Opinion ID: 2971881
Heading Depth: 2
Heading Rank: 2

Heading: The New Jersey Lawsuit

Text: Stavale and his law firm are defendants in the instant case because Stavale later agreed in another lawsuit to assist Profit Technologies Corporation, which was engaged in an action brought by EPG in federal court in New Jersey for misappropriation of confidential information from EPG. In order to avoid objection by EPG, Stavale first worked as a secret “consultant” for Profit Technologies for five months in preparing its defense. In his deposition, Stavale testified that his “consultant” representation “was not known to EPG.” He billed over 200 hours during this fivemonth period. He advised Profit Technologies as to its defense against EPG’s misappropriation case. Stavale advised Quigley and Carrigan that he was getting involved in the litigation when he became a consultant. Stavale later became counsel of record for Profit Technologies in the suit. EPG immediately objected to Stavale’s representation, and the court in New Jersey required Stavale to seek the approval of Quigley and Carrigan. They gave their approval in a “letter of understanding” drafted for them by Stavale. They testified that they viewed the settlement agreement as prohibiting only their personal “assistance,” not as prohibiting their action authorizing their former lawyer to “assist” in the litigation against EPG. As a result of Stavale’s representation of Profit Technologies in the New Jersey case, as authorized by Quigley and Carrigan, EPG in the instant case sued Stavale for breach of contract and inducement of breach of contract. -4- No. 04-1120 Earnings Performance v. Quigley, et al. EPG also sued the nonlawyer defendants for breach of the non-assistance provision of the settlement agreement. The District Court found that Quigley and Carrigan did not “assist” Profit Technologies within the meaning of section 9b(ii) by authorizing Stavale to act as Profit Technologies’ counsel. It concluded that the agree-not-to-assist provision should be interpreted to apply only to direct, personal assistance by Quigley and Carrigan such as “testifying” for the third party opponent of EPG, as recited in section 9(b)(ii). And the District Court found that there was no evidence that Stavale had in fact turned over any trade secret or confidential information or documents to Profit Technologies in connection with the New Jersey case. Alternatively, the District Court cited Model Rule of Professional Conduct 5.6(b), which has been adopted in Michigan, and is a rule against restraints on competition and representation by lawyers: “A lawyer shall not participate in . . . an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a controversy between private parties.” The District Court concluded that “this Rule does not provide any special exception for settlement agreements involving the protection of confidential” information, and therefore “the plain language of Rule 5.6 supports the . . . Defendants’ position that Stavale cannot be prohibited from representing [Profit Technologies] in the New Jersey litigation.” The court declined to issue a preliminary injunction enjoining Stavale from representing the party opposing EPG in the New Jersey litigation. For the reasons that follow, we affirm. -5- No. 04-1120 Earnings Performance v. Quigley, et al.