Cases & Deals

Distribution International and E.J. Bartells obtain complete victory in trade secrets misappropriation action

Clients Distribution International Southwest, LLC and Rhem, LLC

Jones Day clients Distribution International Southwest, LLC and Rhem, LLC, d/b/a E.J. Bartells, two large commercial insulation distributors, obtained a unanimous, favorable jury verdict following a trial in the District Court of Denver, Colorado. Distribution International and E.J. Bartells asserted claims of trade secrets misappropriation, intentional interference with prospective advantage, and breach of duty of loyalty against their former employee, Justin Hargis, and a major competitor, General Insulation Company, based on their theft and use of trade secrets to open a competing branch office in Colorado. Distribution International and E.J. Bartells' claims arose after they discovered that a former employee had plugged a USB thumb drive into his computer and downloaded over 1,600 files and folders. Distribution International and E.J. Bartells claimed that Hargis and his new employer thereafter used their files and folders, containing sensitive pricing, margin, and budget information, to open a competing branch and persuade customers to move business away from them.

After a six-day trial, the jury returned a unanimous verdict in favor of Distribution International and E.J. Bartells on all claims. Additionally, the jury found that both defendants had acted "willfully and maliciously" in misappropriating and using trade secrets to compete in the marketplace. The jury awarded Distribution International and E.J. Bartells $3.365 million in actual damages, and $1.682 million in exemplary damages.

Following the verdict, Jones Day filed several post-trial motions, including a motion for injunctive relief, to increase exemplary damages, for prejudgment interest, and for attorneys’ fees and costs. The court granted all of plaintiffs’ post-trial motions. The court’s final judgment increased exemplary damages by more than $8.4 million for defendants’ continuing malicious conduct (making the final judgment $14.97 million) and included an injunction that, among other things, prohibits defendants from doing business with certain customers for 12 months.

Distribution Int'l Sw., LLC v. Hargis, Case. No. 16-cv-30407 (D. Colo.)

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