Booz Allen v. Deloitte Consulting: A Cautionary Tale for NJ Employers

http://www.njlawjournal.com/home/id=1202724384431/Booz-Allens-Suit-Over-Defections-to-Deloitte-Survives?mcode=1202617074826&curindex=0   Booz Allen sued when a group of its employees resigned and went over to Deloitte.  A federal Judge in Newark, New Jersey, denied Deloitte’s motion to dismiss the claims, allowing Booz Allen to proceed with its case. This is an interesting case and one that employers everywhere should pay close attention to. Booz Allen sued Deloitte claiming that management level individuals at Deloitte orchestrated the major defection of a group of employees in the IDIL (Instructional Development and Immersive Learning) Team.  The defection delayed Booz Allen’s project deliverables to clients like the U.S. Department of Commerce, the Army and the Air Force and caused them significant damages. So, what can we learn as we await the outcome of this lawsuit? 1.   A key detail in this case is that none of the Booz Allen employees were bound by non-competes or non-poaching/non-solicitation restrictive covenants.  But that didn’t prevent the law suit.  Booz Allen was still able to sue based upon a claim that Deloitte tortiously interfered with Booz Allen’s business by recruiting away employees in the IDIL group. 2.  Employers should also be aware about the type of liability that can attach to them from the actions of their management and leadership.  Booz Allen sued on various claims, including fraud and civil conspiracy.  Not only do those claims come with the threat of a punitive damages award, they come with the added hammer of damage multipliers and fee shifting provisions contained within the statutes.  In fact, these claims are far more costly that in the Booz Allen employees were actually bound by contractual restrictive covenants. While Deloitte management may or may not have been involved in or sanctioned these actions, as the employer it will pay the price if it loses the law suit.  And unfortunately, as is the case with any litigation, Deloitte will pay a hefty price even if it doesn’t lose. 3.  As a best practice, employers should, as lawyers must, avoid the “appearance of impropriety.”  This means that all of your actions should pass the sniff test.  It is smells even slightly off, don’t do it.  While the proposed pay off may appear attractive at the outset, you had better believe that, if caught and brought to court, the damages and head ache of being in litigation will far outweigh the initially perceived benefit.  Put another way, if its too good to be true, then it most likely is.