543 F.3d 294 (6th Cir. 2008), 07-3536, Niemi v. NHK Spring Co., Ltd.

Docket Nº:07-3536.
Citation:543 F.3d 294, 88 U.S.P.Q.2d 1321
Party Name:Richard K. NIEMI, doing business as Richard K. Niemi Design and Engineering Services; and RKN Technology, L.L.C., Plaintiffs-Appellants, v. NHK SPRING CO., LTD.; NHK International, Ltd.; and New Mather Metals, Inc., Defendants-Appellees.
Case Date:September 19, 2008
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
FREE EXCERPT

Page 294

543 F.3d 294 (6th Cir. 2008)

88 U.S.P.Q.2d 1321

Richard K. NIEMI, doing business as Richard K. Niemi Design and Engineering Services; and RKN Technology, L.L.C., Plaintiffs-Appellants,

v.

NHK SPRING CO., LTD.; NHK International, Ltd.; and New Mather Metals, Inc., Defendants-Appellees.

No. 07-3536.

United States Court of Appeals, Sixth Circuit.

September 19, 2008

Argued: July 31, 2008.

Page 295

ARGUED:

Robin H. Kyle, Robin H. Kyle, J.D., LL.M., Detroit, Michigan, for Appellants.

Patrick F. Hickey, Dykema Gossett, Detroit, Michigan, for Appellees.

ON BRIEF:

Robin H. Kyle, Robin H. Kyle, J.D., LL.M., Detroit, Michigan,

Page 296

Donald E. Schlyer, Schlyer & Associates, Merrillville, Indiana, for Appellants.

Patrick F. Hickey, Michael A. Little, Dykema Gossett, Detroit, Michigan, for Appellees.

Before: DAUGHTREY and McKEAGUE, Circuit Judges; VAN TATENHOVE, District Judge.[*]

McKEAGUE, Circuit Judge.

Plaintiff Richard K. Niemi devised a new method of manufacturing stabilizer bars for automobiles in 1990, a “ trade secret." He alleges he disclosed this method to defendant New Mather Metals, Inc., only after entering into an oral confidentiality agreement. Pursuant to this agreement, New Mather was allowed to use the manufacturing process in exchange for its promise to maintain its secrecy and to grant plaintiff the exclusive right to perform all design work for New Mather. In 1998, Niemi learned that New Mather had breached the agreement by entering into design contracts with other parties. Niemi brought suit for misappropriation of trade secret, breach of contract, and promissory estoppel. The district court dismissed the claims against New Mather's parent corporation, NHK Spring Co., Ltd., for lack of personal jurisdiction and awarded summary judgment to New Mather on all of Niemi's claims. Niemi has timely appealed these rulings.

On careful consideration of the record, we uphold the district court's dismissal of the claims against NHK Spring Co., but conclude there is sufficient evidence to create genuine issues of material fact on the trade secret and promissory estoppel claims. For the reasons that follow, the summary judgment rulings on these two claims are vacated and the matter remanded for further proceedings.

I. FACTUAL BACKGROUND

Despite having little more than a high school education, plaintiff Richard K. Niemi has, since the 1960s, made a living in the engineering design business in the metropolitan Detroit area. Although his employment situation has been subject to numerous changes over the years, his involvement in the “ bender business," i.e., creating machines and tools to manufacture stabilizer bars for automobiles, has been a constant, as he has serviced customers like New Mather Metals, Inc. of Toledo, Ohio (defendant herein), General Motors Corporation, and Chrysler Corporation. Niemi performed engineering design work for New Mather from 1967 to 1998. During this period, Niemi conducted his business operations informally; apart from quotations, purchase orders and invoices, written documentation was rarely used. During the early 1990s, when the transactions giving rise to this action took place, Niemi operated under the name “ Richard K. Niemi Design and Engineering," as a sole proprietorship. Since 1997, Niemi has conducted business, as “ 50/50 partners" with his son Mark, under the name “ RKN Technology, LLC." RKN Technology operates out of Mark's home in South Lyon, Oakland County, Michigan.

In 1990, Niemi approached Denzil Sheckler, of New Mather, to discuss a new method of manufacturing stabilizer bars for automobiles. New Mather was interested in the new method and, in September 1990, issued the first purchase order requesting Niemi to incorporate the new method design into the manufacturing tooling. Although the purchase order was

Page 297

accompanied by a statement of standard terms and conditions providing that “ no other or different terms or conditions shall apply to this order unless specifically agreed to in writing by the authorized officer of Purchaser," Niemi contends he obtained New Mather's assurance that the new method “ would remain confidential" even before he disclosed it. Niemi aff. ¶ 3, JA 37. He did not reduce this “ confidentiality agreement" to writing in the form of a license because he trusted New Mather as “ honorable people of integrity I've dealt with for thirty years." Niemi dep. at 238-39, JA 98.

Thereafter, in 1993 or '94, Niemi remembers that Albert Blackwood, New Mather's Engineering Manager, approached him with a request that he sign a reciprocal “ exclusivity agreement." Blackwood explained that New Mather, cognizant of the competitive advantage it had gained by using the new bar-forming method, wanted to ensure that its use remained exclusive and that Niemi would not disclose the method to other manufacturers. In exchange for this restriction, Niemi sought assurance that he would continue to receive all of New Mather's design work, as he had for the previous 25 or 30 years, as well as the opportunity to bid on design needs of New Mather's parent corporation, NHK Spring Co., Ltd. After receiving the requested assurance from Blackwood, Niemi signed the exclusivity agreement, but was not given a copy.1 Although New Mather's reciprocal assurance was not reduced to writing, Niemi believed that he and Blackwood both understood that New Mather was obligated to continue using Niemi for its design needs perpetually as long as Niemi maintained the confidentiality of the design. No further writing was needed, in Niemi's estimation, because New Mather's obligation represented a continuation of an arrangement that had been in place for 25 or 30 years, an arrangement with people who Niemi had come to believe were honest and trustworthy.2

In 1998, Niemi learned of reason to believe New Mather had disclosed his trade secret to, and ordered design work from, other designers, actions which he believed were in violation of the parties' reciprocal exclusivity agreement. Niemi confronted Blackwood and New Mather's President, Ron Malcolm. He learned that Raul Cornieles was the new Engineering Manager. When he confronted Cornieles, Cornieles said he was unaware of any agreement, but would look into it. In his next conversation with Mark Niemi, Cornieles asked whether RKN Technology wanted to be New Mather's design source. Mark Niemi responded affirmatively and “ assumed" that Cornieles was thereby ratifying and reaffirming the preexisting mutual exclusivity agreement. Yet, apparently, New Mather did not live up to Niemi's understanding of the exclusivity agreement and Niemi commenced this action.

II. PROCEDURAL HISTORY

Niemi filed suit in the Eastern District of Michigan on February 28, 2002, invoking federal jurisdiction based on the parties' diversity of citizenship. Named plaintiffs include Niemi, d/b/a Richard K. Niemi Design and Engineering Services, and

Page 298

RKN Technology, LLC (referred to collectively as “ Niemi" ). Named defendants include New Mather, its parent corporation NHK Spring Co., Ltd. (a Japan corporation), and another subsidiary of NHK Spring, NHK International Ltd. (a Delaware corporation). The original complaint included two counts, asserting claims for misappropriation of trade secret and breach of contract. On August 8, 2003, the district court, Honorable John Feikens, ruled on NHK Spring's motion to dismiss for lack of personal jurisdiction. The court concluded that personal jurisdiction over NHK Spring was lacking. Rather than dismissing the claims against NHK Spring, however, the district court transferred the case to the Northern District of Ohio, where the actions giving rise to Niemi's claims took place.

On transfer of the case to the Northern District of Ohio, NHK Spring again moved to dismiss for lack of personal jurisdiction on November 21, 2003. The district court, Honorable James G. Carr, Chief Judge, granted the motion on April 12, 2006.3 In the meantime, the district court had on September 2, 2005, granted New Mather's motion for summary judgment on the misappropriation of trade secret claim, but allowed the breach of contract claim to proceed and allowed Niemi to amend the complaint so as to add a promissory estoppel claim. After a further period of discovery on the remaining claims, New Mather filed a second motion for summary judgment on December 1, 2006. The district court granted the motion on March 23, 2007, awarding judgment to New Mather on the breach of contract and promissory estoppel claims and, to the extent Niemi tried to advance a claim for quantum meruit relief in his briefing, dismissed the claim as untimely. On appeal, Niemi challenges the dismissal of NHK Spring, the summary judgment rulings on the trade secret and promissory estoppel claims, and the summary dismissal of his quantum meruit theory.4

III. ANALYSIS

In challenging the district court's summary judgment rulings, Niemi contends the court failed to view the entire the record in the light most favorable to him and insists that he presented sufficient evidence to create genuine issues of material fact on both his trade secret and promissory estoppel claims. The court of appeals reviews de novo an order granting summary judgment. Johnson v. Karnes, 398 F.3d 868, 873 (6th Cir.2005). Summary judgment “ should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor. Id. Not just any alleged...

To continue reading

FREE SIGN UP