Don’t Be a Victim

White collar torts are nothing new, but there are things you can do to help protect your business.

034 3. Perspectives

ON APRIL 28, 2017, THE LOUISIANA OFFICE of Financial Institutions closed a failing First NBC Bank and began the $1 billion expense of cleaning up the mess left in its wake.

It was the fourth bank failure of 2017 and the most expensive the country had seen since the financial collapse of 2008.

While First NBC no longer exists — it was acquired by Hancock Holding Co., the parent company of Hancock Whitney Bank — the legal fallout continues. The investigative efforts of six federal agencies, including the FBI, have since led to the conviction of the bank’s general counsel, Gregory St. Angelo, and two of the bank’s customers, Jeffrey Dunlap and Kenneth Charity, for defrauding the bank of tens of millions of dollars. The fates of first NBC’s former president, Ashton Ryan, and chief credit officer, Bill Burnell, have yet to be seen.

White collar torts are nothing new to New Orleans. The duplicitous conduct has had an impact on the area for decades.

“Such conduct historically has been a disaster for the economic development and expansion of business in the New Orleans region,” said Peter Thomson of Stone Pigman Walther Wittmann. “For example, public corruption, in the form of unethical and potentially criminal behavior like extortion — committed by public officials on businesses and their employees —has caused many businesses to leave the region and state, and prevented other businesses from locating in our region.”

A white collar tort is an umbrella term that covers negligent behavior in the corporate world.

“A commonly accepted definition of a tort is a wrongful act other than a breach of contract for which relief may be obtained in the form of damages or an injunction,”

Be aware of the existence of a disgruntled employee or even a good employee who may be planning to leave and strike out on his own. P. J. Stakelum III, partner at Chehardy Sherman Williams Murray Recile Stakelum & Hayes

said P. J. Stakelum III, partner at Chehardy Sherman Williams Murray Recile Stakelum & Hayes. “White collar torts are an aggregation of torts also referred to as business torts.”

For example, an employee could down- load a company’s trade secrets and take that information to a competitor when they change jobs.

“Such an action could expose that employee to civil liability for tortious conduct in violation of a number of state and federal laws, as well as criminal liability for violation of federal and state laws protecting electronic data,” said Paul Masinter of Stone Pigman Walther Wittmann. “The new employer of the offending person could also face such dual liability depending on the circumstances.”

Crimes involving intellectual property also fall under the umbrella of white collar torts, whether it’s a company copying a logo from another business or illegally accessing the computer data of a competitor.

“Intellectual property can be protected through copyrights, common law trade- marks, federal trademarks, trade secrets and patents,” says Stakelum. “While the laws governing [these items] provide statutory protections for the owners of the intellectual property, they often require that the owner take steps to protect his intellectual property.”

Industry innovators are particularly at risk.

…public corruption, in the form of unethical and potentially criminal behavior like extortion — committed by public officials on businesses and their employees —has caused many businesses to leave the region and state, and prevented other businesses from locating in our region. Peter Thomson, Stone Pigman Walther Wittmann

“When a business comes up with a new idea, others will try to fill that same space,” said Dan Centner, shareholder at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard. “A competitor may use illegitimate means to misappropriate the original idea. Or the competition may be perfectly legitimate, but the originator will nevertheless accuse the competitor of crossing the line. Problems intensify when key employees switch from one competitor to another, or where a party takes steps to protect its ideas under the intellectual property laws.”

White collar torts are nothing new to New Orleans. The duplicitous conduct has had an impact on the area for decades.

“Such conduct historically has been a disaster for the economic development and expansion of business in the New Orleans region,” said Peter Thomson of Stone Pigman Walther Wittmann. “For example, public corruption, in the form of unethical and potentially criminal behavior like extortion — committed by public officials on businesses and their employees —has caused many businesses to leave the region and state, and prevented other businesses from locating in our region.”

According to Stakelum, there are things businesses can do to help avoid and provide protection in the case of legal troubles down the road. They include making sure the business has:

  •  written employment contracts where necessary that include non-compete, non-disclosure and non-solicitation provisions;
  • a legal professional to make sure you are covered when it comes to federal copy- right, trademark and patent protection on intellectual property;
  • agreements in place with employees involved in the creation of any intellectual property;
  • appropriate buy-sell agreements addressing the sale, encumbrance or alienation of company stock; and
  • insurance policies with coverages that are appropriate to the business.

Once you’ve done what you can, the key, said Stakelum, is to keep a watchful eye out.

“Be aware of the existence of a disgruntled employee or even a good employee who may be planning to leave and strike out on his own,” said Stakelum. “Be aware of what your competitors are doing and be alert to the possibility that your business’ trade secrets and intellectual property may become compromised. In this case, you will have to act promptly to protect your rights.”

Comments

comments