Armstrong Teasdale Secures Judgment in Trade Secrets, Unfair Competition Case

September 12, 2022 Firm News

Armstrong Teasdale has secured judgment for client Red Wolf Energy Trading, LLC in a case involving claims of misappropriation of trade secrets and unfair trade practices against Gregory Moeller and Bia Capital Management, LLC. In the Order defaulting Defendants Bia and Greg Moeller and awarding expenses (including attorneys’ fees and costs) as a sanction for repeated discovery violations, the U.S. District Court for the District of Massachusetts, the Hon. Mark L. Wolf stated that the case involved “more meritorious motions to compel and for sanctions against defendants for failure to produce documents than any other case in which this court has presided in more than 37 years.” 

As the Court further stated: “The law is not a game, and, as the court told defendants, civil discovery is not a game of hide and seek. The decision in this case should encourage litigants to understand that it is risky business to recklessly or deliberately fail to produce documents, and perilous to disobey court orders….” 

Red Wolf is an energy trading firm that trades virtual electricity products in federally regulated energy markets. Red Wolf alleged the defendants schemed to enter the market as a competitor using Red Wolf’s software, trade secrets and other assets, in violation of the federal Defend Trade Secrets Act and Massachusetts statute prohibiting unfair and deceptive trade practices.

In the process of discovery, the defendants were required to produce all documents by Dec. 31, 2019, but did not do so. On April 1, 2021, and again on Aug. 31, 2021, the court issued orders directing the defendants to produce the required documents. Based on the production of documents that should have been received in 2019, Red Wolf filed a motion for sanctions which was granted, ordering the defendants to pay Red Wolf’s reasonable attorney fees concerning the motion.

After receiving still more documents from defendants in April 2022 and determining that it still had not received all the relevant discovery, Red Wolf filed a second motion for sanction in June 2022 based on the defendants’ repeated failure to produce the required communications. Despite repeated court orders and sanctions, the defendants failed to produce critical digital evidence, and in August 2022, the court ordered defendants to provide the plaintiff with a copy of the 2019 Slack Archive. Forensic analysis of missing Slack messages by UnitedLex revealed significant production deficiencies along with the proverbial “smoking gun”: a Slack exchange in which the defendants discussed how to create an algorithm derived from the plaintiff’s intellectual property.

Noting that “entering a default judgment for violation of discovery orders is a drastic sanction, the Court nonetheless granted the motion and entered default judgment in favor of Red Wolf among other relief “to do justice in this case and to deter others from engaging in similar extreme misconduct….” The findings from UnitedLex were a significant deciding factor in the judgment.

Red Wolf was represented by Armstrong Teasdale Partner John Sten and Associate Allison McFarland, with support from Partners Jason Moreau and Justin Engel. Derek Duarte, Colleen Freeman and their team of data experts at UnitedLex provided the discovery consulting, forensic analysis, and expert testimony.

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