Ex-Employee, Awarded $9 Million, Must Pay $600,000 to Company

A former employee of a Tarzana medical testing firm, who last week was awarded $9 million in a lawsuit against the company, was ordered Monday to pay his ex-employer $600,000 in damages.

Jurors had sided with employee Harvey J. Lippman in the suit, which argued that he was entitled to a 20% share of the company at the time he was fired. The $9-million verdict last Tuesday was one of the largest awards in Van Nuys Superior Court history, said Judge Thomas Schneider.

But on Monday, jurors also decided that Lippman had misappropriated trade secrets and unfairly competed against his former employer, Central Diagnostic Laboratories, and ordered him to pay $600,000.

The decision was the culmination of a trial that has lasted since Jan. 18.

Lippman filed the suit against the company in October, 1985, after he was fired by the firm’s owner, Dr. Allen M. Levy. Lippman, who had worked for the firm for 14 years, claimed that he was entitled to 20% of the company because of an oral agreement with Levy.

In turn, Levy’s attorney, Allan Browne, filed a cross complaint against Lippman alleging misappropriation of trade secrets and unfair competition. The jury ruled against a slander charge Levy filed against Lippman.

Don Howarth, Lippman’s attorney, maintained that Levy fired Lippman to avoid giving him 20% of the company, an oral commitment the attorney said Levy agreed to in 1976.

Lippman described his relationship with Levy as one of father and son. “He made a promise to me and I trusted him,” he said Monday outside of court.

Browne, argued that since Lippman, 46, could produce no written document, the oral agreement was not valid. He also maintained that his client fired Lippman when he discovered that his employee was using the firm’s client lists and other assets to establish his own company.

Lippman said he has since founded another medical testing firm, Clinical Science Laboratory of North Hollywood, but denied doing so while working for Levy.

Howarth said that as head of marketing for the firm, Lippman had build the company from one that employed only nine workers in 1970 to a major business that has about 900 employees and grossed $45 million in 1985, the year his client was fired.

“I now feel that justice has been served,” Lippman said after the verdict. “I’m very happy.”

Appeal Planned

Levy was not in court Monday afternoon and was unavailable for comment. But Browne indicated his client will appeal the $9-million award. “This is only round one of a 10-round battle,” he said.

Browne said he found the $9-million award “hopelessly inconsistent” with the jury’s award of $600,000 to the company Monday.

Jury foreman William B. Cummings said the 11-1 verdict came after three days of deliberations.

“We were convinced a verbal agreement had been made,” he said. Cummings called Lippman’s job performance exemplary.

He said the jury arrived at the $9-million figure by taking 20% of $45 million, the amount the company grossed in 1985, the year Lippman was terminated.

Central Diagnostic Laboratories has other problems too. Last month, federal health authorities decertified one of its subsidiaries, Central Pathology Services Medical Group, Southern California’s largest Pap smear laboratory, saying it had misdiagnosed too many specimens.