- posted: Mar. 08, 2013
When you think of Hallmark, you often think of the word “giving.” In a recent case, though, Hallmark will be doing the getting: a repayment of a substantial severance package by a former executive who later used Hallmark’s trade secrets to compete against it.
As the Eighth Circuit Court of Appeal explained in Hallmark Cards, Inc. v. Murley, Janet Murley was a former Hallmark Vice-President until Hallmark eliminated her position in 2002. Murley received a severance package consisting of a $735,000 payment, 18 months of paid COBRA health insurance, and executive placement and tax preparation services. In return, Murley promised not to sue Hallmark, and not to use its trade secrets.
Murley went to work at one of Hallmark’s competitors, Recycled Paper Greetings (“RPG”). Murley admitted disclosing confidential Hallmark information, including information about Hallmark’s business model, its consumers’ buying process, and industry analysis that Hallmark paid for. Hallmark learned of the violation of the confidentiality agreement when American Greetings was buying RPG and wanted a third-party to inspect RPG’s information to ensure that RPG did not have any of Hallmark’s information. Hallmark then sued Murley.
The judge made it extra easy for the jury after finding that Murley had deleted 67 documents from her computer just before the computer inspection. The court instructed the jury that
If you should find that a party willfully destroyed evidence in order to prevent its being presented in this trial, you may consider such destruction in determining what inferences to draw from the evidence or facts in this case. You may, but are not required to, assume that the contents of the files destroyed would have been adverse, or detrimental to the Defendant.
The jury found in favor of Hallmark, and the Eighth Circuit Court of Appeals affirmed, overruling Murley’s objection to the jury instruction.
When employees and executives leave, companies have a difficult balancing act of respecting the law and acting fairly to its departing people, and protecting its own interests. The Hallmark case shows that courts will protects the company’s interests when a departure violates its agreement. Now that’s a Hallmark moment.