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Drama over company secrets ends secretly

  • Article by: DAVID PHELPS
  • Star Tribune
  • September 16, 2012 - 4:19 PM

The departure of three top producers for Oakdale-based Woodbury Financial Services last summer that quickly bloomed into a legal drama over trade secrets and misappropriated confidential information ended last week with a whimper.

Attorneys for the Hartford Financial Services Group, parent of Woodbury, and the three former Woodbury vice presidents were placed into a confidential mediation process before a special master Friday afternoon.

As a result, Hartford's request for an injunction to prohibit the use of its proprietary information and for access to the computers of the three fell by the wayside. U.S. District Chief Judge Michael Davis told the parties: "This case can be easily solved. Let's get a handle on it quickly."

Earlier, Hartford attorney Patrick Martin argued during an hourlong hearing in front of Davis that the allegedly pilfered material was only "the tip of the iceberg."

"This is a simple case about these individuals spending their final days [at Woodbury] taking every shred of confidential information they could find," Martin said.

But attorneys for the three former vice presidents said some of the information they took was publicly available elsewhere while other information was either deleted or returned to Woodbury at the request of Hartford.

Hartford said the three individuals, Scott Carlson, Kevin Corrigan and Robert Cairns, took sensitive information about the Woodbury sales force with them to their new jobs selling insurance and investment products at the Questar Capital division of Golden Valley-based Allianz Life Insurance Co. of North America.

Martin argued in court that the alleged theft of the material could affect the $110 million to $115 million sale of Woodbury to AIG's SunAmerica Financial Group, which is scheduled to close in December.

"The final price is based on the value of the business and that price could be impacted if there is a sense that confidential information is floating around," Martin told the judge.

'Not a noncompete case'

But attorneys for the individuals said there was no harm to either Hartford or Woodbury because the material in question was deleted or returned.

"This is not a noncompete case," said Jeffrey Deery. "This is not a hacking case. They were authorized to look at confidential information."

James Cann, the attorney for Carlson, said the Hartford action "is a bullying effort to dissuade the defendants from doing their business."

The three vice presidents -- based in California, Nebraska and Florida -- were responsible for supervising about 180 registered sales representatives in their regions for Woodbury out of a total sales force of 1,300.

"It's startling to me that the actions of these three could put the sale of Woodbury in jeopardy," said Jonathan Harris, the Minneapolis-based counsel for all three. "Their combined sales are dust in the universe."

Because the parties entered mediation, the outcome of the case most likely will remain confidential.

Confidentiality a big concern

But David Larson, an employment law professor at the Hamline University Law School, said trade secret and confidentiality issues are a growing concern in the business world as data storage systems move from old-fashioned file cabinets to personal thumb drives and third-party cloud storage systems.

"Once we moved into the world of digital records, it became a much greater concern," Larson said. "And now that we're moving onto the cloud, concern is really going to increase. It's a big problem and now and it's going to get bigger."

David Phelps • 612-673-7269

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