A recent scandal unites two of my favorite passions: college football and trade secret litigation. As most sports fans are aware, the University of Michigan’s polarizing head coach Jim Harbaugh was suspended last Friday by the Big Ten Conference as part of a disciplinary action against Michigan for improperly recording and stealing signs in violation of the conference’s Sportsmanship Policy. The scandal unfolded quickly as the NCAA announced it was investigating Michigan’s football team on October 20, and then metastasized as The Washington Post and The Wall Street Journal began to cover it. Michigan has a splendid football team this year and one of the strongest teams in college football. But from my vantage point, Michigan’s administration has put that potential championship season at risk by mishandling its response to the scandal and provoking a confrontation with the Big Ten’s Commissioner, Tony Petitti. As explained below, Michigan’s mistakes provide a case study for parties accused of stealing another’s trade secrets on how to avoid the hard lessons that Michigan is absorbing now.

Anatomy of a Scandal. For trade secret lawyers, it’s a story that writes itself. Coming off a catastrophic 2020 season in which the storied Michigan program only won 2 games, an ambitious and enthusiastic assistant named Connor Stalions was hired. According to a report from ESPN:

Stalions, a graduate of the United States Naval Academy, was hired as an off-field analyst at Michigan in May 2022, according to a bio on his LinkedIn account. In the bio, Stalions wrote that he attempts to “employ Marine Corps philosophies and tactics into the sport of football regarding strategies in staffing, recruiting, scouting, intelligence, planning and more.

Among the skills Stalions wrote about on LinkedIn were “identifying the opponent’s most likely course of action and most dangerous course of action” and “identifying and exploiting critical vulnerabilities and centers of gravity in the opponent scouting process.

As many Ohio State fans will tell you, after Stalions’ hire, his military skills were brought to bear, and the results were almost too good to be true. Michigan quickly turned its fortunes around, beating its hated rival Ohio State in 2021 and 2022 (after having lost a record 8 times in a row) and getting to the college football playoff those two years as well. But The Washington Post blew the story open on October 25, reporting that an outside investigative firm had tipped off the NCAA that Stalions “had played a major role in overseeing and coordinating the Wolverines’ sign stealing efforts” during those two seasons. Stalions had overseen an operation that was expected to spend more than $15,000 this season, sending scouts to at least 40 football games around the country, including 8 games of Michigan’s rival Ohio State. These scouts were tasked with videotaping the sidelines of future opponents so that their signs could be decoded.

The conduct would violate, among other things, NCAA Rule 11.6.1 which prohibits off-campus, in-person scouting of future opponents in the same season. Head coach Jim Harbaugh is already in hot water with the NCAA, having served a voluntary 3-game suspension earlier this season to head off more severe sanctions for misleading the NCAA about Michigan’s lack of compliance with recruiting rules during the COVID pandemic.

Michigan’s conduct sparked outrage in the coaching community and in the Big Ten in particular. The Athletic published a survey of 50 college football coaches that found that 94% of them believe Michigan crossed a line. And on November 2, 2023, Petitti spoke with the other 13 Big Ten coaches; according to media reports, those coaches protested the conduct and expressed their outrage. The next day, Petitti spoke with the athletic directors of those 13 schools who demanded action.

On the heels of that pressure, and after a meeting with Michigan’s President, Petitti notified Michigan that the Big Ten Conference believed that Michigan had violated its Sportsmanship Policy and provided Michigan with an opportunity to respond to those concerns. On November 8, Michigan sent its letter outlining its position, which invoked the need for due process and additional time for Michigan to get up to speed, among other defenses. On November 10, Petitti issued a notice of the discipline that he decided to impose on Michigan–namely, suspending Harbaugh for the rest of the regular season, which includes the season-ending battle against Ohio State. (Both of the letters can be found here). I’ll describe the contents of those two letters, which provide support for my lessons, in greater detail below.

Last Friday, Michigan filed a request for an injunction to set aside the suspension, which will be heard by a Michigan state court judge at 9 a.m. on Friday, November 17.

Lesson No. 1: Misleading the Judge May Damage Your Credibility. If you skirt the truth and get caught, there will be hell to pay. Michigan appears to have broken this golden rule in its letter to Petitti.

Many commentators focused on the portion of Petitti’s November 10 letter emphasizing the pervasiveness of Michigan’s sign-stealing scheme, but a section of the letter near the very end (Sections H and IV, pp. 7-8 and 11) is what caught my eye. In support of Michigan’s claim that it needed more time and that due process had not been afforded it, Michigan claimed it “has not yet had an opportunity to review almost any of the evidence.” But according to Petitti, when the Big Ten asked to see the evidence that the NCAA had made available to Michigan, Michigan initially declined to provide its consent, claiming that “historically, the NCAA, to our knowledge, has not permitted disclosure.” It was only after the Big Ten approached the NCAA to confirm what Michigan said was true (it wasn’t, as the NCAA said it did not object to the Big Ten’s review), that Michigan relented and consented to Petitti’s request.

What Petitti then learned, contrary to Michigan’s claim, was that the NCAA had already provided the recorded interviews, photos, videos and other documentation similar to what the Big Ten had already reviewed for purposes of its notice. Petitti said he was “highly concerned” about these statements and concluded that Michigan had in fact had the opportunity to review what he characterized as “extensive evidence” that the NCAA had accumulated.

In sum, Petitti likely perceived that Michigan was playing fast and loose about its opportunity to review the relevant evidence, and that it was stonewalling the investigation. The fact that Petitti highlighted that exchange in an entire section of his letter suggests, at least to me, he was not happy with Michigan and that he concluded he couldn’t trust them.

So let’s apply this lesson to trade secret cases. Resist the temptation to overstate the facts or minimize your client’s involvement. Given the reality that many trade secret cases take place in an emergency setting, where time is limited and big decisions need to be made quickly, an attorney’s credibility may prove critical on contested issues. And don’t be surprised if the judge wants to lift the hood and verify what you are telling him or her.

Lesson No. 2: Don’t Underestimate the Power of Circumstantial Evidence. The scandal originally focused on whether other Michigan coaches were involved in or aware of Stalions’ efforts, or whether he was a rogue assistant breaking the rules on his own. Not surprisingly, Michigan and its coaches denied that they knew that Stalions had used improper means to get the information.

But the circumstantial evidence is compelling, as video evidence shows Stalions on the Michigan sideline, sharing information with Michigan coaches as they react immediately and alert Michigan’s team to what their opponent is doing. Petitti noted photographs and video clips showing Stalions conferring with Michigan’s defensive coordinator during important games at Wisconsin in 2021, at Ohio State in 2022, and against TCU in the college football playoff earlier this year. Evidence of a low-level staff member conferring with Michigan’s defensive coordinator during very important games supported the inference that what Stalions was sharing was valuable, and that it was implausible that the Michigan staff didn’t know or shouldn’t have known that the source of the information was suspicious.

Petitti ultimately decided it was sufficient that Stalions did it for purposes of his sanction, but the circumstantial evidence strongly suggested that others were involved. That may have weighed in favor of the sanction he chose, suspending Harbaugh, particularly in light of the cloud over Michigan’s candor noted above.

Applying that lesson to trade secret cases, defendants must remember that circumstantial evidence is a powerful tool for the plaintiff. As the U.S. Court of Appeals for the Sixth Circuit held in Stratienko v. Cordis Corp., “[p]resented with ‘defendants’ witnesses who directly deny everything,’ plaintiffs are often required to ‘construct a web of perhaps ambiguous circumstantial evidence from which the trier of fact may draw inferences which convince him that it is more probable than not that what the plaintiffs allege happened did in fact take place.'”  Therefore, defendants need to know a court may presume the worst.

Lesson No. 3: A Defendant Needs to be Accountable. Michigan initially appeared to have been caught flat-footed, underestimating the public anger over the scandal. But instead of defusing that situation, Michigan’s leadership lurched wildly to the other extreme, embracing an “everybody does it” narrative while at the same time refusing to acknowledge what Michigan did was wrong.

Readers of this blog know that I am a firm believer in the “penitent defendant” strategy. This approach, which is grounded in defusing the power of a claim of trade secret theft by working to resolve the dispute, is effective in lowering the emotion and moving a potentially costly and damaging dispute toward de-escalation.

As Petitti noted, Michigan did not deny, and has not denied, that the conduct took place. Instead, Michigan took the offensive and attempted to shift the focus to selective enforcement, claiming that other schools had shared Michigan’s signals and weren’t being punished. That argument too fell flat, as Petitti rejected the absence of evidence and any NCAA investigation into those claims and reminded Michigan that its conduct was what mattered.

To date, Michigan has refused any acknowledgement of wrongdoing, shown little or no willingness to cooperate with the Big Ten in its investigation, and avoided any assurance that it won’t happen again. Rather than defusing the dispute and being accountable, Michigan has escalated the dispute, minimized its wrongdoing, denied its severity, and challenged the Commissioner’s authority. Which leads me to my next lesson . . .

Lesson No. 4: Don’t Tug on Superman’s Cape. Michigan ignored Jim Croce’s advice and took a strident, even confrontational, approach with the Big Ten’s Commissioner. Take the time to read Michigan’s November 8 letter. It took on the Commissioner right out of the gates, even though he had the full support of the other 13 members of the conference.

By doing so, Michigan all but assured a strong reaction, in the form of a penalty or suspension this season, would be imposed. This was the very outcome Michigan desperately wanted to avoid.

The lesson? Pick your battles and see Lesson No. 3.

Lesson No. 5. Always Remember the Importance of Your Reputation and Your Brand. As long as I can remember, Michigan and its alumni have taken great pride in Michigan’s academic standing, its high admission standards, and an ethos grounded in playing by the rules. But that pride and reputation seem to be lost in their anger over potentially losing a championship season. Michigan’s leadership has allowed the emotions of its stakeholders (alumni and fans clamoring for a championship) to determine a course of action that may permanently tarnish that brand.