Opinion ID: 4530356
Heading Depth: 2
Heading Rank: 3

Heading: Punitive Damages Award Against Vann and

Text: Livingston 17 In the next issue presented for review, Vann and Livingston contend that the District Court erred in awarding 16 For that same reason, we reject the Livingston Parties’ argument that they were “effectively abandoned” by counsel. Livingston Parties’ Opening Br. at 35. There is no support for the assertion that Morin was the only attorney responsible for their case, or that the other attorneys who entered an appearance on their behalf were incapable of representing their interests. 17 “Review of the District Court’s damages calculation is a mixed question of law and fact.” VICI Racing, LLC v. T- Mobile USA, Inc., 763 F.3d 273, 293 (3d Cir. 2014). We accept the District Court’s findings of fact unless clearly erroneous, but exercise plenary review over the Court’s choice, interpretation, or application of legal principles. Id. 27 punitive damages against them both because the record lacks evidence that their conduct was egregious enough to justify the imposition of such damages and because the District Court incorrectly relied on their lack of remorse. Again, we are unpersuaded. It is patently incorrect to say that the record lacks enough evidence to sustain an award of punitive damages against Vann and Livingston. The District Court noted that Vann approved a compensation package for Huber that incentivized Huber to do damage to AFS, when Vann well knew that Huber remained within AFS’s employ and that he was “working directly against AFS’s interests” by “attempting to steer business toward Livingston and away from AFS[.]” Post-Judgment Op., 381 F. Supp. 3d at 387–88. Moreover, the compensation package that Vann approved for Huber was just one aspect of Vann’s “continued engagement and communication with, and encouragement of, Huber,” 18 despite Vann’s claiming to have been “alarmed” by the fact that “Huber was working on behalf of both AFS and Livingston contemporaneously[.]” Id. at 387. Given Vann’s actual knowledge of Huber’s attempts to move business from AFS to Livingston and of the wrongfulness of Huber’s actions, 19 the 18 Examples include attending in-person meetings with Huber and Vann’s knowledge that “as early as February that Livingston employees were sharing documents on Dropbox and collaborating with Huber.” Post-Trial Op., 295 F. Supp. 3d at 490. 19 As an executive himself, Vann knew and “expressly confirmed his understanding of an employee’s duty of loyalty to their employers.” Post-Trial Op., 295 F. Supp. 3d at 490. 28 Under Pennsylvania law, employees, in addition to officers or directors, may owe their employers fiduciary duties. See AmQuip Crane Rental, LLC v. Crane & Rig Servs., LLC, 199 A.3d 904, 915 (Pa. Super. Ct. 2018) (salesman breached duty of loyalty to employer by helping co-workers breach their noncompetition agreements with employer); Reading Radio, Inc. v. Fink, 833 A.2d 199, 211 (Pa. Super. Ct. 2003) (radio station manager breached duty of loyalty to employer by not enforcing noncompetition agreements); see also Solid Wood Cabinet Co. v. Partners Home Supply, Civil Action No. 133598, 2015 WL 1208182, at  (E.D. Pa. Mar. 13, 2015) (“Pennsylvania law dictates that employees owe their employers a duty of loyalty.”); Synthes, Inc. v. Emerge Med., Inc., 25 F. Supp. 3d 617, 667 (E.D. Pa. 2014) (same); Crown Coal & Coke Co. v. Compass Point Res., LLC, Civil Action No. 07-1208, 2009 WL 891869, at  (W.D. Pa. Mar. 31, 2009) (“Under Pennsylvania law, an employee is an agent of his employer and owes his employer a duty of loyalty.”). Relatedly, confidential relationships also can give rise to fiduciary duties under Pennsylvania law. “[T]he essence of [a confidential] relationship is trust and reliance on one side, and a corresponding opportunity to abuse that trust for personal gain on the other. Accordingly, [a confidential relationship] appears when the circumstances make it certain the parties do not deal on equal terms, but, on the one side there is an overmastering influence, or, on the other, weakness, dependence or trust, justifiably reposed[.]” PTSI, Inc. v. Haley, 71 A.3d 304, 311 (Pa. Super. Ct. 2013) (quoting Weiley v. Albert Einstein Med. Ctr., 51 A.3d 202, 218 (Pa. Super. Ct. 2012)) (alterations in original). Here, the record plainly shows that Huber acted as AFS’s agent, and that they shared a confidential relationship in that AFS trusted Huber, and was 29 record easily supports the inference that Vann and the company he led, Livingston, appreciated that their continued encouragement and facilitation of Huber’s misdeeds would directly result in harm to AFS. The record also supports the inference that their decision to nevertheless encourage and facilitate Huber’s wrongdoing in the face of that known harm was at the very least recklessly indifferent to AFS’s rights. Under Pennsylvania law, such conduct can support a punitive damages award. See, e.g., Hutchison ex rel. Hutchison v. Luddy, 870 A.2d 766, 770 (Pa. 2005) (explaining that punitive damages may be awarded where conduct is “outrageous” because of “reckless indifference to the rights of others[,]” and the conduct at issue was “intentional, reckless or malicious”) (citations and quotation marks omitted); SHV Coal, Inc. v. Cont’l Grain Co., 587 A.2d 702, 705 (Pa. 1991) (upholding punitive damages award where employee deliberately diverted contract to new employer during his last week of employment with previous employer). Thus, Vann’s and Livingston’s argument that the punitive damages award entered against them lacks adequate factual support is wholly unpersuasive. 20 dependent on him, to handle trade secret information as well as to procure new client relationships and maintain existing ones. Huber has not at any point contended that he did not owe AFS a fiduciary duty of loyalty. 20 Vann and Livingston also contend that the record does not support punitive damages because the District Court found that they did not act with malice or intent to harm with respect to AFS’s trade secret misappropriation claim. That argument misses the mark because it ignores that AFS’s trade 30 We also have little difficulty rejecting Vann’s and Livingston’s assertion that the District Court improperly awarded punitive damages against them because of their lack of remorse for their misconduct. To the extent the District Court considered Vann’s and Livingston’s contrition (or, more precisely, the total absence thereof) for their actions in determining whether their conduct warranted the imposition of punitive damages, it is clear that the Court did so only to the extent it was suggestive of their state of mind at the time of their wrongdoing. There was no error in considering Vann’s and Livingston’s attitude for that purpose. See In re Lemington Home for the Aged, 777 F.3d 620, 635 (3d Cir. 2015) (upholding award of punitive damages where defendants’ “state of mind was illuminated by their own testimony at secret misappropriation claim and its claim for aiding and abetting a breach of fiduciary duty were separate and distinct causes of action. The District Court correctly explained that “AFS’s substantive claims targeted different—albeit, at times, overlapping—conduct. In deciding whether to award enhanced damages, and in what amount, we examined different aggravating conduct under each claim. The distinction, in our view, lies in defendants’ states of mind and the nature of their actions. Defendants’ misappropriative conduct, while knowing and unlawful under the statute, might fairly be characterized (with limited exceptions) as passive and acquiescent. Their tortious conduct, per contra, was active, deliberate, and willful; it endured without pause for the better part of a year; and the defendants to date fail to appreciate the gravity of their wrongdoing.” Post-Judgment Op., 381 F. Supp. 3d at 391. On appeal, Vann and Livingston fail to rebut the District Court’s persuasive rejection of their position. 31 trial[,]” which testimony allowed “the jury to infer that they had acted culpably and continued to avoid recognizing the gravity of their misconduct”).