Page 6 - Alternative Dispute Resolution

S6 | MONDAY, NOVEMBER 16, 2015 | Alternative Dispute Resolution | NYLJ.COM
BIGSTOCK
BY ERICA B. GARAY
W hether you represent the employee or former employer (or even the new employer) in a case involving allega-
tions of theft of trade secrets or breaches of non-competition, non-solicitation, anti- poaching, and/or confidentiality (NDA) cov- enants, mediation is an attractive option that should be considered as a valuable tool to help resolve a case including at its earliest stages (and even pre-suit).
These cases (especially at inception) are very labor intensive as the plaintiff prepares to go to court to obtain a Temporary Restrain- ing Order and Preliminary Injunction: drafting briefs, affidavits, orders to show cause, and a complaint, or, on the part of the defendant, preparing the papers that oppose the applica- tion, making a motion to dismiss or answering the complaint. If you are in federal court in the Eastern and Southern Districts of New York you are almost certainly going to be
ERICA B. GARAY is a member of Meyer, Suozzi, English & Klein, where she is chair of the ADR practice and a member of the litigation practice. She serves on the NAM and American Arbitration Association rosters of neutrals for commercial and complex arbitration, and is co-chair of the ADR Committee of the Nassau County Bar Association.
asked to swear your first witness in on the return date of the order to show cause, and a trial will proceed. Looking at this “to do” list makes it very obvious that pursuing such a case in court will involve substantial legal fees for both plaintiffs and defendants. Equally important is that it can take a substantial amount of time to obtain a decision on the preliminary injunction application.
But is there another way to resolve the par- ties’ dispute? Mediation is the answer. These cases are uniquely suited to be resolved in this way (even at the earliest stages) if the practitioner understands how to use the mediation process.
Cases involving misappropriation of trade secrets and enforcement of restrictive cov- enants are usually very emotional and highly charged. They involve themes of betrayal, greed, and, oftentimes, dishonesty. Cases that are emotional are prime candidates for media- tion because the persons involved are asked to attend the mediation session(s). Through joint sessions and caucus sessions, these per- sons are called upon to “tell the story.” Such venting is an important first step toward mov- ing beyond the anger involved in the litigation, and being able to focus on settlement.
Although each case involving theft of trade secrets and breaches of non-competi- tion and non-solicitation covenants may be unique insofar as the contractual language and facts may differ, most of these cases will
settle on very similar terms. Practitioners who can focus on what their clients’ needs are and where their interests lie can get to the end-game faster. Understanding this makes a lawyer-advocate a very important asset to his or her client. Mediation can be used to resolve cases efficiently and effectively. Since most cases settle eventually, mediation can be used to settle early and avoid expense. It is an extremely efficient process that is eco- nomic and well-suited to resolve this type of case quickly.
Mediation is a private (or court-annexed), voluntary proceeding that is confidential and provides a process for an informal resolution of a dispute in which a neutral person facili- tates disputing parties to reach an agreement, but has no power to impose a resolution. Usually, mediation does not involve any pre- sentation of sworn testimony or evidence and no decision (or award) is issued. Rather, the parties meet with the mediator (usually after providing mediation statements that analyze the issues, claims and defenses), and through the mediator’s assistance reach a resolution, which should be documented in a written (and binding) settlement or term sheet. (In New York, for an out-of-court settlement to be binding, it must be in writing and signed. See CPLR 2104, 3417.)
Settlements of cases involving theft or mis- use of “trade secrets” or confidential infor- mation usually will focus on how to ensure
that the pilfered material is returned and not retained by the former employee (and pos- sibly his new employer), rather than on the issue that would be litigated: that is, whether the information is protectable either under common law (i.e., does it qualify as a “trade secret”) or the confidentiality (or non-disclo- sure) agreement (i.e., is it “confidential infor- mation” as defined by the contract). Thus, instead of litigating whether, for example, a customer list constitutes a protectable trade secret, the parties can address the informa- tion taken, how it is returned or not used, and obtain assurances that the information has not been retained.
Thus, a settlement would likely include the following items: what customers can or cannot be solicited, what geographic area the restrictions will involve, what services can or cannot be provided, and for what period of time, and, whether there is a payment of damages or lost profits, or a liquidated dam- ages provision for a future violation. Other items, such as a payment of legal fees can, of course, also be addressed. In other words, the mediation can result in a new agreement between the parties.
Because these claims are so emotionally charged and often have difficulties of proof (as it is usually the case that neither side wants to have its customers involved, let alone deposed or called as witnesses at a preliminary injunction hearing or trial), they
Resolving Emotional, Highly Charged Employment Issues With Mediation