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Smyth Jewelers accuses ex-COO of stealing trade secrets

The Smyth Jewelers store in Timonium (Maximilian Franz/The Daily Record).

The Smyth Jewelers store in Timonium (Maximilian Franz/The Daily Record).

The owners of Smyth Jewelers claim their former chief operating officer is violating his employment agreement by planning to open a competing store and using Smyth’s customer lists and business plans to build his company.

Former COO Mark A. Motes left Smyth in November and started Meritage Fine Jewelers LLC, which is planning to open a retail store this summer near the Smyth’s Timonium location, according court filings. But Motes’ employment agreement with the Albert S. Smyth Co. prohibits him from directly competing with the company for two years after termination, according to Smyth’s amended complaint, filed last week in U.S. District Court in Baltimore.

Motes also allegedly solicited several other employees to leave Smyth after he departed in violation of his employment agreement.

Motes’ attorney, Michelle Jeanine Dickinson, said Monday she and her client are reviewing the amended complaint but believe it is not timely and the allegations are “completely meritless.”

“We plan to vigorously defend against these new allegations as we are against the original ones and expect to be vindicated,” said Dickinson, a Columbia solo practitioner.

In a motion to dismiss the original complaint filed in March, Motes claims the plaintiffs are attempting to enforce a restrictive covenant in a long-expired employment agreement. The agreement, which was effective when Motes became COO in 2007, ended in 2010, according to the motion, but the amended complaint alleges the parties extended it.

The amended complaint also expanded the lawsuit to include federal and state trade secret claims and civil racketeering allegations after it was learned Motes and the other former Smyth employees have maintained access to Dropbox files containing customer information, vendor lists, personnel data and other proprietary information, according to the amended complaint.

One of those employees, John Jackson III, had maintained the Dropbox account, where confidential information was stored, and changed the access information from his Smyth email to a personal one, allowing him to maintain access which cannot be revoked by the company.

The defendants still have access to the company files as of Monday, according to Smyth’s attorney, Steven K. Fedder. The complaint seeks court orders requiring them to return control and prohibiting them from using the proprietary information.

“The two immediate things is they can ask the court to change it back to our name so we can then remove it and we can also get Dropbox, where all this stuff is, to give us access,” said Fedder, of Fedder & Janofsky LLC in Baltimore.

Dropbox is not a party to the lawsuit.

Fedder said his client did not learn about the Dropbox issue until a forensic technician was brought in during its investigation while the company waited for the court to issue a scheduling order in the case.

The initial lawsuit, filed in Baltimore County Circuit Court in February and removed to federal court in March, sought damages from Motes for violating his noncompetition agreement and overdrawing his accounts, according to Fedder. Once the case was removed to federal court, where the rules do not permit discovery until a scheduling order is issued, Fedder and his client used the extra time to look into possible unauthorized access to computer systems.

The amended complaint adds Jackson, two other former Smyth employees and Meritage Fine Jewelers as defendants.

The case is Albert S. Smyth Co., Inc. et al. v. Mark A. Motes et al., 1:17-cv-00677-CCB.

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