It’s no secret that restrictive covenant and trade secrets claims are sometimes used as leverage in business disputes. However, the recent case of Sean Morrison Entertainment v. Thompson, et al. (pending in Chicago federal court as Case No. 11-cv-2462) serves as a reminder that the need for leverage does not obviate the need for a good faith basis for any claim that is filed.

Apparently, the dispute in that case began when a TV production company called Sean Morrison Entertainment (“SME”) hired a number of mixed martial arts fighters to participate in a reality TV show. After the show was filmed, the fighters sued SME in Wisconsin claiming that they had not been paid for their work. SME responded by filing a separate suit in Chicago federal court against both the fighters and the lawyers that represented them in the Wisconsin case, accusing them of stealing SME’s trade secrets.

The fighters recently filed a motion asking the Chicago federal court to sanction SME under Rule 11 for filing frivolous claims in a jurisdiction with no connection to the dispute. The Motion argued that SME’s claims made no sense because “[t]he defendants are all professional MMA fighters; they are not owners or producers of reality based shows … Thus, defendants would have neither any reason, nor would they realize any benefit [from using] this … show in their business as professional fighters.” Additionally, the Motion argued that – irrespective of the bases of the underlying claims – the Court has no jurisdiction over this case because the defendants have zero connection to the state of Illinois: “Any competent first year law student who has taken Civil Procedure would be familiar with the case of International Shoe v. Washington … which mandates that … a defendant must have sufficient minimum contacts with a forum state to justify the imposition of personal jurisdiction against him. Either plaintiff’s counsel lacks the knowledge of a first-year law student, or more likely, its Illinois attorney chose to ignore the law and decided to file in Illinois anyways, because as an Illinois based LLC, this jurisdiction would be most convenient for plaintiff and its attorney. In either event, plaintiff’s counsel certainly made no effort to ascertain whether there was any legitimate basis to sustain personal jurisdiction here, and should be sanctioned accordingly.”

No one wants to be the recipient of a Rule 11 letter or motion. As a result, this case serves as a cautionary tale. Even in situations involving restrictive covenants or trade secrets where emotions often run high, lawyers and companies must critically evaluate the bases for their claims so that they can justify those claims to the Court.


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