MWK Recruiting Inc. v. Jowers

Decision Date15 September 2022
Docket Number1:18-CV-444-RP
PartiesMWK RECRUITING, INC., Plaintiff, v. EVAN P. JOWERS, Defendant. EVAN P. JOWERS, Counterplaintiff, v. MWK RECRUITING, INC., ROBERT E. KINNEY, RECRUITING PARTNERS GP, INC., KINNEY RECRUITNG, LLC, COUNSEL UNLIMITED, LLC, and KINNEY RECRUITING LIMITED, Counterdefendants. Candidates Firms Candidates Finns Finn Name Placement
CourtUnited States District Courts. 5th Circuit. Western District of Texas

FINDINGS OF FACT AND CONCLUSIONS OF LAW

ROBERT PITMAN, UNITED STATES DISTRICT JUDGE.

On December 7 and 8, 2021, the Court held a bench trial in this matter. (Dkts. 338, 339). The parties submitted post-trial briefs. (Pl. Br., Dkt. 342; Deft. Br., Dkt. 343). Having considered the evidence and testimony presented at trial, the arguments of counsel, the briefing, and the governing law the Court enters the following findings of fact and conclusions of law.

I. BACKGROUND

The issues in this case stem primarily from an employment dispute between Defendant/Counterplaintiff Evan P. Jowers (Jowers) and Plaintiff/Counterdefendant MWK Recruiting, Inc. (MWK). Beginning in April 2006, Jowers worked as a legal recruiter for MWK and its associated entities,[1] which are all lead by Robert E. Kinney (Kinney). (Second Am. Compl., Dkt. 80, at 2-6; Third Am. Answer, Dkt. 237, at 40). In 2006, shortly after he was hired, Jowers signed an Associate Recruiter Employment Agreement (“Jowers Agreement”), which includes noncompete and non-solicitation covenants. (Jowers Emp't Agreement, Dkt. 80-1). Jowers resigned from MWK on December 16, 2016. (Tr. I, at 149).

During his employment, Jowers originally recruited attorneys for placements at large law firms based in the United States and United Kingdom, but around 2015 he relocated to Hong Kong to place attorneys with law firms in Asia. (Second Am. Compl., Dkt. 80, at 14). In December 2016, Jowers ended his employment with Kinney Recruiting HK and joined Legis Ventures as an attorney recruiter. (Second Am. Compl., Dkt. 80, at 14). MWK alleges that Jowers submitted six MWK candidates through Alejandro Vargas (“Vargas”), the founder of Legis Ventures, while he was still employed with MWK. (Id.). Specifically, MWK alleges that Jowers sent Kinney an email stating Jowers had submitted candidates named James Chang, Longhao Zhang, Richard Han, Pamela U, Claudia Lau, and Xiao Zhang through Vargas. (Id.).

Jowers also obtained two loans related to his employment in 2012. First, Jowers entered into a Forgivable Loan Agreement and Promissory Note (the “Forgivable Loan”). (Id. at 6). Second, Jowers entered into a Loan Agreement and Promissory Note (the “Revolving Loan”). (Id. at 8). As of the date of Jowers's resignation, Kinney alleges Jowers still owed money on both loans (Id. at 43, 44). For his part, Jowers alleges that, despite promising to do so, MWK refused to reimburse him for work related expenses in Hong Kong, refused to provide him with a Hong Kong work visa, and failed to provide an office location and housing costs in Hong Kong. (Third Am. Answer, Dkt. 237, at 51, 54-55). Jowers also asserts that the Jowers Agreement provided that he would receive certain commission amounts for placing attorney candidates, but that these commission rates were unilaterally reduced after commissions were earned. (Id. at 54).

II. SUMMARY OF THE EVIDENCE

During the trial, the Court heard testimony from Kinney, Jowers, and Alexis Lamb. (Dkt. 340). The Court also entered exhibits provided by both parties. (Dkt. 341).

A. Misappropriation of MWK's Trade Secrets

In its complaint, MWK alleges that Jowers misappropriated MWK's trade secrets related to information about law firm clients and attorney candidates (Second Am. Compl., Dkt. 80, at 24, 32- 36). MWK brings these claims under both the Federal Defend Trade Secret Act (“FDTSA”), and the Texas Uniform Trade Secret Acts (“TUTSA”). At trial, Kinney testified that Jowers misappropriated MWK's trade secrets by utilizing confidential information he'd obtained during his final year of employment with MWK to place six candidates at law firms in the year following his departure from MWK. (Tr. I, at 77). Those candidates included Steve Kang (“Kang”), James Chang (“Chang”), Rose Zhu (“Zhu”), Pamela Usukumah (“Usukumah”), Longhao Wang (“Wang”), and Meng Ding (“Ding”). (Id. at 157).

Kinney testified that he became aware that Jowers was working with Wang, Chang, and Usukumah through an email Jowers sent to him following his departure from MWK, which stated he had been sent the three names “right before I left Kinney.” (Id. at 50; P-53, Dkt. 341-2, at 2). An email from Jowers through his Kinney Recruiting email address shows that he began making contacts with firms on behalf of Rose Zhu in October of 2016. (P-20, Dkt. 341-1, at 150). Kinney further testified that he did not find out about Jowers's work with Kang and Ding until he issued subpoenas during discovery and found that Jowers had been communicating with these candidates through a personal email address while working at MWK. (Tr. I, at 45-47, 121).

Kinney testified that the Jowers Agreement included nondisclosure clauses. (Id. at 144). The clauses state:

At all times during and after the Employee's employment, the Employee shall not use or disclose to any person the Company's Proprietary Information, except as such disclosure or use may be required in connection with the Employee's employment, or unless the Robert Kinney expressly authorizes such in writing.

(P-2, Dkt. 341-1, at 6-7).

For a period of one year following the effective date of termination of the Employee's employment, the Employee shall not, in the course of the personnel placement service business, solicit or provide services to any candidate or client with whom the Employee had contact with, knowledge of, or access to during the twelve months immediately preceding the effective date of termination, and shall not assist any entity other than the Company in so doing.

(Id. at 7). Kinney testified that he did not give Jowers any authorization in writing permitting him to utilize or disclose the information obtained about the six candidates. (Tr. I, at 144).

Regarding what Kinney considers to be proprietary information regarding MWK's candidates, he stated “their identity,” “information about them” that is “not readily ascertainable by people.” (Id. at 158). This information could include specifics about deals clients had made, how much experience clients had, clients' law school information, why and where clients would want to move, and what their most confidential desires about their future employment were. (Id. at 166). He testified that recruiters at MWK establish trust and confidence relationships in order to place candidates, relationships which take a long time to develop. (Id. at 158-59). Kinney stated that the information MWK gathers about candidates in order to build trust and make placements is, therefore, a valuable business asset and offers MWK significant competitive advantages against other recruiting businesses that do not have the same information. (Id. at 159). On crossexamination, Kinney noted that he wasn't sure if a candidate's name alone constituted a trade secret.

(Id. at 216). Jowers testified that the confidential information he gathered from the candidates was based on his own personal relationships with the candidates and that MWK did not take measures to protect the information at issue, nor did Kinney ever tell him he needed to keep information secret. (Id. at 213-14).

The parties provided specific evidence regarding the alleged trade secret misappropriation for each of the six candidates. Regarding Kang, Jowers first met Kang while working for MWK. (Tr. II, at 139-41; 242-44; P-130, Dkt. 341-4, at 734). Jowers testified that, before leaving MWK, he obtained information regarding Kang's desire to transfer firms and sent an email to Latham & Watkins regarding Kang's candidacy from his personal email address. (Tr. II, at 247). After leaving MWK, as early as December 14, 2016, Jowers continued to communicate with Latham & Watkins about Kang, including information about Kang's clients and how much Kang's practice was worth. (P-57, Dkt. 341-2, at 9). Jowers testified that he believed Kinney would “blow up the whole deal” if he involved Kinney in the placement of Kang at Latham & Watkins. (Tr. II, at 147-48). Kang was ultimately hired by Latham & Watkins and Jowers received a placement fee. (P-130, Dkt. 341-4, at 724).

Chang emailed back and forth with Jowers in December 2016 to set up a phone conversation. (P-20, at 169-70). On December 14, 2016, Chang emailed Jowers, expressed his interest in changing firms, and listed his clients. (P-59, at 66). On December 23, 2016, Kinney emailed Chang and asked him if he had heard from Jowers. (Id. at 65). On March 7, 2017, Jowers emailed the law firm DLA Piper to put forward Chang's candidacy. (P-61, Dkt. 341-2, at 67). In the email, Jowers discusses Chang's language abilities, his “stellar” end-of-year reviews, his desire to move back to China, his deal sheet and clients, and his resume. (Id.). Chang was ultimately hired by DLA Piper, and Jowers was paid a placement fee. (P-126, Dkt. 341-4, at 642).

Jowers began sending information about Zhu out to firms as early as October 20, 2016 using his MWK email address. (P-20, Dkt. 341-1, at 150). In his emails, Jowers details how much Zhu's practice was worth and her client list. (Id.). Following his resignation, Jowers continued to send emails to law firms on behalf of Zhu, containing the same information he had sent to firms while working at MWK. (P-63, Dkt. 341-2, at 93; P-64, Dkt. 341-2, at 96; P-65, Dkt. 341-2, at 99). The law firm Baker & McKenzie hired Zhu “on or about May 17, 2017,” and paid a placement fee to Jowers for her placement. (P-122, Dkt. 341-4, at 590).

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