See You In Court? Not So Fast ' State Secrets Litigation Traps For The Unwary, Overreaching Federal Contractor

• Published date: 13 June 2023
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Terrorism, Homeland Security & Defence, Government Contracts, Procurement & PPP, Trials & Appeals & Compensation
• Law Firm: Cooley LLP
• Author: Ms Helenanne Connolly and Daniel Grooms

GRID Networks LLC v. Quantum Leap Research LLC, et al., a recent case from the US District Court for the Eastern District of Virginia (EDVA), is a fascinating illustration of the litigation challenges government contractors face when they attempt to sue their competitors and/or involve, even tangentially, their intelligence community customers in the process.

The Quantum Leap Research case, on its face, had all the hallmarks of a classic commercial dispute between competitors - but with a twist.

GRID, an entity that assists government customers with telecommunications infrastructure, internet protocol (IP) networking and secure communications in the area of national security, was started by a well-known founder and operator in the national security government contractor community. In 2018, Peraton, a large government contractor, acquired GRID (then, Strategic Resources International). A year after the acquisition, the GRID founder departed GRID and founded Quantum Leap Research, another entity providing national security services to federal intelligence community customers. Thereafter, GRID threatened to sue Quantum Leap Research.

In June 2020, GRID and Quantum Leap Research reached a resolution of their differences, under which Quantum Leap Research agreed that it would not - before April 2022 - hire any GRID employee or any person that was a GRID employee in the six months preceding the hire. Almost immediately prior to the expiration of that agreement, in April 2022, GRID again threatened to sue, claiming that Quantum Leap Research violated the parties' agreement - allegations that Quantum Leap Research denied.

On June 21, 2022, GRID filed a lawsuit in the Fairfax County Circuit Court (a Virginia state court) against Quantum Leap Research and several of its employees, claiming that they breached their contractual obligations to GRID, and that they tortiously interfered with GRID's contractual expectancies with employees and customers. GRID sought $14 million in damages, citing the alleged loss of a strategic and lucrative contract with one of its government customers purportedly due to GRID's employee churn. GRID also submitted with its complaint extensive discovery requests seeking detailed information concerning Quantum Leap Research's customer contracts, as well as details around its products and services provided to those customers.

Given the classified nature of the work that GRID and Quantum Leap Research perform for their government customers...