Connecticut Business Litigation Blog : Connecticut Business Lawyer & Attorney : N. Kane Bennett : Aeton Law Partners LLP : Hartford, Middletown, Glastonbury

Following my post about the Dur-A-Flex v. Laticrete jury verdict, I received a statement from Laticrete's CEO, David Rothberg.  You can read the full statement here.   Mr. Rothberg stated that he is "extremely disappointed in the verdict." He added that the jury finding against Laticrete was "absolutely baseless."  He left no secret as to Laticrete's post trial plans as he says the company intends a vigorous defense on appeal.

Trial counsel for Laticrete, Elizabeth Stewart, confirmed to me today that Laticrete does expect to appeal.  She commented that no decisions have been made yet on which issues Laticrete will raise on appeal.  Attorney Stewart had no further comments on the case.   

One of the most intriguing aspects to the appeal in this case is that Judge Eveleigh presided over the trial.  Judge Eveleigh has a very good reputation as a trial court judge.  In addition, he is now set to take a seat on the Connecticut Supreme Court.  I do not know yet what potential grounds might exist for the appeal, but I can say it seems very likely Judge Eveleigh considered the potential appellate issues in this case very closely.   

Stay tuned.  I expect there will be additional posts on this case.

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After an eight week jury trial in Waterbury Superior Court, an East Hartford based flooring solutions company,Dur-A-Flex, has been awarded 50.5 million dollars in damages for the misuse of its trade secrets by Laticrete International, a Bethany based multinational corporation.  Laticrete was a former purchaser of Dur-A-Flex's colored sand products.  The jury found that the Laticrete misappropriated Dur-A-Flex's trade secrets for the colored sand and awarded 43.7  million dollars in damages.  After the jury verdict, Judge Dennis Eveleigh awarded Dur-A-Flex more than 5 million dollars for attorney's fees in a written decision (download here).   He also conditioned Laticrete's future use of Dur-A-Flex's technology on payment of royalty fees.

The case was brought back in 2006 on the Complex Litigation Docket in Waterbury  (Access court docket here). Dur-A-Flex was represented by Lawrence Rosenthal and Fletcher Thomson from Rogin Nassau's Hartford office.  Laticrete was represented by Elizabeth Stewart from Murtha Cullina's New Haven office.  

Dur-A-Flex supplied color sand to Laticrete for use in Laticrete's grout products.  Laticrete was the only customer of Dur-A-Flex for the sand product.  Laticrete at some point stopped buying the colored sand from Dur-A-Flex and started making an identical sand product.  Dur-A-Flex claimed that Laticrete was, if fact, using Dur-A-Flex's manufacturing process to make the sand.    The jury agreed with Dur-A-Flex and found that Laticrete violated Connecticut's Uniform Trade Secrets Act. 

Attorney Rosenthal commented on the verdict and stated he was "certain that Dur-A-Flex had been significantly damaged by Laticrete's improper and unauthorized use of its technology."  He believed the verdict was the largest ever for a trade secret case in Connecticut. 

I also believe this is the largest jury verdict in Connecticut history for a trade secret case.  Additionally, Connecticut case law is fairly sparse when it comes to significant trade secret cases.  I expect that the Dur-A-Flex case will impact trade secret law in Connecticut for years to come.  In particular, not only the amount of the award, but Judge Eveleigh's written decision on awarding future royalties and attorney's fees, which included a 10% contingency success fee.   Judge Eveleigh also issued a post-judgment order permitting Dur-A-Flex to attach the assets of Laticrete. It should be noted that Judge Eveleigh will become a justice of the Connecticut Supreme Court on June 1, 2010.   As such, I expect that his decision will carry more weight on these issues.

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Corey Dennis, a former Superior Court clerk in Connecticut, sent me an article he recently published on Connecticut civil procedure.  I am posting the article,  "Roadmap to Connecticut Procedure" (download here), with the permission of the Connecticut Bar Journal and Corey.  The article brings the perspective of a Law Clerk who was involved with the procedural aspects of the Connecticut Superior Court on a regular basis. It is a nice summary of the basics of early motion practice in Connecticut state courts.   The article also has a useful chart on distinctions between state and federal procedure in a few important areas.  Corey is now an associate at Skoler Abbott & Presser in Springfield, MA.

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The Complex Litigation Docket or “CLD” is a special session of the Connecticut Superior Court  designed to accommodate the needs of complex cases.  The Judicial Branch published a fact sheet about the CLD.   Here is a summary of the CLD facts:

• Designed for cases with intricate legal issues, multiple parties, or significant damages;
• A single judge is assigned over all aspects of the case, similar to federal court;
• Assignment of hearing dates for motions instead of the standard "short calendar" sessions;
• Judges and court officers fully supported by staff with newer technology; and
• Enhanced use of court-annexed mediation, include special masters.

Any party, or a judge, may request a transfer of a case from the regular Superior Court docket to the CLD.  A request is made by filling out and submitting an application.  Any objection must be filed within 15 days.  The Chief Administrative Judge of the Civil Division handles the request, and a hearing may be held to determine if referral to the CLD is appropriate.  The determination for placement on the CLD is made by an evaluation of several factors listed on the fact sheet.

For many business dispute or commercial cases, the CLD may be an appropriate venue rather than the regular docket.   The CLD is more akin to the federal court.  The benefits of a single judge assignment can be significant as it reduces delays in discovery and motion practice.  The CLD judges have standing orders designed to streamline the process.  Each case is also assigned a court officer who remains involved in the scheduling and administrative process.  In this way, cases are actively managed. 

The CLD also affords an opportunity to change venue in a case.  If your case is in a venue that you deem unfavorable to your case or client, one of three CLD venues (Hartford, Stamford, Waterbury) may be preferable.  You can request a particular venue when applying for the CLD, but there is no certainty that the request for a specific location will be granted.  Nevertheless, any one of the three venues may be preferable to others venues.

Although there are many upsides to the CLD, there are some reasons to stay on the regular docket.  For example, trial dates on the CLD are currently being scheduled 2 to 3 years out from assignment.  Although CLD trial dates are less likely to be continued than dates on the regular docket, CLD cases can take longer to arrive at resolution, especially if trial is necessary.   Also, there can be some gamesmanship involved with referrals to the CLD.  I have seen litigants applying to the CLD simply to delay the proceedings on the regular docket.  There is also a $325.00 fee for the docket.

In most significant business disputes or commercial litigation cases, the advantages available on the CLD, such as the single judge assignment,  may make the CLD the preferable venue. 

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After 5 years of litigation, two appeals, and one trial, the answer is.......Yes, that statement can constitute a valid offer to end a Connecticut partnership between two feuding sisters who had agreed in writing to split lottery winnings.  The story of the feuding sisters has been covered by Alaine Griffin at the Hartford Courant and the local news stations (NBC CT;   CBS NEWS).

According to yesterday's ruling by Connecticut Superior Court Judge Cynthia Swienton, when one sister said "I don't want to be your partner anymore" and the other said "okay," the partnership was over and the contract rescinded. 

The case involved a dispute between two sisters, Terry and Rose,  over a written contract that dated back to 1995.  Terry split some poker winnings ($165,000) with her sister Rose and decided they needed a contract to make sure there would be a split for any future winnings.  You might call the contract a  paper napkin partnership agreement, but it was notarized and drafted by an accountant.  It was simple and straightforward.  The relevant part of the contract read:

We are partners in any winning we shall receive, to be shared equally.

Fast forward to 2004 and a fight over $250.  The Court found that Terry said during the fight "I don't want to be your partner anymore."  Rose replied "okay."  Rose then went and became partners with her brother, Joe.  Of course, Joe then went out and bought a $500,000 winning Powerball ticket.  Terry found out, Rose refused to pay Terry, and finally a lawsuit was filed for breach of contract.   

After going through the history of the relationship and finding credibility in favor of Rose, the Court found that Terry and Rose mutually agreed to rescind or cancel the contract on the basis of that exchange of words and the conduct of the sisters after the exchange.  Case closed, at least for now.  It is unclear if there will be any appeal.   

In reading the decision, I found it interesting that there was no mention of Connecticut's partnership statute.  It is not clear if either party raised the statute in the case.  The case was decided on pure contractual grounds based on an agreement to rescind the contract.  Nevertheless, it also appears to me that the Court was swayed by more than just the exchange of words, but the actual conduct of the parties after the exchange.  In other words, you could say that they stopped acting like partners, they agreed not to be partners, and therefore, no partnership continued to exist.  

Interesting case, but also sad to see.  In the end, Terry's frustration over $250 might have cost her not only a share of the $500,000 winning ticket, but the good relationship she had with her sister. 

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That was the question posed in an email newsletter I received today from the International Association of Privacy Professionals.   I am a member of this group out of personal interest and to to stay on top of issues related to privacy laws and technology.   One of the benefits of belonging to this group is that I get email newsletters with summaries of new laws, regulations, and lawsuits dealing with privacy issues from all over the world. 

Today's email posed the question in the title of this post and featured an article from the New York Times by Natasha Singer called "Shoppers Have No Secrets."   The article details the technology of "behavioral tracking" by retail and advertising businesses and how the Federal Trade Commission (FTC) is playing catch up when it comes to regulating this technology.

Online behavioral tracking has been a hot button issue for both businesses and privacy rights groups for a few years.  Natasha's article lists several types of new tracking to include:

• Cameras that can follow you from the minute you enter a store to the moment you hit the checkout counter, recording every T-shirt you touch, every mannequin you ogle, every time you blow your nose or stop to tie your shoelaces.
• Web coupons embedded with bar codes that can identify, and alert retailers to, the search terms you used to find them.
• Mobile marketers that can find you near a store clothing rack, and send ads to your cellphone based on your past preferences and behavior.

The article is a very good summary of the issue and has links to advocacy groups on both sides of the debate.  The article also highlights the differences between European and US based privacy laws. In general, the EU is far more advanced and stringent when it comes to personal data protection. 

In the US, the FTC publishes guidelines and takes enforcement action under its authority to regulate unfair trade.  There are also the states' Attorney Generals and class action and individual lawsuits.  Nevertheless, to answer the question I posed in this post, it is clearly a "NO" in the US.   Data protection laws will not catch up to new technology. At least, not anytime soon.

So, should Connecticut businesses ignore consumer privacy issues?    Not if the business wants to stay ahead of the game and out of litigation over privacy violations.   The FTC and state Attorneys General still have broad enforcement powers to regulate unfair trade.  Also, individual consumers continue to bring lawsuits over these issues.  

For Connecticut businesses, it is a good idea or best practices to implement  a policy related to protection of consumer data, preferences, and personal identifiers.  I have posted some tips about these issues before.  If you are looking for "do it yourself" resources, another good place to start is the FTC guidelines on behavioral tracking or its Guide for Business in protecting personal information. 

Of course, by the time you implement a privacy plan for today's technology, it will be time to start updating it for what tomorrow brings.  Good thing I get an email to remind me.   

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