Talent Agency Claims Trade Secrets of Representing Celebrities Stolen

Matthew Futterman has written an interesting piece in The Wall Street Journal regarding a departed talent agent and we've copied the relevant portions below:

"Hollywood agency CAA has raided rival IMG Worldwide of agents and top executives, rising to challenge IMG's primacy in sports. In the process, stars have followed. IMG lost baseball's Derek Jeter when talent agent Casey Close jumped ship and moved to CAA. Similarly, it lost football's Tony Gonzalez and LaDainian Tomlinson when talent agent Tom Condon moved to CAA from IMG.

Litigation erupted when a $90,000-a-year junior agent named Matthew Baldwin defected to CAA last month. IMG alleges in a lawsuit against Mr. Baldwin that not only is he violating a non-compete clause in his contract, but that he took some 7,000 confidential files.

Mr. Baldwin denies the allegations, contending that what he took from his laptop was personal, including photos and music, or included information, such as coaches' salaries, that's largely available to the public. Mr. Baldwin, who was part of IMG's team in Minneapolis representing several top coaches, also has moved across the country to California, where he says state law makes IMG's non-compete clause unenforceable.

IMG says it is suing to mitigate the damage from the loss of trade secrets and proprietary information. "If they want to be in the businesses we are in they should start their own," said Jim Gallagher, a spokesman for Cleveland-based IMG. "They can't hire our junior agents in an attempt to steal our clients, our trade secrets and our clients' confidential information."

CAA declined to make Mr. Baldwin available for comment but Jeffrey Kessler, a lawyer for Los Angeles-based CAA, said the agency has the right to hire whomever it wants, and California law doesn't allow employers to prevent their former employees from making a living in whatever industries they choose. CAA itself isn't named in the litigation.

After working for five years in Minneapolis under Gary O'Hagan, the director of IMG's coaches division, Mr. Baldwin, age 32, began discussing a position with CAA earlier this year, according to court papers filed by Mr. Baldwin in federal district court in Ohio. During his time at IMG, he helped Mr. O'Hagan represent some of the biggest names in coaching, including the NFL's Mike Shanahan, college football coach Mike Leach, and Villanova University's head basketball coach Jay Wright.

According to Mr. Baldwin's sworn declaration, on March 29 he signed a lease on an apartment in Los Angeles. He also stated that on March 31 he collected his 2009 bonus of $15,000. According to sworn declarations by both men, on April 1 Mr. Baldwin promised Mr. O'Hagan that a rumor of his imminent departure for CAA was not true. On April 2, while Mr. O'Hagan, was on a plane, Mr. Baldwin left him phone and email messages announcing his resignation effective immediately after nearly six years at IMG, the declarations say.

That same day, Mr. Baldwin began to work for CAA and sued IMG in federal district court in California to void the clause in his contract barring him for two years from soliciting IMG clients he had represented. In court papers, Mr. Baldwin argued that as a resident of California—with the lease to prove it—he was entitled to the state's protections against such covenants.
IMG executives say Mr. Baldwin has a right to continue his work, he just can't solicit IMG clients for two years.

In addition to the employment debate is the controversy surrounding some 7,400 documents that IMG claims include proprietary information and trade secrets. The documents include contracts and personal information of numerous coaches, and commissions, IMG alleges in its suit filed in Ohio.

IMG's computer forensic experts stated in sworn testimony in the Ohio litigation that Mr. Baldwin downloaded the documents from his laptop to a portable USB drive, then uploaded the information to other terminals in subsequent days.

After Mr. Baldwin sued IMG in California, IMG went to federal district court in Ohio seeking a temporary restraining order that would stop Mr. Baldwin from soliciting IMG clients and force him to return all the files he took from IMG.

Mr. Kessler, CAA's lawyer, said the allegations about the documents are baseless, adding: "It's an issue that IMG has manufactured because they can't enforce what they really want to enforce, which are the covenants that would restrict Matthew Baldwin's employment."

Now judges in Ohio and California must determine the appropriate venue for the dispute. A ruling could come any day in the Ohio case and a hearing is scheduled for May 23 in the Los Angeles case. If Ohio law rules, the case tips in favor of IMG. If the case goes to California, it tips in favor of Mr. Baldwin."