Jury awards local design firm three pennies on the dollar
By DAVE DANFORTH Daily Press Staff Writer
A Santa Monica jury Monday awarded local design firm owner Gary Mandel less than 3 percent of what he wanted from a star designer in a hard-fought trade-secrets case.
The verdict, a $47,000 award for Mandel, represented a major victory for designer Lendy Walker. Walker left Mandel’s GMPC firm to start her own outfit in January 2002.
Though jurors were troubled by how Walker quickly wound up with some of the same clients she’d sold while at Mandel’s GMPC, they decided that Mandel hadn’t proven conclusively what trade secrets she’d stolen, or how she’d engaged in unfair competition.
“This case was about bad manners,” said one juror. “They should have worked it out.”
The juror faulted Mandel for creating an antagonistic relationship with Walker once she left and suggested the two should have struck an independent deal involving royalties for the disputed work.
The case again emphasized how dreams of legal riches often crash at the hands of Santa Monica juries, who have a reputation for being “bullet-proof” — difficult to goad by plaintiff’s lawyers into major damages.
Mandel has asked for $2 million, representing residual profits through 2006 on accessory design work done by Walker mostly for Disney and Universal studios. But Walker claimed that most of the work for the studios, on items such as caps for their theme parks, was on new designs she invented once she left Mandel’s company.
She estimated that only 5 percent of the income at her new firm came from designs she devised while at GMPC. She further claimed that Disney and Universal had asked her to continue to work for them and owned the rights to the designs. Whether she pursued them, or they pursued her, was a point of contention during the trial.
Walker said she originally sold Disney and Universal while at GMPC by “cold-calling” them and interesting them in her designs, which came to include a “Sponge-Bob” cap Berman gleefully held aloft for jurors to see.
“Isn’t it adorable?” said Berman in opening arguments. “There’s no Coca-Cola formula here. These are hats.”
Berman contended that Walker was a brilliant designer whose work created apparel that flew off the shelves at the studio-owned theme parks. The only better designer at GMPC was Mandel himself, Berman contended.
But Mandel’s lawyer, Eddie Woods, argued that work for the studios represented a theft of trade secrets. Its client list was confidential, he noted. He also said Walker’s use of a key Taiwan manufacturing firm to make the apparel misappropriated a relationship Mandel had spent years building up.
One juror ridiculed the notion that Disney and Universal represented confidential clients, noting that the Taiwan firm bragged on its Web site of the relationship.
The jury was almost deadlocked after two-plus days of deliberating. Most jurors had trouble articulating exactly what Walker had done wrong. So jury foreman Markoff, anxious to avoid a hung jury, suggested that the panel reverse its work by deciding on damages first and then later fitting the damages to wrongful acts.
“It was really patchwork and horse-trading,” Markoff noted.
Walker started at GMPC in 1996 and earned a paycheck in bonus and commissions of $300,000 annually when she left to start her own company with then-fiance Adam Beatty after complaining that Mandel wouldn’t give her a hike in commissions.
Her high pay and Beatty’s business school education, troubled some jurors. But they were more astonished, said one, that Mandel and Walker didn’t just patch up their differences and share profits on designs she’d originated while with Mandel.
“It’s not a victory, but something we can walk away from,” said Walker after the jury ended its service in Santa Monica Superior Court.
Originally published in the Santa Monica Daily Press print edition on July 29, 2003. Read the original PDF.