Advanced Fluid Sys., Inc. v. Kevin Huber, Insysma (Integrated Sys. & Mach., LLC

• Decision Date: 06 March 2018
• Docket Number: CIVIL ACTION NO. 1:13–CV–3087
• Citation: 295 F.Supp.3d 467
• Parties: ADVANCED FLUID SYSTEMS, INC., Plaintiff v. Kevin HUBER, Insysma (Integrated Systems and Machinery, LLC) , Livingston & Haven, LLC, Clifton B. Vann IV, and Thomas Aufiero, Defendants
• Court: U.S. District Court — Middle District of Pennsylvania

295 F.Supp.3d 467

ADVANCED FLUID SYSTEMS, INC., Plaintiff

v.Kevin HUBER, Insysma (Integrated Systems and Machinery, LLC) , Livingston & Haven, LLC, Clifton B. Vann IV, and Thomas Aufiero, Defendants

CIVIL ACTION NO. 1:13–CV–3087

United States District Court, M.D. Pennsylvania.

Signed March 6, 2018

David G. Concannon, Law Offices of David G. Concannon, Wayne, PA, Robert J. LaRocca, Pro Hac Vice, Kohn Swift & Graf PC, Philadelphia, PA, for Plaintiff.

Jonathan Zachary Cohen, Jonathan Z. Cohen Ltd., Wayne, PA, Philip J. Morin, III, Brian R. Tipton, Nishali Amin Rose, Veronica P. Hallett, Florio Perrucci Steinhardt & Fader, LLC, Phillipsburg, NJ, for Defendant.

Christopher C. Conner, Chief Judge

MEMORANDUM

Plaintiff Advanced Fluid Systems, Inc. ("AFS") commenced this action alleging that the collective defendants—a former employee and several of AFS's competitors—colluded to deprive AFS of its trade secrets and valuable business opportunities. Following more than four years of litigation and several rounds of dispositive motion practice, the court on September 18, 2017 convened a bench trial to address AFS's remaining claims for misappropriation of trade secrets, breach of fiduciary duty, and aiding and abetting said breach, and to hear evidence on AFS's request for compensatory, exemplary, and punitive damages. Pursuant to Federal Rule of Civil Procedure 52(a), we set forth our findings of fact and conclusions of law below.

I. Findings of Fact and Procedural History ¹

A. The Parties & Their Relationships

AFS distributes, manufactures, and installs hydraulic components and hydraulic systems. (See Doc. 236 at 2; see also 9/20/17 Tr. 146:24–147:1; 9/25/17 Tr. 10:17–11:19). The company is headquartered in York, Pennsylvania. (See Doc. 236 at 2, 4). Dan Vaughn ("Vaughn") serves as AFS's vice president and engineering manager. (9/18/17 Tr. 72:21–22). Vaughn oversees "large engineering projects" and directs AFS's sales and engineering teams. (Id. at 73:5–9). His father, Jim Vaughn, is founder and president of the firm. (Id. at 101:9–10, 117:7–9; 9/22/17 Tr. 130:17–20). In November 2006, AFS hired defendant Kevin Huber ("Huber"). (See 9/18/17 Tr. 99:14–16; 9/21/17 Tr. 14:4–6; 9/25/17 Tr. 10:3–5; see also AFS Ex. 6 at 1). Huber was employed by AFS continuously through his resignation on October 26, 2012. (See 9/18/17 Tr. 37:15–19).

Defendant Livingston & Haven, LLC ("Livingston") designs, assembles, and installs hydraulic fluid systems and is headquartered in North Carolina. (See Doc. 236 at 5). Defendant Clifton B. Vann IV ("Vann") is the chief executive officer of Livingston's holding company. (See 9/19/17 Tr. 137:21–138:1, 140:2–22). He was president of Livingston at all times relevant herein. (AFS Ex. 42 at 2). Defendant Thomas Aufiero ("Aufiero") was employed first as sales engineer and eventually as sales manager at AFS from 1989 through January 2011, when he left to work for Livingston as regional sales manager. (9/21/17 Tr. 11:10–12:16, 21:6–8). Huber too forged a relationship with the Livingston defendants beginning in January 2012, in hopes of pursuing business opportunities of mutual interest. (See id. at 28:7–29:18, 37:1–17). Huber left his position at AFS after incorporating his own firm, Integrated Systems and Machinery, LLC ("Integrated Systems"), in October 2012. (9/25/17 Tr. 8:17–9:21). This litigation has its genesis in Huber's concurrent affiliations with AFS, Livingston, and Integrated Systems. (See generally Docs. 70, 236).

B. Huber's Employment with AFS

Huber joined AFS as a full-time sales engineer in November 2006. (See 9/18/17 Tr. 99:14–16; 9/21/17 Tr. 14:4–6; 9/25/17 Tr. 10:3–5). He was employed with AFS consistently until his abrupt resignation in October 2012. (9/18/17 Tr. 37:15–22; 9/20/17 Tr. 14:4–11). At some point after Huber's departure, AFS learned that, for a three-month period in 2008, Huber worked contemporaneously for both AFS and another equipment manufacturer, Dayton T. Brown. (See 9/21/17 Tr. 14:16–16:4; 9/25/17 Tr. 159:24–163:4). Huber received compensation from both employers during this time, (see 9/25/17 Tr. 160:8–162:4), but never informed either AFS or Dayton T. Brown of the dual-employment arrangement, (see 9/21/17 Tr. 14:16–23, 15:25–16:19; 9/25/17 Tr. 161:6–12, 163:2–4).

Shortly after beginning employment with AFS, Huber gave AFS the "lead" on a hydraulics project at Wallops Island, Virginia. (See 9/18/17 Tr. 99:17–18; 9/21/17 Tr. 78:11–22). A college friend of Huber's, Keith Fava ("Fava"), was employed by Orbital Sciences Corporation ("Orbital") and advised Huber that Orbital and the Virginia Commonwealth Space Flight Authority ("the Authority") were seeking a hydraulics supplier to design a system to launch Orbital's "Antares" rocket from NASA's facility on Wallops Island. (See 9/21/17 Tr. 78:11–22). The Antares rocket services and supplies the International Space Station. (See Doc. 236 at 3; see also 9/20/17 Tr. 63:21–64:1). AFS contracted with the Authority in September 2009 to build, install, and maintain the system. (See AFS Ex. 15).

The resulting installation—the Teleporter/Erector/Launcher Hydraulic System ("Hydraulic System")—is comprised of several constituent parts, depicted and labeled below:

(AFS Ex. 272A). The "TEL" or "strongback" component is a platform which carries the rocket in a horizontal position to the launch pad. (See AFS Ex. 16; 9/18/17 Tr. 75:1–9, 77:3–5). A pair of "gripper arms" secure the rocket to the strongback. (AFS Ex. 16; 9/18/17 Tr. 77:6–8). The strongback "mates" to the cylinder assemblies, at which point the system is prepared for the launch sequence. (AFS Ex. 16; 9/18/17 Tr. 75:10–16). The Hydraulic System lifts the rocket into a vertical position over a 30–minute period. (See AFS Ex. 16; 9/18/17 Tr. 75:10–16). After liftoff, the system's unique "rapid retract" feature pulls the strongback away in a matter of seconds. (See 9/18/17 Tr. 76:3–12). AFS designed the cylinder assemblies together with Maritime Hydraulic, with whom it subcontracted to manufacture the hydraulic cylinders themselves. (See id. at 87:4–9).

AFS developed and supplied the Authority with a comprehensive package of engineering drawings generated during the system's design and installation. (See AFS Ex. 20; see also 9/18/17 Tr. 92:5–93:3). All drawings delivered by AFS included an AFS title block declaring:

This drawing discloses propriety and confidential data of Advanced Fluid Systems, Inc., and may not be used disclosed or released, in whole or in part, for any purpose outside the authorized recipient, without signed authorization, and must be returned upon request.

(E.g., AFS Exs. 67, 69–81; see also AFS Ex. 20; 9/18/17 Tr. 92:25–93:10, 125:12–22). These materials were accessible through a password-protected online repository by a limited number of employees of the Authority, Orbital, and Martinez & Turek, a manufacturer subcontracted to design the system's gripper arms. (See 9/20/17 Tr. 25:6–26:5).

AFS employee Guy Baum ("Baum") served initially as a full-time project manager for the Hydraulic System. (9/20/17 Tr. 67:12–22). Baum retired in June 2011, at which point Huber unofficially assumed Baum's responsibilities and served as the de facto project manager for the remainder of the AFS–Orbital relationship. (Id. at 67:25–68:2; see 9/18/17 Tr. 99:23–24; 9/20/17 Tr. 68:17–69:2, 173:8–174:1; 9/21/17 Tr. 27:4–6). Key members of the Hydraulic System teams from both the Authority and Orbital agreed that, with few and minor exceptions, they were satisfied with AFS's work. (See, e.g., AFS Ex. 274, Reed and Nash Dep. 24:7–26:15, Mar. 30, 2016 ("Reed/Nash Dep."); 9/20/17 Tr. 65:17-70:25; VCSFA Ex. 5). According to Orbital's lead engineer, Michael Brainard ("Brainard"), the system worked "flawlessly" at its first launch and "performed very well" on subsequent launches. (9/20/17 Tr. 66:2–67:2; AFS Ex. 18). Brainard's principal criticism was with Baum, with whom Brainard did not get along with and whose project management services Brainard found to be lacking. (See 9/20/17 Tr. 67:10–24, 68:10–16). Brainard agreed that his minor customer service complaints were remediable and likely could have been resolved by AFS's hiring of a new project manager dedicated to Orbital. (Id. at 68:7–9, 170:2–4).

C. Huber's Courtship with Livingston

Aufiero resigned from AFS in January 2011, (9/18/17 Tr. 106:2–3; 9/21/17 Tr. 21:6–8), and joined Livingston as regional sales manager and industrial hydraulic project manager. (9/21/17 Tr. 26:1–19). Aufiero began to recruit Huber to join Livingston shortly after his own departure. (Id. at 22:6–16). He kept in close touch with Huber and remained interested in AFS's work on the Hydraulic System. (Id. at 22:23–23:6). Aufiero asked Huber to send him photographs of the recently-completed cylinder assemblies on January 30, 2011, and Huber complied. (AFS Ex. 28; AFS Ex. 29 at 1–2; 9/20/17 Tr. 23:7–16). In November 2011, Huber shared videos and photographs with Aufiero of milestone testing of the Hydraulic System's rapid retract function. (AFS Exs. 30, 30A, 30B, 31–32, Ex. 32–wmv; 9/18/17 Tr. 107:4–108:25). Huber thereafter asked Aufiero to shift communications to Huber's personal Gmail address. (AFS Ex. 9).

Huber began collaborating with Livingston on business opportunities as early as December 2011. Their discussions initiated with a Navy test stand project; Huber advised Aufiero that AFS lacked capacity to bid on this project. (See 9/21/17 Tr. 31:2–25). Huber visited Livingston's headquarters for the first time on January 8, 2012 to discuss the Navy project. (Id. at 28:18–29:3). At least four "high level" Livingston employees—Vann, Aufiero, Craig Hill ("Hill"), and Wayne Hawkins ("Hawkins")—attended this meeting. (Id. at 28:24–29:18). Each knew that Huber was employed by their competitor, and each knew that Huber was attempting to steer valuable business their way. (Id. at 30:16–31:4). Over the coming months, Huber directed two other opportunities—an Air Force test stand...