Bro-Tech Corp. v. Thermax, Inc.

• Decision Date: 03 September 2009
• Docket Number: Civil No. 05-CV-2330.
• Citation: Bro-Tech Corp. v. Thermax, Inc., 651 F.Supp.2d 378 (E.D. Pa. 2009)
• Parties: BRO-TECH CORPORATION t/a the Purolite Company, et al., Plaintiffs, v. THERMAX, INC. d/b/a Thermax USA Ltd., et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

651 F.Supp.2d 378

BRO-TECH CORPORATION t/a the Purolite Company, et al., Plaintiffs, v.THERMAX, INC. d/b/a Thermax USA Ltd., et al., Defendants.

Civil No. 05-CV-2330.

United States District Court, E.D. Pennsylvania.

September 3, 2009.

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Aaron H. Marks, Jonathan E. Minsker, Joshua Greenblatt, Marc E. Kasowitz, Leonard A. Feiwus, Kasowitz Benson Torres & Friedman LLP, New York, NY, Clive Zietman, Keith Thomas, Manches LLP, London, UK, Joseph J. Centeno, Joseph J. McGovern, Peter J. Toren, Richard R. Harris, Richard P. Limburg, Alexis P. Basilevsky, Mathieu Shapiro, Sarah Shapiro, Obermayer Redmann Maxwell & Hippel LLP, Sidney L. Gold, Sidney L. Gold & Associates, PC, Philadelphia, PA, for Plaintiffs.

Frank M. Gasparo, John A. Basinger, David Zaslowsky, Grant Hanessian, Jacob Max Kaplan, Baker & McKenzie LLP, New York, NY, Harvey A. Sernovitz, Law Offices of Harvey A. Sernovitz, P.C., Philadelphia, PA, for Defendants.

MEMORANDUM & ORDER

RUFE, District Judge.

I.INTRODUCTION

In this case, PlaintiffsBro-Tech Corporation, trading as The Purolite Company, and Purolite International Ltd.(collectively "Plaintiffs" or "Purolite"), which are in the business of producing ion exchange resins,¹ bring multiple claims relating to Defendants' alleged misappropriation of their confidential and trade secret information.There are nine named Defendants: two corporate entities comprising part of the global energy and chemical company the Thermax Group ("Thermax"),² three high-ranking employees of Thermax, and four individuals who left the employ of Purolite to join Thermax in 2005.Plaintiffs' Amended Complaint includes fifteen causes of action or equitable grounds for relief, some brought against certain Defendants, and some brought against all.³Plaintiffs bring federal claims for violations of the Racketeer Influenced and Corrupt Organizations Act("RICO")⁴ and the Computer Fraud and Abuse Act ("CFAA"),⁵ and state law claims of Misappropriation of Trade Secrets in violation of the Pennsylvania Uniform Trade Secrets Act ("PTSA"),⁶ Unfair Competition, Tortious Interference with Existing and Prospective Contractual and Business Relationships, Civil Conspiracy, Breach of Contract, Breach of the Duty of Loyalty, Commercial Disparagement, Conversion and Inevitable Disclosure, as well as equitable claims of Unjust Enrichment and Vicarious Liability and a request for preliminary and permanent injunctions.⁷Plaintiffs have since withdrawn the claims for Conversion and Inevitable Disclosure,⁸ and these will be dismissed.Certain defendants have asserted affirmative defenses to equitable claims they face.⁹Presently before the Court are three Motions for Summary Judgment filed by various sets of defendants,¹⁰ which encompass virtually all of the causes of action brought against them, and Plaintiffs' Motion for Summary Judgment as to the affirmative equitable defenses noted above.¹¹

II.BACKGROUND

Overall, the Amended Complaint describes a scheme by Defendants to steal and use Purolite's trade secret information related to the development, production and sale of ion exchange resins.Through the alleged scheme, Purolite employees who knew or could access Purolite's proprietary chemical technology and sales information would accumulate it, quit Purolite, and go to work for Thermax, bringing Purolite's proprietary information with them for their new employer's use and benefit.The evidence adduced, viewed in the light most favorable to Plaintiffs where appropriate, reflects the following regarding the parties and events in this matter.

A.Parties

1.Plaintiffs

PlaintiffBro-Tech Corporation t/a The Purolite Company is a corporation incorporated under the laws of Delaware with its principal place of business in Pennsylvania.PlaintiffPurolite International Ltd. is a corporation owned in part by The Purolite Company.It is organized under the laws of the United Kingdom with its principal address in South Wales.¹²As noted, the plaintiffs are referred to hereinafter as "Plaintiffs" or "Purolite."

Purolite was founded, and is primarily run, by members of the Brodie family.Stefan Brodie co-founded Purolite with his brother, Don.At all relevant times, Stefan Brodie was Purolite's Chief Executive Officer and President.At all relevant times, Don Brodie was Executive Vice-President of Purolite.Also, at all relevant times, Jacob Brodie, Stefan Brodie's son, was Vice-President of Purolite.¹³

Purolite began business as an importer of ion exchange resins in 1982.¹⁴It became an ion exchange resin manufacturer in 1984.¹⁵Purolite operates manufacturing sites in Philadelphia, Pennsylvania, Romania and China, and is the second largest manufacturer of ion exchange resins in the world.¹⁶Purolite also develops ion exchange resins and related technologies.¹⁷

2.Defendants

a. Thermax

DefendantThermax, Inc., d/b/a Thermax USA LTD. is a Michigan corporation with its principal place of business in that state.DefendantThermax Ltd. is a company incorporated under the laws of India.As noted previously, these Defendants are referred to hereinafter as "Thermax."Among other things, Thermax is a manufacturer of ion exchange resins.

b. Individual Thermax Defendants: Pheroz Pudumjee, Amitabha Mukhopadhyay and S.S. Shastri

DefendantsPheroz Pudumjee("Pudumjee"), Amitabha Mukhopadhyay("Mukhopadhyay") and S.S. Shastri("Shastri") have senior roles within Thermax.At all relevant times, Defendant Pudumjee was the Executive Director of Thermax, Ltd., Defendant Mukhopadhyay was the Chief Financial Officer of Thermax, Ltd., and Defendant Shastri was the President of Thermax, Inc.In these roles Mukhopadhyay and Shastri bore direct responsibility for decisions regarding Thermax's ion exchange resins business in the United States.¹⁸When discussed collectively, Defendants Pudumjee, Mukhopadhyay and Shastri are referred to hereinafter as the "Individual Thermax Defendants."

c. Former Employee Defendants: Nancy Gleasman, Cindy Gresham, James Sabzali, and Narvinder Sachdev

The four remaining Defendants are individuals who worked for Purolite before resigning in or around March, 2005, and immediately going to work for Thermax.DefendantNancy Gleasman("Gleasman") worked for Purolite for three years before resigning in 2005.At the time she resigned from Purolite, she held the position, "Midwest Sales Manager."DefendantCindy Gresham("Gresham") worked for Purolite for twenty-one years as a materials and product manager, and lastly, as a sales representative, before resigning in 2005.DefendantJames Sabzali("Sabzali") worked for Purolite for nine years before resigning in March, 2005.When he resigned from Purolite, he held the position, "North American Sales and Marketing Manager and International Marketing Manager."DefendantNarvinder Sachdev("Sachdev") is a trained chemical engineer and holds an MBA degree.He worked for Purolite from October, 1986 to March, 2005.In that time, he worked as a development chemist and a production facility manager, and ultimately held a position in which he supervised the technical quality of all Purolite products, worldwide.When discussed collectively, Gleasman, Gresham, Sabzali and Sachdev are referred to hereinafter as the "Former Employee Defendants."

3.Circumstances and Events underlying this litigation

a. Purolite's business, internal operations, procedures and security

As noted, Purolite develops, manufactures and sells ion exchange resins ("IER").Generally speaking, "ion exchange resins are chemical substances used to purify liquids."¹⁹They consist of a polymer matrix, ordinarily in the form of a small bead, attached to a "functional group" that is either acidic or basic.²⁰The bead, or polymer, is composed of either polystyrene or acrylic.²¹It is made in the first basic step of IER production, called "polymerization."The polymer is attached to a charged functional group in the second basic step of IER production, called "activation" or in some cases, "sulfonation."Two broad categories of resin result, cation and anion exchange resins.²²Anion exchange resins are basic, and cation exchange resins are acidic.Each can be either strong or weak, depending on purpose.²³

In general, during the process of polymerization, a suspension of monomer (the chemical basis from which polymers are formed), water, and suspending agents that facilitate the formation of beads is placed in a vessel and stirred and heated in a controlled fashion until the desired polymers are produced.²⁴Suspension ingredients can be formulated to produce gel polymers or macroporous polymers, which, in turn, are used in gel or macroporous resins of different types and uses.Polymers thus produced are then rinsed and otherwise prepared for activation.The particulars of the next step, activation, vary widely depending on the type of resin to be produced, in terms of anion or cation, strength, and other desired characteristics.²⁵Throughout the IER production process, precision in formulation and execution is necessary to achieve the desired result.

Purolite has spent much time and capital researching and testing its IER products and the processes by which they are made.Essential ingredients in Purolite's products may be known or discoverable.²⁶Yet Purolite claims a property interest in its specific product "recipes" or formulations, and also in its exact production processes, which include factors such as time periods, temperatures and equipment used.²⁷By May, 2005, through its own research efforts, Purolite had developed proprietary information with respect to many different IER products or production processes.²⁸Purolite also manufactured a broad array of IERs and sold them globally.²⁹It claims a proprietary interest in its confidential sales information relating to its own sales...