Gregory Parzych served as president of ZipBy USA, LLC, a parking technology company, starting in 2016. In 2020, Parzych learned that Q-Free International, the owner of a company called TCS that Parzych had previously founded, was considering selling TCS. Parzych informed ZipBy's owner, Anthony Karam, and was asked to investigate. Parzych received financial data from Q-Free but then advised Karam against the acquisition. Shortly after ZipBy's board rejected the deal, Parzych secretly executed a nondisclosure agreement on behalf of his own shell company, MJP Global Technologies, to acquire TCS himself. ZipBy fired Parzych and sued him for breach of fiduciary duty, breach of contract, trade secret misappropriation, and other claims. A jury initially awarded ZipBy $2.5 million in damages, but the district court later set aside the verdict on the trade secret claims, finding the evidence insufficient. The district court upheld the remaining verdicts, entered a permanent injunction barring Parzych from acquiring TCS, and awarded ZipBy a portion of its legal fees. Parzych appealed the damages and fee awards, while ZipBy cross-appealed the dismissal of the trade secret claims.
The First Circuit addressed several distinct legal issues. First, regarding evidentiary challenges, the court held that the district court did not abuse its discretion in admitting expert testimony estimating lost profits. Although the expert relied on 2019 financial projections that predated the pandemic, the court found the methodology reliable because the expert accounted for pandemic impacts and the projections were used to estimate synergies rather than standalone performance. The court also rejected the argument that lost profits are an impermissible measure of damages for a stolen corporate opportunity under Massachusetts law, noting that plaintiffs may choose between restitution and actual loss. Second, the court affirmed the exclusion of TCS's 2021 and 2022 tax returns, ruling that the late disclosure violated Federal Rule of Civil Procedure 26 and was not harmless. Third, the court found no abuse of discretion in denying a trial continuance when lead counsel contracted COVID-19, noting that counsel participated remotely and the jury preferred to proceed. Fourth, on the cross-appeal regarding trade secrets, the court affirmed the district court's judgment as a matter of law. The court reasoned that ZipBy could not claim ownership of Q-Free's financial data merely because it was a licensee; the data remained Q-Free's secret. Furthermore, ZipBy's internal strategy to forgo the acquisition was not a trade secret because ZipBy took no reasonable measures to keep that decision confidential. Finally, the court affirmed the attorney's fee award, interpreting the IP Agreement under California law to cover fees incurred in enforcing the agreement's covenants, which included the duty to devote energy to the company's best interests.
The decision reinforces that corporate officers who divert business opportunities to themselves face significant liability for breach of fiduciary duty and contract, including permanent injunctions. It clarifies that lost profits are a viable damages measure in corporate opportunity cases, provided the expert methodology is reliable. The ruling also limits trade secret claims where the plaintiff lacks direct ownership or reasonable secrecy measures regarding the information. The case is remanded to the district court to enforce the affirmed judgment, including the permanent injunction and the two-thirds fee award.
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