Gregory Parzych served as the president of ZipBy USA, LLC, a parking technology company, from 2016. In 2020, Parzych learned that Q-Free International, a company that had previously acquired Parzych's former business, TCS, was considering selling TCS. Parzych advised ZipBy's owner to decline the acquisition, and ZipBy's board voted not to proceed. However, Parzych then secretly attempted to acquire TCS for himself using financial data Q-Free had provided to ZipBy. Upon discovering this, ZipBy fired Parzych and sued him for breach of fiduciary duty, breach of contract, trade secret misappropriation, trademark infringement, and false designation. A jury initially returned a verdict against Parzych on all counts, awarding ZipBy damages. The district court subsequently granted Parzych's motion for judgment as a matter of law on the trade secret claims, finding the evidence insufficient, but upheld the verdict on the other claims and entered a permanent injunction barring Parzych from acquiring TCS. Parzych appealed, and ZipBy cross-appealed the set-aside of its trade secret verdict.
The First Circuit addressed several key issues. First, regarding evidentiary challenges, the court found no abuse of discretion in admitting expert testimony on lost profits. The expert's reliance on financial projections rather than actual performance was deemed a permissible method for estimating 'but-for' earnings, and the district court properly excluded tax returns introduced late in the discovery process. Second, the court affirmed the denial of a trial continuance when lead counsel contracted COVID-19, noting the counsel participated remotely and the jury preferred to proceed. Third, on the cross-appeal regarding trade secrets, the court agreed with the district court that the information was not protected. Financial data provided by a third party (Q-Free) was not owned by ZipBy in a way that restricted Parzych's use, and ZipBy's internal strategy to forgo the acquisition was not kept secret. Finally, regarding attorney's fees, the court interpreted the IP Agreement under California law to allow fee recovery for enforcing the agreement's covenants. Since the jury found Parzych breached the IP Agreement by failing to devote his energy to ZipBy's interests, the fees incurred in litigating that breach were recoverable, even if they also supported other claims.
The decision reinforces that former executives who attempt to divert corporate opportunities for themselves face significant liability for breach of fiduciary duty and contract, even if they successfully argue that specific information does not qualify as a trade secret. It clarifies that lost profit damages are a viable remedy in corporate opportunity cases under Massachusetts law, not just restitution. The ruling also confirms that fee-shifting provisions in employment agreements can cover the full scope of litigation costs incurred to enforce the agreement's core covenants, provided the breach is established.
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