Ex-Adelson Partners Stole Trade Secrets For New Firm: Suit

By Y. Peter Kang

Law360, Los Angeles (May 9, 2016, 9:13 PM ET) -- Four former partners of Adelson Testan Brundo Novell & Jimenez PC are accused of unlawfully gathering confidential information and attempting to secure Adelson clients for more than a year before jumping ship to start a new firm, according to a suit filed in California state court.

Adelson filed the Superior Court suit on May 4 against Orange County-based firm Misa Stefen Koller Ward LLP and its four founding partners, all former partners at Adelson's Long Beach office, accusing them of misappropriation of trade secrets, breach of fiduciary duty and unfair competition, among other claims.

"This is a classic, yet extreme, case of misappropriation of trade secrets and breach of fiduciary duty by former partners building a competing firm using their employers' resources," the 16-page complaint states.

Adelson asserts that the quartet was led by Adelson's former co-managing partner of its Long Beach office, Michael N. Misa, and spent nearly 18 months planning the launch of their own firm, using Adelson's computer systems to mine the firm's client lists and pitch the clients at Adelson's expense, "all while collecting paychecks from plaintiff."

The former partners had intended to stay on with Adelson until August, but their plans were uncovered in April and they were promptly terminated, according to Adelson.

"The four partners intended to keep their scheme hidden, using their positions to continue gathering confidential information, for several more months until their conspiracy was discovered by other partners at ATB," an attorney for Adelson, Daniel J. Callahan of Callahan & Blaine APLC, said in a statement.

An attorney for Misa Stefen denied the allegations, saying they were baseless.

"These attorneys ... decided to leave that firm in full compliance with all legal and ethical rules," said Daniel O'Rielly of O'Rielly & Roche. "There was nothing inappropriate in the way they departed, or in the way they have conducted business since they left. Our clients will vigorously defend their good names in the legal community against these baseless and clearly vindictive allegations."

After Adelson learned the four attorneys were conspiring to launch a rival law firm in April, it conducted a forensic review of the defendants' computers, phones and other equipment they used while employed with the firm, according to the complaint. The review revealed that the lawyers used their personal devices to access and store firm documents and that the quartet had been planning the new firm as early as November 2014, the suit said.

The suit says Misa used his position as co-managing partner of the Long Beach office to make a "conscious effort" to divert files for prospective clients through that office even though they might've been better handled by a different office.

"As the targeted clients did not pay for travel time, diverting matters to the Long Beach office was solely for the benefit of the individual defendants, not ATB or the client," Adelson said.

Adelson claims that Misa Stefen reached out to two support staffers to join their firm and also had one of Adelson's clients, 99 Cents Only Stores, move their business to Misa Steffen, according to the complaint.

The firm also brings claims of breach of contract and intentional interference and said it will seek more than $2 million in damages.

Adelson, which bills itself as the largest workers' compensation defense law firm in the country, was the target of a sexual harassment and gender discrimination lawsuit filed by a former employee who accused the firm's former managing partner of groping her at work.

The former employee filed suit under the name Jane Roe to protect her identity and alleged that she was subject to near-constant harassment, including groping of her breasts and crotch by her supervisor, Matthew Kearl.

The case was settled in March just prior to the start of trial, according to court records.

Adelson is represented by Daniel J. Callahan, Michael J. Sachs and David T. Bartels of Callahan & Blaine APLC.

Misa Stefen is represented by Daniel O'Rielly of O'Rielly & Roche LLP.

The case is Adelson Testan Brundo Novell & Jimenez v. Misa Stefen Koller Ward LLP et al. case number 2016-00850385, in the California Superior Court, County of Orange.

--Additional reporting by Bonnie Eslinger. Editing by Patricia K. Cole.

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