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First Niagara Risk Management, Inc. v. Kolongowski

United States District Court, E.D. Pennsylvania

February 17, 2017

KOLONGOWSKI, et al. Defendants.


          Slomsky, J.


         Plaintiff First Niagara Risk Management, Inc. (“FNRM”) filed this action against Defendant Thomas Kolongowski, a former employee of Plaintiff, and Defendant Trident Risk Advisors, LLC (“Trident”). Defendant Kolongowski is the President of Trident. In the Amended Complaint, Plaintiff alleges that Defendants committed numerous acts, including misappropriation of trade secrets, conversion of property, breach of contract, breach of the fiduciary duty of loyalty, unfair competition, tortious interference with prospective economic advantage, tortious interference with prospective contract, and civil conspiracy to obstruct justice. (Doc. No. 21 at 12-22.)

         Before the Court is Plaintiff's Motion for Contempt in which Plaintiff contends that Defendant Kolongowski violated a Stipulated Order for Preliminary Injunction and Forensic Discovery (Doc. No. 10) signed by the Honorable Stewart Dalzell on February 25, 2016.[1] (Doc. No. 29.) On December 13, 2016, a hearing was held on the Motion (Doc. No. 29) and Defendant Kolongowski's Response in Opposition (Doc. No. 30). For reasons discussed below, the Court will grant Plaintiff's Motion for Contempt. (Doc. No. 29.)


         Plaintiff designs and develops insurance programs for its business customers in need of insurance and also does a risk analysis in order to obtain cost saving policies. (Doc. No. 21 at 2.)

         As a part of its business, Plaintiff “develops and maintains certain confidential proprietary and trade secret protected information that is utilized to drive its business and attempt to obtain additional customers.” (Id.) This information includes: detailed lists of customers and prospective customers, information about customers and their insurance coverage history, insurance claims history, preferences, and buying cycles. (Id.) Plaintiff's confidential information is used to service existing customers and to identify prospective customers. (Id. at 3.)

         A. Defendant Kolongowski's Employment at FNRM and Events Leading to the Stipulated Order for Preliminary Injunction and Forensic Discovery

         On April 7, 2014, Plaintiff hired Defendant Kolongowski as a Vice President, Regional Insurance Sales Manager. (Doc. No. 21 at 3.) When he was hired, Kolongowski signed an employment agreement with Plaintiff. (Id. at 4.) The employment agreement included a non-solicitation clause and a prohibition on using Plaintiff's confidential information.[2] (Doc. No. 1 at 17-19.) These provisions applied during his employment with Plaintiff and for two years after he left FNRM. (Id. at 18-19.) He acknowledged that he remained under the obligations of the two-year non-solicitation clause and confidentiality provision post-employment with Plaintiff. (Doc. Nos. 29-1 at 3, 15-1 at 4.) Kolongowski terminated his employment with Plaintiff on January 31, 2016. (Doc. Nos. 29-1 at 3, 15-1 at 1.)

         On that day, after submitting his resignation, Kolongowski emailed to his personal email account Plaintiff's entire Eastern Pennsylvania commercial book of business reports, a copy of an email that he had sent to his FNRM manager containing specific details on seven of the most recently produced new clients, and a link to proprietary FNRM marketing materials. (Doc. No. 21 at 6-7.) A few days later, Plaintiff discovered not only these emails and but also the fact that Kolongowski had emailed additional information to his personal email account, including boiler plate documents, templates, and previously developed industry checklists. (Doc. Nos. 29-1 at 3, 24 at 3.) In view of these discoveries, Plaintiff believed that Kolongowski intended to use its confidential and proprietary information to operate his new business, Trident. (Id. at 8.)

         On February 9, 2016, Plaintiff's counsel sent Kolongowski a cease and desist letter referencing his unauthorized downloading and forwarding of Plaintiff's confidential information. (Id. at 7.) The letter instructed him to take remedial measures including, arranging a forensic examination of his personal computer and devices, and to return the confidential information. (Id.) In addition, on February 12, 2016, Plaintiff filed a Motion for Preliminary Injunction (Doc. No. 2) and a Complaint (Doc. No. 1), naming Kolongowski and his new company, Trident Risk Advisors, LLC, as Defendants.

         B. Stipulated Order for Preliminary Injunction and Forensic Discovery

         On February 25, 2016, Judge Dalzell approved the parties' Stipulated Injunction.[3] (Doc. No. 10.) The Stipulated Injunction provides in relevant part:

(1) Defendant Thomas Kolongowski ("Defendant") is enjoined from directly or indirectly misappropriating, disclosing or using FNRM's confidential information or Trade Secrets, including specifically (a) lists of agents, brokers, policyholders, customers and prospects; (b) information about customers and their families known to him through his employment with the Company including but not limited to: names, contact information, insurance coverage history, claims history, investment history, preference, buying cycles, risks, characteristics, requirements, and all information housed in the Company's Customer Relationship Management system; (c) policy expiration dates, investment maturity dates, pricing patterns, renewal dates, commissions, policy terms, rates, premium costs; (d) Company business, financial and other plans, reports, records, inventions, trade secrets, strategies, budgets, accounts, projects, revenues, pricing, costs, sales, know-how and other information of a similar nature; (e) personnel information, including but not limited to information regarding the skills and compensation of other employees of the Company; and (t) other secret, confidential or proprietary information of any nature relating to the Company, its suppliers, designers, and customers, and their respective owners, parents, subsidiaries, officers, board members, and employees, which is not generally available to the public.
(2) Defendant is enjoined from directly or indirectly (a) soliciting for any employment or services any of the Company's employees; (b) influence or seek to influence any employee to leave the Company's employ; (c) call upon, solicit or accept business from, whether directly or indirectly through another entity or person, for his benefit or for the benefit of any other entity or person, any client, customer, prospect or referral source with whom he had business contact or provided services to, either alone or with others, while employed by the Company, or whose name became known to him during his employment with the Company, for two years from the date of his separation from FNRM ("Injunction Period"), pursuant to the provisions of his Offer Letter, dated March 27, 2014, attached as Exhibit A.
(3) Within five (5) business days of the date of this Order, Defendant will provide access to his personal computers and other devices, if any, to an independent, third-party forensic discovery vendor to be retained as an expert by FNRM's counsel for forensic review, so that FNRM can be assured that its information has not been compromised and to facilitate its return to FNRM. The vendor shall be mutually selected and agreed upon, with costs to be split evenly between the parties, or, in some other such manner as the parties may agree.

(Doc. No. 10 at 1-2.)

         C. Defendant Kolongowski's Actions After the Stipulated Order Was Signed

         i. Facts Specific to The Castle Group

         Plaintiff argues here that Defendants violated the terms of the Stipulated Injunction by servicing through Trident a company referred to as The Castle Group. (Doc. No. 29-1 at 11.) Kimberly McGillicuddy, Kolongowski's former direct supervisor at FNRM and a current Senior Vice President, Enterprise Sales Leader, testified at the contempt hearing that The Castle Group was and is considered a prospect of FNRM. (Hearing Tr., 80:21-25, Dec. 13, 2016.) On January 22, 2015, while Kolongowski was still employed with FNRM, he sent an email to Janet Castle, an employee of The Castle Group. (Doc. No. 29-18 at 1.) The email referenced The Castle Group's insurance policies and prior year's coverage. (Id.) The email concluded with “Thank you for your continued interest in First Niagara Risk Management.” (Id.) Over a year later, on March 24, 2016, after Kolongowski left Plaintiff's employ, he forwarded documents relating to The Castle Group from his personal email account to his Trident account. (Hearing Tr., 57:9-17, P-15, Dec. 13, 2016.)

         Kolongowski testified at the contempt hearing that Trident did provide insurance services to The Castle Group. (Id. at 62:22-25, Dec. 13, 2016.) This was evidenced by a March 14, 2016 invoice that Trident sent for its insurance services to The Castle Group. (Id.) Kolongowski admitted that Trident continued to provide services to The Castle Group through December 2016, the month that the contempt hearing was held. (Id. at 62:22-71:20, Dec. 13, 2016.) He noted that Trident has received approximately $18, 000 in revenue from The Castle Group as of December 13, 2016. (Id. at 70:7-10, Dec. 13, 2016.) On December 19, 2016, he produced additional invoices from Trident to The Castle Group dated from June 22, 2016 to November 9, 2016. (Doc. No. 40-1 at 3.) All the invoices show that Trident received $33, 067.17[4] in revenue from The Castle Group through December 2016, which has not been disputed by Kolongowski. (Doc. Nos. 40-1 at 4, 40-2.)

         ii. Personal Laptop, Cellphone, and Hard Drive

         Pursuant to the requirements of the Stipulated Injunction, Kolongowski was required to provide a forensic discovery vendor access to his “personal computer and other devices” within five business days of the date of the Order. (Doc. No. 10.) He eventually made available three items: his personal laptop, cellphone, and a hard drive to which he transferred information. (See Doc. Nos. 17 at 1-2, 29-1 at 4.) Events involving each item warrant separate discussion.

         On March 2, 2016, in compliance with the time requirements of the Stipulated Order, Kolongowski provided his laptop and cellphone to Plaintiff's e-discovery vendor, Epiq eDiscovery Solutions, Inc. (“Epiq”). (Doc. No. 29-1 at 4.) Epiq imaged the laptop, and ...

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