By Jeff MacHarg and Camryn Rohr.
Judge Conrad’s Final Judgment in Airtron, Inc. v. Bradley Allen Heinrich ends this years-long Chapter 75, trade secret case. No doubt, the plaintiff (Airtron) pushed this lawsuit to make a point: if you take our secrets, we will come after you, and we won’t stop until justice is done. Judge Conrad, it seems, also had a point to make about pursuing justice to the bitter end.
After leaving Airtron, Bradley Heinrich allegedly solicited an Airtron employee, poached customers, and misappropriated trade secrets. Heinrich then used these things to advance a (short-lived) career at a competing business. In June 2022, Airtron sued the competing business, Heinrich, and several others. Heinrich’s original counsel withdrew early on and was never replaced. By mid-2023, the other defendants had settled out or were otherwise dismissed, leaving Heinrich representing himself as the sole remaining defendant.
Discovery brought big problems for Heinrich. In March 2024, Judge Conrad imposed crippling sanctions against him for failing to comply with the Rules of Civil Procedure and the Court’s discovery orders. In addition to a money sanction (that Heinrich apparently never paid), Judge Conrad struck Heinrich’s answer and defenses and entered default against him as to liability on Airtron’s trade secret and Chapter 75 claims. (Our Fox partner, Brad Risinger, reported on this sanction ruling here.) On the path to final judgment, the final line to cross was damages.
Under the circumstances, Airtron seemingly liked its chances in having Judge Conrad as the fact-finder. In August 2024, the Court convened an evidentiary hearing on damages. Airtron was represented. Heinrich was not. According to the trial briefs and the Final Judgment, Airtron did what most practitioners would expect: it marshalled and presented evidence of lost profits and asked the amount to be trebled under Chapter 75. Airtron also asked for punitive damages and attorneys’ fees because, well, why not?
Airtron argued its lost profits should be measured by profits that Heinrich’s competing business earned on sales to common customers. Judge Conrad carefully examined the evidence, but found it lacking. Judge Conrad found no evidence that any of these common customers would have hired Airtron for this work. Airtron, therefore, failed to establish that it lost any profits as a result of Heinrich’s misappropriation. Without addressing other smaller damages measures mentioned in the briefing (e.g., that Heinrich directly benefitted via his salary from the competing business), Judge Conrad, simply awarded nominal damages of one dollar, which he trebled to three.
Judge Conrad also declined to award punitive damages or attorneys’ fees. On punitives, Judge Conrad found that Heinrich’s conduct was neither willful nor malicious. As a fact-finder weighing credibility, Judge Conrad found that although Heinrich could (and should) have done more to end the misappropriation, he did enough to avoid a finding that he acted willfully and with malice. Judge Conrad further commented that imposing punitive damages would serve little purpose here where Heinrich acted inappropriately, but not egregiously; Airtron suffered no actual economic harm; and no evidence suggests Heinrich profited in any meaningful way from his misconduct. Indeed, the unrebutted evidence showed the competing business fired him soon after the lawsuit was filed, he was currently unemployed, and had no savings or assets. Judge Conrad added that Heinrich’s litigation misconduct (for which he was severely sanctioned) is not a proper basis for an award of punitive damages. Instead, punitive damages are to punish egregiously wrongful conduct outside of court. Consistent with these findings (specifically, lack of willfulness), Judge Conrad declined to award Airtron any of the nearly $300,000 in attorneys’ fees that Airtron requested.
At the end of the day, Airtron made its point. But it was an expensive point to make.
Takeaways:
When is enough, enough? Litigants need to continuously consider this question. Does Judge Conrad’s Judgment reflect some frustration with the judicial resources devoted to a practically meaningless exercise? In my opinion, yes. Judge Conrad’s express award of pre and post judgment interest on three dollars of damages speaks volumes. Judge Conrad also hints at litigation offramps that were never taken. Heinrich and Airtron apparently reached a settlement, but Heinrich was unable to raise money to pay the lump sum, voiding the settlement. He offered to pay smaller amounts over time, but evidently, Airtron wanted more. Certainly, one can’t fault Airtron from at least asking to recover damages and its costs; but this result should give practitioners pause when there doesn’t seem to be much practical value in the relief being sought.
Judges will judge. Practitioners also need to continuously view their positions from all angles, especially from the bench. Most of the time, law and justice overlap, but not always. This Judgment seems to reflect Judge Conrad’s sense that justice would not be further served by saddling a penniless, pro se defendant with a seven-figure judgment, particularly when the wrongful behavior had long-since stopped.
Trials are unpredictable. This case is another reminder to all practitioners and parties that results at trial are never, ever certain. Few would have predicted that with liability established (via sanction) and no meaningful legal opposition, Airtron would emerge from this bench trial with a three-dollar award (plus interest). Leaving the fate of your claims and recovery in the hands of other humans is risky business.