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Trade Secret Jury Verdict : Ex-employees of Plastic Bag Maker Started Competing Co.

The jury unanimously found in favor of the plaintiff on the claims of breach of fiduciary duty and conspiracy, and awarded $16,457,866 in general damages plus $250,000 in punitive damages against Rabchev and $25,000 in punitive damages against Nakaoka. In July 2003, plaintiff Mercury Plastics Inc., which manufactures and sells plastic bags, suffered the sudden resignation of Luben Rabchev and several other employees, including two key managerial people. Rabchev was the president and a director of Mercury Plastics from its start in 1987. Another director who resigned in July, John Nakaoka, had been hired by Rabchev in March 2003 to act on the company's board of directors. Rabchev and the other employees who resigned then formed a new company, Infinity Packaging, Inc., that operated in the same market as Mercury Plastics. Mercury Plastics sued Rabchev; John Nakaoka, another of the employees who had resigned; Infinity Packaging, Inc., and others, claiming they had committed a breach of fiduciary duty by founding a new company, allegedly while they were still employed at Mercury. The unnamed parties were dismissed as the result of a nonsuit motion. Mercury Plastics claimed that in July 2003 Rabchev resigned without notice. Mercury Plastics claimed that Rabchev and Nakaoka formed competing company Infinity Packaging, Inc., which sold plastic bags though it did not manufacture them. Mercury further claimed that a number of key sales people, who also resigned on the same day in July 2003 without notice, were employed immediately by Infinity and began selling plastic bags to the same key agricultural customers to whom they sold while employed at Mercury. Mercury Plastics also claimed that the defendants misappropriated trade secrets of Mercury and interfered with Mercury's economic advantage.

Full post as published by The Trade Secrets Vault on March 27, 2008 (boomark / email).