Court Upholds BioPoint's $7.5 Million Win in Trade Secrets Case
Catapult Staffing must pay for inside job that launched its biotech business
Last year SLN reported on a large federal court award in a lawsuit between Boston competitors BioPoint, Inc. and Catapult Staffing, LLC. The case involves a BioPoint Business Development Manager, Leah Attis, who shared candidate information and sales leads with Andrew Dickhaut, the Managing Director of Catapult's newly opened Boston office, who happened to be her fiancé. She did this even though at one point she said to Dickhaut: “Andrew - I can’t give you names from our system. People have [gone] to jail for that.”
But share information she did, and as result Catapult was able to establish a lucrative biotech staffing business with no prior experience in the field. Read the earlier story and details here:
Bill Josey
The appeal
Catapult appealed, and on July 30, 2023, the United States Court of Appeals for the First Circuit Court largely upheld the trial court's ruling in a 35-page opinion, attached below. The court reversed the part of the order holding Dickhaut jointly responsible the return of Catapult's profits from the scheme. The panel also knocked $157,068 off the underlying judgement on a technical point.
With attorney's fees, Catapult now owes BioPoint $7,554,402, plus accrued interest. The base award represents trebled damages under a Massachusetts trade secret law. BioPoint will soon be in a position to pursue collection activities if the judgment is not paid. This could include garnishing Catapult's bank account and clients who owe fees.
Lessons learned: protect your data- it is really, really valuable
The case is an excellent affirmation of the value of a staffing firms' client and candidate data. It has been argued in some cases that things like client and candidate lists are not "trade secrets" as defined by law. But usually courts hold, as they did here, that properly guarded compilations of proprietary information have independent value and qualify for trade secret protection. The key words are "properly guarded." This means reasonable measures to keep the information confidential, starting with confidentially/non-disclosure agreements and properly protected information technology systems.
Lessons learned: culture matters
The trial court's opinion, attached to the earlier story, describes what can be characterized as aggravating circumstances, including Attis' damning statement to Dickhaut about doing jail time, then proceeding to undertake the wrongful actions. The trial court also relied upon evidence suggesting that Catapult's executive management knew what was happening and did not disapprove of it:
The record supports the inference that Catapult executives knew of and yet allowed Dickhaut’s solicitation of confidential information from Attis. See, e.g., Ex. 72 (Dickhaut emailing Salustri that Attis was helping him with the search for a Vedanta placement); Dickhaut Test., Jury Trial Day 3 Tr. at 165-166 (confirming that Dickhaut stated, “I positioned our capability using the Vedanta story and Shire projects I learned from Leah” in a weekly report to Salustri); Salustri Test., Jury Trial Day 4 Tr. at 79 (Catapult executive stating he had no intention to discipline Dickhaut for his actions with respect to BioPoint).
Further, Catapult seemingly rewarded Attis for her actions by hiring her into a similar role after BioPoint fired her! These factors likely contributed to the catastrophic outcome for Catapult.
There is an important risk management lesson here for those interested in such things: Company culture matters. Catapult management appeared blind to the wrongful nature of the misconduct, and the trial judge noticed. Catapult's core values on its website do not mention integrity:
Relentless
We live by a simple code: Challenge the impossible. We challenge our clients and ourselves to drive past the boundaries of what’s possible to create extraordinary outcomes.
Talented
We value the awesome, the outrageous, and the downright brilliant. We have found that the best way to achieve our extraordinary results is to attract and hire simply outstanding people: crazy-smart talent with a proven record of success in their previous jobs.
Supportive
We are a culture based on trust, tolerance, and love. We speak openly and often, respect each other’s opinions, and do what we say we will do.
Respectful
Talent is not a commodity. It doesn’t matter what position a candidate is seeking; they should be treated with respect, told the truth, and communicated to professionally throughout the entire process.
Contrast this with my former employer Kforce, which has long emphasized integrity, as demonstrated by Kforce's first core value:
Integrity
Act with intention. Keep promises. Take responsibility.
Our founders established a culture of integrity, respect and trust. We foster this within ourselves, but we also hold each other accountable: to be deliberate and thoughtful with our actions; to approach everything with a servant's heart; to honor our partnerships; and to do the right thing, no matter who's watching.
You cannot possibly teach all the law to your employees. But you can tell them they are expected to distinguish right from wrong and conduct themselves accordingly. There certainly can be consequences if you don't.
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