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Executive Consulting Group, LLC v. Baggot

United States District Court, D. Colorado

April 25, 2018

EXECUTIVE CONSULTING GROUP, LLC, d/b/a ECG Management Consultants, Plaintiff,


          CHRISTINE M. ARGUELLO United States District Judge

         This matter comes before the Court upon Plaintiff Executive Consulting Group, LLC's, d/b/a ECG Management Consultants (“ECG”), Motion for Preliminary Injunction (“Motion”), in which Plaintiff seeks a preliminary injunction against Defendant Deirdre Baggot (“Defendant”). (Doc. # 3.) The Court has reviewed the Motion together with ECG's memorandum in support thereof (Doc. # 4); Defendant's opposition (Doc. # 30); and ECG's reply (Doc. # 36). The Court also held a full-day hearing on March 1, 2018, at which the Court received testimony and other evidence.[1] For the reasons set forth below, the Court grants ECG's Motion.

         I. BACKGROUND[2]

         The Court summarized the procedural history of the instant dispute in a recent order as follows:

Plaintiff Executive Consulting Group, LLC, d/b/a ECG Management Consultants (“ECG”), is a strategic consulting firm serving the healthcare industry. (Doc. # 1 at 2.) Defendant began working as a Principal for ECG on January 11, 2016. (Id. at 3.) Two weeks prior, Defendant signed an offer letter from ECG that provided she would lead ECG's bundled payment practice and outlined her compensation. (Id. at 3-4.) The offer letter also stated that Defendant, as an ECG employee, was “bound to hold [corporate] information in strictest confidence and not to disclose confidential information or allow it to be disclosed, during or after [her] employment.” (Id. at 4.) Defendant executed an Employment Agreement with ECG at the same time. See (Doc. # 1-1.) Relevant here, the Employment Agreement included a Non-Competition Provision, a Non-Solicitation Provision, and a Confidentiality Provision. (Id. at 4-9.) In the event Defendant violated these or other provisions, the Employment Agreement allowed ECG to “apply for a temporary restraining order, preliminary injunction, specific performance, or other interim or equitable relief.” (Id. at 11.)
On January 19, 2018, some two years into her employment with ECG, Defendant informed her supervisor in a phone call and a letter that she was resigning from ECG effective 30 days thereafter. (Doc. # 1 at 9.) On January 23, 2018, Defendant informed her supervisor that she was accepting a new position with ECG's direct competitor, The Chartis Group (“Chartis”). (Id.)
On January 29, 2018, ECG filed a complaint for injunctive relief against Baggot. See generally (id.) The Complaint alleges that Baggot sent numerous emails containing ECG's confidential, proprietary, and trade secret information, from her ECG account to her personal email address three days before she submitted notification of her resignation. (Id.) It also alleges that Baggot was scheduled to speak at a conference on ECG's behalf and using its material the following day, January 30, 2018. (Id.) ECG raises five claims for relief: (1) breach of contract; (2) misappropriation of trade secrets under federal law; (3) misappropriation of trade secrets under Colorado state law; (4) misappropriation of trade secrets under Delaware state law; and (5) unjust enrichment. (Id. at 14- 17.) ECG simultaneously filed an Emergency Motion for a Temporary Restraining Order (“TRO”) (Doc. # 2) and a Motion for a Preliminary Injunction (Doc. # 3).
The following day, January 30, 2018, the Court issued ECG's requested TRO after a brief hearing on ECG's emergency motion. See (Doc. ## 12, 13.)

(Doc. # 63 at 1-3.)

         At the March 1, 2018, hearing on the instant Motion, the Court received testimony from Defendant and from Stephen Messinger, the President of ECG. See (Doc. # 64.) Based on this testimony, the Court finds as follows. Before Defendant began her employment with ECG, she spoke with an attorney regarding her Employment Agreement with ECG; came up with 15 proposed revisions to the agreement; and specifically read the Non-Competition and Non-Solicitation Provisions. (Tr. at 35:23-36:24.) Defendant successfully negotiated with Mr. Messinger to reduce the duration of her Non-Competition Provision from 24 months to the 12 months reflected in the agreement. (Tr. at 32:23-33:9.) Mr. Messinger testified that ECG intends for the Non-Competition Provision in the Employment Agreement to protect ECG's trade secrets. (Tr. at 234:4-7.)

         According to Mr. Messinger, ECG, which has approximately 287 employees, hired Defendant “with a singular purpose of building a world class consulting operation for bundled payment services.” (Tr. at 170:19-21, 182:8-21.) ECG made Defendant the leader of the bundled payments practice and hired her as 1 of only 33 Principals at ECG, which is ECG's highest client-facing title. (Tr. at 181:22-182:7.) The titles below Principal are, in descending order of rank, Associate Principal, Senior Manager, Manager, Senior Consultant, Consultant, Senior Analyst, and Analyst. (Id.) Defendant earned more than $900, 000 per year in compensation and was no less than the fifth highest-paid employee of the entire firm during both 2016 and 2017. (Id. at 39:7-12, 183:3-18.) She also was one of only 26 employees at ECG who held equity in ECG's holding company. (Id. at 43:9-24, 183:19-185:3.)

         While at ECG, Defendant recruited, trained, and supervised approximately five other employees in the bundled payments practice. (Ex. 10 at 23-27; Tr. at 50:17-25, 53:12-54:4.) Defendant had a role in hiring and firing employees within the practice. (Tr. at 54:19-24.) As a Principal, Defendant was part of ECG's management team and contributed to ECG's strategies at a firm-wide level, including proposing a new parental leave policy that the firm adopted. (Tr. at 184:4-185:1.) Defendant executed contracts and engaged counsel on behalf of ECG. (Tr. at 185:2-18.). Defendant also directed marketing efforts and independently approved a variety of client billable and non-billable expenditures within her practice, including, for example, a multiday meeting for her bundled payments practice area in Philadelphia that resulted in approximately $25, 000 in direct and indirect costs. (Tr. at 188:6-190:22.) While she was employed at ECG, Defendant performed work from a password-protected laptop, and had access to ECG's secured, password-protected systems, including ECG's customer relationship management software and Microsoft SharePoint. (Tr. at 57:17-58:15.)

         Like ECG, Chartis is a healthcare consulting firm, and both firms compete in the area of bundled payments. (Tr. at 58:21-59:5.) As Defendant explained, bundled payments are an “alternative to ‘fee for service, ' which is the traditional way healthcare has been reimbursed . . . it is a fixed price that [the Centers for Medicare and Medicaid Services (“CMS”)] has been studying in an effort to address issues of overtesting, overtreating, [and] variation.” (Tr. at 29:20-30:6.)

         Defendant was in contact with Chartis regarding potential employment by the fall of 2017. She interviewed with Chartis representatives on September 27, 2017, and was asked to present materials concerning her “current work” at ECG. (Tr. at 59:9-60:20; Ex. 68.) In an email to her recruiter, Defendant explained that she “didn't print anything for fear of getting sued or fired, ” but instead displayed ECG materials from her laptop during the interview. (Tr. at 60:23-63:15; Ex. 15.) On November 30, 2017, Defendant accepted a position as a Director and Business Leader of Chartis's bundled payment offering and agreed to a start date of January 22, 2018. (Tr. at 63:19-64:4.)

         On December 4, 2017-while she was still employed with ECG-Defendant sent an email to Chartis Director Cindy Lee regarding BPCI Advanced, a new bundled payments initiative of the CMS. (Ex. 50.) Defendant explained that “I expect a big announcement from CMS very soon” and noted that “[t]he more clients we can do [letters of intent] for[, ] I find we will lock them in for [the] entire 5 years of [the] program.” (Id.) Defendant added that “[i]f [an] announcement comes before end of year we will need to strategize quickly as once clients sign on with a consultant it's hard to get them to switch, ” and she asked for “help profiling [Chartis] potential client targets before end of year.” (Id.) At the hearing, Defendant acknowledged that “consultants would be competing to try to get providers signed up for” “consulting services regarding” BPCI Advanced. (Tr. at 67:16-68:16.) On the last day of 2017, Defendant collected a scheduled $295, 000 bonus from ECG. (Tr. at 69:12-20.)

         From January 16 to January 19, 2018, Defendant sent from her ECG email address to her personal email address more than 30 emails. (Tr. at 77:17-79:19; Ex. 14.) By way of example, these emails include: (1) a list of current clients and client contact persons for ECG's bundled payments practice (Ex. 14-5); (2) a list of all active projects, including client name, project description, project manager, and project start date, for all of ECG, not only the bundled payments practice (Ex. 14-7); materials (marked “confidential” throughout) for presentations to active ECG clients as part of ongoing work for those clients, including ECG's analyses and recommendations for those clients (Ex. 14-9; Ex. 14-34); pitch decks for prospective ECG clients (Ex. 14-10, Ex.14-19); a contract between ECG and a vendor marked “confidential” throughout (Ex. 14-11); emails regarding specific engagements ECG was pursuing (Ex. 14-16; Ex. 14-28); and a packet of materials from an ECG's Principals' Meeting, setting forth firm performance metrics, recruitment strategies, and a list of ECG's “key accounts” and strategies for those accounts (Ex. 14-29).

         On January 19, 2018, approximately two years into her tenure at ECG, Defendant gave Mr. Messinger notice of her resignation. (Tr. at 74:1-7; Ex. 18.) In her resignation letter, Defendant stated that she “will work to ensure a smooth transition over the next 30 days and would request that my last day of employment be February 16th, 2018.” (Ex. 18.) However, as noted, Defendant was set to begin working at Chartis on January 23, 2018, and indeed, she did begin working at Chartis on approximately that date. (Ex. 64 at 34-35.) ECG did not discover that Defendant was working for Chartis until Defendant sent an email to Mr. Messinger on January 23, 2018, from a Chartis email account noting her “intent to seek employment with The Chartis Group.” (Tr. at 173:7-17; Doc. # 1 ¶ 32.) Following ECG's discovery that Defendant had become employed with Chartis, the parties agree that Defendant's last day of employment with ECG was effectively January 19, 2018. (Tr. at 93:18-94:17.) Once Defendant received her Chartis computer, it appears that she inserted a jump drive into that computer and accessed files concerning two of ECG's clients. See (Tr. at 18:22- 19:7; Ex. 17; Ex. 64 at 96:11-101:18.) Defendant currently is “on leave” from Chartis to “deal with this” lawsuit. (Tr. 161:14-17.)

         Mr. Messinger explained that Chartis is ECG's “number one competitor” and that ECG competes with Chartis for approximately five projects per month, amounting to tens of millions of dollars of work. (Tr. at 181:12-21.) He explained that ECG “would have no way of knowing of the . . . lost opportunities from clients not calling us or calling Chartis because of [Defendant] going there.” (Id.) Mr. Messinger also testified that assisting a client with a letter of intent-as Defendant explained to Chartis's Ms. Lee- would likely lead a consulting firm to “retain that client for years and years and years, because of all [the] follow on and ancillary work associated with that.” (Tr. at 179:25- 180:8.)

         Regarding the documents Defendant emailed to herself, Mr. Messinger noted that a client list, for example, “gives insight to key contacts within [the client's] organization” and would provide a competitor “effectively, with the treasure map, with the huge opportunity to go and understand the business that we're doing.” (Tr. at 234:19-235:3.) Mr. Messinger also described the “constant” efforts that go into developing the information reflected in the list, including investment in thought leadership, developing consultant expertise, supporting publication efforts, and sponsoring speaking engagements. (Tr. at 235:4-12.) Mr. Messinger noted that ECG “entrust[s] [its] consultants, like [Defendant], with confidential proprietary client information and our trade secrets” and “take[s] seriously the duty of protecting . . . not only client information, but strategic information and other trade secrets.” (Tr. at 234:4- 15.)

         II. ...

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