Exploring The "Sham Affidavit" Doctrine In Trade Secret Case Relating To Side-Switching Employee

• Published date: 26 July 2022
• Subject Matter: Employment and HR, Intellectual Property, Contract of Employment, Trade Secrets
• Law Firm: Holland & Knight
• Author: Mr Charles Weiss

Most litigators have at least a passing familiarity with the "sham affidavit" doctrine, under which an affidavit submitted in opposition to summary judgment that without explanation flatly contradicts the affiant's prior deposition testimony is held insufficient to create a genuine issue of fact. As explained by one court, the term:

[R]efers to the trial court practice of disregarding an offsetting affidavit that is submitted in opposition to a motion for summary judgment when the affidavit contradicts the affiant's prior deposition testimony. The doctrine calls for rejection of the affidavit where the contradiction is unexplained and unqualified by the affiant. In such circumstances, the alleged factual issue in dispute can be perceived as a sham, and as such it is not an impediment to a grant of summary judgment.

Shelcusky v. Garjulio, 797 A.2d 138, 144 (N.J. 2002) (internal citation omitted). For example, in the case often cited as the originator of the doctrine, the plaintiff's president admitted at length during his deposition that he had no direct evidence of the defendant's purported fraudulent intent to enter into a contract with no intention of performing it. In opposition to the defendant's motion for summary judgment, however, he submitted an affidavit recounting in great detail purported conversations in which the defendant essentially admitted that it had never intended to perform. The district court found the affidavit insufficient to create a genuine issue of fact and granted summary judgment. The court of appeals affirmed, explaining that "If a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own prior testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact." Perma Research and Dev. Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir. 1969).

This issue recently came up in the context of "side-switching" employees in a New Jersey trade secret case between competing telemarketers. The plaintiffs alleged that the defendants "hired away key managers and more than forty members of their sales force, siphoned customers, and misappropriated alleged trade secrets" that included the "script" used on calls with prospects. Metro Marketing, LLC v. Nationwide Vehicle Assurance, Inc., 275 A.3d 459 (N.J. Super. App. Div. 2022)

Among the plaintiffs' claims was that several of their employees, who were also named as defendants, had surreptitiously started working for the defendant while still employed by the plaintiffs. When they were deposed, all three denied they had done so. Thereafter, one such person (referred to as the side-switching employee) returned to work with the plaintiffs and provided an affidavit in opposition to the defendants' summary judgment motion in which he admitted that the plaintiffs' claims were true (contrary to his deposition testimony denying them). His only explanation for contradicting his deposition testimony was that he "had found inaccuracies"...