$6.8 Million Award for Theft of Company Trade Secrets

A dental technology company has obtained a $6.8 million judgment against a former employee accused of stealing the company’s designs. The federal district court in Central California entered the judgment after finding the defendant, Jian Lu, liable for stealing trade secrets. Sirona Dental Systems Inc., et al. v. Jian Lu, No. 2:15-cv-08777 (C.D. Cal. Oct. 19, 2017). This case highlights the importance of non-disclosure agreements, paying close attention to developments in your industry, as well as vigorously protecting your rights in court.

Sirona Dental Systems is one of the world’s largest manufacturers of dental technology, employing more than 3,300 people worldwide, and marketing its products in more than 135 countries. It develops, manufactures, and markets a complete line of dental products. One product in particular, the Apollo DI, combines highly confidential software and hardware to create an optical imaging equipment/system designed to provide dentists low-cost 3-D images of their patient’s teeth. At all times, Sirona treated the Apollo DI technology and designs as extremely confidential business secrets and proprietary information. Sirona took significant steps to protect the technology and information and keep them secret.

In 2011, Sirona acquired Arges Imaging, Inc., a company that focused on 3-D imaging technology. Defendant Jian Lu was Arges’ Senior Technical Director at the time. Lu had entered into a Non-Disclosure Agreement (NDA) with Arges’ in 2009. Lu became a senior engineer at Sirona beginning in approximately May 2011. While at Sirona, Lu worked on the Apollo DI technology and designs.

In 2013, Lu resigned from Sirona. In 2014, Sirona learned that two companies in China were placing orders with Sirona’s vendors for Apollo DI materials and were essentially creating a duplicate of the Apollo DI system and bringing it to market. When Sirona learned that these companies were owned by Lu, it filed suit for misappropriation of trade secrets and breach of the NDA agreement.

Although Lu and his companies answered Sirona’s complaint and initially participated in discovery, in July 2016, Lu’s attorneys withdrew from the case. Lu briefly represented himself, and then stopped participating in the case altogether. At that point, default judgment was entered against Lu’s companies and, in December 2016, the trial court granted summary against Lu. It held that Lu had stolen trade secrets. When Lu failed to participate in the subsequent damages proceedings, the court found Sirona was entitled to $6.66 million in damages for research and development that Lu allegedly saved by stealing information from Sirona, as well as $150,000 in penalties for intentional copyright infringement. Judgment was entered in October 2017.

While internal safeguards are important, when it comes to protecting trade secrets, companies also need to be vigilant and act quickly and decisively when it appears that a former employee is attempting to use the former employer’s secrets or copyrighted material to compete in the marketplace.

Iowa Waives Appeal of $2.2 million Verdict In Favor of Settlement

On August 24, 2017 we reported that former communications director for the Iowa Senate Republican Caucus, Kristen Anderson, was awarded $2.2 million in damages by a jury that found Anderson had been fired in retaliation for complaining about sexual harassment and a hostile work environment.

In late September, the parties reached a settlement, pursuant to which the State of Iowa will forego any appeal of the jury verdict, and will pay approximately $1,045,000 to Anderson, and approximately $705,000 for Anderson’s legal costs and fees.  On October 1, 2017, Iowa’s State Appeal Board approved this settlement.


Court Grants New Trial in Sexual Harassment Case Based on Evidence of Other Complaints Against Supervisor

Despite “substantial evidence” supporting a jury’s verdict, a judge may weigh the evidence and set aside the verdict if it is contrary to the clear weight of the evidence. Federal Judge Richard A. Jones did just that in EEOC v. Trans Ocean Seafoods, Inc., No. 15-cv-01563 (W.D. Wash. Sept. 8, 2017). He granted the plaintiffs’ motion for a new trial under FRCP 59(a). In doing so, the court set aside the jury’s verdict for the employer, holding that it knew or should have known of a supervisor’s inappropriate sexual comments based on the “clear weight of the evidence.”

The plaintiffs brought claims alleging sexual harassment under Title VII of the Civil Rights Act and the Washington Law Against Discrimination. They alleged that they were sexually harassed by their supervisor. At trial, the parties provided conflicting testimony about whether the plaintiffs complained to the employer’s operations manager at an off-site meeting about the supervisor’s harassment. The jury credited the operations manager’s testimony about the off-site meeting, which contradicted the plaintiffs’ testimony. However, it was undisputed that the employer was on notice of complaints about the supervisor’s conduct toward other employees and his prior inappropriate conduct. Indeed, the employer had issued him two prior warnings.

In granting the motion for a new trial, the court weighed the credibility of the witnesses and relied upon documents referencing complaints about the supervisor’s harassment of employees other than the plaintiffs, including the operations manager’s investigation notes and the disciplinary records. The court initially rejected the plaintiffs’ argument that the employer’s knowledge of a hostile work environment as to other victims should be imputed to the plaintiffs for purposes of establishing the employer’s liability absent corroborating evidence. However, the court found sufficient corroborating evidence and held that the weight of the evidence demonstrated that the employer was on notice of the supervisor’s improper conduct toward the plaintiffs for at least a year prior to their complaint to the Equal Employment Opportunity Commission.

This case demonstrates that a jury’s verdict is not necessarily the final word. Federal judges have broad authority to weigh evidence, including witness credibility, and may set aside a verdict if it is contrary to the weight of the evidence. It also highlights the importance of taking prompt remedial action when an employer has knowledge of inappropriate comments or conduct.



Discrimination Due To Breastfeeding: Jury Verdict Upheld in Favor of Police Officer

Affirming that breastfeeding is a medical condition related to pregnancy and that the police department’s conduct violated the Pregnancy Discrimination Act (PDA), a federal appeals court in Atlanta has upheld the jury’s verdict for a former Tuscaloosa, Alabama police officer. Hicks v. City of Tuscaloosa, Alabama, No. 16-13003 (11th Cir. Sept. 7, 2017).  Stephanie Hicks was awarded $374,000 in damages against the police department for pregnancy discrimination due to breastfeeding.

Trouble started for Hicks immediately after she returned from maternity leave. She was provided with only one option as a place to pump at work: an unsanitary and public locker room. She also felt she was constantly under scrutiny regarding her whereabouts during her pumping breaks. Even as she headed down to the locker room to pump, she would hear taunting, such as “wrap those boobs up” on her police radio.

Making matters worse, the police department began writing her up for what she believed were minor issues. Hicks was demoted to a patrol officer a week after her return from leave. This meant she would receive a pay decrease, be assigned to night and weekend shifts, and no longer have a vehicle. As a patrol officer, she also would have to wear a snug-fitting bullet proof vest on duty. Her obstetrician provided her with a doctor’s note explaining that the tight vest would reduce her milk supply and place her at risk for infections. In response, the police department told her she had no choice but to wear the vest or risk serious bodily injury. This was the last straw and she resigned.

Breastfeeding advocates and supporters attended the trial to support Hicks as a nursing mother. The jury also supported Hicks and found sufficient evidence of discrimination. The Eleventh Circuit affirmed. It also said that Congress intended the PDA to include physiological conditions post-pregnancy and that the PDA would be rendered a nullity if women were protected during a pregnancy, but could be readily terminated for breastfeeding.

The Affordable Care Act requires employers to provide nursing mothers with reasonable break times for expressing breast milk and with a private place to pump, other than a restroom. As a direct result of the verdict, Tuscaloosa’s police department and City Hall now have private rooms for nursing mothers; all employers should do the same. Employers are obligated to engage in the interactive process with breastfeeding employees who provide medical documentation to support the need for an accommodation. Finally, employers must have a zero-tolerance policy for harassment or retaliation of nursing employees.

The Significance of Expert Testimony

Expert testimony can play a significant role in shaping the outcome of cases that go to trial. For example, in a case lacking witnesses or evidence that could directly support or undercut the plaintiff’s accusations of severe sexual misconduct, what stood out most was the expert testimony.

On August 8, 2017, a two-week jury trial ended with a New Jersey mayor being cleared of any wrongdoing under the New Jersey Law Against Discrimination (LAD), while his accuser, who remains employed by the township he leads, must pay damages for defamation. Tamara Smith v. Township of Irvington and Anthony Vauss, in the Superior Court of New Jersey, Essex County.

According to her initial complaint, the plaintiff was hired by the Township in 2004, and, in mid-2005, became a Public Works Inspector with the Township’s Department of Public Works. Leading up to the Township’s mayoral election in May 2014, the plaintiff allegedly reported to the eventual winner of that election, Anthony Vauss.

As Smith alleged in the complaint, her work environment became “toxic” in August 2013, when Vauss allegedly propositioned her for a discrete sexual relationship (Smith and Vauss both had spouses who also worked for the Township). In return, Vauss allegedly promised that, as Mayor, he would get Smith promoted and would otherwise attend to the financial needs of Smith and her husband. When Smith rebuffed his advances, Vauss allegedly raped her.

Smith sued Vauss as well as the Township under LAD. LAD prohibits employers from discriminating against employees on the basis of sex, including by condoning sexual harassment. Moreover, alleged victims of prohibited discrimination can sue not just their employers, but also individual supervisors who are accused of aiding and abetting the alleged discrimination.

Faced with the prospect of going to trial with just Vauss’ word against Smith’s, Vauss’ legal team ultimately won the battle by using expert witnesses. First, a psychological evaluation revealed that Smith was battling depression and experiencing delusions. Second, a linguistics expert, by studying Smith’s speech patterns, was able to connect her to an anonymous letter received by the local newspaper attacking Vauss for completely unrelated, allegedly false reasons.

In cases with few witnesses to the alleged wrongdoing, defense teams can benefit from considering the value of expert witnesses to establish a critical element in their defense. This case demonstrates how that tactic was employed successfully to undermine the motives of the plaintiff.


Sexual Harassment Case Costs Iowa Taxpayers $2.2 Million

A former staffer for the Iowa Senate Republican Caucus in Iowa has been awarded $2.2 million in damages for retaliation that will be paid from Iowa’s already-floundering general fund.  Kirsten Anderson was terminated from her position as communications director for the caucus in 2012. She alleged the termination was in retaliation for her complaints about sexual harassment and a hostile work environment and the jury took her side.

Anderson described working for the caucus as a “boy’s club” where sexual jokes, as well as jokes about race, ethnicity, and religion, were constant and supervisors openly shared sexual comments about potential new hires. She also described state senators who would stop by the office and remark on other employees. Further, Anderson described a senior analyst who would show pornographic photographs to women in the office and occasionally summon the staff to look at women walking by outside his window. When the senior analyst began going through a divorce, according the Anderson, the already-hostile environment worsened, with regular usage of derogatory terms and angry or threatening comments.

Anderson’s coworkers testified to the accuracy of the allegations, with one coworker describing returning from lunch to a pornographic screensaver having been installed into her computer. Multiple coworkers admitted they did not complain or attempt to take action for fear of retaliation. One supervisor admitted he did not speak up because he claimed to have seen others retaliated against for doing so. Witnesses also described the senior analyst returning to the office and screaming at the staffers after Anderson complained about the office environment.

The lawsuit, which was decided in July 2017, was originally filed in October 2014, and Iowa State Republicans have since released a statement stating they have been addressing the issue. However, Anderson has recently filed a motion in court seeking an independent investigation into the Iowa Senate Republican Caucus, which could reveal further discriminatory issues within the caucus.

The concern, especially in cases where the environment comes to be described as a “locker room” or “boy’s club,” is that employees who feel threatened or offended by this kind of conduct may fear they will lose their jobs if they speak up. When that fear spreads to supervisory employees, systemic discrimination or harassment can go unnoticed until litigation.

Cases like these demonstrate the importance of a strong, well-communicated anti-harassment policy that is uniformly enforced throughout the company. Additionally, proper supervisor training and communication can go a long way in helping to alleviate these issues.

Jury Awards $4.5 Million to Hospital Employee for Discrimination and Retaliation

A plaintiff has been awarded $4.45 million for an age discrimination, disability discrimination, and retaliation action he filed under state law in a court in Iowa against his former employer. Gregory Hawkins v. Grinnell Regional Medical Center, et al., No. 08791 LALA002281. The award included $220,009 in back pay, $2 million in emotional distress damages, and $2.28 million for future emotional distress damages.

This case illustrates the importance of properly accommodating disabled employees and clearly documenting performance issues. Disability issues can present significant challenges when performance is an issue. Reasonable accommodation may include allowing an employee to take leave for treatment and recovery, as long as such leave is not an undue burden on the employer. Employers should appropriately document performance issues through written discipline and accurate performance reviews, so ongoing performance issues do not seem to appear suddenly just before an employee is fired.

According to the evidence, the plaintiff, Gregory Hawkins, was a long-term employee of Grinnell Medical Center who was promoted to the position of lab director in 1985. Hawkins received favorable performance reviews and pay raises during his employment. In late-2013, Hawkins was diagnosed with breast cancer and took a leave of absence to obtain treatment. He returned to the lab director position in March 2014 on a part-time basis.

In June 2014, hospital administrators asked Hawkins to retire, claiming the Hospital needed a full-time lab director. Hawkins asked to keep working, telling the administrators in an email that his job was “keeping his mind off” his cancer diagnosis. His oncologist expected him to make a full recovery by the end of 2014, and Hawkins said he wished to begin working full-time again at that time. The Hospital suspended Hawkins until he was able to return full-time to the position in October 2014. Hawkins worked as the lab director until June 2015, when he was terminated.

Although the Hospital claimed Hawkins was terminated because he failed to adequately manage the lab and lab employees, Hawkins alleged that he was fired because of his age (63 at the time of the verdict), disability, and protected activity. The jury sided with the plaintiff, finding that the Hospital had violated Iowa state laws prohibiting age discrimination, disability discrimination, and retaliation. The size of the compensatory damages award – $4.28 million for past and future emotional distress damages – clearly showed the jury believed the plaintiff had been profoundly affected by the Hospital’s treatment of him following a cancer diagnosis.


Court Reduces Jury Award of $6.45 Million to $100,000.

On May 16, 2017, we reported that a jury in Davis v. Packer Engineering, Inc., No. 1:11-cv-07923, awarded plaintiffs Danya Davis and Bernessa Wilson each $3 million in punitive damages and $150,000 and $300,000, respectively, in compensatory damages.  In that case, the plaintiffs had alleged, among other things, that their employers subjected them to a hostile work environment and retaliated against them for complaining about such environment by terminating their employment.  At that time, we noted that the jury award far exceeded the statutory caps imposed by Title VII.

On August 2, 2017, U.S. District Judge Andrea Wood slashed the $6.45 million award to $100,000, with Davis and Wilson each receiving $50,000.  Judge Wood explained that, pursuant to Title VII’s statutory cap, a plaintiff cannot recover more than $50,000 where the employer has more than “14 and fewer than 101 employees in each of 20 or more calendar weeks in the current or preceding calendar year.”  Packer’s payroll records show its workforce fell within that range in the relevant years.



Evidence of Immigration Status Blocked by Courts

Could barring evidence in court of undocumented workers’ immigration status actually prevent employers from hiring illegal immigrants? It could, according to one Illinois district court judge.

U.S. Magistrate Judge Sheila Finnegan has barred evidence regarding a plaintiff’s immigration status in a case involving a claim for unpaid wages under the Fair Labor Standards Act, ruling that the evidence was “not relevant to a claim for unpaid wages under the FLSA.” Kim v. Hakuya Sushi Inc. et al., No. 1:15-cv-03747 (N.D. Ill. July 5, 2017). Her opinion mirrored the language of other cases finding that “immigration status has generally been protected from discovery” in FLSA claims. See, e.g., Rosas v. Alice’s Tea Cup, LLC, 127 F. Supp. 3d 4, 9 (S.D.N.Y. July 6, 2015). According to Judge Finnegan, denying illegal workers the protections of the FLSA would “create an incentive for employers to hire illegal workers so they could pay them less than minimum wage, in contravention of laws designed to reduce illegal immigration.”

This trend of barring evidence of an individual’s immigration status extends beyond the context of the FLSA. For example, the Fifth Circuit Court of Appeals upheld a lower court decision that evidence of a plaintiff’s immigration status should be barred in the context of a Title VII claim. Cazorla v. Koch Foods of Miss., L.L.C., 838 F.3d 540, 556 (5th Cir. Sept. 27, 2016) (confirming E.E.O.C. v. Rest. Co., 448 F. Supp. 2d 1085, 1087 (D. Minn. 2006)). Similarly, courts have held that plaintiffs in employment discrimination suits are not compelled to disclose the accuracy of their Social Security numbers because, “‘even though such immigration status might be relevant [to credibility], it is a potential weapon for harassing and intimidating individuals and because there [are] other tools for impeachment that would not implicate the plaintiffs’ immigration status.’” Jimenez v. Brooks, 2016 Conn. Super. LEXIS 581, *18 (Conn. Super. Ct. Mar. 15, 2016) (quoting E.E.O.C. v. First Wireless Group, Inc., 2007 U.S. Dist. LEXIS 11893 (E.D.N.Y. Feb. 20, 2007)).

The Supreme Court of Washington has gone one step further. It has publicly endorsed a proposed new rule that would exclude evidence of a party’s immigration status from all civil and criminal cases (with a few exceptions). The Court said the new rule “would promote equitable access to justice by removing the potential for racial and ethnic stereotyping that inevitably results from the unnecessary injection of immigration status evidence into the fact-finding process.” New Rule of Evidence 413 — Immigration Status, 2017 Wash. LEXIS 631, *7 (Wash. June 1, 2017).

Whether barring evidence of immigration status from FLSA claims, Title VII claims, or civil litigation altogether, there is an undeniable trend towards protecting immigrants in our justice system.


Workplace Bullying Costs State $3 Million


A California state jury has handed down a $3 million award to a Caltrans (California Department of Transportation) employee in a case alleging harassment by supervisors.  John Barrie, a staff services analyst at Caltrans, alleged his supervisors harassed him by intentionally triggering his allergies through exposure to chemicals such as perfumes and cleaning solutions.

Barrie began working at Caltrans in 2005. He informed his supervisor at the time that he had a disability that caused him to have severe reactions to certain chemicals (such as perfumes and cleaning supplies). Barrie’s supervisor provided him with an “unofficial” accommodation, which worked well for the next five years. Barrie’s supervisor asked his coworkers not to wear perfume, and the cleaning crew was instructed not to use certain supplies such as Windex.

In 2010, a new supervisor took over Barrie’s department. The supervisor rescinded Barrie’s “unofficial” accommodation. Barrie then requested a formal accommodation, but the “unofficial” accommodation was not reinstated. Perfume and cleaning chemicals were used in his workspace. Barrie’s complaint alleged that after he filed an internal, complaint his supervisors retaliated against him. For instance, he was transferred to another office without explanation. Barrie was placed in the lobby and asked to perform reception duties, which he viewed as a demotion. Barrie also alleged he was forced to miss out on opportunities to earn overtime.

In 2012, a Caltrans Human Resources representative did a surprise inspection in which they found perfumes and cleaning chemicals had been sprayed in Barrie’s office. Instead of vindicating him, this led to further retaliation. According to notes from the investigation, Barrie’s supervisors wanted to punish him for going “outside of the chain of command.”  Another time, Barrie alleged that he came to work to find his lumbar pillow soaked in perfume. Barrie alleged that his supervisor called him “idiot” and “jerk,” and that other coworkers accused him of “causing problems.”

Barrie filed his lawsuit in February 2013. In May 2017, the jury delivered a $3-million-dollar verdict for Barrie. Barrie continues to work for Caltrans, although he now works remotely.  Caltrans is considering an appeal. This case is a reminder to employers that employee requests for accommodation must be taken seriously.

The attorneys at Jackson Lewis routinely work with employers on setting reasonable accommodations. If you have any questions regarding these issues, do not hesitate to contact Jackson Lewis.