Fishkin v. Susquehanna Partners, G.P.

340 F. App'x 110
CourtCourt of Appeals for the Third Circuit
DecidedJuly 27, 2009
DocketNo. 08-3100
StatusPublished
Cited by2 cases

This text of 340 F. App'x 110 (Fishkin v. Susquehanna Partners, G.P.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fishkin v. Susquehanna Partners, G.P., 340 F. App'x 110 (3d Cir. 2009).

Opinion

OPINION

VAN ANTWERPEN, Circuit Judge.

This appeal stems from a dispute between Appellant Susquehanna International Group, LLP (“SIG”), a securities trading firm, and two of its former employees, Cal Fishkin and Igor Chernomzav, who left SIG and formed a competing securities trading joint venture, TABFG, LLC (“TABFG”), in partnership with NT Prop Trading, LLC (“NT Prop”). SIG now appeals from the District Court’s Order of February 12, 2007, denying its motion for summary judgment regarding disgorgement of profits, and from the District Court’s Order of June 17, 2008, denying its claim for misappropriation of trade secrets. For the reasons that follow, we will affirm.

I.

Because we write solely for the parties, we will address only those facts necessary to our opinion.

In the spring of 1999, Cal Fishkin and Igor Chernomzav began working for SIG as securities traders, and each executed an employment contract containing restrictive covenants. One such covenant, the “Non-competition” clause, provided in part that,

[f]or a period of nine (9) months following the later of the termination of [Employee’s] employment or the third anniversary following Employee’s entry into the training course, Employee shall not trade in any products in which he or she was trading for [SIG] at any time during the three (3) month period prior to the termination of Employee’s employment.

The noncompetition clause also barred Fishkin and Chernomzav from disclosing confidential information about SIG’s business and restricted them from associating with anyone employed at SIG during the nine months prior to their termination for a period of five years. The employment agreement provided SIG with alternative remedies in the event of a breach: (a) liquidated damages of $700,000 or $800,000, depending on the when the breach occurred; or (b) injunctive relief and other remedies to which it was entitled at law.

In August 1999, SIG assigned Francis Wisniewski to trade Dow Futures, which are futures contracts in the Dow Jones Industrial Average (“DJIA”),1 in the trading pit at the Chicago Board of Trade. [113]*113Following about a month of unsuccessful trading, Wisniewski developed a formula for calculating the expected values of Dow Futures based on his observation that successful traders of Dow Futures monitored trading data for the S&P 500 Index. Because all of the individual stocks in the DJIA are also included in the S&P 500 Index, Dow Futures and S&P Futures tend to move in the same direction, with S&P Futures typically adjusting to market movements slightly before such adjustments are reflected in the price of Dow Futures. Accordingly, SIG’s Dow Fair Value formula reflected the relationship between S&P Futures and Dow Futures. After developing this formula, Wisniewski created a spreadsheet to make the formula’s calculations more quickly. After two months of trading Dow Futures, SIG reassigned Wisniewski. He saved the spreadsheet containing the Dow Fair Value formula.

In August 2001, SIG reassigned Wis-niewski to the Dow Futures pit and, shortly thereafter, assigned Fishkin to trade Dow Futures (and engage in related hedging transactions) with Wisniewski. They used the Dow Fair Value formula that Wisniewski previously developed and traded the product until March 2003; for the year 2002, Wisniewski and Fishkin earned SIG net trading profits of approximately $30 million.

Fishkin grew dissatisfied with his compensation and, in June 2002, sought to negotiate a new employment contract with SIG. SIG did not immediately respond to his request. Later that year, Fishkin was approached by a non-SIG trader representing a group that later became NT Prop about whether he would be interested in forming a new company to trade Dow Futures. Fishkin indicated that he would be interested in participating in the new trading group as of March 2003, when his contract with SIG expired. Between December 2002 and April 2003, Fishkin met with NT Prop representatives several times to discuss a trading venture; at one such meeting, NT Prop representatives asked Fishkin about SIG’s profitability in trading Dow Futures. Fishkin told them that confidentiality provisions precluded him from revealing such information, but, when asked if he made more than $5 million at SIG, Fishkin replied by saying “you’ll be pleased.” In February 2003, Fishkin stopped trading for SIG and officially left the company in March 2003 (along with Chernomzav)2 to start a competing business, TABFG, LLC. On March 31, 2003, articles of incorporation were filed for TABFG. In late April 2003, TABFG and NT Prop entered into a joint venture to trade securities and financial products on the Chicago Board of Trade (as well as other exchanges). TABFG began trading on April 25, 2003; it traded for four and one-half months until September 16, 2003, when it was enjoined from doing so by the District Court.

On March 30, 2003, Fishkin and Cher-nomzav, along with Francis Wisniewski, filed suit in the Court of Common Pleas of Montgomery County, Pennsylvania, seeking declaratory and injunctive relief to the effect that the noncompetition agreements in their employment contracts with SIG3 were unenforceable. SIG filed a counterclaim seeking an injunction preventing Fishkin and Chernomzav from trading as well as damages for breach of contract, [114]*114misappropriation of trade secrets, conversion, tortious interference with contract, and civil conspiracy. SIG also impleaded TABFG; NT Prop; and Richard Pfeil, a principal of NT Prop, as third-party defendants. NT Prop and Pfeil removed the case to the U.S. District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1332.'4

SIG moved for a preliminary injunction to enforce Fishkin’s and Chernomzav’s noncompetition agreements, and Judge James McGirr Kelly5 granted that motion on September 16, 2003.6 On February 3, 2006, SIG moved for summary judgment to make the injunctive relief permanent, and NT Prop filed a motion for summary judgment on April 21, 2006. On May 31, 2006, the Distinct Court denied NT Prop’s motion for summary judgment and granted SIG’s motion, thereby making permanent the preliminary injunctive relief enforcing the employment contract’s restrictive covenants against Fishkin and Chernomzav.

On February 12, 2007, the District Court considered cross-motions for summary judgment concerning the proper measure of damages resulting from Fish-kin’s and Chernomzav’s breach of their noncompetition covenants. SIG sought to measure the amount of damages as the profits earned by Fishkin, Chernomzav, TABFG, and NT Prop; the District Court rejected this theory of damages and denied SIG’s motion for summary judgment in its entirety. Conversely, Fishkin, Chernom-zav, and TABFG contended that SIG could not prove the appropriate measure of damages — its own lost profits — and sought the dismissal of SIG’s claims of breach of contract, tortious interference, and conspiracy. The District Court granted their motion in part, finding that the proper measure of damages for SIG’s claims was its lost profits and that SIG could not establish that measure. Nevertheless, the District Court found that, because “there remain disputed issues of fact as to whether SIG was harmed by Mr. Fishkin and Mr.

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