Misappropriation Litigants Must Show Evidence of Impropriety

• Pages: 22-23
• Date: 01 October 2022
• Author: Michael Stefanilo Jr.
• Subject Matter: Civil Law

dismissed all three claims. Barclay

appealed only the intentional interfer-

ence of expectancy claim. The Court

of Special Appeals of Maryland, the

state’s intermediate appellate court,

armed the dismissal.

The Court of Appeals of Maryland,

the state’s highest court, armed

the judgment and adopted section 19

of the Restatement (Third) of Torts,

which provides that a defendant is

liable for intentional interference with

an inheritance or a gift if

• the plainti had a reasonable

expectation of receiving an

inheritance or gift;

• the defendant committed an

intentional and independent

legal wrong;

• the defendant’s purpose was

to interfere with the plainti’s

expectancy;

• the defendant’s conduct caused

the expectancy to fail;

• the plainti suered injury as a

result; and

• the plainti did not have the

right to seek a remedy for the

same claim in a probate court.

However, it found that Barclay h ad

failed to allege th e interference nec-

essary to state a cl aim.

In reaching its conclus ion, the

high court note d that the tort “ha[d]

been recognized by courts in about

half the states,” w hile “[a] handful

of states ha[d] specif‌ic ally rejected

the tort” out o f concern for interfer-

ing with probate cour t jurisdiction. It

observed that th e tort was “a species

of interference w ith economic expec-

tancy” and “ [saw] no principled rea-

son to deny liabilit y for inheritance

interference.”

The limitations of p robate pro-

ceedings and re medies to deter bad

actors also spu rred the appellate

court to adopt the to rt. “Probate can-

not add to the will som ething that is

not there, nor ca n the probate court

bring into being a wil l which the tes-

tator was prevented from m aking

and executing by frau d,” it said. The

court also noted t hat bad actors had

no risk of loss in prob ate because the

estate genera lly pays the tortfeasor’s

attorney fees. T hus, “[t]he damages

potentially recoverab le by a success-

ful plainti will l ikely shift the incen-

tives motivating a bad ac tor away

from bad condu ct,” the high court

reasoned.

As to concerns abo ut overstepping

into probate jurisdic tion, the court

of appeals cited th e Reporter’s Note

to Section 19(2) of th e Restatement,

which stated, “ the tort ‘is not available

to a plainti who had th e right to seek

a remedy for the sa me claim in a pro-

bate court .’”

Finally, the appell ate court held

that “the inter ference must be with

an ongoing or pro spective relation-

ship,” It noted Ba rclay’s claim was

based solely on S adie’s groundless

litigation f‌iled af ter the doctor’s death,

and there was no all egation that

Sadie had inter fered with the relation-

ship between B arclay and Castruccio

before his will was f‌in alized. As such,

the court concl uded there was no via-

ble claim for intenti onal interference

with inheritance.

“Tortious interfe rence with con-

tract cases fre quently turn on the

terms of the contrac tual relationship

at issue, while tor tious interference

with prospective cont ract or business

expectancy c ases hinge on the con-

creteness or likeli hood of anticipated

relationships co ming to fruition,” says

Jonathan R. Ingrisano, Milwaukee, WI,

member of the Litigation Section’s

Business Torts & Un fair Competition

Committe e. “Analyzing this spe cies

of tortious inter ference claim through

that ‘relationsh ip’ lens makes a lot of

sense,” he opines.

There can be “no w rongful inter-

ference after d eath which can then

cause the testato r to vary from his or

her original in tent,” adds Ingrisano.

Instead, “wrongful post-death inter-

ference with a bene f‌iciary’s receipt of

inheritance would almost always be

independe ntly actionable, as it was

in this case with fee s hifting and con-

tempt sanctio ns available,” he con-

cludes.

Noting the limit of th e case, Joseph

D. Kropp, Wellesley, MA, chair of the

Trust Litigation Subcommittee of the

Secti on’s Real Estate, Condemnation

& Trust Litigation Committee notes,

“The tort is pro perly intended not to

include post-death interference as

other remedie s exist for the ‘post-

death interfere nce’ relating to recov-

ery of the estate ’s attorney fees at

issue in the case .”

Misappropriation

Litigants Must

Show Evidence of

Impropriety

By Michael Stefa nilo Jr., Litigation

News Contributing Editor

An appellate court has ruled that a

startup competitor of tech giant Apple

Inc. failed to satisfy its burden of proof

in establishing a misappropriation claim

based on its former employees’ reten-

tion and use of purported trade secrets.

The ruling highlights public policy con-

siderations favoring free mobility of

employees, while also revealing strate-

gies that practitioners may employ to

protect their clients when their employ-

ees depart for a competitor, according

toABA Litigation Sectionleaders.

In Hooked Media Group, Inc. v. Apple

Inc., Hooked sued Apple alleging mis-

appropriation of trade secrets under

the Uniform Trade Secrets Act (UTSA),

among other things. Apple had sought

to acquire Hooked’s engineers, but

Hooked preferred “acquisition possibili-

ties” of a larger magnitude, including

the sale of its technology and mar-

ket share. Apple declined to purchase

Hooked but indicated interest in paying

a “f‌inder’s fee” for the engineering team

as part of an “acqui-hire.” Apple then

proceeded to contact and retain three

Hooked employees, including its chief

technical ocer, without providing any

compensation to Hooked. The trial court

entered summary judgment in favor of

Apple. Hooked appealed to the Sixth

District Court of Appeals for the State

of California, one of 47 states and the

District of Columbia to adopt the UTSA.

The appellate court armed the

entry of summary judgment. Hooked

unsuccessfully argued that Apple

had misappropriated two types of its

trade secrets by poaching its employ-

ees: “(1) technical information, such

as algorithms and app recommen-

dation strategies; and (2) informa-

tion about the makeup and skills of

Hooked’s core engineering team.” In

rejecting Hooked’s claims, the court

reasoned that there was insucient

evidence that former Hooked employ-

ees possessed trade secret information

or even that these same employees

FALL 2022 • VOL. 4 8 NO. 1

22 | ABA LITIGATION SECTIO N

Published in Litigation News Volume 48, Number 1, Fall 2022 . © 2022 by the American B ar Association. Repr oduced with permis sion. All rights rese rved. This informa tion or any portion th ereof may not be cop ied or disseminated in any for m

or by any means or stored i n an electronic database o r retrieval syst em without the expr ess written co nsent of the American B ar Association.

THE LATEST DEVELOPMENTS IN LITI GATION

NEWS & ANALYSIS