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Federal Judge Sends a ‘Stearn’ Message with $5 Million Trade Secret Award

By May 19, 2023No Comments

In a trade secrets case in the U.S. District Court, District of Massachusetts, Judge Richard Stearns has issued a scathing M.G.L. chapter c. 93A decision rebuking Defendants for deliberately and deceptively using Plaintiff’s trade secrets to the detriment of Plaintiff. The decision captioned, Biopoint, Inc. v. Dickhaut et al, came down on April 25, 2023. The Court issued a hefty damage award of more than $5,000,000 for unjust enrichment attributable to trade secret misappropriation and triple damages under Chapter 93A – with legal fees still to be assessed.  This decision comes on the heels of a June 2022 trial in which the jury returned a verdict for Plaintiff, finding the defendants liable for misappropriation of trade secrets and tortuous interference but awarding a relatively modest $312,000 in lost profits.  This begs the question: How did the Court get to a damages figure 16 times larger than the Jury?

The individual Defendant, Dickhaut, was apparently an unscrupulous headhunter.  With the help of his fiancé, Dickhaut colluded to underbid offers to place staff at prominent local biotechnology firms.  Dickhaut was found to have solicited and used confidential information from his fiancé, an employee of the Plaintiff Biopoint at the time, to secure staffing placements.  This was apparently done with the knowledge of Dickhaut’s employer, co-Defendant Catapult Staffing.  It was proven that Dickhaut used cost, pricing and other trade secret information fed to him by his now-wife to undercut the Plaintiff and to place several employees at high-profile biotech companies.

The Court appeared persuaded that this misconduct was a Chapter 93A violation requiring treble damages because of evidence that Catapult Staffing knew that Dickhaut’s conduct was illegal.  The Court also held that the Biopoint data that Dickhaut relied upon allowed Catapult Staffing to compete unfairly for placements based on Biopoint’s intellectual property, which took years for Biopoint to generate at great expense.  As Stearns indicated, “Stealing the information that BioPoint had acquired and stored . . . even if only the names that it had identified as potential candidates for a position, can be akin to ‘starting a marathon in mile 25.’”

In calculating damages, Judge Stearns focused on the gross profits Catapult Staffing realized (not just the lost profits Biopoint suffered per the jury) due to the Defendants’ malfeasance: $1,375,148.  He further found that Catapult and Dickhaut’s conduct was “unfair and deceptive” under Chapter 93A, entitling the plaintiff to treble damages and reimbursement of attorneys’ fees.  Interestingly, Because Defendants failed to produce offset information at trial, Judge Stearns declined to give Defendants a credit for costs and the final award was a gross figure that did not consider or net out Defendants’ expenses.  Defendants have indicated they will appeal – so stay tuned for further developments.  The decision can be found here.