a competing program, and, most egregiously, some even intentionally destroyed that information from TechAmerica’s servers,” Osborne wrote. “The information included documents created by TechAmerica and its member companies, proprietary information regarding TechAmerica members, budgets, and confidential contracts and business agreements.”

He said among the illegal activities committed by the former TechAmerica, now ITI employees included:

  • All four departing employees took internal TechAmerica documents with them to ITI. These even included documents created by other TechAmerica employees (e.g. board materials and legislative analyses).
  • One employee wiped a TechAmerica-issued mobile device while keeping the data on a personal cloud drive; deleted three gigabytes of documents on a TechAmerica server and computer; changed the passwords on a TechAmerica-paid Dropbox account to deprive TechAmerica of its rightful access to the information; and took nearly every paper in the office.
  • One employee, after becoming employed by ITI, declined to return TechAmerica’s laptop for an entire week and used confidential TechAmerica member information still on that laptop to methodically contact TechAmerica members and pitch them to switch their allegiance to ITI via emails originating on TechAmerica’s laptop.
  • Two employees, while still employed at TechAmerica, explicitly conspired in an email to let a TechAmerica membership lapse so they could proposition the company after the employees moved to ITI.
  • One employee, while still employed at TechAmerica, provided TechAmerica membership information to ITI in response to requests from an ITI executive.

“I must emphasize that the above statements are facts, not allegations or conjectures; each one, and many more similar ones, are clearly documented and verified by information that remains on TechAmerica’s systems,” Osborne said. “This situation was not simply a matter of employees leaving to take a new job or fair competition among businesses. This was a brazen and premeditated theft and destruction of TechAmerica and its members’ property. If these illegal acts had happened at any of your companies, you would not tolerate it. You would do exactly what TechAmerica is doing to stand up for the value of our intellectual property.”

He added that TechAmerica plans to announce a new hire for its public sector organization before the end of 2013.

The court will hold an initial conference between the parties on Feb. 7 if the court doesn’t dismiss TechAmerica’s lawsuit in the meantime.

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