A recent verdict in the Superior Court of Fulton County, Georgia is an excellent reminder of the importance of conducting thorough discovery in unfair competition cases. Earlier this year, after a four day trial, a Georgia jury awarded telecom company Cost Management Group (“CMG”) $282,001 in damages, $300,000 in attorneys’ fees, and $200,000 in punitive damages, finding that CMG’s former president, Daniel Bommer, breached his contract by operating a competing company, as well as siphoning employees and business away from CMG to a second competing company, all while employed by the plaintiff.
Interestingly, this particular case was preceded by a separate 2009 action, in which CMG filed suit against another one of its former officers, who it also accused of diverting CMG’s accounts and agents to a competing business. According to court filings, CMG prevailed in that case as well and was awarded more than $120,000 in damages. The added “bonus,” however, was a cache of e-mails discovered on CMG’s former chief operating officer’s server (who was not even named in the lawsuit). Among those e-mails were communications in which Bommer allegedly requested the competing business “destroy all evidence of past and future email communications between [itself] and Bommer.” In large part based on the information secured in these retrieved e-mails, CMG proceeded with filing suit against Bommer, alleging claims for breach of fiduciary duty, usurpation of corporate opportunities, unfaithful agent, conversion/theft of corporate property, breach of the securities and exchange agreement and fraud, as well as a claim for punitive damages.
Perhaps even more importantly, as a direct result of CMG’s discovery in the first case, prior to trial against Bommer, CMG filed a motion for sanctions, claiming Bommer spoliated critical evidence. The court agreed and granted CMG’s motion, completely striking Bommer’s answer and counterclaim. Accordingly, at trial, the only remaining issue for the jury was a determination of damages — always a position plaintiffs’ lawyers love to find themselves.
Had CMG’s counsel not conducted thorough and sifting discovery in the original case, including seeking electronic discovery from non-parties, it is quite possible that CMG may have never located the evidence of spoliated e-mails. By doing so, CMG was able proceed directly a trial on damages, without ever having a jury even establish liability. Had CMG’s lawyers not located this information, the trial undoubtedly would have been much more complicated and certainly gone on for much longer than four days. Again, the case is a superb testament to leaving no stone unturned during the discovery process in unfair competition matters — particularly electronic stones.
The case is Cost Management Group v. Bommer, Civil Action File No. 2009CV168191, Fulton County Superior Court, Georgia.