## Facts

- Harris Group, Inc. operated an engineering firm whose financial consulting department advised lenders financing ethanol and power plant projects.
- Michael S. Robinson, Robert D. Courtney, and Jon E. Neff worked in that department and, while still employed, planned a competing business later formed as Luminate, L.L.C.
- Before resigning, the employees inventoried Harris Group clients and projects they intended to take, leased office space, obtained insurance, copied company files for later use, and deleted original files after copying.
- They prepared communications and a website indicating the consulting team had “spun off” from Harris Group and joined the new firm.
- In late April 2006, they resigned with one day’s notice, immediately recruited remaining department employees, and successfully hired five of seven.
- In Luminate’s first week, they contacted Harris Group clients and sent customers form letters to terminate at-will contracts with Harris Group and transfer business to Luminate.
- Harris Group sued for, among other claims, breach of confidentiality agreement, conversion, breach of fiduciary duty, intentional interference with contract, and unjust enrichment; certain claims were dismissed or rejected by directed verdict.
- A jury found defendants liable for breach of confidentiality agreement, conversion, breach of fiduciary duty, and intentional interference with contract, and provided an advisory unjust enrichment verdict; the trial court entered judgment and awarded damages, including compensatory and punitive damages.

## Issues

1. Whether sufficient evidence supported liability for breach of confidentiality agreement, conversion of electronic files/information, breach of fiduciary duty, and intentional interference with Harris Group’s customer contracts.
2. Whether at-will customer contracts can support an intentional interference claim when defendants use wrongful means to induce termination.
3. Whether “conversion” under Colorado law may include copying, deleting, and using an employer’s electronic files and data in a competing business.
4. Whether punitive damages and unjust enrichment awards were legally supportable and non-duplicative given the theories of liability and evidence.

## Decision

- The Colorado Court of Appeals affirmed the judgment in part, reversed in part, and remanded for further proceedings.
- The court largely upheld liability findings for breach of confidentiality agreement, conversion, breach of fiduciary duty, and intentional interference with contract based on defendants’ appropriation and use of employer information and coordinated departure and solicitation.
- The court held that interference claims may proceed even as to at-will contracts when the defendant employs improper or wrongful means (including misuse of confidential information or breach of fiduciary duty).
- The court concluded the evidence supported conversion where defendants copied and deleted electronic files and used them to compete, thereby exercising wrongful dominion and depriving the employer of control.
- The court sustained punitive damages to the extent supported by findings of fraudulent and malicious conduct tied to actionable torts, but reversed or modified certain damages components and portions of the unjust enrichment award, and remanded to correct errors and prevent duplicative recovery.

## Legal Principles

- Employees may prepare to compete while employed, but they may not breach fiduciary duties, misappropriate confidential information, or engage in disloyal competitive conduct before resignation.
- Intentional interference may be actionable as to at-will contracts or relationships when the defendant uses wrongful means to induce termination, including breaches of duty or misuse of confidential information.
- Conversion can reach electronic files and business information when a defendant wrongfully exercises dominion or control in a manner that deprives the owner of possession or control, including by copying for competitive use coupled with deletion of originals.
- Punitive damages require statutory predicates (fraud, malice, or willful and wanton conduct) and must be tied to tort liability and supported by the evidentiary record.
- Unjust enrichment may be available as equitable relief but must not duplicate recovery already awarded under contract or tort theories and must be supported by identifiable benefits wrongfully retained.

## Conclusion

The court largely upheld verdicts arising from coordinated, pre-resignation misappropriation of employer information and post-resignation solicitation, confirmed that wrongful means can support interference with at-will customer contracts, recognized conversion liability for electronic files in these circumstances, and required recalculation or limitation of certain damages and unjust enrichment to avoid legal error and duplicative recovery on remand.


Harris Grp., Inc. v. Robinson, 209 P.3d 1188 (Colo. App. 2009)