An appeals court has upheld the dismissal of most criminal charges against five former Eaton Aerospace employees accused of stealing trade secrets from the Jackson company for aerospace contracts.
"It was a home run," declared their attorney, Ed Blackmon Jr. of Canton. "This trade-secret case is simply not supported by the facts."
Prosecutors had appealed the decision by U.S. District Judge William Barbour Jr., who threw out the first five counts of the latest indictment, saying the charges of conspiracy to defraud, theft of trade secrets and wire fraud were unconstitutionally vague. He also dismissed two trade-secret charges, saying they were barred by the statute of limitations.
Wednesday's decision did not affect five charges that still accuse the former employees of stealing trade secrets.
"There are still standing charges to go forward on, and as far as what course of action we will take, a final decision has not been made," said Assistant U.S. Attorney John Dowdy, who heads the criminal division in the Southern District of Mississippi. "But I do anticipate a decision being made rather quickly."
No trial date is set for the five engineers who left Eaton to work for Frisby Aerospace, now known as Triumph Actuation Systems.
"My hope is this case is never set for trial because these guys have been on hold for years while the government tries to determine whether they committed a crime," Blackmon said.
The trial of Eaton ex-employees Rodney Case, Kevin Clark, Mike Fulton, Douglas Murphy and James Ward had been scheduled for June 16 but was delayed by the prosecution's appeal.
The five men worked as engineers at Eaton, which designs, tests and manufactures aerospace hydraulic fluid applications for commercial and military use. The indictment alleges they took Eaton's trade secrets with them when they went to work in January 2002 in North Carolina at Frisby.
"It was an object of the conspiracy that the defendants would and did leave their employment at Eaton and take engineering jobs at Frisby, where they would and did compete directly against Eaton for aerospace contracts for hydraulic pumps and motors," the indictment says.
The indictment also alleges the five conspired to enrich themselves while at Frisby through salaries and business by using property stolen from Eaton.
Blackmon denied those claims and said no trade secrets were involved and that the designs Eaton says are proprietary have been used "around the world, from here to China."
In addition to the criminal charges, Eaton - a Fortune 100 business - filed a $350 million lawsuit against the former employees and Frisby, accusing them of stealing trade secrets.
Hinds County Circuit Court Judge Swan Yerger recently appointed David Dogan III as a special master to help rule on issues in the case.
The lawsuit is one of at least three cases the FBI is examining involving suspended Hinds County Circuit Judge Bobby DeLaughter and former Hinds County District Attorney Ed Peters as part of its probe into a judicial bribery scandal in Mississippi.
At the center of the federal investigation is whether Peters used his close friendship with DeLaughter, a former assistant district attorney under Peters, to influence the judge's rulings.
DeLaughter presided over the Eaton case until he removed himself in January, citing the federal investigation. He has denied any wrongdoing in the Eaton case or any other case.
Peters was never listed as an attorney of record in the Eaton case but was secretly assisting the company.
"There is circumstantial evidence that Ed Peters had inside information in the case and was using that inside information, trying to get the special master dismissed from the case," Blackmon said.
Eaton attorneys could not be reached Wednesday for comment but have previously said they would not discuss Peters' role in the case.
In January, Madison lawyer Larry Latham stepped down as special master in the case, telling The Clarion-Ledger, "I stepped up to the plate and did what I needed to do." He had replaced Oxford lawyer Jack Dunbar, whom DeLaughter removed Oct. 29.
Four days earlier, Latham said Peters called him, according to a transcript of a court hearing.
"Mr. Peters informed me that I was being considered for appointment as a special master in this case, (and) would I be interested if I were selected?" Latham said.
Latham said he assumed Peters was one of the lawyers getting a list together of nominees for the position. He said he asked Peters if he was going to be in the case.
"I have not yet entered my appearance," he said Peters replied.
Latham said he had no further contact with Peters until Nov. 8 when Peters left a message with Latham's assistant: "Don't bring up my name."
At the time, he said he was unaware Dunbar was still serving as special master.
"I saw nothing out of the ordinary in the phone call," Latham said, "until such time as the pieces fell together and it became apparent that there had been ... no ... independence in the selection of a new special master."
Latham called DeLaughter and Peters "reputable, honest gentlemen. I've practiced law with and against them and before him when he was on the bench, and I know that I'm amongst honorable men. But the appearance of impropriety is strong, and I cannot serve under that ... cloud."
