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$60 Million Trade Secrets Verdict Announced in Utah

The Salt Lake Tribune is reporting that American National Insurance Co. will challenge a $60 million verdict awarded by a Utah jury this month to a rival company in a suit over the defection of agents.

James Pozzi, senior executive vice president with the Galveston, Texas-based company, said the punitive damages verdict - which was based on a claim that American National poached Farm Bureau Insurance Co. agents in southern Utah and misappropriated that agency's trade secrets - is excessive. He added that his company is evaluating a "number of legal actions" to overturn it. However, Dennis James, a Salt Lake City lawyer for Farm Bureau, contends that the decision was appropriate.

"I believe the punitive damage[s] award was a powerful message in favor of corporate integrity."

A suit filed in U.S. District Court alleged that Darrin Ivie shared confidential information with American National while still working as a district manager for Farm Bureau's Zion's Cove agency. In addition, Ivie engaged in recruitment efforts that caused at least seven Farm Bureau agents and three recruits to leave the company to become American National employees, according to the lawsuit.

Ivie tendered his resignation in February 2003 and was named a general agent with Farm Bureau the next month, the suit says. About that time, some Farm Bureau customers allegedly received an invitation to a dinner meeting in Fillmore to learn about American National's venture into the farm market.

The defendants - Ivie, American National, two of its subsidiaries and one of its employees, Kenneth Gallacher - were accused of various counts of breach of fiduciary duty, interference with contractual relationships, interference with business relations, misappropriation of trade secrets and civil conspiracy. They denied all the allegations.

However, the federal jury on Aug. 8 awarded Farm Bureau $3,606,214 in compensatory damages. The 11 jurors also awarded punitive damages of $60 million against American National and its subsidiaries and $2.4 million against Gallacher.

Punitive damages are designed to punish wrongdoers. Pozzi, in a press release, complained that the amount has no correlation to the compensatory damages and is unconstitutional.

We'll keep an eye on this one for you.

Full post as published by Womble Trade Secrets Blog on August 20, 2008 (boomark / email).