By Amaris Elliott-Engel

 

A $2 million settlement was reached in a Dragonetti Act case involving a trucking company employee who alleged his prior employer pursued a frivolous lawsuit against him after he was fired from the company and joined another trucking business.

 

According to plaintiffs attorney Thomas More Marrone of Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig, the $2 million settlement between his client, Winner Logistics Inc. and its principals, David Wallover and Curt Roble, and Wallover's prior employer, Labor & Logistics Management Inc. of New Hope, Pa., was reached Sept. 25.

 

The Philadelphia Winner Logistics Inc. v. Labor & Logistics Management case is still pending against LLM's law firm, Fitzpatrick Lentz & Bubba, and attorneys Joseph A. Bubba and Nancy Conrad.

 

David Wallover started working for LLM, a contract truck driver company, in 2000 as a driver lease manager, and Wallover was fired in 2002 when he refused to sign a noncompete agreement, according to an opinion written by Philadelphia Common Pleas Judge Mark I. Bernstein in April.

 

Bernstein granted the plaintiff's motion for summary judgment against LLM and its president, Curtis Ball, in April, and LLM and Ball settled last month.

 

After Wallover was fired and he joined Winner Logistics in Huntingdon Valley, Pa., LLM and Ball filed a lawsuit against Wallover alleging that Wallover breached restrictive covenants in his employment contract and misappropriated LLM's trade secrets, Bernstein wrote.

 

Bucks County Common Pleas Judge John J. Rufe imposed a two-year injunction Jan. 24, 2005, on Wallover and Winner Logistics from contacting the customers of LLM, according to a Superior Court non-precedential Jan. 4, 2006, decision overturning Rufe's injunction in Labor & Logistics Management Inc. v. Wallover .

 

The Superior Court panel of Judge Maureen Lally-Green and former Judges Michael T. Joyce and Justin M. Johnson overturned the injunction. According to the panel's opinion, the judges found that Wallover didn't misappropriate a list of LLM's customers when he left the company, that customer identities are not trade secrets and that Wallover couldn't be enjoined from contacting LLM customers he retained memory of.

 

Following the Superior Court decision, Winner Logistics brought a Dragonetti action, or an action alleging wrongful use of civil proceedings, against LLM, Ball and LLM's attorneys.

 

Bernstein noted in his opinion that LLM and Ball said in discovery arguments that they didn't pursue litigation in the underlying case because of advice from their attorneys.

 

In deciding to grant summary judgment, Bernstein wrote: "Since defendants Ball and LLM did not in any way rely on anything their lawyers said, LLM and Ball simply decided to file suit regardless of whether there was any legal justification. It is precisely this mindless abuse of legal process that the Dragonetti statute was enacted to deter."

 

Ball and LLM couldn't rely on any Dragonetti defenses because the lawsuit wasn't based upon advice of counsel and because Ball's belief that the claim might be valid wasn't a reasonable belief based upon knowledgeable analysis, Bernstein said.

 

Marrone said his clients were pleased with the settlement because it affirmed for them that the court system works.

 

"These are hard-working people who started a business and immediately had to start defending a frivolous lawsuit," Marrone said. "Forget about the financial devastation, it's emotional devastation to wake up every day to know someone is trying to shut your business down."

 

Marrone said the $2 million settlement tendered LLM's commerical liability policy limits.

 

LLM defense counsel Thomas J. Cole Jr. of Pepper Hamilton didn't respond to a request for comment.

 

Marrone also said LLM and Ball agreed to withdraw the appeal regarding allegedly confidential documents.

 

Marrone said he's not aware of other Dragonetti cases with plaintiff success on summary judgment.

 

Fitzpatrick Lentz & Bubba's counsel, Arthur "Terry" Lefco of Marshall Dennehey Warner Coleman & Goggin, declined comment on the portion of the case still pending against his clients.

 

Bernstein denied both the defense's and the plaintiff's motions for summary judgment Tuesday. According to the docket, Bernstein said both sides failed to carry their burden of proof to support summary judgment and the case involves a genuine issue of material fact regarding what the attorney defendants knew before initiating and continuing the underlying trade secrets case.

 

According to Fitzpatrick Lentz's memorandum of law in support of its summary judgment motion, its attorneys didn't act with gross negligence and primarily for an improper purpose.

 

The attorneys also relied on the report from their client that Wallover had signed a restricted covenant, according to the motion. The assumption that Wallover had signed the covenant was made because, according to LLM practice, every LLM employee signs a noncompetitive covenant in order to be employed, court papers said.

 

According to court papers, LLM assumed Wallover had signed a covenant at his hiring date in 2000 until a review of personnel files in 2002 revealed he hadn't signed a covenant; it was then that Wallover refused to sign a noncompete agreement and Wallover was fired.

 

The attorneys also argued the Dragonetti Act is unconstitutional when applied to lawyers and law firms, court papers said.

 

Marrone said the law firm should explain why it shouldn't be held responsible for participating in a lawsuit that Bernstein already determined was frivolous.

 

Thomas Martin, also of Feldman Shepherd, was plaintiff co-counsel.