Defense of $8.0 Million Claim for Theft of Trade Secrets; Employee Disloyalty; Breach of Non-solicitation Agreement; Aiding and Abetting
Our client, a very large truck parts supply company, hired the top two managers of plaintiff’s North Dakota branch, with employment to start after a new branch office was built out by client. After waiting in place for three and one-half months, the managers resigned without notice and immediately began recruiting plaintiff’s employees – and were successful in getting 55% of the work force to join our client. The managers and all employees were “at will,” but one of the managers had a non-solicitation agreement and the new employees brought customer lists with them. Plaintiff contended that the employee “lift out” irreparably destroyed their North Dakota business. After a three-week jury trial in North Dakota federal court, the jury returned a defense verdict on all counts.
Ponzi Auditor Exonerated
In re Kelley (Bankr. D. Minn. 2015; File No. 12-0X008) – After the collapse of a massive Ponzi scheme, the bankruptcy trustee said an auditor of one of the special purpose entities used to conduct the fraud had negligently failed to detect the fraud, causing damages of $116,000,000. After a two-week trial, the arbitration panel rejected the claim and awarded a total defense victory to the CPA firm.
High Damage Lawsuit Defeated
Bank v. CPA Firm, 2010 MT 291 – A CPA firm was sued when several years of audits did not uncover a massive lapping scheme involving a revolving line of credit from a bank. The accounting firm faced claims for the thefts and massive consequential damages from the shareholders of the audit client, the audit client, the lender, and the holding company that acquired the lender. We quickly negotiated a resolution with the audit client’s shareholders in return for the audit client's dropping its claim. We then won a jury verdict against the bank and sustained a dismissal of the holding company’s claim in a ruling by the state supreme court.
Bottom line: The CPA firm incurred costs and settlements that were a small fraction of the total exposure.
Auditor to Non-profit Resolves Claims, Keeps Client
The auditors of a non-profit organization did not detect a scheme to skim cash from the proceeds of the charity’s annual fundraiser. Our representation included a private investigation and negotiations with the board to rebate the audit fee.
Bottom line: The CPA firm’s audit relationship continued, and so did the highly visible, local charity.
RICO Charges by Heiress against CPA Dismissed
When the disgruntled heir of a family fortune wanted a “deep pocket” to pay her claim that another heir had stolen from the decedent, she sued the decedent’s CPAs for treble damages and her attorneys' fees under the Racketeer Influenced Corrupt Organization Act. We argued that the allegations of fraud and common enterprise lacked credibility.
Bottom line: Federal court dismissed the claim.
Litigation Prevention during CPA-Driven Deal
Two clients of a public accounting firm entered into negotiations for one to purchase the other – and each wanted the CPAs to stay in the deal. Moss & Barnett designed a comprehensive waiver of any claims for lack of independence or conflict of interest, plus provisions releasing all prospective claims and indemnifying the accountants in the event of later litigation.
Bottom line: Our client CPA proceeded in full accord with the AICPA Code of Conduct and with complete protection against future liability exposure.
Settling a Former Shareholder’s Claims
The majority owner of a successful company was sued by a former minority shareholder she had previously bought out. The plaintiff alleged that his rights as a minority shareholder were violated before he sold his stock. In a case of first impression, the plaintiff claimed that he had been illegally terminated from his employment and was entitled to lost salary. He also claimed emotional distress damages for having been forced off the board of directors, and he argued that his stock sale did not preclude either claim.
Our team of trial attorneys first persuaded the court to dismiss the employment claim, and then resolved the rest of the claim successfully. Decisive developments in the case included locating the plaintiff’s pertinent medical records and forcing the production of his personal diary, which revealed multiple sources of distress beyond his employment termination.
Swift Action Protects Brand, Shuts Down IP Infringement
When the brand name of a highly successful food product was misappropriated to sell an energy drink to young men as a faux illegal drug, our litigation attorneys and trademark team combined forces, obtained an immediate temporary restraining order, and quickly issued a preliminary injunction in federal court. The result was the entire removal of the infringing product from shelves within days, which sent a loud message that ensured the integrity of our client’s brand and products.
Medicare Reimbursement Lawsuit Dismissed for No Payment
After a hospital chain was sold to another operator, several of the sold hospitals were hit with millions of dollars in Medicare cost assessments. The buyer and the seller “tag teamed” a lawsuit, in an effort to squeeze the CPA firm of the sold chain into paying the assessments on the grounds that financial statement audits had been inadequately reserved for the risk of subsequent assessment, and had failed to properly disclose the risk in footnotes. Moss & Barnett’s defense team used creative discovery to demonstrate that the parties specifically bargained for the risk of a future Medicare assessment in their purchase price, and aggressive case management techniques (including an appearance at a mediation and refusing to offer any payment for settlement) – and the use of an engagement letter indemnity clause to force the dismissal of the lawsuit without any payment.
Bottom line: The lawsuit was dismissed without any payment.
Shut Down Trader’s Claim of Accountants’ Audit Failure
Broker Dealer v. CPA, 611 N.W.2d 372 (Minn. Ct. App.) – Successfully defended multi-million dollar failed audit claim arising out of alleged international money laundering and stock market manipulation trading scheme by clarifying the scope of the accountant's priority defense in Minnesota.
$10-million Claim against CPA Dismissed
Client v. CPA, 105 F. Supp. 2d 1045 (D. Minn.) – Obtained dismissal of $10-million accounting malpractice case for failure to comply with expert disclosure requirement of Minn. Stat. § 544.42.
Defeat Investors’ Accounting Negligence Claims
Investor v. CPA, 520 F. Supp. 128 (D. Minn.) – Defended securities fraud and accounting negligence claim; established pleading requirements under Fed. R. Civ. P. 9(b) in Minnesota federal court.
Legal Malpractice Defense
Client v. Attorney, 394 F. 3d 1062 (8th Cir.) – Provided defense of attorney sued on conflict of interest claim following incorporation of a new business.
Client v. Attorney, 1998 WL 373276 (Minn. Ct. App.) – Won defense of legal malpractice claim for alleged negligence in handling underlying trial and probate court.
Investor v. Law Firm (D. Minn.) – Defended major Minnesota law firm on securities fraud and legal malpractice class action brought under fraud on the market theory.
Will Sustained Against Forgery Claim
In re Estate, 2005 WL 1619867 (Minn. Ct. App.) – The client was named as sole beneficiary of his mother’s estate, but his sister challenged the will on the grounds that their mother’s signature had been forged by the client. On appeal, after the probate court overruled the forgery claims, the Minnesota Court of Appeals stated that the opinion of the sister’s handwriting expert was effectively “undermined” by the cross-examination of Tom Shroyer.
Fabricated Sexual Assault Claim
Plaintiff v. Non-Profit Client (Ramsey County District Court No. C7-06-770) – Tom Shroyer defeated a claim that a social worker for a community non-profit agency had sexually assaulted one of his clients. The jury took less than 15 minutes to return a unanimous defense verdict after Tom cross-examined the plaintiff for an entire day.
Minority Shareholder Buyout Limited
Shareholder v. Client Company (Henn. Cty. Dist. Ct. File No. EM 96 008614) – When the client corporation abruptly fired its 49% owner, he sued for a premium, “fair value” buyout. After a “battle of experts” on radically differing valuations, the court ruled in favor of the company, drastically curtailing the amount and terms of the buyout.
Quick Response Ends Loan Fraud Claims
A lawyer for a bank wrote to an accountant, an inflammatory letter claiming that the accountant was a party to an underlying loan fraud. In less than eight hours, Moss & Barnett (1) determined that the letter was likely authorized by a “rogue” loan officer, (2) prepared a letter for the CPA with a detailed, point-by-point rebuttal of the charges, and (3) helped the CPA arrange to meet with the bank’s president and present his side of the claim, along with the letter.
Bottom line: The bank dropped the entire matter.
Sibling Will Dispute Resolved
We represented one of the disputing siblings in a family will contest, which involved claims that our client had forged the mother’s signature. During the trial in probate court, Moss & Barnett attorneys convincingly attacked the credibility and reliability of the other side’s handwriting expert during cross-examination, and eventually helped our client prevail.
Complex Cross-Border Tax Claim Rejected
When a foreign corporation hired a U.S. CPA firm to prepare domestic, federal, and state tax returns, the CPAs never bargained to provide tax consulting on the client’s international operations. After the client was hit with tax in another country, it sued the U.S. accounting firm for failing to advise on ways to avoid the foreign tax. Moss & Barnett used vigorous discovery (including detailed requests for the tax advisory records and files of the client’s foreign-based CPA firm) to demonstrate the baseless nature of the claim.
Bottom line: The claim was dropped without any payment.