A Baltimore County judge validly slashed a $20 million jury verdict to $1 after determining a local defense company had failed to prove damages against Beretta U.S.A. Corp. for breaching a nondisclosure agreement regarding improvements to the AR-15 rifle, Maryland’s second-highest court ruled last week.
In an unpublished 3-0 decision, the Court of Special Appeals agreed with the judge that Beretta is liable only for fees and compensation received under its NDA with Adcor Industries Inc. and not for unjust enrichment or consequential damages that the jury found. The appellate court added that Beretta received no fees and compensation in breaching the NDA.
“(A)lthough in retrospect Adcor wishes it bargained for a broader remedy that included any benefit conferred upon Beretta, the role of the courts is not to alter the negotiated allocation of risks just because one of the parties comes to regret the deal it made,” Judge Steven B. Gould wrote for the Court of Special Appeals. “If we did, the unfairness to Beretta would be palpable.”
Adcor’s attorney, Thomas M. Donnelly, said Monday that the company will seek review by the Court of Appeals – Maryland’s top court — “because the Court of Special Appeals ruling has broad, negative implications across multiple industries that operate within Maryland, which all invest tremendous resources into research and development and rely on NDAs to protect their confidential information.”
Donnelly heads the Law Offices of Thomas M. Donnelly LLC in Baltimore.
Beretta’s attorney, T. Sky Woodward, did not immediately respond Monday to a request for comment on the Court of Special Appeals’ decision. Woodward is with Bradley Arant Boult Cummings LLP in Washington.
Adcor sued Beretta in 2015, accusing the firearms manufacturer of having misappropriated work done by Adcor to improve the AR-15 rifle. Adcor said it provided samples of its improved AR-15 in October 2012 but claimed that by then Beretta had made a plan to retain Adcor’s trade secrets on improving the rifle.
The Baltimore County Circuit Court jury deliberated for roughly three-and-a-half hours in December 2018 before returning the $20 million verdict, meant to compensate Adcor for research and development done in contemplation of the partnership with Beretta as well as lost revenue.
But in February 2019 Judge Vicki Ballou-Watts granted Beretta’s motion for judgment notwithstanding the verdict and reduced the damages to a dollar.
Ballou-Watts said the evidence at trial failed to show Adcor had suffered more than just nominal financial damages of fees and compensation as provided under the NDA, prompting the company’s appeal to the Court of Special Appeals.
Gould was joined in the opinion by Judges Gregory Wells and James R. Eyler, a retired judge sitting by special assignment.
The Court of Special Appeals rendered its decision in Adcor Industries Inc. v. Beretta U.S.A. Corp., No. 118, September Term 2019.