Unisys Beats Ex-VP’s Disparagement Claim in Trade Secrets Suit

A former Unisys Corporation senior vice president lost his breach of contract counterclaim over allegedly disparaging comments his previous employer made about him in a trade secrets and noncompete violations lawsuit he and his current employer Atos SE face.

Unisys’ comments about Leon Gilbert in its complaint are permissible under the terms of his severance agreement, the US District Court for the Eastern District of Pennsylvania said Thursday, and its COO’s comments about his purported betrayal don’t violate a nondisparagement provision because they occurred while he was still employed.

Unisys sued Gilbert and another former digital workplace services executive, Michael McGarvey, in February for allegedly taking 13,000 confidential documents with them when they left for competitor Atos in January. The IT company said both men signed noncompete agreements banning the transfer of Unisys’s proprietary information or data, and requested a temporary restraining order barring both from working at Atos.

Atos was added to the lawsuit in March after expedited discovery revealed that it directly participated in the executives’ alleged misappropriation of trade secrets that could undermine Unisys’ hundreds of millions of dollars of investment, Unisys said in its amended complaint.

Judge Paul S. Diamond declined to issue a TRO barring Gilbert and McGarvey from working at Atos, but enjoined them from disclosing, retaining, or using Unisys’ trade secrets and soliciting other employees. He also ordered Atos to remove, return, and/or destroy all Unisys-related documents it received from Gilbert.

Gilbert argued that Unisys breached its severance agreement by making false and disparaging allegations about him in its initial complaint, and in a telephone conference with 70 Unisys employees where Chief Operating Officer Mike Thomson allegedly said he felt personally betrayed by his and McGarvey’s departures. Publicity the complaint received has caused “incalculable damage” to his reputation, he said.

Diamond held that Unisys’ statements made in the complaint are allowed under the severance agreement, which says it shall not make negative comments about Gilbert except to “make comments to an arbitrator or court for the purpose of determining its rights under this Agreement or any agreement.”

The court granted Unisys’ motion to dismiss the claim, furthering noting that the allegations about Thomson’s statements fail because the nondisparagement provision is effective after the termination of Gilbert’s employment and he was still employed at the time of the call.

Diamond dismissed the counterclaim based on Unisys comments made following Gilbert’s termination without prejudice because he “may be able to plead additional facts” to support the claim.

Gilbert and McGarvey brought their own lawsuit against Unisys in Delaware Chancery Court in May. They argued that they’re entitled to advancement of over $800,000 in legal expenses they’ve spent in the trade secret suit. The claims remain pending after a hearing on motion for judgment on the pleadings was held July 10.

Kirkland & Ellis LLP, Linklaters LLP, and Morgan, Lewis & Bockius LLP represent Unisys. McGuireWoods LLP represents Gilbert and McGarvey. Paul, Weiss, Rifkind, Wharton & Garrison LLP and Welsh & Recker PC represent Atos.

The case is Unisys Corp. v. Gilbert, E.D. Pa., No. 23-cv-00555, 7/27/23.