W.L. GORE & ASSOCIATES v KROLL ASSOCIATES

PARAGRAPH
ALLEGATIONS
KROLL DENIES
ADMITS
GORE
ENGAGEMENT
RESPONSE
LATZKO
COURT
DENIES KNOWLEDGE
INFORMATION SUFFICIENT
NUGENT
CLIENTS
REFERS
ENGAGEMENT LETTER
AFFIRMATIVE DEFENSE
MESSRS
PEREL SPOKE
CLAIMS FAIL
DELAWARE
COMPUTER HARDWARE
PRIVATE INVESTIGATION FIRMS
COUNSEL
COMPLAINT
SECURITY
KROLL LACKS
CONTACTING
THEFT
REPORT

        IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

                        IN AND FOR NEW CASTLE COUNTY
                                                                                          :
W.L. GORE & ASSOCIATES, INC., a                :
Delaware corporation,

                                Plaintiff, :

                -against-                               Civil Action No. 18255

KROLL ASSOCIATES, INC., a Delaware :
corporation,

                                Defendant.  t

                and

GIBSON, DUNN & CRUTCHER LLP,                   :

                                Intervenor. :


                       ANSWER OF KROLL ASSOCIATES, INC.

                Kroll Associates, Inc. ("Kroll"), by and through its undersigned

counsel, submits this Answer to the Verified Complaint of W.L. Gore & Associates,

Inc. ("Gore") and states as follows:

                1.       Kroll denies the allegations contained in Paragraph 1, except

admits that Kroll may provide a variety of security-related products and services to

its clients.



               2.      Kroll denies the allegations contained in Paragraph 2, except

admits that Kroll refused to disclose the identity of its current client to Gore.

                3.      Admitted.

                4.      Admitted.

                5.      Kroll lacks knowledge or information sufficient to form a

ANSWER OF KROLL ASSOCIATES, INC.

counsel, submits this Answer to the Verified Complaint of W.L. Gore & Associates,

Kroll denies the allegations contained in Paragraph 1,

admits that Kroll refused to disclose the identity of its current client to Gore.

Court to Kroll's Internet Site for its complete and accurate contents.

admits that Gore contacted Kroll to conduct an audit of Gore's security systems and

to investigate a recent theft of computer hardware.

admits that Gore retained Kroll on July 21, 1997 and refers the Court to the engagement

To the extent a response is required, Kroll denies the allegations contained in Paragraph 12.

Court to the July 2 1, 1997 engagement letter for its complele and accurate terms.

1977, that Kroll gave Gore a written report, and Kroll refers to that report for a

and denies knowledge or information sufficient to

form a belief as to Mr. Lat.&o's motivation for contacting Mr. Nugent.

Nugent and Latzko spoke several times by telephone.

that Mr. Latzko met with Messrs.

Kroll denies the allegation in paragraph 23 except Kroll lacks

admits that Mr. Latzko and Mr. Perel spoke by telephone and discussed the issue of

The Complaint fail to state a claim upon which relief can be granted.

SECOND AFFIRMATIVE DEFENSE

Gore's claims fail in whole or part because Kroll is not subject to the

private investigation firms, 24 De1.C.

relationship between the private investigation firm and its clients.

2 . COMPLAINT IN INTERVENTION FOR DECLARATORY JUDGMENT

LITIGATION
GORE
KROLL
GIBSON
CITE
RIGHTS LETTER
DUNN
WORK PRODUCT
PREPARING
PLAYTEX
PRIVILEGE
RESERVATION
PROTECTION
LLP
DISCLOSURE
ATTORNEY
ENGAGEMENT
COURT
ASSERTS
EMBIL
ISSUANCE
REVIEW
CRUTCHER LLP
INTERVENOR
DECLARATORY JUDGMENT
CLIENT
PEOPLESOFT
ANTICIPATION
CONFIDENTIALITY

                IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE                   /L
                              IN AND FOR NEW CASTLE COUNTY


W.:L. GORE & ASSOCIATES, INC.,               )
a Delaware Corporation,                      )
                          Plaintiff,

         V.                                  ) Civil Action No. 18255

KROLL ASSOCIATES, INC.,
a Delaware Corporation,

                          Defendant,

         and

GI:BSON, DUNN & CRUTCHER :LLP,

                          Intervenor.


          COMPLAINT IN INTERVENTION FOR A DECLARATORY JUDGMENT


                  1.      Gibson,    Dunn &  Crutcher LLP ("Gibson, Dunn")

files this Complaint: pursuant to 10 Del. C.
                                                       - -- S       6501, et seq.,

se,eking  a declaratory judgment to prevent the disclosure of

Gibson, Dunn's attorney work product.

                 2.       Plaintiff W.L. Gore & Associates, Inc. ("Gore")

filed this action on August 23, 2000 seeking an order, among

other          things,     requiring     defendant,     Kroll.    Associates,    Inc.

("Kroll"'), to divulge the name of "Client X," whom Gore alleges

Kroll identified as having interests directly in conflict with

Gore's interests.



              3. On        September 6,      2000,    the    Court    signed a

COMPLAINT IN INTERVENTION FOR A DECLARATORY JUDGMENT

KROLL ASSOCIATES, INC.,

Intervenor.

Gibson, Dunn & Crutcher LLP

Gibson, Dunn's attorney work product.

Plaintiff W.L. Gore & Associates,

, to divulge the name of "Client X," whom Gore alleges

to determine whether,the engagement is related to the 1997

Dunn has disclosed to this Court and Gore

engaged Kroll to assist it in preparing the legal defense of

No. PP-816-GMS (the "PeopleSoft Litigation").

WHEREFORE, Intervener Gibson, Dunn & Crutcher LLP

not receive further disclosure as to the services provided by

(Cite iIS:

In addition, Playtex argue,s that Columbia

in anticipation of litigation, such m,aterials will be Columbia states that these notes were

4226-56 contain a section for also asserts that this document memorializes

product privilege.

Columbia states that these notes indicate that Embil was following an outline prepared were

that these notes were prepared after the reservation of highlight claims files considered

the reservation of rights letter, I find that they are prepared after the issuance of the

asserts that this review took place after the issuance letter, and was kept in Embil's files

to the confidentiality issue, Playtex notes that there is originally identified as legal

3 . KROLLS CORRECTED BRIEF IN OPPOSITION TO GORES MOTION FOR ISSUANCE OF TEMPORARY RESTRAINING ORDER

DEL
TEMPORARY RESTRAINING ORDER
GORE
FIDUCIARY DUTY
COURT
MOTION
CLIENT
TRADE SECRETS
DELAWARE
ISSUANCE
BALANCE
ENGAGEMENT
CONFIDENTIAL INFORMATION
FAVORS KROLL
AMERICAN TOTALISATOR
BROWN
DISCLOSURE
PRELIMINARY INJUNCTION
PRIVATE INVESTIGATION FIRMS
EMPLOYEES
SUBSEQUENT MATTER
PLAINTIFF
OPPOSITION
PND AUTHORITIES
AUTOMATIC TOTALISATOR
ETHICAL WALL
REPUTATION
CONFIDENCES
GORE FACES

      IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

                       IN AND FOR NEW CASTLE COUNTY

W.L. GORE & ASSOCIATES, INC., a         :
Delaware corporation,                            PUBLIC VERSIdN

                             Plaintiff, :

                -against-                        Civil Action No. 18255          `,,

KROLL ASSOCIATES, INC., a Delaware :
corporation,

                             Defendant. :




 KROLL'S CORRECTED BRIEF IN OPPOSITION TO GORE'S MOTION
        FOR ISSUANCE OF TEMPORARY RESTRAINING ORDER


                                        Thomas J. Allingham II (I.D. No. 476)
                                        Bradley James Enna (I.D. No. 3495)
                                        SKADDEN, ARPS, SLATE,
                                             MEAGHER & FLOM LLP
                                        One Rodney Square
                                        P.O. Box 636
                                        Wilmington, DE 19899
                                        (302) 651-3000

                                        Attorneys for Defendant
                                        Kroll  Associates, Inc.


Dated: August  30,200O



                                                      TABLE OF (`ONTEYTS

                                                                                                   

          TABLE OF AUTHORITIES . . . .  _ . . . . . . . . . . . . . . . . . . . . . . . . . . .    

          NATURE AND STAGE OF THE  PROCEElDING  . . . . . . . . , . . . . . .                      

          PRELIMINARY STATEMENT . . .  _ . . . . . . . . . . . . . . . . . . . . . . . , .

KROLL'S CORRECTED BRIEF IN OPPOSITION TO GORE'S MOTION FOR ISSUANCE OF TEMPORARY RESTRAINING

Plaintiff,:

THE BALANCE OF HARDSHIPS STRONGLY FAVORS KROLL.

TABLE OF CASES PND AUTHORITIES

Ace Ltd. v. Canital Re Cow, Del.

American Totalisator Svsts..

Automatic Totalisator, Ltd..

LEXIS 528, Brown, C..

verified complaint, motions for a temporary restraining order, preliminary injunction

Gore alleges breach of fiduciary duty and misappropriation of trade secrets arising from

-2-z of an engagement on behalf of a client whose interests are adverse to those of Gores.

may breach client confidences, could seriously harm Kroll a&its current client.

Kroll would certainly suffer damage to its bt siness reputation,

a de facto "ethical wall" existed between the prior Gore

confidentiality policy prohibited disclosure of Gore's confidential information

will such a disclosure occur in the future - as a result of Kroll's assignment on behalf

Both of these cases dealt with employees who accepted employment with competitors in

Gore faces no such imminent danger of irreparable

Kroll is not permitted to accept a subsequent matter which is adverse to

Although such statutes specifically bar employees of private investigation firms from

I hereby certify that two copies of the foregoing Kroll's Corrected Brief in Opposition to

4 . MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR EXPEDITED PROCEEDINGS

KROLL
EXPEDITE
MOTION
PRELIMINARY INJUNCTION
DEL
CLIENT
DEFENDANT
ADVERSE
DELAWARE
PLAINTIFF
FACTS
HARDSHIPS
RESTRAINING ORDER
EXHIBIT
REQUEST
REPRESENTATION
DISCOVERY
FIDUCIARY DUTY
ENGAGEMENT
ATTORNEYS
COURT
LAW
NEMOURS
VERIFIED COMPLAINT
CONFLICT
CONFIDENCES
THREAT
DISCLOSE
SECRETS

          IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
                              IN AND FOR NEW CASTLE COUNTY


W.L. GORE  & ASSOCIATES, INC., a
Delaware corporation,

                         Plaintiff,

              V.                                     Civil Action No.
                                              >
KROLL ASSOCIATES, INC.,
a Delaware corporation,

                         Defendant.



                           MEMORANDUM OF LAW IN SUPPORT OF
              PLAINTIFF'S MOTION FOR EXPEDITED PROCEEDINGS







                                              Jay W. Eisenhofer (Del. I.D. #2864)      ]
                                              Sidney S. Liebesman (Del. I.D.`#3702?
                                              C. Curtis Staropoli (Del. I.D. #3595)
                                              GRANT  8z EISENHOFER,  F.A.
                                              1220 N. Market Street, Suite 5GO         .Y
                                              Wilmington, DE 19801            L-`.          `I-
                                              (302) 622-7000
                                              Fax: (302) 622-7100

                                              Attorneys for Plaintiff
                                              W.L. Gore & Associates, Inc.
DATED: August 23,200O



                                                     TABLE OF CONTENTS

                                                                                                   
TABLE OF CASES AND AUTHORITIES . . . .                                                             
                                                                            . . . . . . . . . . . .

PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MEMORANDUM OF LAW IN SUPPORT OF

PLAINTIFF'S MOTION FOR EXPEDITED PROCEEDINGS

THE BALANCE OF THE HARDSHIPS FAVORS GORE.

Del.

Inc. has filed a verified complaint for injunctive relief

a motion for a temporary restraining order and motion for preliminary injunction

alleging that defendant Kroll Associates, Inc. breached its fiduciary duties to Gore by

and the threat that Kroll will disclose Gore's confidences and secrets.

On August 18, 2000, Kroll admitted to Gore that an actual conflict of interest existed

Kroll, however, refused to identify that other client.

restraining order,

the facts relating to this motion, both of which are incorporated herein by reference.

When faced with a motion for expedited discovery,

whether in the circumstances the plaintiff has articulated a sufficiently

Allen, C. (Attached at Exhibit A).

"A party's request to schedule an application for a preliminary injunction, and to expedite

a concurrent engagement with a client whose interests are directly adverse to those of Gore.

*2, Lee, J. ("the law will recognize a fiduciary duty arising out of a commercial

Kroll represents that it is subject to, and protected by, the duties and obligations of

Kroll may not take on a representation adverse to Gore which is

See Nemours Foundation v. Gilbane,

Kroll will disclose Gore's confidential, trade secrets pursuant to Kroll's new, adverse

5 . PLAINTIFFS OPENING BRIEF IN SUPPORT OF MOTION FOR ISSUANCE OF TEMPORARY RESTRAINING ORDER

KROLL
CLIENT
FIDUCIARY DUTY
CONFLICT
TRADE SECRETS
RESTRAINING ORDER
DEFENDANT
ENGAGEMENT
COURT
TEMPORARY RESTRAINING ORDER
AUDIT
PLAINTIFF
BREACH
CONFIDENTIAL INFORMATION
COMPL
IRREPARABLE HARM
REPRESENTATION
FIDUCIARY RELATIONSHIP
MISAPPROPRIATION
WORK PRODUCT
ENGAGEMENT LETTER
PRIOR ENGAGEMENT
DISCLOSURE
PRIVILEGE
INJUNCTION
INFORMATION RELATING
SECURITY SYSTEMS
AGREEMENT
PROPRIETARY INFORMATION

          IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
                           IN AND FOR NEW CASTLE COUNTY

W.L.  G'GRE   & ASSOCIATES, INC.,          >
a Delaware corporation,
                                           i
                     Plaintiff,
                                           ,'
              V.                                  Civil Action No.
                                           i                                :
KROLL ASSOCIATES, INC.
a Delaware corporation,                    1

                     Defendant.


            PLAINTIFF'S OPENING BRIEF IN SUPPORT OF ITS MOTION
              FOR ISSUANCE OF TEMPORARY RESTRAINING ORDER







                                           Jay W. Eisenhofer (Del. I.D. #2864)
                                           Sidney S. Liebesman (Del. I.D. 113702)
                                           C. Curtis Staropoli (Del. I.D. #3595)
                                           GRANT & EISENHOFER, P.A.
                                            1220 N. Market Street, Suite 500
                                           Wilmington, DE 19801
                                           (302) 622-7000
                                           Fax: (302) 622-7 100

                                           Attorneys for Plaintiff
                                           W.L. Gore & Associates, Inc.

DATED: August 23,200O



                                                     TABLE OF CONTENTS



TABLE OF CASES AND AUTHORITIES . . . . . . . . . . . . . . . . ii

PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . 1

FOR ISSUANCE OF TEMPORARY RESTRAINING ORDER

Gore Retains Kroll To Conduct A Detailed And Sensitive Audit

boll Reveals To Gore That An Actual Conflict Of

Interest Exists Between Gore And Another Client

Of Breach Of Fiduciary Duty

Misappropriation Of Trade Secrets

trade secrets in violation of statutory and common law.

subject to the attorney-client privilege and were attorney work product.

Kroll for another engagement, which Kroll also represented was subject to the attorney-client

representation; and Gore is at risk that its trade secrets will be disclosed to an adverse

preliminary injunction and expedited proceedings.

The engagement was memorialized in a retainer agreement between Iain

Compl.

The engagement letter was marked by Kroll as

operation of its various security systems and controls.

representatives regarding Gore's trade secrets, confidential information, technologies,

.provided Mr. Nugent with some information relating to the subject matter of the engagement.

it will suffer irreparable harm if relief is not granted;

to plaintiff of denying it, or that plaintiff has not proceeded as

particul.arly where the breach might involve the disclosure of confidential information.

Ch., 200 A.2d 428,42930 (enjoining defendant from working for his new employer in a capacity

plaintiff's confidential information was likely to be disclosed and a fiduciary relationship

because of its prior engagement

their sharing of confidential and proprietary information); Morris v. Resolution Trust Corp.,

6 . VERIFIED COMPLAINT

KROLL
CLIENT
BUSINESS
DELAWARE CORPORATION
BUSINESS INTELLIGENCE
TECHNOLOGY
ENGAGEMENT
NUGENT
RELATING
SECURITY
CONFIDENTIAL INFORMATION
LATZKO
CONFLICT
TRADE SECRETS
TRUST
PLAINTIFF
DEFENDANT KROLL
CONSULTING
DIRECTLY ADVERSE
COMPETITION
COMPLAINT
RESPECTFULLY ALLEGES
FIDUCIARY DUTY
DUTY KROLL OWES
RISK CONSULTING
INTELLECTUAL PROPERTY
ENGAGEMENT LETTER
SUPERIOR KNOWLEDGE
FIDUCIARY DUTIES

:
I IN THE COURT OF CHANCERY OF THE &ii& ;F DELAWARE -':_..
IN AND FOR NEW CASTLE COUNTY

W.L. GORE & ASSOCIATES, INC.,
a Delaware corporation,

Plaintiff,

Y. ) Civil Action No. /BzflYF
KROLL ASSOCIATES, INC.,
a Delaware corporation,

Defendant.

VERIFIED COMPLAINT

Plaintiff W.L. Gore & Associates, Inc. ("Gore"), by and through its undersigned counsel,

as and for its Complaint against defendant Kroll Associates, Inc., respectfully alleges as follows:

I. PRELIMINARY STATEMENT

1. This is an action to stop Kroll Associates, Inc. ("Kroll") from breaching the

fiduciary duty Kroll owes to Gore. Since 1997, Gore has been a client ofKrol1, a subsidiary of

The Kroll-O'Gara Company. Kroll provides a broad range of specialized products and services

relating to: risk consulting, business intelligence, internal investigations, forensic accounting,

backg~round investigations, and security services. As a Gore client, Kroll received more than

Gore's trust and confidence. Indeed, Kroll examined and analyzed many of Gore's sensitive

busin':ss areas, technologies and systems for the purpose of assisting Gore in improving its

intellectual property security methods and systems. After having observed, investigated,

documented and analyzed Gore's most sensitive and proprietary information, methods and

systems, Gore very recently discovered that Kroll is providing consulting services to another,

unknown entity whose interests Kroll claims are directly adverse to Gore. Such an undertaking