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Jury verdict : Exel Transportation Services Inc. case

The case settled for $10 million from the TTS entities. The TTS entities also agreed to pay 10 percent of their gross margin for business with ETS's top 25 customers over 18 months, and restrict themselves from soliciting, hiring and contracting ETS agents or sales agents for 20 months. ETS alleged several millions of dollars in damages. The company also requested an injunction enjoining the defendants from accessing ETS's computer system and using its trade secrets and other confidential and proprietary information in the marketplace. According to court documents, plaintiff Exel Transportation Services Inc. provides transportation and supply chain management products and services to facilitate links between shippers and carriers in the manufacturing, retail and consumer industries. ETS contracts mostly through agents and salespeople. In March 2006, ETS allegedly discovered that former employees were systematically accessing or "hacking into" its computer system and company e-mail accounts to obtain trade secrets and other confidential and proprietary information in order to help establish alleged rival companies Total Transportation Services, LLC and Total Transportation Services LP, both of Plano. ETS sued former employees Michael Joseph Musacchio and John Michael Kelly and the TTS entities, alleging violation of the Computer Fraud and Abuse Act, the Stored Communications Act and the Texas Theft Liability Act as well as misappropriation of trade secrets, tortious interference and breach of contract. Another defendant, Joseph Roy Brown, was originally included as a defendant, but he was later dismissed without paying any money. The plaintiff company alleged that the former employees now worked for the TTS entities, and that they used ETS computer passwords to hack into its computer system almost 1,200 times, accessing about 65 individual e-mail accounts. ETS further claimed that the defendants were using confidential company information to lure customers, employees and independent contractors to the TTS entities. ETS also claimed that, while working for the company, the former employees acknowledged that they understood ETS's code of business conduct, which prohibits disclosing sensitive information about clients. The plaintiff also sought actual, consequential, exemplary and punitive damages, attorney fees, prejudgment and postjudgment interest and court costs.

Full post as published by The Trade Secrets Vault on February 17, 2008 (boomark / email).