A Big Bill for Biller: Whistleblowers and Confidentiality Agreements
Many of the cases we talk about here on Suits by Suits are breach of contract cases brought by executives against their former employers. Sometimes, however, the employer turns the tables, bringing an action against a former executive for breaching its confidences. When that happens, the executive can find himself owing the company a lot of money, rather than the other way around.
According to the opinion, Mr. Biller’s disagreements with Toyota started in 2007, when he accused the company of wrongfully discharging him for complaining about its “unethical discovery practices.” He settled his claim and signed a severance agreement that prohibited him from keeping, copying, or disclosing Toyota’s confidential information. The parties also agreed to arbitrate any dispute over the severance agreement.
Biller then started a litigation consulting firm and used information about his work with Toyota on the firm’s website. Toyota sued to prevent him from using its confidential information, and won a $2.6 million award from an arbitrator. In his opinion, the arbitrator wrote that Biller’s website “revealed specific facts and figures concerning Toyota settlements and litigation costs, settlement policies and tactics, and conversations with the client.” Thus, said the arbitrator, “Biller did the professionally unthinkable: he betrayed the confidences of his client.” Biller argued that he spoke out as a matter of necessity to “protect the public and the courts” from Toyota’s failure to live up to its e-discovery obligations; the arbitrator found that this motive did not “justify his unprecedented ethical violations.” The Ninth Circuit then affirmed the arbitrator’s award in full, rejecting Biller’s claim that the arbitrator had failed to follow the law.
Biller should have refused to agree to the confidentiality agreement if he had foreseen that he would face a dispute over his planned future disclosures of information. But given the duties that lawyers have to safeguard the information of their clients, walking away from the deal may not have helped.