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Trade Secret Jury Verdict : Redwood Health Services v. Clifford Der, dba Benefit Brokerage Services

Verdict-Defendant : The jury found in favor of the plaintiff on the counts of breach of fiduciary duty and interference of contract, and awarded it $59,780. The jury found for Der on the counts of breach of contract and common counts, and awarded him $135,291. In 2001, plaintiff Redwood Health Services and Clifford Der co-developed a partially self-insured health plan for small employers, called "Basic Plus." Redwood and Der, doing business as Benefit Brokerage Services, doing business as Health Plan Alliance, then entered into an agreement under which Redwood would act as a third-party administrator of the plan and provide financing for marketing, and Der would act as a general insurance agent who would market and sell the plan through his network of brokers. Redwood would then get an administrative fee and a marketing fee on each plan sold, and Der would get a commission. Redwood started marketing through other brokers and stopped paying Der. In 2004, Der stopped selling Basic Plus plans and began selling a similar plan called "Insured Plus." Redwood stopped Der's commissions in 2005. Beneficial Administration Co., Inc. agreed to act as the third party administrator for Insurance Plus, and put the logo on its website and documents. Der then transferred 18 employer groups from Basic Plus to Insured Plus and also sold new Insured Plus plans. Redwood Health Services sued Der, doing business as Benefit Brokerage Services, doing business as Health Plan Alliance, claiming breach of fiduciary duty and interference of contract. Redwood also sued Beneficial Administration Company, Inc., claiming service mark infringement. Der filed a cross-claim against Redwood Health Services, for a breach of contract and common costs. Beneficial Administration was dismissed on a non-suit on Feb. 26, 2008, because the judge believed that there was insufficient evidence of confusion, similarity of marks and damages on infringement to allow the case to proceed to the jury against it. Redwood claimed that Der had committed a breach of fiduciary duty when Der began selling the Insured Plus plans, which Redwood claimed were too similar to the Basic Plus plan. Redwood also alleged that Der misappropriated trade secrets when he switched groups from Basic Plus to Insured Plus, though this claim was not presented to the jury. Der claimed that Redwood was in the wrong, since they began selling the Basic Plus plans through a different agent in 2003. Der sought damages for unpaid commissions on all Basic Plus plans sold, whether through him or through another agent. Der asked the jury for more than $1.5 million.

Full post as published by The Trade Secrets Vault on April 24, 2008 (boomark / email).