CASE STUDY
Misappropriation of Trade Secrets
Highlights
• Chevron Corp., an integrated
worldwide energy company
ranked No. 3 on the Fortune 500,
settled before trial.
• Jury verdict returned in favor of
Berg-Nelson Company, Inc. The
defendant, Advanced Sealing and
Supply Co., Inc., was ordered to
pay substantial damages.
• The jury endorsed Cummins &
White’s argument that Berg-
Nelson hoses did not need to
be protected by confidentiality
or written non-disclosure
agreements in order to
constitute a trade secret.
About the Attorneys
Charles Spagnola, lead trial
counsel, joined Cummins &
White, LLP, as a partner
in 2006. Mr. Spagnola’s
practice focuses on
complex civil, business and
real estate litigation, as
well as sophisticated criminal defense.
Michelle A. Burr, second
trial counsel, joined
Cummins & White, LLP,
as an associate in 2004.
Ms. Burr’s practice focuses
on civil litigation, with an
emphasis on intellectual
property, professional liability defense,
personal injury, employment law, and
general business litigation.
DAVID VS. GOLIATH
JURY VERDICT FOR BERG-NELSON COMPANY IN TRADE SECRET CASE
In March 2009, Cummins & White, LLP, successfully represented
Berg-Nelson Company, Inc., a plaintiff in litigation brought against a
competitor claiming misappropriation of trade secrets. After a four-week
jury trial presented in Los Angeles County Superior Court in Torrance,
Calif., the jury ordered the defendant, Advanced Sealing and Supply Co.,
Inc., to pay substantial damages. Chevron Corp., also named as a
defendant in the original lawsuit, settled before trial.
Background
Berg-Nelson Company, Inc., designs and fabricates rubber and metal hoses,
belting, valves, and fittings. For approximately 10 years, the company
worked with Chevron Corp. developing quality control and safety
procedures for using flexible high-pressure hoses and specially designed
couplings for a number of different uses within Chevron’s El Segundo,
Calif., refinery. Berg-Nelson also designed and fabricated proprietary,
specialized fuel injection hoses for turbine generating units at the
refinery. These “co-gen” hoses were sold to Chevron based on
individual purchase orders.
In its lawsuit, filed in December 2006, Berg-Nelson alleged that Advanced
Sealing and Supply, a competitor, misappropriated trade secrets by wrong-
fully obtaining a technical drawing from a former Berg-Nelson employee
and a sample of the co-gen hose, as well as confidential price lists from
Chevron employees with whom it had a longstanding relationship. This
disclosure allowed Advanced Sealing and Supply to reverse engineer
the hose and avoid the expense and time involved with its own
product development.
The claim also alleged that armed with Berg-Nelson’s confidential designs
and pricing information, Advanced Sealing and Supply interfered with
Berg-Nelson’s contract and non-contractual business relationship with
Chevron (though this part of the complaint was later dismissed).
Berg-Nelson sought damages based on the loss of business (past and
future) with Chevron resulting from Advanced Sealing and Supply’s
wrongful conduct.
Continued…

Cummins & White, LLP
Cummins & White, LLP, is
recognized as one of California’s
premier business, insurance, and
criminal defense law firms. The
Newport Beach-based firm is
engaged in general civil litigation
and transactional practices,
which include insurance
coverage, business, estate
planning, healthcare, real estate,
and liability defense. The firm
was founded in 1951 and has
16 partners and associates.
2424 S.E. BRISTOL, SUITE 300 || NEWPORT BEACH, CA 92660 || 949–852–1800 ||
Legal Strategy
Cummins & White, LLP, pursued a variety of legal theories in order to
protect Berg-Nelson. The major dispute in this case was whether the Berg-
Nelson hoses designed for Chevron constituted trade secrets. Berg-Nelson
contended that the design and make-up of the hoses was not known to the
general public or even to Chevron, which had previously requested the
information without success. During the trial, Charles Spagnola, lead
trial counsel from Cummins & White, argued that the Berg-Nelson hoses
did not need to be protected by a written non-disclosure or confidentiality
agreement in order to constitute a trade secret. Mr. Spagnola provided
compelling evidence supporting the claim of misappropriation of trade
secrets, including the fact that Berg-Nelson’s complaint was filed and
served on Advanced Sealing and Supply before it had even started selling
the hoses to Chevron. The fact that it proceeded to sell the hoses with
actual knowledge of the allegations after the complaint was filed showed
willful and malicious behavior.
Mr. Spagnola focused on Chevron’s written corporate policies regarding the
exchange of proprietary information and secrets. As part of its business
dealings with Chevron, Berg-Nelson went to extraordinary lengths to clarify
Chevron’s position regarding other contractors at the refinery and potential
improper disclosure of trade secrets. Chevron has written corporate policies
in place to protect proprietary information of its business partners and
provided a written statement of hiring practices upon which Berg-Nelson,
in part, based its decision to enter into a services agreement with Chevron.
Result/Implication
After a four-week trial, the jury awarded $242,000 to Berg-Nelson. Craig
Nelson, president of Berg-Nelson, said the verdict would lead to fundamental
changes in how business is conducted in the industrial hose industry,
particularly in regard to copying competitor’s products in order to gain an
unfair advantage. “This will change the way our industry does business,”
Mr. Nelson said. “We believe the verdict sends a message to others in the
industry—suppliers and buyers alike—that Berg-Nelson’s products are
valuable and protected.”
According to Mr. Spagnola, the successful plaintiff verdict was a ringing
endorsement of the legal strategy pursued by Cummins & White. “This was
a real life David vs. Goliath story, showing the struggles of a small company
doing business with a multinational corporation,” he said. “The verdict was
an indictment of the way Chevron and Advanced Sealing and Supply did
business, disregarding Chevron written corporate policies in place for years
to protect the interests of business partners such as Berg-Nelson.” ■
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