Maryland Court Tosses $20M Jury Verdict for Breach of Nondisclosure Agreement
July 7, 2021
The Maryland Court of Special Appeals recently considered the evidence that must be proven in order to support an award for damages for breach of a nondisclosure agreement (NDA). In Adcor Industries, Inc. v. Beretta U.S.A. Corp., gun manufacturer Beretta was interested in producing its own version of the M-16 rifle and it entered into negotiations with Adcor Industries, Inc. to utilize technology that had been developed by Adcor. 250 Md. App. 135 (April 1, 2021). Before Adcor provided Beretta with any documentation related to its technology, Beretta signed a NDA in which it agreed to certain restrictions on the documents it received. After Beretta informed Adcor that it was not going to go forward with plans to utilize Adcor’s technology, Adcor brought suit alleging that Beretta had violated the terms of the NDA. A jury found Beretta had violated the NDA and awarded $20 million in damages, but the trial court reduced the award to $1.
The Court of Special Appeals affirmed the reduction of the award to $1. It found that Adcor had failed to prove losses had been caused by Beretta’s breach of the NDA with reasonable certainty. Adcor had contended that since it cost Adcor $12 million to develop the technology that it shared with Beretta, $12 million of the $20 million jury award could properly be attributed to a “benefit conferred” on Beretta. The court ruled that damages based on a “benefit conferred” theory could not be recovered because there had been a contract between the parties and the benefit conferred approach applies only to claims where there is no contract that rely on quasi-contract and unjust enrichment theories.