February 26, 2013

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Legal Case Profiles

February 26, 2013

USA Power v. PacifiCorp: A David and Goliath Legal Battle  

By Sarah Ryther Francom

Peggy Tomsic describes USA Power v. PacificCorp as a “real-life David versus Goliath story. You have PacificCorp, a huge utility, and then you have USA Power, which is essentially two people. It was clearly a big deal.”

A big deal it was. Tomsic and co-lead counsel James Magleby and Eric Schnibbe, all lawyers with Salt Lake-based Magleby & Greenwood, represented USA Power during a years-long legal battle against PacificCorp, including five weeks of trial in front of a jury. In the end, the jury sided in favor of USA Power and leveled a steep $134 million fine against PacifiCorp—an unprecedented amount for the Mountain Region.

A Broken Dream

The story begins in 1996, when USA Power was formed with the sole purpose to locate, acquire and develop power generation sites. After years of research and site selection, the company decided to focus its efforts toward developing a power plant in Utah.

In 2002, the small, Texas-based company presented PacifiCorp (parent company of Rocky Mountain Power) with an innovative plan to build a cleaner power plant, dubbed Spring Canyon, in Juab County. “This was their livelihood,” says Tomsic, speaking of the two individuals who were the backbone of USA Power. “Everything they did got poured into this idea.”

Less than a year after seeing the plans (and after signing a nondisclosure agreement), PacifiCorp decided to build a nearly identical power plant named Currant Creek.

To further complicate the matter, PacifiCorp hired former USA Power attorney, Jody Williams, and her firm, Holme Roberts & Owen (HRO), to assist the process.

As a result, USA Power sued PacifiCorp for misappropriation of trade secrets and breach of the confidentiality and nondisclosure agreements, according to court documents. USA Power also sued Williams and HRO for breach of their fiduciary duties of confidentiality and loyalty.

“When PacifiCorp stole [the idea] and Holmes Roberts breached their duty, [USA Power] didn’t have anything,” says Tomsic. “This really did kill their business. They spent from 1996 working on the idea and then spent the past seven years litigating.”

The Long Road

The verdict favoring USA Power was not an easy feat. It was a long, nearly 10-year process to get the case in front of a jury.

In February of 2005, Tomsic filed the first complaint, but it quickly hit a wall. “The judge who had the case at that time, Judge Medley, granted all of the defendant’s motions and threw our case out, with the exception of one claim,” Tomsic says

But the case eventually reached the Utah Supreme Court, which issued a unanimous 5­−0 verdict, reversing the decision and sending the case to be tried before a jury. That was May of 2010—five years after the initial complaint was filed.

Due to further complications, it took another two years for the case to receive its final trial date—April 9, 2012. Meanwhile, USA Power’s co-founder and the driving force behind the entire project passed away from brain cancer. “I’d been begging to get a trial date before we lost him,” Tomsic recalls. “It added to the very emotional situation.”

The trial lasted a hearty five weeks, in which lead counsel Tomsic and co-lead counsel Magleby took turns arguing the case. Though they each praise the other for their sharp litigating skills, they both credit the jury for taking their role seriously, listening acutely and taking notes throughout the long ordeal. “They realized that this was a big deal,” Magleby says. “They had pads that were filled deep. They were engaged. It was impressive.”

Tomsic finished her closing argument at 4 p.m. on Monday, May 21. A mere four hours later, the jury had reached a unanimous decision in favor of USA Power. “Even though we believed it because we fought for it for years, then when you suddenly get the verdict, it’s still a surprise,” Magleby recalls. “We thought, ‘Are we really finally here?’”

Not realizing how quickly the jury would reach a decision, Schnibbe and the two USA Power plaintiffs were out to dinner when the verdict was read. “We called them on the phone and told them to meet back at the office right away,” Tomsic recalls. “They got here and Jim and I were cold-faced. He throws the verdict form on the table. They looked at it and started hopping around. It was a long road for these guys.”

The 10-member jury (including two alternate jurors) unanimously found that PacifiCorp misappropriated USA Power’s trade secrets and breached the confidentiality agreement, and that Williams and HRO breached their fiduciary duties by helping PacifiCorp. PacifiCorp was found liable for $134 million, HRO for $3.2 million.

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