Bodemer v. Swanel Beverage, Inc.

Decision Date31 July 2012
Docket NumberNo. 2:09 CV 90.,2:09 CV 90.
Citation884 F.Supp.2d 717
PartiesWilliam BODEMER and Innovative Beverage, Inc., Plaintiffs/Counter–Defendants, v. SWANEL BEVERAGE, INC., Defendant/Counter–Claimant.
CourtU.S. District Court — Northern District of Indiana

OPINION TEXT STARTS HERE

Carly A. Brandenburg, David C. Jensen, Eichhorn & Eichhorn, Hammond, IN, for Plaintiffs/Counter–Defendants.

Eric L. Kirschner, Beckman Kelly & Smith, Glenn William Kuchel, Green & Kuchel PC, Hammond, IN, for Defendant/Counter–Claimant.

OPINION AND ORDER

JAMES T. MOODY, District Judge.

Plaintiffs and counter-defendants William Bodemer and Innovative Beverage Inc. have moved for summary judgment on their complaint for a declaratory judgment and on defendant and counter-claimant Swanel Beverage, Inc's (hereinafter Swanel) counterclaims. (DE # 34.) For the reasons set forth below, that motion is granted in part and denied in part.

I. BACKGROUND1

Swanel is a privately held beverage corporation headquartered in Hammond, IN, that does business across the United States. Swanel's business consists of selling approximately fifty soft drink, juice drink, and energy drink products. Additionally, Swanel rents beverage dispensing equipment to restaurants, bars, and other establishments. Swanel's primary energy drink is a product called “Banzai Energy Blast.” Swanel sells Banzai in both a can and in the bag-in-box format.2 Banzai is intended to be a cheaper alternative to Red Bull.

Prior to 1994, Bodemer worked for a beverage company called T & C Carbonics (“T & C”), holding positions that included sales representative and manager. A competitor of Swanel, T & C sold fountain beverages and juices. In 1994, Swanel purchased T & C, and Bodemer began working at Swanel as an outside sales manager. Bodemer was eventually promoted to Swanel's National Sales and Marketing Manager. Bodemer's duties in that role involved maintaining relationships with current and prospective Swanel clients, developing new products, and maintaining quality control. Bodemer was involved with almost every facet of Swanel's business.

After Bodemer had worked for Swanel for approximately three years, Swanel and Bodemer entered into an agreement that contained both non-compete and confidentiality provisions. Bodemer continued his employment with Swanel until February 2009. On February 13, 2009, Bodemer informed Swanel that he was leaving his position. Four days later, on February 17, Swanel management informed Bodemer that he did not need to finish out his remaining two weeks, and instructed him to stop working immediately. Swanel also had one of its attorneys send Bodemer a letter on that same day, which reminded Bodemer of the non-compete and confidentiality agreements he had signed, and stated in relevant part:

[A]ll information and materials you have received, encountered, and/or learned during your employment with Swanel must be treated and kept as confidential.

(DE # 1–2 at 5 (emphasis in original).)

In November 2008, Bodemer incorporated Innovative Beverage, Inc. (hereinafter Innovative). At some point in the months following Bodemer's departure from Swanel, Bodemer began operating Innovative. Bodemer initially ran Innovative out of his own home, but has since moved the business to a warehouse. Innovative produces an energy drink called BAM, a product similar to Swanel's Banzai energy drink.

Innovative has since started competing with Swanel. Innovative has successfully convinced at least one of Swanel's retail clients to switch its business to Innovative. That business, Kam's, located in Champaign, Illinois, was originally a client of T & C Carbonics, but became one of Swanel's clients after Swanel bought T & C Carbonics in 1994.

In April 2009, Bodemer and Innovative (hereinafter Bodemer) commenced the current action seeking a declaration that Bodemer did not violate the non-compete agreement, that the confidentiality agreement is unenforceable, and that Swanel does not have any information eligible for protection under the Indiana Uniform Trade Secrets Act. (DE # 1.) In response, Swanel brought two counterclaims, alleging that Bodemer breached the confidentiality agreement (DE # 11), and that Bodemer violated the Indiana Uniform Trade Secrets Act. ( Id.)

Bodemer has now moved for summary judgment on all of his claims requesting declaratory relief, and on both of Swanel's counterclaims. (DE 34, 35.)

II. ANALYSIS

The court will begin its analysis with Bodemer's motion for summary judgment on Swanel's two counterclaims. It will then conclude with an analysis of Bodemer's motion for summary judgment on his declaratory action claims.

BODEMER'S MOTION FOR SUMMARY JUDGMENT ON SWANEL'S COUNTERCLAIMS
A. Legal Standard

Federal Rule of Civil Procedure 56 requires the entry of summary judgment, after adequate time for discovery, against a party “who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). [S]ummary judgment is appropriate—in fact, is mandated—where there are no disputed issues of material fact and the movant must prevail as a matter of law. In other words, the record must reveal that no reasonable jury could find for the nonmoving party.” Dempsey v. Atchison, Topeka, & Santa Fe Ry. Co., 16 F.3d 832, 836 (7th Cir.1994) (citations and quotation marks omitted).

The moving party bears the initial burden of demonstrating that these requirements have been met; it may discharge this responsibility by showing that there is an absence of evidence to support the non-moving party's case. Carmichael v. Village of Palatine, Ill., 605 F.3d 451, 460 (7th Cir.2010) (citing Celotex, 477 U.S. at 323, 106 S.Ct. 2548). To overcome a motion for summary judgment, the non-moving party must come forward with specific facts demonstrating that there is a genuine issue for trial. Id. (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). The existence of a mere scintilla of evidence, however, is insufficient to fulfill this requirement. Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The nonmoving party must show that there is evidence upon which a jury reasonably could find for him. Id.

The court's role in deciding a summary judgment motion is not to evaluate the truth of the matter, but instead to determine whether there is a genuine issue of triable fact. Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505;Doe v. R.R. Donnelley & Sons Co., 42 F.3d 439, 443 (7th Cir.1994). On summary judgment a court may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts; these are jobs for a factfinder. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir.2003) (citing Anderson, 477 U.S. at 255, 106 S.Ct. 2505). In viewing the facts presented on a motion for summary judgment, the court must construe all facts in a light most favorable to the non-moving party and draw all reasonableinferences in favor of that party. Chmiel v. JC Penney Life Ins. Co., 158 F.3d 966, 968 (7th Cir.1998); Doe, 42 F.3d at 443. Importantly, the court is “not required to draw every conceivable inference from the record [in favor of the non-movant]-only those inferences that are reasonable.” Bank Leumi Le–Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir.1991) (emphasis added).

B. Trade Secrets Counterclaim

Count Two of Swanel's counterclaim asserts that Bodemer violated the Indiana Uniform Trade Secrets Act (“IUTSA”), Ind.Code 24–2–3, by misappropriating Swanel's trade secrets. Bodemer's first and only argument on this issue is that he is entitled to summary judgement because the “materials Swanel seeks to define as trade secrets are not covered under the [IUTSA's] definition” of trade secret. (DE # 35 at 20.)

The IUTSA defines a trade secret as:

“Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Ind.Code 24–2–3–2. A protectable trade secret therefore has four characteristics: (1) information, (2) which derives independent economic value, (3) is not generally known, or readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and (4) is the subject of efforts reasonable under the circumstances to maintain its secrecy.” Steve Silveus Ins., Inc. v. Goshert, 873 N.E.2d 165, 179 (Ind.Ct.App.2007). The determination of whether information constitutes a trade secret is a question of fact.3

Here, Swanel contends that the following pieces of information constitute trade secrets under the IUTSA: (1) Swanel's list of distributors 4 (DE # 41 at 4); (2) Swanel's information regarding the requirements and sales volumes of its distributors ( id.); (3) Swanel's “product recipes, productformulations, the methods by which they were developed and the companies with whom Swanel worked to develop them” (DE # 50–1 at 4); (4) the identity of Swanel's flavor house (DE # 41 at 6); (5) Swanel's information about the regions and locations where Banzai products are “more easily sold” ( id. at 7); (6) Swanel's pricing structure and costs of producing its products ( id. at 7); and (7) the identity of Swanel's raw materials suppliers and the pricing arrangements Swanel had with each ( id. at 4). The court will address each piece of information in turn.

1. Swanel's List of Distributors

Indiana courts have recognized that under certain circumstances, a customer list can...

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