Briefing.Com v. Jones
| Decision Date | 26 January 2006 |
| Docket Number | No. 04-196.,04-196. |
| Citation | 126 P.3d 928,2006 WY 16 |
| Parties | BRIEFING.COM, a California corporation; and Richard C. Green, Appellants (Plaintiffs), v. Gregory JONES, individually; Cynthia Dietzmann, individually; and Street Account LLC, a Wyoming corporation, Appellees (Defendants). |
| Court | Wyoming Supreme Court |
Thomas A. Nicholas, III and Robert C. Jarosh of Hirst & Applegate, Cheyenne, Wyoming; and Paul E. Chronis and Melissa Eckhause of McDermott, Will & Emery, Chicago, Illinois, for Appellants.
William P. Schwartz, William B. Campbell, and Janet Lewis of Ranck & Schwartz, LLC, Jackson, Wyoming, for Appellees.
Before HILL, C.J., and GOLDEN, KITE, VOIGT, and BURKE, JJ.
[¶ 1] This matter is before the Court upon our agreement to answer questions certified to us by the United States District Court for the District of Wyoming, the Honorable William F. Downes presiding.1 Appellants, Briefing.com and Richard C. Green, filed suit in the federal district court against Gregory Jones, Cynthia Dietzmann, and StreetAccount LLC, based in part on a theory of misappropriation of trade secrets.
[¶ 2] 1. Would the Wyoming Supreme Court adopt a common-law cause of action for misappropriation of trade secrets and/or confidential information when former employees of a company are alleged to have misappropriated their former employer's trade secrets and/or confidential information to start a competing business?
2. If the answer to question number 1 is yes, what are the elements of the cause of action?
[¶ 3] W.R.A.P. 11.03 requires the certifying court to provide a "statement of all facts relevant to the questions certified," as well as the "nature of the controversy in which the questions arose[.]" The certifying order from the United States District Court for the District of Wyoming provides the following information in that regard:
Statement of Alleged Facts Relevant to Certified Questions
Plaintiff, Briefing.com, is a California corporation that provides analysis of stock and fixed income markets for use by professional and individual investors. Plaintiff, Richard Green, is the President of Briefing.com and is a member of Briefing.com's board of directors. The Briefing.com website was started in 1995. Mr. Green owns approximately 51 percent of Briefing.com's outstanding shares and is Briefing.com's majority shareholder.
Street Account LLC is a Wyoming limited liability company whose members include defendants Gregory Jones and Cynthia Dietzmann. Plaintiffs allege that Defendant StreetAccount LLC is [a] direct competitor of Briefing.com in the internet-based market analysis industry. Defendants Jones and Dietzmann are citizens of the State of Wyoming. Mr. Jones and Ms. Dietzmann currently own approximately 10 percent and 1.1 percent, respectively, of the outstanding shares of Briefing.com.
Mr. Jones and Ms. Dietzmann are former employees of Briefing.com. While employed with Briefing.com, they worked in the company's Jackson, Wyoming office. Ms. Dietzmann was employed by Briefing.com for approximately seven years as a market analyst until her resignation in or about late February or early March 2003. Mr. Jones was employed by Briefing.com from approximately November 1996 through late February or early March 2003. Plaintiffs allege that in addition to being an employee of Briefing.com, Mr. Jones was also a member of Briefing.com's board of directors for approximately six years until his resignation from that position in April 2003.
Plaintiffs allege that, based on their former positions with Briefing.com, Defendants Jones and Dietzmann knew of Briefing.com's work and proprietary studies in developing Briefing.com's themes and designs. More specifically, Plaintiffs allege that, as employees of Briefing.com, Defendants Jones and Dietzmann had inside access to certain of the company's confidential information and data regarding the internet-based market analysis trade.
Plaintiffs allege that while working for Briefing.com, Ms. Dietzmann developed a list of market contacts that Briefing.com used to obtain market information that could be displayed on its website. Plaintiffs allege that such market contact information developed by Ms. Dietzmann was developed pursuant to her employment with Briefing.com, and is therefore the sole property of Briefing.com. Plaintiffs allege, however, that Ms. Dietzmann did not return all of Briefing.com's market contact information to the company, either before or after her resignation. As a result, Plaintiffs allege that Defendants misappropriated certain of Briefing.com's trade secrets and/or confidential information in order to form and operate a competing business.
In Count V of their Second Amended Complaint ("SAC"), Plaintiffs asserted a common-law cause of action against Defendants for misappropriation of trade secrets and/or confidential information. On or about March 30, 2004, Defendants moved to dismiss Count V of the SAC on the grounds that Wyoming law does not recognize a cause of action for misappropriation of trade secrets. Alternatively, Defendants requested that the issue be certified to the Wyoming Supreme Court for a determination as to whether such a cause of actions exists under Wyoming law. On June 4, 2004, [the federal district court] heard oral argument from all parties relating to Defendants' motion to dismiss Count V. After hearing argument, [it was] determined that there was no controlling precedent under Wyoming law to rule on this issue, and therefore, [the federal district court] found that the questions referenced above should be certified to the Wyoming Supreme Court for resolution.
[¶ 4] A cause of action for misuse of trade secrets was first recognized by Roman law, and was well known to the common law.2 Trade secret laws have their genesis in society's need to encourage innovation and to foster standards of trust in the marketplace:
The basis of the law as to trade secrets, apart from breach of contract, is the abuse of confidence or an impropriety in the means of procurement of information. Trade secrets are protected to encourage the development of new inventions, processes, and business techniques, to protect against breaches of faith and the use of improper methods to obtain information, and to maintain standards of loyalty and trust in the business community. An employee owes a duty of fidelity to an employer while the worker is employed by that employer, even where the employment is at will and even though the worker has not signed an agreement not to use trade secrets acquired by the employee; therefore, an employee will be restrained from using the employer's trade secrets learned during employment. Moreover, one who knowingly and for his or her own interests helps employees to violate their duty of fidelity and trust to their employer with respect to trade secrets is also liable to the employer, and will be restrained from use of the confidential information.
54A Am.Jur.2d Monopolies, Restraints of Trade, and Unfair Trade Practices § 1114 (1996 and Supp.2005). At the same time, however, trade secret law has recognized a counterbalancing need for free competition:
It has been said that the law of trade secrets is the result of balancing two conflicting elements essential to society. On the one hand, there is a strong policy favoring free competition, thus entitling an employee to use the skill and knowledge of his trade or profession which he has learned in the course of his employment, for the benefit of himself and the public, if he does not violate a contractual or fiduciary obligation in doing so. On the other hand, in order to promote the progress of science and the useful arts, the law provides certain protections to an originator, one of these being the law protecting trade secrets.
P. Guthrie, Annotation, Employee's Duty, in Absence of Express Contract, Not to Disclose or Use in New Employment Special Skills or Techniques Acquired in Earlier Employment, 30 A.L.R.3d 631, § 2 at 636 (1970 and Supp.2005).
[¶ 5] The body of law on this subject has accumulated over many years and it is well annotated in various authorities. See generally Alois Valerian Gross, Annotation, What is "Trade Secret" so as to Render Actionable Under State Law its Use or Disclosure by Former Employee, 59 A.L.R.4th 641 (1988 and Supp.2005); Michael A. Rosenhouse, Annotation, Proper Measure and Elements of Damages for Misappropriation of Trade Secret, 11 A.L.R.4th 12 (1982 and Supp.2005); K.H. Larsen, Annotation, Former Employee's Duty, in Absence of Express Contract, Not to Solicit Former Employer's Customers or Otherwise Use his Knowledge of Customer Lists Acquired in Earlier Employment, 28 A.L.R.3d 7 (1969 and Supp.2005); Donald M. Zupanec, Annotation, Criminal Liability for Misappropriation of Trade Secret, 84 A.L.R.3d 967 (1978 and Supp.2005); and Gregory M. Wasson, Misappropriation of Trade Secret Under the Restatement of Torts, 14 P.O.F.3d 619 (1991 and Supp.2005).
[¶ 6] Today, there are three primary manifestations of trade secret law. The first is the formulation of the common law tort set forth in the 4 Restatement of the Law of Torts, Division Nine, Part 1, Chapter 36, § 757 at 1-2 (1939):
§ 757. Liability for Disclosure or Use of Another's Trade Secret-General Principle.
One who discloses or uses another's trade secret, without a privilege to do so, is liable to the other if
(a) he discovered the secret by improper means, or
(b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him, or
(c) he learned the secret from a third person with notice of the facts that it was a secret and that the third person discovered it by improper means or that the third person's disclosure of it was otherwise a breach of his duty to the other, or
(d) he learned the secret with notice...
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