BioPoint, Inc. v. Dickhaut
U.S. Court of Appeals for the First Circuit
BioPoint, Inc. v. Dickhaut, 110 F.4th 337 (1st Cir. 2024)
BioPoint, Inc. v. Dickhaut
Opinion
United States Court of Appeals
For the First Circuit
No. 23-1575
BIOPOINT, INC.,
Plaintiff, Appellee,
v.
ANDREW DICKHAUT; CATAPULT STAFFING, LLC, d/b/a Catapult
Solutions Group,
Defendants, Appellants,
LEAH ATTIS,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Rikelman, Lynch, and Howard,
Circuit Judges.
Dana A. Zakarian, with whom Christopher J. Hurst, Steven D.
Procopio, and Smith Duggan Cornell & Gollub LLP were on brief, for
appellant.
Allison L. Anderson, with whom James W. Bucking, Rachel L.
Kerner, and Foley Hoag LLP were on brief, for appellee.
July 30, 2024
LYNCH, Circuit Judge. Catapult Staffing, LLC and Andrew
Dickhaut (collectively, "Catapult") appeal from separate jury and
judge findings that they misappropriated BioPoint, Inc.'s trade
secrets, misappropriated its confidential business information,
were unjustly enriched by these activities, tortiously interfered
with BioPoint's prospective business relationships, and violated
the prohibitions on unfair and deceptive trade practices in the
Massachusetts Consumer Protection Law, Mass. Gen. Laws ch. 93A,
§ 11 ("chapter 93A").
The jury found that Catapult had misappropriated and
used BioPoint's trade secrets with respect to three candidates
recruited by Catapult and with respect to two of BioPoint's
clients, the firms Vedanta and Shire/Takeda. It also found
Catapult had engaged in tortious interference with BioPoint's
business relationship with one candidate. The jury awarded
BioPoint $312,000 in lost profits.
The judge, prior to the jury trial, had reserved to the
court decision on all equitable claims for relief. He notified
the parties he would hold a bench trial and decide those equitable
claims after the jury trial. He held a bench trial and then issued
a twenty-nine-page decision entitled "Findings of Fact, Rulings of
Law, and Order After a Bench Trial." The judge found for BioPoint
as to all equitable claims and awarded it $5,061,444, consisting
of the amount by which "Catapult was unjustly enriched" by its
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"misappropriation of BioPoint's trade secrets," trebled because
"Catapult's conduct also violated [chapter 93A]." The court also
awarded BioPoint reasonable costs, attorneys' fees, and
prejudgment and postjudgment interest.
We largely affirm, but reduce the judge's award, and the
award of judgment, by $157,068. We also reverse the district
court's imposition of joint-and-several liability on Andrew
Dickhaut and remand for further proceedings.
I.
"As this case comes to us following a bench trial" and
a jury trial, "we recount the relevant facts as found by the
district court, consistent with record support." Reyes v. Garland,
26 F.4th 516, 518(1st Cir. 2022) (quoting Gonzalez-Rucci v. INS,539 F.3d 66, 67
(1st Cir. 2008)).
BioPoint is a life sciences consulting firm based in
Massachusetts which scouts for highly skilled candidates to place
in temporary positions at pharmaceutical, biopharmaceutical, and
medical device companies. Those companies pay BioPoint a
(typically hourly) rate for the candidates' services (the "bill
rate"), and BioPoint remits a portion of that payment to the
candidates (the "pay rate"), profiting from the difference.
BioPoint maintains an internal database in which it records
proprietary information regarding clients, candidates, and their
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respective bill and pay rates. In 2015, BioPoint hired Leah Attis,
who became one of the company's top salespeople.
Catapult, based in Texas, is also a placement company
that operated in other industries until it attempted to enter the
same field as BioPoint. Catapult opened a Boston office in 2017
and hired Andrew Dickhaut, Attis's fiancé, as Managing Director.
(Dickhaut and Attis were married on February 1, 2020.) At the
time that Catapult entered the Boston market, it had no intention
of operating in the life sciences industry. It planned to focus
instead on the "technology, light industrial, accounting, and
finance industries." But Catapult's plans shifted and it began to
target the life sciences space after a "disastrous" first year for
the Boston office, which resulted in Dickhaut's having to take a
pay cut.
In December 2017, Jeff Autenrieth, a talent acquisition
consultant at Moderna, a pharmaceutical company, contacted Attis
at BioPoint seeking to fill a life sciences placement at his
company. Dickhaut knew Autenrieth from high school and had
introduced him to Attis in 2016 at her request. Autenrieth had a
particular candidate in mind, Chris Foley, and suggested that Foley
be placed through BioPoint. Attis initially agreed but then
proposed to Autenrieth that Dickhaut handle the placement not
through BioPoint but through Catapult, because "[h]e need[ed] the
headcount." When Autenrieth followed up, Attis stated that she
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"[didn't] want to put anything in writing over [her] system" and
that Dickhaut (her fiancé) "really need[ed] a deal." Catapult
ended up placing Foley at Moderna, and he was the company's first-
ever life sciences placement.
In February 2018, Autenrieth became a talent acquisition
consultant at Vedanta, a biotechnology company. Although
Autenrieth relied on Dickhaut to place several "somewhat entry
level" contractor roles at Vedanta, Autenrieth did not think
Catapult had the ability at that point to fill higher-level
positions.
Soon, though, Catapult did begin to make a few of those
high-level placements at Vedanta. In March 2018, Dickhaut
identified a candidate for a quality-assurance life sciences role
at Vedanta. Dickhaut told his boss that his fiancée Attis, though
she was at BioPoint, had "helped [him] with the search" and was
"pitching in a little bit too via LinkedIn."
Dickhaut continued to make inroads at Vedanta. In
December 2018, Catapult and Vedanta entered into a "managed
services provider" ("MSP") agreement, which had been pitched by
Dickhaut, under which Catapult would manage all of Vedanta's
candidates' labor contracts. That agreement also granted Catapult
"master vendor status" with Vedanta, such that Catapult had the
first opportunity to fill openings at Vedanta.
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Under the MSP agreement, in January 2019, Vedanta had an
opening for a "study team leader." Dickhaut asked Attis to give
him both BioPoint's bill and pay rates for that role and also to
give him names of suitable potential candidates from information
she had at BioPoint. Attis provided him with the rates and said
she "[couldn't] give [him] names from [BioPoint's] system" because
"[p]eople ha[d] [gone] to jail for that."
Around this time, Attis suggested to her supervisors the
possibility of BioPoint's "supporting [Dickhaut's] hiring needs
for [Vedanta]" by becoming a vendor through their MSP. Attis's
superiors at BioPoint not only rejected this proposal, but they
also warned Attis that she was not allowed to share any of
BioPoint's confidential information with Dickhaut.
Attis did not heed that warning. In January 2019,
Dickhaut asked her what BioPoint's pay rate would be for a clinical
operations director, and she responded that she would "look up"
someone in a comparable role whom she had just placed through
BioPoint. Attis also discussed candidates for Vedanta positions,
apparently obtained from BioPoint's system, with Dickhaut.
Indeed, at one point, after Dickhaut had moved forward with a
candidate without consulting Attis, Attis told him that "[n]ext
time" he should "wait for [her] to check [her] system."
In March 2019, Vedanta needed to hire a medical director.
When Dickhaut was having trouble finding someone, he asked Attis
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for help. Attis again asked her supervisors whether BioPoint could
partner with Catapult to help fill that role, and they once again
refused, reiterating that there was a "conflict of interest" and
that they had "no interest in partnering with a competitor."
Dickhaut became "furious" when Attis conveyed this conversation to
him, and he "criticiz[ed] [Attis] and BioPoint for not working
with him." Trying to appease Dickhaut, Attis wrote him: "I
understand if you don't want to work with BioPoint, but I do have
those two candidates set aside for you."
Using BioPoint's database information provided by Attis,
Dickhaut went on to place three candidates in the medical director
role, each of whom had been or was being vetted by BioPoint: Chris
Da Costa, Stephen Haworth, and Candida Fratazzi. In fact, BioPoint
had been about to place Fratazzi at Shire, a pharmaceutical company
and Attis's biggest client, for a pay rate of $250 an hour, when
Fratazzi suddenly withdrew from consideration because she had
accepted a position at Vedanta for a pay rate of $300 an hour. A
few days before Fratazzi withdrew, Dickhaut asked Attis for the
bill rates of Takeda, a company that was in the process of
acquiring Shire.
BioPoint terminated Attis's employment on December 4,
2019, after discovering that she had helped Dickhaut place Fratazzi
at Vedanta. In May 2020, Vedanta terminated its MSP agreement
with Catapult.
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On January 21, 2020, BioPoint sued Catapult, Dickhaut,
and Attis in the U.S. District Court in Massachusetts. In March,
the court dismissed without prejudice BioPoint's claims against
Attis so that BioPoint could refile them in state court, as
required by her employment contract. BioPoint then filed a four-
count amended complaint against Catapult and Dickhaut, bringing
three Massachusetts state-law claims and one federal claim, under
federal question and supplemental jurisdiction. BioPoint alleged
(1) misappropriation of trade secrets in violation of the
Massachusetts Uniform Trade Secrets Act ("MUTSA"), Mass. Gen.
Laws. ch. 93 § 42, (2) misappropriation of trade secrets in
violation of the federal Defend Trade Secrets Act ("DTSA"), 18
U.S.C. §§ 1831-39, (3) tortious interference with prospective
relationships in violation of Massachusetts common law, and (4)
unfair and deceptive trade practices in violation of chapter 93A.
In the complaint, BioPoint requested damages under MUTSA and DTSA
as well as "all damages authorized by" chapter 93A.
Catapult filed a motion to dismiss the complaint in full,
which the court denied, and the case proceeded to discovery and
ultimately to trial. On December 22, 2021, Catapult filed a motion
in limine to exclude at trial, as a discovery sanction, any damages
calculations not yet disclosed by BioPoint. The court granted the
motion on January 4, 2022, ruling that "to the extent that lost
profits damages were not disclosed during discovery, they w[ould]
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be excluded," and that, because "unjust enrichment is an equitable
remedy to which the right to a jury trial does not attach, . . .
[d]isgorgement damages . . . [would] be reserved to the court and
not presented to the jury." On May 10, 2022, Catapult submitted
a letter to the court seeking clarification as to the scope of the
jury trial in light of the court's ruling. The court issued this
order on May 11, 2022: "As the only lost profits evidence disclosed
during discovery concerns Ms. Fratazzi, the scope of the jury trial
will be limited to issues regarding her placement. Depending on
the jury's finding of liability, the court may confer with the
parties as to the necessity for further proceedings." BioPoint
filed a "motion for reconsideration and/or clarification," arguing
that "[r]estricting the liability phase of this case to Fratazzi’s
placement" would mischaracterize the complaint, lead to the
exclusion of "key evidence," and "prevent BioPoint from proving
the claims which could lead the Court to award disgorgement." In
response, the court issued the following order on May 13:
The jury will be asked to decide only
questions at law, and issues of equity will be
reserved for the court. Damages at trial
shall be limited to that of BioPoint's
asserted lost profits disclosed during
discovery, as the court previously ruled. The
court will confer with counsel . . . as to the
scope and content of the liability issue to be
presented to the jury. To that end, parties
shall submit their respective proposed jury
verdict slips to the court . . . .
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At a hearing on May 19, the court explained how it would
divide the claims between a jury trial on legal claims and a
possible subsequent bench trial on claims for equitable relief.
Neither party objected. The court then issued its order:
Having carefully considered the contours of
the dispute in this case and the parties'
respective positions, the court determines
that the issues of liability at law -- that
is, on plaintiff's claims for trade secret
misappropriation and tortious
interference -- will be presented at the jury
trial. The bulk of the asserted damages (with
the exception as to Ms. Fratazzi) are those
sounding in equity and they will be considered
together with the equitable unfair competition
claim at a subsequent bench proceeding, should
the jury return a finding of liability.
Both parties again did not object.
Before and during the trial, the court requested that
the parties submit proposed special verdict forms ("verdict
slips"). The court then issued a verdict slip for the parties'
consideration, which, the court explained, was drafted so that all
would know "what exactly the jury decided to do with respect to
various aspects of information that are being claimed as trade
secrets." The court rejected Catapult's objection to the verdict
slip on the grounds that it did not require "the jury to identify
what information it finds is a trade secret" and did not ask the
jury to determine whether allegedly misappropriated trade secrets
were actually used by Catapult.
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At the jury trial, where Catapult's liability for lost
profits was, due to BioPoint's discovery violation, limited to
damages arising from Fratazzi's placement, BioPoint also presented
evidence as to other candidates and clients. The verdict slip
then asked the jury to determine whether Catapult had
misappropriated BioPoint's trade secrets "concerning" five
candidates, including Fratazzi, and two client firms, including
Vedanta. The jury was given the standard Massachusetts trade
secrets misappropriation instructions without any differentiation
as to the causes of action stated.
The jury found that Catapult had misappropriated trade
secrets concerning the firms of Vedanta and Shire/Takeda and also
concerning candidate Fratazzi as well as other individual
candidates, and that it had tortiously interfered with BioPoint's
business relationship with Fratazzi. The jury awarded BioPoint
$312,000 in damages "as reasonable compensation for the damages it
incurred in the placement of Dr. Fratazzi because of Andrew
Dickhaut's and Catapult's conduct[.]" That lost-profits number
was calculated from BioPoint's disclosure that it had expected to
make $5,000 per week on Fratazzi's placement at Shire.
The court then held, as it had said it would, a bench
trial on the issues of whether Catapult had been unjustly enriched
by its misappropriation of BioPoint's trade secrets, whether
Catapult had engaged in unfair and deceptive trade practices,
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whether that conduct was knowing and willful, and what damages
were warranted. After the trial, the court issued a carefully
reasoned twenty-nine-page order stating its findings of fact,
conclusions of law, and order granting awards on the equitable
claims.
In its Findings of Fact, Conclusions of Law, and Order,
the court began by carefully noting the jury's findings:
At the conclusion of a June 14-22, 2022[,]
trial, a jury found defendants Andrew Dickhaut
and [Catapult] liable for the misappropriation
of trade secrets from plaintiff [BioPoint].
Catapult and BioPoint are competitors in the
highly lucrative life sciences consultant
search market. The jury found that Catapult
and Dickhaut had misappropriated trade secrets
with respect to three candidate consultants
recruited by BioPoint and had tortiously
interfered with BioPoint's prospective
business relationships with one of those
candidates. The jury awarded BioPoint
$312,000 on the successful tortious
interference claim. The jury also found that
Catapult and Dickhaut misappropriated
BioPoint’s trade secrets concerning two of its
prospective clients, Vedanta and Shire.
Following the jury trial, a two-day bench
trial was convened on October 18-19, 2022, to
try BioPoint’s remaining equitable claims for
unjust enrichment, violations of the
Massachusetts Fair Business Practices Act,
Mass. Gen. Laws ch. 93A, and for an award of
enhanced damages and attorneys' fees.
Turning to the requested equitable relief before the court of
unjust enrichment, the court correctly stated: "The unjust
enrichment 'attributable' to trade secret misappropriation is
distinct from the issue of whether a defendant appropriated a trade
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secret." The court stressed that "Catapult's use of BioPoint's
trade secret ha[d] already been determined by the jury," thus
laying the basis for an unjust enrichment award by the court. In
weighing whether to make such an award, it stated that:
One theory of unjust enrichment is a
plaintiff’s trade secret giving a defendant a
head start. To establish that a
misappropriated trade secret gave a defendant
a head start, plaintiff must proffer evidence
"(1) that the alleged misappropriation gave
[defendant] a head start and (2) that the head
start helped to bring about certain earnings
over the following months or years." Alifax
Holding Spa v. Alcor Sci. Inc., 2021 WL
3911258, at *1 (D.R.I. Sept. 1, 2021).
Later the court also noted as to the chapter 93A claims:
To determine whether conduct violates Chapter
93A, the court considers "(1) whether the
practice . . . is within at least the penumbra
of some common-law, statutory, or other
established concept of unfairness; (2) whether
it is immoral, unethical, oppressive, or
unscrupulous; [and] (3) whether it causes
substantial injury to consumers (or
competitors or other businessmen)." PMP
Assocs., Inc. v. Globe Newspaper Co., 366 Mass
593, 596 (1975). . . . A finding of trade
secret misappropriation is also sufficient to
establish an unfair or deceptive act under
Chapter 93A. See Mass. Eye & Ear Infirmary v.
QLT Phototherapeutics, Inc., 412 F.3d 215, 243
(1st Cir. 2005) ("Under Massachusetts law,
misappropriation of trade secrets alone can
constitute a violation of Chapter 93A."); see
also Prescott v. Morton Int'l, Inc., 769 F.
Supp. 404, 407 (D. Mass. 1990) ("The standards
for finding misappropriation of a trade secret
provide the criteria for finding an unfair or
deceptive act."); Juncker Assocs. & Co. v.
Enes, 2002 WL 31104013, at *4 (Mass. Sup. Ct.
Sept. 5, 2002) (same). The same is true with
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respect to a jury’s finding of tortious
interference. See People's Choice Mortg.,
Inc. v. Premium Cap. Funding, LLC, 2010 WL
1267373, at *18 (Mass. Super. Ct. Mar. 31,
2010) ("Topdot’s actions constituted a
tortious interference with an advantageous
business relationship. Thus, Topdot’s actions
were within a concept of unfairness
established at common-law. For this reason,
the court concludes that Topdot's actions
merit relief under [Mass. Gen. Laws ch.] 93A,
§ 11.").
Under the law and under the findings set forth in the judge's
order, the court then stated: "The court finds that the jury's
verdict amply supports a determination that Catapult violated
Chapter 93A and that no further findings of fact on this issue are
required." BioPoint, Inc. v. Dickhaut, No. 20-10118, 2023 WL
3071422, at *8 (D. Mass. Apr. 25, 2023) (emphasis added).
The court held accordingly: (1) citing to a Rhode Island
case on the head start doctrine, that BioPoint was entitled to the
entirety of Catapult's profits arising from its relationship with
Vedanta, because those profits "were made possible because of
BioPoint's trade secret information and therefore amount to unjust
enrichment"; and (2) that Catapult was liable under chapter 93A
and that its conduct was knowing and willful under the statute,
which authorized an award of exemplary damages. The court also
held that "Dickhaut at all times was acting within the scope of
his employment for the benefit of Catapult" and that "Dickhaut's
conduct and culpable state of mind [were] imputable to Catapult as
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his employer under the long-established principles of vicarious
liability." As to damages, the court awarded treble damages
jointly against Dickhaut and Catapult, totaling $5,061,444:
Catapult's Vedanta profits, multiplied by three, plus the jury's
award for Catapult's lost profits on Fratazzi, multiplied by three.
Catapult's Vedanta profits included the profits made from placing
Fratazzi at Vedanta, such that BioPoint was awarded both lost
profits related to Fratazzi (by the jury) and unjust enrichment
based on Catapult's profits from placing Fratazzi at Vedanta (by
the court).
In May 2023, after entry of final judgment, Catapult
filed a motion requesting judgment as a matter of law, a new trial,
remittitur, and amendment of the judgment. The court denied the
motion, and Catapult timely appealed to this court.
II.
We analyze first the most important issues presented by
the appeal.
A. Unjust enrichment and the court's award based on the
head start doctrine
Catapult argues that the district court erred in
awarding to BioPoint as unjust enrichment the entirety of the
profits that it derived from its relationship with Vedanta.
When evaluating the district court's unjust enrichment
award, we review the court's factual findings for clear error and
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its legal conclusions de novo. See SEC v. Sanchez-Diaz, 88 F.4th
81, 87 n.2 (1st Cir. 2023).
Catapult argues to us, but did not timely argue to the
district court, that the district court relied on an inapplicable
legal theory, the "head start" doctrine, to justify the award of
the entire Vedanta profits. The district court stated that it
found, "[c]onsistent with the jury's verdict" that Catapult had
misappropriated some of BioPoint's trade secrets, and that
Catapult's misappropriation of those trade secrets "gave [it] a
head start in developing a working relationship with Vedanta,
enabling it to obtain the MSP agreement," such that Catapult was
unjustly enriched to the extent that it profited from that
relationship. In its rulings of law, the court noted that "[o]ne
theory of unjust enrichment is a plaintiff's trade secret giving
a defendant a head start," and cited Alifax Holding Spa v. Alcor
Sci. Inc., No. 14-440, 2021 WL 3911258 (D.R.I. Sept. 1, 2021), for
the elements of that theory. The court then described in its
findings of fact1 how Catapult had obtained and used information
that Dickhaut and his fiancée Attis had misappropriated from
BioPoint in order to develop and maintain a working relationship
with Vedanta. Rejecting Catapult's argument that BioPoint could
1 The court also noted again that "[t]he court has
discretion whether to apply a jury's factual findings to a Chapter
93A claim or whether to ask the jury for a non-binding advisory
opinion with respect to the chapter 93A claim."
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not recover as unjust enrichment profits from placements that had
not been submitted to the jury, the court held that "[b]ut for the
misappropriation of BioPoint's trade secrets, there would have
been no ongoing relationship between Catapult and Vedanta" and
that "Catapult's entire relationship with Vedanta was enabled and
sustained with BioPoint information." That conclusion, the court
noted, was "further supported by the fact that Catapult did not
make any further placements at Vedanta after BioPoint terminated
Attis."
Catapult argues both that, in this Massachusetts case,
the court erred in relying on Rhode Island law, see BioPoint, Inc.,
2023 WL 3071422, at *6 (citing Alifax Holding Spa,2021 WL 3911258
,
at *1), and that under Massachusetts law the head start doctrine
is limited to certain manufactured product trade secret cases.
As the Massachusetts Supreme Judicial Court ("SJC") has
explained, the "'head start rule' has no application" in a case in
which the "trade secret . . . has never appeared in any marketed
product or otherwise lawfully been made publicly accessible." USM
Corp. v. Marson Fastener Corp., 392 Mass. 334, 354(1984) (citing Jet Spray Cooler, Inc. v. Crampton,377 Mass. 159
, 171 n.11 (1979)
("Generally, the 'head start rule' has been applied in cases where
the plaintiff's product, including the trade secret, has been
marketed.")). It is possible to read the SJC cases as establishing
that in product trade secret cases alleging unjust enrichment,
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such damages under the head start doctrine are limited to the time
that it would take to reverse engineer, or otherwise legitimately
discover, the secret in the public domain. The rationale for this
limitation is that "[t]he marketing of the product gives
competitors a legitimate opportunity to study the product and to
learn the principles of the trade secret through reverse
engineering or similar procedures." Jet Spray, 377 Mass. at 171
n.11.
Regardless, Catapult did not argue in a timely fashion
to the district court either of its two points. In its proposed
findings of fact and conclusions of law following the bench trial,
BioPoint argued:
Catapult's Vedanta profits [could] also be
disgorged based on an unfair "head start"
theory. []"Head start" damages refer to the
development and delay costs defendants avoid
through misappropriation that can be inferred
from the evidence presented. See Alifax
Holding Sp[a] v. Alcor Sci. Inc., 404 F. Supp.
3d 552, 577-78 (D.R.I. 2019) (explaining that
one year of profits attributable to the
defendant's unfair head start, gained through
its misappropriation, was a rational measure
of damages).
In Catapult's reply to BioPoint's proposed rulings, it did not
argue either of the two points it now asserts on appeal, noting
instead that "Autenreith's testimony . . . destroy[ed] BioPoint's
'head start' argument. . . . Catapult's 'head start' was
Dickhaut's relationship with Autenreith -- not BioPoint's alleged
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trade secrets."2 Catapult did not, then, make a legal argument
that the head start doctrine was not applicable, but argued,
rather, that it was contradicted by the evidence. The district
court then issued its findings of fact and rulings of law, in which
it cited the Alifax case and held that the Catapult's
misappropriation of trade secrets gave it a head start. In
Catapult's postjudgment motion, it briefly stated that the head
start rule did not apply to this case, but failed to cite any
authority for this statement, as BioPoint noted in its opposition
to that motion. Because Catapult "did not adequately
present . . . to the district court" the argument that
Massachusetts law limits the head start rule in unjust enrichment
cases to contexts involving manufactured products under Jet Spray
and USM, "[it] has waived" the argument. See Kelly v. Riverside
Partners, LLC, 964 F.3d 107, 117 (1st Cir. 2020).
The district court may well have extended Massachusetts
law as to unjust enrichment as set forth in Jet Spray and USM,
which federal courts usually may not do if a proper objection is
made and preserved. See CVS Pharmacy, Inc. v. Lavin, 951 F.3d 50,
58 (1st Cir. 2020) ("[A federal court] must 'take care not to
2 BioPoint did not argue to the district court the theory
asserted by the dissent that the jury's finding of no
misappropriation as to one of the Vedanta candidates precluded the
court from determining that there was a causal relationship between
Catapult's misappropriation of trade secrets and its profits from
the Vedanta relationship.
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extend state law beyond its well-marked boundaries in an
area . . . that is quintessentially the province of state
courts.'" (omission in original) (quoting Markham v. Fay, 74 F.3d
1347, 1356 (1st Cir. 1996))). We leave that issue for a case in
which it is properly raised.3
We turn to Catapult's other, not waived, attacks. Based
on the fact that, in its special verdict form, the jury found that
BioPoint had proven misappropriation of trade secrets concerning
only three out of the five candidates that BioPoint had chosen to
3 It is clear that it is not the law of Massachusetts that
a jury which has found misappropriation of a plaintiff's trade
secrets (but has rejected certain claims of misappropriation)
limits the court from making a full award of the defendant's unjust
enrichment and/or chapter 93A violations. Nor does it limit the
use of the head start doctrine against a defendant whose
misappropriation gave it a head start in a relevant new business
it would not otherwise have had. In Jet Spray, the SJC noted that
"[a]n award to a plaintiff of the defendant's net profits is made
primarily to ensure that the defendant is not unjustly enriched as
a result of his wrongful acts," such that "the plaintiff may
actually recover far more than its actual loss." 377 Mass. at
159, 182. The court next stated:
Here, the plaintiffs have been awarded the
entirety of the defendants' net corporate
profits from 1964 to 1975. This award is made
because it is impossible for the defendants to
segregate the portion of their profits which
is attributable to the misappropriated trade
secrets from the portion of their profits
which may be attributable to other factors.
Id. at 183; see also Governo L. Firm LLC v. Bergeron,166 N.E.3d 416
, 428 (2021) ("[O]bject of restitution in certain contexts is
to eliminate profit from wrongdoing[.]" (citing Restatement
(Third) of Restitution and Unjust Enrichment § 51 (2011))).
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submit to the jury (Candida Fratazzi, Steven Haworth, and Chris Da
Costa), Catapult argues there was no basis for the court to award
all of the Vedanta profits as unjust enrichment. Catapult argues
that the only damages that can be awarded as unjust enrichment are
those arising from life sciences placements as to which the jury
found that Catapult had misappropriated trade secrets.
This argument misunderstands the law, the procedural
history of this case, and the jury verdict. The district court
ruled, without objection, that "the scope of the jury trial w[ould]
be limited to issues regarding [the] placement" of Fratazzi,
consistent with its prior ruling sanctioning BioPoint for its
discovery violation. The court ruled further that "[t]he bulk of
the asserted damages (with the exception as to Ms. Fratazzi) [were]
those sounding in equity," and that those would "be
considered . . . at a subsequent bench proceeding, should the jury
return a finding of liability." The court explained accordingly
at a hearing before the jury trial took place that if the jury
returned a finding of liability as to Fratazzi, the court would
"sort out the rest" at a subsequent bench trial. The parties
assented. The jury did find trade-secrets misappropriation as to
Fratazzi, so Catapult cannot have been surprised that the district
court did exactly what it said that it would do by awarding
disgorgement damages that exceeded the lost profits arising from
the Fratazzi placement.
- 22 -
We repeat that the court correctly noted in its rulings
of law that "[t]he unjust enrichment 'attributable' to trade secret
misappropriation is distinct from the issue of whether a defendant
[mis]appropriated a trade secret." The jury had already determined
that Catapult was liable with respect to the placement of Fratazzi,
and the amount of gain (not including lost profits) that was
attributable to, or which arose on account of, Catapult's improper
conduct was for the court to decide as an equitable matter.4 The
court did not err in finding that but for Catapult's
misappropriation of BioPoint's trade secrets, it would not have
had a business relationship with Vedanta, such that all of the
Vedanta profits arose on account of Catapult's misappropriation
and thus were recoverable as unjust enrichment.5
In the special verdict form, the jury found, too, that
Catapult had misappropriated trade secrets concerning Vedanta,
separately from its finding of misappropriation concerning
Fratazzi and other candidates. In Catapult's filed objections to
4 Indeed, under MUTSA, damages for misappropriation "can
include both the actual loss caused by misappropriation and the
unjust enrichment caused by misappropriation that is not taken
into account in computing actual loss." Mass. Gen. Laws ch. 93,
§ 42B(a) (emphasis added); see also 18 U.S.C. § 8
1836(b)(3)(B)(i)(II) (similar language in DTSA).
5 The court's citation to a case under Rhode Island law
and its invocation of the head start doctrine may have been
inapposite, but this arguable error, if any, was at most harmless
error. The court's reasoning was sound and grounded in
Massachusetts unjust enrichment law and the text of MUTSA and DTSA.
- 23 -
the court's draft verdict slip, Catapult in fact agreed with the
court that the jury should be asked for a finding regarding
misappropriation as to Vedanta specifically, separately from its
findings regarding misappropriation as to individual candidates.6
By negative implication, Catapult admitted that the equitable
claim regarding Vedanta was not coextensive with the claim
regarding Fratazzi and the other candidates.7 And the jury
6 Catapult did request, by contrast, that the jury not be
asked whether Catapult had misappropriated trade secrets
concerning Moderna, because "[t]he equitable claim for Moderna is
the same as [the claim for] Chris Foley," whom the verdict slip
already included.
7 Indeed, "Massachusetts law provides two distinct
theories of recovery based on the improper use of confidential
information: misappropriation of trade secrets and unjust
enrichment." Mass. Eye & Ear Infirmary v. QLT Phototherapeutics,
Inc., 552 F.3d 47, 61(1st Cir. 2009) (citing Jet Spray Cooler, Inc. v. Crampton,361 Mass. 385, 282
(1972) and USM Corp. v. Marson Fastener Corp.,379 Mass. 90, 393
(1979)). "Thus, the entry of judgment with respect to [a] trade secrets claim d[oes] not legally compel the same result with respect to [an] unjust enrichment claim."Id.
The case Specialized Technology Resources, Inc. v. JPS
Elastomerics Corp., 80 Mass. App. Ct. 841(2011), is also relevant to the issue of separate jury and judge findings in trade secret cases. There, the plaintiff had asserted a claim for misappropriation of trade secrets under the common law and a claim under chapter 93A.Id. at 842
. The jury found in favor of the defendants on the common-law misappropriation claim, but the judge, in a subsequent bench trial, disagreed with the jury and found the defendants liable for misappropriating trade secrets, awarding damages under chapter 93A.Id.
The Massachusetts Appeals Court affirmed, holding, in
accordance with prior caselaw, that "a judge who has reserved a c.
93A claim is [not] bound by [the] jury's factual findings[.]" Id.
at 846. The court also affirmed the award of disgorgement of profits under chapter 93A.Id. at 850
. Citing Jet Spray and the
- 24 -
subsequently found that Catapult had misappropriated trade secrets
concerning Vedanta, separately from its finding that Catapult had
misappropriated trade secrets concerning three individual
candidates. The district court appropriately relied on this jury
finding, which should not be read as redundant, in disgorging the
Vedanta profits.
We do agree with Catapult, however, that "[t]he
disgorged profits from the placement of Dr. Fratazzi" are
"duplicative of BioPoint's lost profits claim." Under the
governing law, BioPoint may not recover both the lost profits
associated with Fratazzi and the unjust enrichment that accrued to
Catapult as a result of her placement. See 18 U.S.C.
§ 1836(b)(3)(B)(i) (providing for "damages for actual loss caused by the misappropriation of the trade secret; and . . . damages for Restatement (Third) of Unfair Competition, the court noted that the plaintiff was "entitled to the profit he would have made had his secret not been unlawfully used, but not less than the monetary gain which the defendant reaped from his improper acts."Id.
Rejecting the defendants' argument that the plaintiff had not established "the requisite monetary harm," the court found that "the precise scope of [plaintiff's] monetary loss [was] difficult to quantify," and, "[h]aving satisfied the requirement that it demonstrate some monetary loss, the use of disgorgement of profits to compensate [plaintiff] for the defendants' misuse of the trade secret was entirely appropriate."Id.
(citing Jet Spray,377 Mass. at 170-71
).
This case shows that the court, when considering a chapter
93A claim, may adopt factual findings that contradict the jury's
prior findings with respect to trade secrets misappropriation, and
the court may award disgorgement for trade-secret misappropriation
under chapter 93A.
- 25 -
any unjust enrichment caused by the misappropriation of the trade
secret that is not addressed in computing damages for actual
loss"); Mass. Gen. Laws ch. 93, § 42(B)(a) ("Damages can include
both actual loss caused by misappropriation and the unjust
enrichment caused by misappropriation that is not taken into
account computing actual loss."); Jet Spray, 377 Mass. at 170 ("Of
course, a plaintiff is not entitled to both the profits made by
the defendant and his own lost profits."). The district court
awarded $52,356 as disgorged profits for the placement of Fratazzi,
and then trebled that sum, for a total of $157,068. Because this
constituted clear error, the unjust enrichment award must be
reduced by that amount.
B. Dickhaut's joint and several liability
Catapult further contends that the district court
improperly disgorged Dickhaut of unreceived profits when it held
him jointly and severally liable for the unjust enrichment award.
We agree that holding an individual like Dickhaut jointly and
severally liable for the entirety of his employer's unjust
enrichment is a bridge too far.
After the district court awarded damages "jointly
against both Dickhaut and Catapult," the defendants asked the court
to "specify that the unjust enrichment award [was] against Catapult
only." Citing Liu v. SEC, the defendants argued that Dickhaut
could not be disgorged of profits he never received. 591 U.S. 71
- 26 -
(2020). The district court disagreed, maintaining Dickhaut's
joint-and-several liability because he "collaborated with and
ranks high in the firm." According to the court, Liu "did not
address situations in which multiple parties engage in concerted
wrongdoing" and so provided no obstacle to imposing joint-and-
several liability on Dickhaut.
We read Liu differently. Liu explicitly recognized
that -- notwithstanding the general rule against joint-and-several
liability for profits that have accrued to another, see id.at 82-83 (citing Belknap v. Schild,161 U.S. 10
, 25–26 (1896); Keystone Mfg. Co. v. Adams,151 U.S. 139, 148
(1894); Jennings v. Carson,4 Cranch 2, 21
(1807)) -- the common law permitted "some flexibility to impose collective liability" in equity, specifically on "partners engaged in concerted wrongdoing,"id.
at 90-91 (citing Ambler v. Whipple,87 U.S. 546, 559
(1874)). Though
the Liu Court admittedly declined to "wade into all the
circumstances" in which the concerted-wrongdoing exception might
apply, it pointed to several factors that might render joint-and-
several liability inappropriate. Id. at 91. These circumstances
included where the defendants' "finances were not commingled,"
where "one [defendant] did not enjoy the fruits of the scheme,"
where "one [defendant] was a mere passive recipient of profits,"
and where "other circumstances would render a joint-and-several
disgorgement order unjust." Id. In addition to these guideposts,
- 27 -
the Liu Court clarified the structure of the analysis: lower courts
must determine, based on the facts of each case, whether joint-
and-several liability would be consistent with traditional
equitable principles at common law. Id.
Here, BioPoint does not dispute that the profits
attributable to trade-secret misappropriation accrued to Catapult
and not to Dickhaut. Thus, the district court should have analyzed
whether -- given factors like Dickhaut's relationship to Catapult,
his role in the scheme, his enjoyment (or lack thereof) of the
profits, and his status as an individual -- joint-and-several
liability would be consistent with traditional equitable
principles at common law. The district court did not conduct this
inquiry.8 Examining the issue ourselves, we conclude that imposing
joint-and-several liability on Dickhaut is inconsistent with
traditional equitable principles.
We begin with Liu itself. Multiple red flags identified
in Liu are present here. BioPoint does not allege, and there is
no reason to believe, that Catapult and Dickhaut commingled
8 To support its position that "parties can be held joint-
and-severally liable where the individual 'collaborated with and
ranks high in the firm,'" the district court cited only an
unpublished, out-of-circuit, district-court case, SEC v. Bahgat,
17-CV-9721, 2023 WL 3491733(W.D.N.Y. May 17, 2023). Bahgat itself did not contend with Liu; it did not conduct an analysis of equitable powers at common law; and it involved, in stark contrast to Catapult and Dickhaut, a "managing member,"id. at *2
, and "a company that [he] owned," Complaint at 2, Bahgat,2023 WL 3491733
(No. 17-CV-971).
- 28 -
finances. And other than through his salary and commissions,
evidence of which the district court excluded from trial, Dickhaut
did not receive any profits or otherwise enjoy the fruits of the
scheme.
Massachusetts state courts have rejected joint-and-
several liability in similar circumstances before. In USM Corp.,
the SJC vacated the imposition of joint-and-several liability on
an employee who had misappropriated trade secrets because the
employee had "not been unjustly enriched by the use of [the] trade
secret." 392 Mass. at 340. The SJC compared the USM defendant to the "stockholders, officers[,] and directors" in Jet Spray Cooler,361 Mass. at 844
, who had reaped "the benefits of [trade] secrets" and for whom joint-and-several liability had been appropriate.Id.
(quoting Jet Spray Cooler,361 Mass. at 844
). The control
Dickhaut exercised over Catapult and the benefits he received are
more similar to USM than to Jet Spray Cooler. Dickhaut, a regional
manager for a national company, exercised far less control over
his entity co-defendant than did the stockholder-officer-director
defendants in Jet Spray Cooler. And, as in USM, the district court
did not address whether Dickhaut benefited from the illegal scheme
and, if so, to what extent.
No other circuit has applied Liu's concerted-wrongdoing
exception to a non-owner employee as minor as Dickhaut. In SEC v.
Johnson, the Fourth Circuit allowed the imposition of
- 29 -
joint-and-several liability on an entity and an individual who was
the entity's control person and owner. 43 F.4th 382, 389-93(4th Cir. 2022). In SEC v. World Tree Financial, LLC, the Fifth Circuit allowed joint-and-several liability on an entity and an individual who was the entity's 60% owner and CEO.43 F.4th 448, 448
, 467 n.15 (5th Cir. 2022). In Integrity Advance, LLC v. CFPB, the Tenth Circuit allowed joint-and-several liability on an entity and an individual who was the entity's sole employee, founder, president, CEO, and majority shareholder.48 F.4th 1161, 1165
, 1177 n.21 (10th Cir. 2022); see Petitioner's Reply Brief at 13-14, Integrity Advance,48 F.4th 1161
(No. 21-9521); see also SEC v. Camarco, No. 19-1486,2021 WL 5985058
, at *18 (10th Cir. Dec. 16, 2021)
(rejecting joint-and-several liability where non-profiting
defendant merely "indirectly benefited" from profiting defendant's
wrongdoing). Each of these defendants was more closely related to
and exerted more control over the profiting entity than did
Dickhaut.
We need not and cannot define all the facts and
relationships that would render defendants "partners engaged in
concerted wrongdoing" such that joint-and-several liability would
be appropriate. It is sufficient, for today, to decide that the
district court exceeded its equitable powers when it imposed
joint-and-several liability on an individual, non-owner,
non-director employee, without concluding whether or how much the
- 30 -
employee benefited from the scheme, merely because the employee
"collaborated with and ranks high" in the entity that profited
from the wrongdoing. Given this conclusion, Dickhaut cannot be
held severally liable for the entirety of Catapult's unjust
enrichment. Due to the state of the record, it is difficult from
our vantage to calculate the amount by which Dickhaut was unjustly
enriched through his earnings. On remand, however, it ought to be
a simple matter for the parties to agree on these earnings. If
not, the district court will need to conduct further proceedings.
C. Catapult's other arguments
We address and reject Catapult's remaining arguments.
First, Catapult argues that the district court should
have granted its motion for a new trial under Rule 59(a) because
of alleged errors in the jury's special verdict form. We review
for abuse of discretion the district court's denial of such a
motion, which should be granted "only 'if the verdict is against
the law, against the weight of the credible evidence, or tantamount
to a miscarriage of justice.'" Sánchez v. Foley, 972 F.3d 1, 16(1st Cir. 2020) (quoting Thomas & Betts Corp. v. New Albertson's, Inc.,915 F.3d 36, 60
(1st Cir. 2019)). Legal error does not warrant a new trial if it is harmless (or not prejudicial) to the moving party. See, e.g., Granfield v. CSX Transp., Inc.,597 F.3d 474, 488
(1st Cir. 2010) ("We have sent cases back for a new trial
when we have found the trial court abused its discretion in not
- 31 -
granting a new trial where it had admitted irrelevant and highly
prejudicial damages evidence which tainted the award."); Dall v.
Coffin, 970 F.2d 964, 969 (1st Cir. 1992) ("[W]e have held that a
party seeking a new trial based on nondisclosure by a juror must
'demonstrate actual prejudice or bias.'" (quoting United States v.
Aponte-Suarez, 905 F.2d 483, 492 (1st Cir. 1990))).
Catapult argues that the district court abused its
discretion by issuing a special verdict form that did not require
the jury to (1) "make specific findings regarding the trade secrets
that were allegedly misappropriated," or (2) to determine that
Catapult had actually used the trade secrets that it
misappropriated.
"The questions in a special verdict form must be
'reasonably capable of an interpretation that would allow the jury
to address all factual issues essential to judgment.'" Johnson v.
Teamsters Loc. 559, 102 F.3d 21, 28(1st Cir. 1996) (quoting United States v. Real Property Located at 20832 Big Rock Dr.,51 F.3d 1402, 1408
(9th Cir. 1995)). "[T]he court's instructions to the jury" and "the special verdict form are examined as a whole to determine if they fairly presented the issues to the jury."Id.
We hold that there was no error in the special verdict
form, because, read in context with the jury instructions, it
enabled the jury to determine all the relevant factual issues.
The court provided the definition of a trade secret and instructed
- 32 -
the jury that BioPoint, in order to prevail, had to show by a
preponderance of the evidence that its "asserted information
constituted confidential trade secrets" and that "Catapult [had]
misappropriated and used this trade secret information [w]ithout
BioPoint's permission." Neither party objected to those
instructions. The jury then indicated in the special verdict form
that Catapult had "misappropriated BioPoint's trade secrets
concerning" certain "individuals/entities," including Fratazzi,
whom Catapult had placed at Vedanta. Considered with the jury
instructions, the verdict form adequately presented the issues to
the jury.
Second, Catapult argues that the district court erred by
imposing exemplary damages pursuant to chapter 93A because, as
Catapult argues, MUTSA supersedes and prevents the award of damages
under chapter 93A in this case. Section 42F(a) of MUTSA provides
that MUTSA "supersede[s] any conflicting laws of the commonwealth
providing civil remedies for the misappropriation of a trade
secret." Mass. Gen. Laws ch. 93, § 42F(a). In contrast to chapter
93A, MUTSA requires a finding of maliciousness to award exemplary
damages for trade secret misappropriation and, even then, permits
only double, not treble, damages. Mass. Gen. Laws ch. 93, § 42B;
see Mass. Gen. Laws ch. 93A, § 11.
We will assume arguendo in Catapult's favor that
BioPoint's MUTSA claim is not barred by MUTSA's retroactivity
- 33 -
clause.9 We find, in any case, that Catapult did not preserve this
argument at the district court. Catapult raised this argument for
the first time in its postjudgment motion, and the district court
ruled, correctly, that Catapult had forfeited the argument by
failing to raise it earlier. Catapult did argue during the bench
trial that a finding of maliciousness was required for an award of
exemplary damages under MUTSA, but it did not timely argue the
separate issue of whether MUTSA would supersede chapter 93A in
this case. "[L]egal arguments are preserved only when 'raised
squarely' in the district court," United States v. Lindsey, 3 F.4th
32, 41(1st Cir. 2021) (quoting United States v. Peake,874 F.3d 65, 72
(1st Cir. 2017)), which Catapult did not do.
Because the argument was not preserved, we review it for
plain error. See Triantos v. Guaetta & Benson, LLC, 91 F.4th 556,
563(1st Cir. 2024). To prevail under this standard, Catapult must show that "(1) an error was committed; (2) the error was 'plain' (i.e. obvious and clear under current law); (3) the error was prejudicial (i.e. affected substantial rights); and (4) review is needed to prevent a miscarriage of justice." Dimanche v. Mass. Bay Transp. Auth.,893 F.3d 1, 10
(1st Cir. 2018) (quoting Smith v. Kmart Corp.,177 F.3d 19, 26
(1st Cir. 1999)). We need not
9 For that reason, we do not need to resolve the question
of whether judicial estoppel plays any role in this case.
- 34 -
conclusively resolve each prong of the test to reject Catapult's
plain-error argument. See id. at 12 (bypassing the final prong).
Here, we find that Catapult's argument fails under the
second prong because, if there was any error, it was not plain.
As Catapult notes, "no appellate court ha[s] provided guidance on
the issue" of "[w]hether MUTSA super[s]edes Chapter 93A[.]"
Because there was no precedent to guide resolution of this issue,
there was no plain error. See United States v. Olano, 507 U.S.
725, 734 (1993) ("At a minimum, court of appeals cannot correct an
error pursuant to Rule 52(b) unless the error is clear under
current law.").
III.
For the reasons stated, we reject Catapult's requests
for a new trial, to remit the exemplary damages award, and to remit
the jury's lost profits award, but reduce the damages award by
$157,068, and reverse the district court's decision to hold
Dickhaut jointly and severally liable and remand for further
proceedings. No costs are awarded.
-Dissenting Opinion Follows-
- 35 -
RIKELMAN, Circuit Judge, dissenting in part. I
respectfully dissent from part II.A of the majority opinion. In
my view, the district court's unjust enrichment award went far
beyond the jury's verdict on the extent of Catapult's liability
for using BioPoint's trade secrets. And because the trade secret
statutes allow a plaintiff to recover only unjust enrichment
"caused by" a defendant's misappropriation, the court erred as a
matter of law in awarding the entirety of Catapult's Vedanta
profits to BioPoint. Thus, I would vacate and remand for a
recalculation of the unjust enrichment award before any trebling
under chapter 93A.
I part ways with the majority opinion on this critical
issue because I have a different view of the record and the legal
questions resolved by the district court. To explain this
disagreement, I recount what the record demonstrates about the key
twists and turns of this case.
I. BACKGROUND
BioPoint sued Catapult in January 2020, six weeks after
it terminated Leah Attis. It brought four claims against Catapult:
two statutory trade secret misappropriation claims under MUTSA and
DTSA, a tortious interference claim under Massachusetts common
law, and a chapter 93A claim.
As the case proceeded, the parties disagreed heatedly on
the scope of discovery. BioPoint sought information about every
- 36 -
life-sciences consultant and client with whom Catapult had worked
since March 1, 2017; Catapult objected that this request was far
too broad. In the course of this dispute, Catapult disclosed that
it had directly placed at least twenty life-sciences consultants
at Vedanta.
Eventually, the district court had to intervene to
resolve the parties' discovery disputes. It ruled that Catapult
had to provide BioPoint with a list of around forty-five
life-sciences consultants placed by Catapult across five clients
so that BioPoint could cross-reference this list against the
consultants in its own confidential, internal database. Under the
district court's ruling, BioPoint could then obtain further
discovery only about the consultants or clients who appeared both
on Catapult's list and in BioPoint's database. By comparing
Catapult's list to its database, BioPoint identified twelve
overlapping life-sciences consultants, nine of whom Catapult had
placed at Vedanta. The parties then completed their discovery
process.
After discovery ended, the parties discussed with the
district court the scope of the jury and bench trials. Eventually,
the court ruled that BioPoint's trade secret and tortious
interference claims would be presented at the jury trial, and thus
Catapult's liability on those claims would be decided by the jury.
- 37 -
At the jury trial, BioPoint pursued its trade secret
claim based on Catapult's work with just five life-sciences
consultants (Chris Foley, Candida Fratazzi, Chris Da Costa,
Stephen Haworth, and Jordan Pothier) and three companies (Moderna,
Vedanta, and Shire/Takeda). The jury found trade secret
misappropriation as to only three of these five consultants -- the
individuals Catapult placed into Vedanta's medical director role.
The jury expressly rejected the claim that Catapult had
misappropriated BioPoint's trade secrets when Catapult placed
Pothier as a research associate at Vedanta, the only other Vedanta
consultant BioPoint put to the jury. (It also rejected BioPoint's
claim that Catapult had tortiously interfered with BioPoint's
relationship with Vedanta.) Thus, the jury found trade secret
misappropriation for only a fraction of the life-sciences
consultants Catapult placed at Vedanta.
The jury also rejected BioPoint's trade secret claim for
Foley, Catapult's first ever life-sciences placement, even though
BioPoint had argued strenuously that Foley had "launched"
Catapult's life-sciences business. Foley was the Moderna
consultant "payrolled" by Catapult, and he was placed at Moderna
while Jeff Autenrieth still worked there. On the special verdict
form, the jury found that Catapult had not misappropriated any of
BioPoint's trade secrets concerning Foley or Moderna. Thus,
although the majority opinion suggests that Catapult used
- 38 -
BioPoint's trade secrets to place Foley and several other unnamed
life-sciences consultants, the jury made no such findings.
Importantly, there was also no liability finding by the
jury on Catapult's first life-sciences placement at Vedanta in
March 2018. The Vedanta placements for which the jury did find
trade secret liability, the three consultants Catapult placed into
the medical director role, did not begin until May 2019, more than
a year later. In sum, the jury found liability for only a fraction
of the consultants Catapult placed at Vedanta, and those placements
occurred long after Catapult began its relationship with Vedanta,
fourteen months later to be precise.10
After the jury trial, the district court again reviewed
with the parties the scope of the coming bench trial. According
to the court, the bench trial would focus on the disgorgement
damages, meaning the unjust enrichment award, and the chapter 93A
claim. The court said: "The issue of disgorgement damage[s] [was]
not presented to the jury, and [thus] the court will hear evidence
of causation to the extent not presented at the jury trial (that
is, whether the profits sought [to be] disgorged are attributable
10 The majority opinion also discusses that Catapult did
not place any more consultants at Vedanta after BioPoint terminated
Attis. It is important to put this fact in context. Vedanta
functionally ended its relationship with Catapult about two months
after BioPoint sued Catapult in late January 2020, which was just
one month after BioPoint terminated Attis in December 2019.
Vedanta featured in BioPoint's lawsuit against Catapult; indeed,
Vedanta was named twenty-two times in BioPoint's complaint.
- 39 -
to the use of the misappropriated trade secret[s])." (Emphasis
added.) The court indicated that it would determine the amount to
disgorge without "disturb[ing] the jury's verdict that [Catapult]
misappropriated trade secrets relating to certain
consultants/client[s]."
With the district court's directive about the bench
trial in mind, BioPoint argued that MUTSA and DTSA provided the
statutory authority to disgorge all of Catapult's Vedanta profits.
As BioPoint said, citing the statutes, "a court may award 'damages
for any unjust enrichment caused by the misappropriation of the
trade secret that is not addressed in computing damages for actual
loss.'" (Quoting 18 U.S.C. § 1836(b)(3)(B)(i)(II).)
Catapult disagreed that BioPoint was entitled to all the
Vedanta profits. It argued that the district court could not award
the full Vedanta profits "as a matter of law" because doing so
would "disgorge Catapult's profits for the placement of a
consultant for which the jury found no liability," Pothier. More
generally, Catapult contended that BioPoint was not legally
entitled to its profits for placing Vedanta consultants "for whom
BioPoint has not even claimed trade secret misappropriation" and
"for which there was no finding of liability," because BioPoint
had failed to prove that these profits were "caused by
misappropriation of BioPoint's trade secrets."
- 40 -
During the bench trial, BioPoint tried to enforce the
district court's ruling that it would not disturb the jury's
liability verdict. When Catapult sought to offer testimony or
argument that was arguably inconsistent with the jury's verdict,
BioPoint objected. In response, the court agreed with BioPoint
that "[t]he jury did [already] determine" the misappropriation
issue. And BioPoint made a similar point in its briefing after
the bench trial, arguing that the court had decided that "the jury
verdict [would] provide[] the full set of facts for c. 93A
liability."
After the bench trial, the district court issued its
ruling on the unjust enrichment award and Catapult's chapter 93A
liability. In its decision, the court evaluated the unjust
enrichment issue first, as an entirely separate issue from
Catapult's chapter 93A liability. In addressing unjust
enrichment, the court reiterated that "Catapult's use of
BioPoint's trade secrets ha[d] already been determined by the
jury." The court's only task, in its own words, was to determine
whether Catapult's Vedanta profits were "attributable to the use"
of those trade secrets. The court ultimately determined that all
the Vedanta profits fell into this category by relying on
BioPoint's argument about the "head start" theory, including a
case cited by BioPoint that discussed this theory and was decided
under the Rhode Island trade secret statute. See BioPoint, Inc.
- 41 -
v. Dickhaut, No. 20-10118-RGS, 2023 WL 3071422, at *6 (D. Mass. Apr. 25, 2023) (citing Alifax Holding Spa v. Alcor Sci. Inc., C.A. No. WES 14-440,2021 WL 3911258
, at *1 (D.R.I. Sept. 1, 2021)).
The district court also ruled that Catapult had violated
chapter 93A, which prohibits unfair or deceptive acts. The court
explained that, under Massachusetts law, "[a] finding of trade
secret misappropriation is . . . sufficient to establish an unfair
or deceptive act under Chapter 93A." Thus, the court concluded
that "the jury's verdict amply support[ed] a determination that
Catapult violated Chapter 93A and . . . no further findings of
fact on this issue [were] required." Id. at *7-8(emphasis added). To determine whether BioPoint was entitled to exemplary damages under chapter 93A, the court then evaluated whether Catapult's violations had been knowing and willful. Based on its conclusion that Catapult's conduct was knowing and willful, the court trebled the lost profits and unjust enrichment awards.Id. at *10
.
I reach three conclusions based on this record. First,
the jury explicitly found that Catapult did not use BioPoint's
trade secrets in all its work for Vedanta. To the contrary, the
jury verdict indicates that BioPoint's trade secrets played a role
in a fraction (substantially less than fifty percent) of Catapult's
life-sciences placements at Vedanta. Second, the district court
awarded BioPoint unjust enrichment damages under the trade secret
statutes, not chapter 93A. Third, the district court decided that
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it would base its chapter 93A liability ruling on the jury's
verdict. It expressly declined to treat the jury's verdict as
only advisory for chapter 93A purposes.
II. DISCUSSION
The district court's unjust enrichment award cannot be
squared with the governing law. Based on how the district court
structured the jury and bench trials, the court's unjust enrichment
award had to be consistent with the jury's liability verdict. And
it was not. The jury found liability for trade secret
misappropriation for only a fraction of the life-sciences
consultants that Catapult placed at Vedanta. And this finding
severs the legally necessary causal connection between Catapult's
misappropriation of BioPoint's trade secrets and all the Vedanta
profits.
A. The Scope of the Award
BioPoint sought Catapult's Vedanta profits as a measure
of the "actual damage[]" caused by Catapult's trade secret
misappropriation. BioPoint was expressly authorized to seek this
recovery under the trade secret statutes, which provide that
damages "can include both the actual loss caused by
misappropriation and the unjust enrichment caused by
misappropriation that is not taken into account in computing actual
loss." Mass. Gen. Laws ch. 93, § 42B(a); see also 18 U.S.C. §
1836(b)(3)(B)(i)(II) (similar language in DTSA).
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But to recover under the trade secret statutes, BioPoint
had to prove that Catapult's unjust enrichment was "caused by" its
misappropriation, see Mass. Gen. Laws ch. 93, § 42B(a), and
BioPoint failed to do that for all the Vedanta profits. At trial,
BioPoint failed to prove by a preponderance of the evidence that
Catapult had misappropriated trade secrets with respect to two of
the five consultants BioPoint put to the jury, including,
crucially, Pothier, a Vedanta placement. Thus, the jury absolved
Catapult of using BioPoint's trade secrets for some of the
life-sciences consultants it placed at Vedanta. That liability
finding contradicts the district court's conclusion that all of
Catapult's life-sciences placements at Vedanta, not to mention the
entirety of Catapult's Vedanta profits, were attributable to
Catapult's misappropriation of BioPoint's trade secrets.
To be sure, the jury also found that Catapult
misappropriated trade secrets "concerning Vedanta." And the
district court's task was to apply the jury's verdict. But viewing
the verdict as a whole, it is clear the jury did not intend to
hold Catapult liable for every consultant placed at Vedanta, given
that it found no liability for Pothier. Further, the jury's
liability finding on Vedanta follows necessarily from its finding
that Catapult misappropriated BioPoint's trade secrets when it
placed three consultants at Vedanta -- Fratazzi, Haworth, and Da
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Costa (the medical director placements).11 Indeed, in response to
a question from the jury about what misappropriating trade secrets
"concerning Vedanta" meant on the special verdict form, the
district court instructed the jury that the phrase meant simply
"relating to" the client. Thus, the jury's verdict did not
establish with any "degree of certainty" that the entirety of
Catapult's Vedanta profits were caused by Catapult's
misappropriation of BioPoint's trade secrets. See Restatement
(Third) of Unfair Competition § 45(2) (Am. L. Inst. 1995) (listing
factors courts should consider when determining "[w]hether an
award of monetary relief is appropriate" in a trade secret
misappropriation case).
To the contrary, BioPoint did not put the vast majority
of Catapult's life-sciences placements at Vedanta to the jury at
all. (Indeed, it put to the jury only four of the nine
"overlapping" Vedanta consultants identified through discovery.)
And BioPoint failed to meet its burden of proof on one of the few
life-sciences Vedanta placements that it did include in the trial.
11 The majority opinion concludes that, before the jury
trial, Catapult admitted by "negative implication" that the
Vedanta claim was not coextensive with the claims related to the
individual consultants placed at Vedanta. Even if this were true,
it would mean only that Catapult conceded that it could be liable
on the Vedanta claim for damages beyond those associated with
individual consultants. It would not mean that Catapult conceded
that it could be liable for damages relating to Vedanta consultants
for whom the jury found no liability.
- 45 -
Thus, the jury's verdict reflects a practical resolution: The jury
agreed with some of BioPoint's trade secret claims, but not all,
and found that some of Catapult's Vedanta profits, but not all,
were "caused by" Catapult's misappropriation of BioPoint's trade
secrets.
The district court reached a different conclusion by
relying on the "head start" theory discussed in a decision about
the Rhode Island trade secret statute. See Alifax Holding Spa,
2021 WL 3911258, at *1. The majority opinion concludes that
Catapult waived any legal argument about the application of this
theory in non-products-liability cases like this one. Still, even
assuming such a waiver, the head start theory cannot save the
unjust enrichment award for two reasons.
First, however one frames the head start theory, it
cannot overcome the explicit requirement in the trade secret
statutes of a causal connection between the misappropriation and
the extent of the unjust enrichment award. The parties may not
waive or stipulate away this statutory requirement, and, in any
event, Catapult repeatedly argued that all its Vedanta profits
were not "caused by" any misappropriation. See TI Fed. Credit
Union v. DelBonis, 72 F.3d 921, 928 (1st Cir. 1995) ("Issues of
law are the province of courts, not of parties to a lawsuit . . . .
Courts, accordingly, 'are not bound to accept as controlling[]
- 46 -
stipulations as to questions of law.'" (quoting Sanford's Est. v.
Comm'r, 308 U.S. 39, 51 (1939))).
Second, head start, in any iteration, cannot bridge the
causal gap between the jury's finding of liability for just three
Vedanta placements and the district court's award of all of
Catapult's Vedanta profits. Under Massachusetts law, for example,
the head start "rule" limits, rather than expands, the scope of
damages. As the Supreme Judicial Court of Massachusetts has
explained, the rule "limit[s] damages to that period of time in
which 'others in the trade are likely, through legitimate business
procedures, to have become aware of [the misappropriated trade]
secrets.'" Jet Spray Cooler, Inc. v. Crampton, 385 N.E.2d 1349,
1357 n.11 (Mass. 1979) (citation omitted). But the district court
did not use the head start rule in this way. In crafting the
unjust enrichment award, it never defined the time period of any
head start by Catapult; instead, it simply awarded the entirety of
Catapult's Vedanta profits.
Nor does the theory invoked by federal courts when
measuring the "benefit conferred" upon a trade secret defendant by
the value of the "head start" it obtained in its business through
misappropriation bridge the causal gap here. Epic Sys. Corp. v.
Tata Consultancy Servs. Ltd., 980 F.3d 1117, 1130 (7th Cir. 2020).
For example, a court might measure the value of the defendant's
head start by its total avoided research and development costs,
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see id.,or the profits obtained during the period that it would have taken the defendant to develop the product on its own, see Alifax Holding Spa v. Alcor Sci. Inc.,404 F. Supp. 3d 552
, 576-77 (D.R.I. 2019), aff'd in part, rev'd in part sub nom. Alifax Holding SpA v. Alcor Sci. LLC, No. 2022-1641,2024 WL 2932910
(Fed. Cir.
June 11, 2024). But the district court did not attempt to measure
the value of Catapult's head start by calculating its saved
expenses or its profits during a limited time period. To put it
differently, the court did not separate the discrete value of
Catapult's head start from any other benefit that accrued to
Catapult through its misappropriation. Thus, like the
Massachusetts rule, this version of head start does not provide
the necessary causal link between the jury's limited liability
verdict and the sweeping unjust enrichment award.
In sum, I recognize that there is no precise science to
calculating the unjust enrichment that accrued to a defendant
because of its trade secret misappropriation. Indeed, unjust
enrichment "can take several forms and cover a broad array of
activity." See Syntel Sterling Best Shores Mauritius Ltd. v. The
TriZetto Grp., Inc., 68 F.4th 792, 809 (2d Cir. 2023). But the
requirement of a causal connection remains, and the lack of that
connection here to the entirety of Catapult's Vedanta profits means
that the award exceeded the legal boundaries of the trade secret
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statutes.12 See, e.g., SEC v. First City Fin. Corp., Ltd., 890
F.2d 1215, 1231 (D.C. Cir. 1989) (explaining that disgorgement
must "be a reasonable approximation of profits causally connected
to the violation").
B. The Majority Opinion's View
At times, the majority opinion suggests that the
district court awarded disgorgement under chapter 93A, not under
the trade secret statutes, and thus the award simply reflects that
the district court found Catapult's liability under chapter 93A to
extend beyond its statutory trade secret liability.13 Based on my
review, the record does not support this conclusion for two
reasons.
First, the district court's ruling, especially when read
in light of the case's procedural history, orders disgorgement of
the Vedanta profits as a remedy for Catapult's statutory trade
12 I agree with the majority opinion that a court may
"make[] a full award of the defendant's unjust enrichment." But,
in my view, the award here was legally invalid because it included
profits that the jury concluded were not "unjustly" obtained by
Catapult because they were not "caused by" Catapult's trade secret
misappropriation.
13 The majority opinion also briefly suggests the presence
of a free-standing, common-law equitable unjust enrichment claim
against Catapult, based on Catapult's misappropriation of
BioPoint's confidential information. Cf. Mass. Eye and Ear
Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 56 (1st
Cir. 2009). But there was no free-standing unjust enrichment claim
in the complaint. Instead, as BioPoint argued, unjust enrichment
is a measure of damages under the trade secret statutes.
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secret violations.14 And, as I explained above, the scope of the
district court's remedy cannot be squared with the damages
provisions of those statutes.
Second, even if the district court had awarded unjust
enrichment as a remedy for BioPoint's chapter 93A claim, the award
would still be legally invalid as inconsistent with the jury's
verdict. I agree with the majority opinion that, under
Massachusetts law, the court could have decided to treat the jury's
verdict on a related claim as merely advisory for chapter 93A
purposes. See Specialized Tech. Res., Inc. v. JPS Elastomerics
Corp., 957 N.E.2d 1116, 1120 (Mass. App. Ct. 2011). In my view,
however, that's just not what happened here.
The district court treated Catapult's chapter 93A
liability as derivative of BioPoint's claims that went to the jury.
As the court noted in its decision following the bench trial, "[a]
finding of trade secret misappropriation is . . . sufficient to
establish an unfair or deceptive act under Chapter 93A." BioPoint,
14 That chapter 93A, unlike MUTSA or DTSA, does not
expressly authorize unjust enrichment as a measure of damages
supports my view. The statute provides that "[a] person may assert
a claim under [chapter 93A] . . . for money damages only." Mass.
Gen. Laws ch. 93A, § 11. Such "damages may include double or
treble damages" and "attorneys' fees or costs," but chapter 93A
does not refer to unjust enrichment, unlike MUTSA and DTSA. And
the SJC has never addressed whether chapter 93A authorizes
disgorgement. See Atlantic Rsch. Mkt'g Sys., Inc. v. Troy, No.
07-11576-PBS, 2010 WL 1904849, at *6 (D. Mass. May 11, 2010)
(declining to award disgorgement damages under chapter 93A
"[g]iven the statute's focus on actual monetary loss").
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2023 WL 3071422, at *7. And although the court recognized that it "ha[d] discretion whether to apply [the] jury's factual findings to [the] Chapter 93A claim," it elected not to stray from the jury's verdict.Id.
Instead, the court concluded that "the jury's verdict amply support[ed] a determination that Catapult violated Chapter 93A and . . . no further findings of fact on this issue [were] required."Id. at *8
(emphasis added). Thus, in my view,
the district court ruled that Catapult's chapter 93A liability
would be coextensive with its trade secret liability, as found by
the jury, and that is how the parties litigated the case.15
So, regardless of whether the district court awarded the
Vedanta profits under the trade secret statutes or chapter 93A,
its unjust enrichment remedy had to square with the jury's
liability findings. And, for the reasons I explained, it does
not. Thus, I respectfully dissent from part II.A of the majority
opinion.
15 As BioPoint argued vigorously after the bench trial,
"[p]er the Court's many earlier rulings, and its authority to treat
the verdict as definitive, the jury verdict provided the full set
of facts for c.93A liability."
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