Summary Judgment Against Emmel - News America Marketing was awarded summary judgment on its breach of contract claim against Robert Emmel, a whistleblower and former employee who retained confidential business documents after he was fired, and who recently testified against News America at the Floorgraphics trial. ( click here for the order).
Former Employee - Emmel worked at News America from 1999 to 2006 as an account director, selling News America services to retailers. In that capacity he was privy to confidential information, including sales prices and tactics, and contract terms. News America's employee policies prohibited disclosure of confidential information, and on December 21, 2006, a few weeks after he was fired, Emmel signed an agreement not to disclose confidential News America information.
Disclosures - Despite the policies and agreement:
During his employment and after his termination, Emmel voluntarily disclosed
confidential company documents to governmental entities. Specifically,
unbeknownst to NAMIS, Emmel provided documents to (1) two United States
Senators; (2) two United States Senate Committees; (3) the Securities and
Exchange Commission; and (4) the New York State Attorney General. Emmel's final
disclosure of confidential information to the government was on December 20,
2006, when he sent fifty-five pages of documents to the United States Senate
Retention of Documents - After his termination, Emmel "retained confidential company documents and information, including three DVDs that contained a complete copy of every document that was stored on the hard drive of his [company]-issued laptop."
Lawsuit Against Emmel - News America challenged Emmel's disclosures as a breach of the employee policies and of the December 21, 2006 agreement, along with several other causes of action. The Court rejected News America's argument that the employee policies were binding contracts, but found a violation of the December 21 agreement. Emmel argued that he did not disclose any confidential information after signing the agreement on December 21, but the court rejected this argument, finding that the documents he mailed on December 20 were not received until after December 21, and therefore "Emmel's voluntary disclosure did occur after the agreement was signed." News America also argued that the December 20 agreement was breached by his disclosures in response to a subpoena from Floorgraphics, but the court did not reach that issue.
No Whistleblower Protection - Emmel argued, unsuccessfully, that his breach was justified by his status as a whistleblower who sought to disclose News America's anticompetitive business practices. He stated in a declaration that his disclosures to government authorities were an effort to "document . . . what [he] believed in good faith was N[ews America]'s illegal anti-competitive conduct against N[ews America] competitors and N[ews America]'s fraudulent conduct against its own retailer-customers." The court found no authority protecting such disclosures.
Nominal Damages - While News America did not prove any actual damages caused by Emmel's actions, the court found that nominal damages for breach of contract were appropriate, along with injunctive relief. On the remaining causes of action, the court granted summary judgment in favor of Emmel, namely: conversion, breach of the duty of good faith and fair dealing, breach of fiduciary duty, promissory estoppel, fraud, and punitive damages.
Costs and Fees - A jury will now consider the amount of nominal damages to award, and the amount of expenses and attorney's fees, if any, to award to News America in connection with the breach of contract claim. In defending News America's lawsuit, Emmel has incurred well over $400,000 in legal fees (though he testified that the tab was picked up by Floorgraphics and Insignia), and he's spent substantial time and effort in his case, as well as in the other related lawsuits.
Benefits - But despite the costs, I'm sure he takes substantial satisfaction in knowing that the truth about News America's anti-competitive behavior -- at least some part of it -- has been publicly revealed. Emmel provided crucial documents and testimony in the Floorgraphics litigation. At trial, for example, he testified about "Operation Retailer Freedom," which was News America's effort to sign up very small retailers with only one or two stores with the goal of destroying Floorgraphics.