M3 USA CORPORATION v. HART

District Court, E.D. Pennsylvania·Decided July 9, 2021·No. 2:20-cv-05736·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

M3 USA CORPORATION : CIVIL ACTION : v. : NO. 20-5736 : KARIE HART, et al. :

MEMORANDUM KEARNEY, J. July 9, 2021 Parties choosing to offer a judgment for a sum certain plus “any applicable reasonable attorney’s fees and costs” to end a litigation must perform under the terms of their offer when the opposing party accepts. An offer of judgment is a unique procedure under federal law. It is unlike a negotiated settlement agreement reflecting lawyers’ consent to specific terms. It is instead a “take it or leave it” based on the words in the offer. A defendant making an offer of judgment for a sum certain plus applicable reasonable attorney’s fees and costs must tender the “applicable” reasonable fees and costs if the offer is accepted. We today address obligations to pay attorney’s fees and costs based on language a former employer accepted in an offer of judgment from its former employee and her new employer in a trade secret case. The former employer now moves for its reasonable attorney’s fees and costs incurred in this action under the offer of judgment. Counsel for the former employee and her new employer drafted the offer of judgment and now argue their chosen word “applicable,” which they placed before “reasonable attorney’s fees” in their offer, has no meaning because the former employer is not a prevailing party under the trade secret statutes and fees are not recoverable under the common law. But counsel for the former employee and her new employer chose the term “applicable” which, at best, suggests there may be some fees regardless of the trade secret statutes. The term “applicable” is ambiguous; does it mean “eligible” for fees in this case? We must construe “applicable” against the former employee and her new employer. We interpret “applicable” to mean reasonable fees and costs incurred in this case as opposed to statutory eligibility for fees. We then measure the reasonableness of the attorney’s fees incurred by the former employer

including the amount of time billed to this matter. We sustain objections to vague billing entries and to charges unrelated to this case. We do not allow fees for work not “applicable” to the case. We otherwise grant the former employer’s Petition for fees finding $238,560.13 to be reasonable along with the reimbursement of $69,547.64 in costs with no post-judgment interest under the parties’ contract. I. Alleged facts M3 USA Corporation provides market research recruitment, data collection, and support services in the healthcare industry in the United States, Europe, and Asia.1 M3 hired Karie Hart as an Inside Sales Manager on May 29, 2009.2 She signed a Proprietary Information and Inventions Agreement with confidentiality provisions as a condition of her employment.3 Ms. Hart agreed to

“hold in confidence and not disclose or, except within the scope of [her] employment with Company, use any Proprietary Information.”4 In her position with M3, Ms. Hart had access to confidential and proprietary M3 information, including through an M3 provided laptop.5 Ms. Hart signed a Confidentiality and Non-Solicitation Agreement as a condition of receiving her commission plan for the year.6 In exchange for commissions, Ms. Hart agreed to hold M3’s trade secret and proprietary information confidential and in a fiduciary capacity and to safeguard such information.7 She also agreed not to disclose M3’s trade secret and proprietary information to a third party during or after her employment, except in the good faith performance of her duties.8 Ms. Hart also agreed she would not “contact, call upon, encourage or solicit, on behalf of a Competitive Business . . . , any existing or prospective client or customer of the Company who [she] serviced, or otherwise developed a relationship with, as a result of [her] employment with the Company, nor will [she] attempt to divert or take away from the Company the business of any such client or customer” during her employment and a one year period following the termination of her employment.9

M3 promoted Ms. Hart to a Senior Account Manager position in March 2014 followed by another promotion to Vice President of Sales in December 2014.10 Ms. Hart managed two main accounts, including the BluePrint Research Group account.11 On December 19, 2016, two years after Ms. Hart’s promotion to Vice President of Sales, M3 and BluePrint entered into a Market Research Master Services Agreement.12 Under the Master Services Agreement, M3 provided healthcare market research services to BluePrint.13 M3 alleges it enjoyed a steady and increasing revenue stream with consistent sales from the BluePrint account from 2016 to 2019.14 Ms. Hart leaves M3 in July 2020.

M3’s Chief Revenue Officer Indrani DasGupta resigned from M3 on January 1, 2020 to become the Chief Executive Officer of Atlas Primary, Inc., a direct competitor of M3.15 M3 believed Ms. DasGupta began poaching its employees and clients despite her knowledge, as a former M3 executive, of the confidentiality and restrictive covenant agreements M3 required of its employees.16 M3 Project Manager Savanah Haunert resigned from M3 in May 2020 to accept a position as the Director of Market Research Operations at Atlas.17 M3 alleged Ms. Haunert worked for Ms. Hart on the BluePrint account.18 M3 also alleged sometime between February and June 2020, Ms. DasGupta spoke to Ms. Hart about joining Atlas.19 Ms. Hart resigned from M3’s employment on July 30, 2020 to become an Atlas Senior Vice President beginning August 1, 2020.20 M3 alleged Ms. Hart admitted to selling a substantial amount of business for Atlas before leaving M3.21 M3 contends it began losing BluePrint’s business beginning in April 2020, with a substantial decline in monthly sales from April to July 2020 compared to the previous year.22 M3 attributes at least some of its business loss to BluePrint’s decision to move its account from M3 to Atlas.23

M3 alleged Ms. Hart misappropriated its confidential proprietary information and trade secrets regarding BluePrint before or shortly after leaving its employ.24 M3 believed Ms. Hart abused her access to its market research system and other client-related files on her M3-provided laptop to obtain trade secret information and gain a competitive advantage for Atlas, violating M3’s policies and employee handbook, and her signed agreements.25 M3 also believed Atlas used this stolen information to undercut M3’s bids and divert business from M3 to Atlas, and M3 continued to lose BluePrint sales, revenue, bids, and projects to Atlas.26 Ms. Hart continues to work on the BluePrint account for Atlas.27 M3 sues Ms. Hart and Atlas.

M3 sent Ms. Hart and Ms. DasGupta a cease-and-desist letter on September 1, 2020, demanding Ms. Hart and Atlas cease the breach of Ms. Hart’s restrictive covenants and demanding the return of M3’s confidential information and trade secrets.28 When the parties could not resolve their issues, M3 sued Ms. Hart and Atlas on November 16, 2020 alleging Ms. Hart breached her restrictive covenants and duty of loyalty to M3 and misappropriated M3 trade secrets and confidential information for the benefit of Atlas.29 M3 claimed Ms. Hart and Atlas violated the Defend Trade Secrets Act30 and the Pennsylvania Uniform Trade Secrets Act.31 Atlas and Ms. Hart moved to dismiss for lack of personal jurisdiction and failure to state some claims.32 We granted their motion in part and denied in part.33 We held a pretrial conference on February 17, 2021, setting an August 3, 2021 trial date.34 M3 moved for a preliminary injunction on March 1, 2021, which we denied without prejudice.35 The parties completed some discovery.36 M3 accepts an offer of judgment including applicable attorney’s fees.

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M3 USA CORPORATION v. HART, (E.D. Pa. 2021).

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