Burbank Grease Servs., LLC v. Sokolowski

• Decision Date: 20 January 2005
• Docket Number: No. 04-0468.,04-0468.
• Parties: BURBANK GREASE SERVICES, LLC, Plaintiff-Appellant, v. Larry SOKOLOWSKI, United Grease LLC and United Liquid Waste Recycling, Inc., Defendants-Respondents.
• Court: Wisconsin Court of Appeals

278 Wis.2d 698

2005 WI App 28

693 N.W.2d 89

BURBANK GREASE SERVICES, LLC, Plaintiff-Appellant,¹ v. Larry SOKOLOWSKI, United Grease LLC and United Liquid Waste Recycling, Inc., Defendants-Respondents.

No. 04-0468.

Court of Appeals of Wisconsin.

Submitted on briefs September 7, 2004.

Decided January 20, 2005.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Michael L. Hermes and Christopher M. Toner of Metzler and Hager, S.C., Green Bay.

On behalf of the defendants-respondents, Larry Sokolowski, the cause was submitted on the brief of Stephen J. Eisenberg and Pam M. Baumgartner of Eisenberg Law Offices, S.C., Madison; and on behalf of the defendants-respondents, United Grease, LLC and United Liquid Waste Recycling, Inc., the cause was submitted on the brief of David E. McFarlane and Mark H.T. Fuhrman of Bell, Gierhart & Moore, S.C., Madison.

Before Dykman, Vergeront and Higginbotham, JJ.

¶ 1. VERGERONT, J.

Burbank Grease Services, LLC, appeals the circuit court's order dismissing on summary judgment its claims of misappropriation of a trade secret, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and computer crimes. Based on the undisputed facts, we conclude: (1) the customer information Burbank asserts is a trade secret does not meet the standard in WIS. STAT. § 134.90(1)(c)1;² (2) the claims of breach of fiduciary duty against Larry Sokolowski and aiding and abetting that breach against United Grease, LLC and United Liquid Waste Recycling, Inc., are preempted by § 134.90(6); and (3) Sokolowski did not take computer data from Burbank without authorization in violation of WIS. STAT. § 943.70(2)(a)6. Accordingly, the circuit court correctly granted summary judgment against Burbank on the four claims and we affirm.

BACKGROUND

¶ 2. Burbank³ is engaged in the business of collecting and processing used restaurant fry grease, trap grease, and industrial grease. At the relevant time, Burbank had approximately 11,250 customers in Wisconsin and 3,200 in surrounding states. The majority of Burbank's customers are restaurants; at the relevant time about 65% were restaurants, about 34% were grease trap customers, and less than 1%—about fifteen —were industrial customers.⁴ Sokolowski was employed by Burbank in various management positions from November 1997 to April 2001. Approximately six months prior to leaving Burbank, Sokolowski was made procurement/territory manager. In that position he oversaw sales people, managed customer relations with industrial clients, and prepared spreadsheets and billings for the accountant. During Sokolowski's employment he sometimes worked at home to meet deadlines, with the knowledge and approval of Burbank.

¶ 3. In October 1998, Burbank distributed a code of conduct that it required all managers to acknowledge and adhere to. Sokolowski acknowledged in writing that he received the code. The code provided that "[n]o ... employee shall disclose any confidential or privileged information to any person within the Company who does not have a need to know or to any outside individual or organization except as required in the normal course of business." In April 1999, all Burbank employees received an employee handbook that contained a provision stating that employees who improperly used or disclosed trade secret or confidential business information, which was defined to include customer lists, would be subject to disciplinary action including termination. The provision also stated that employees may be required to sign a nondisclosure agreement as a condition of employment. Sokolowski was never asked to sign a nondisclosure agreement and there is no evidence any other employee was asked to do so. Sokolowski was also never asked to sign a noncompete agreement.

¶ 4. In April 2001, Sokolowski resigned his employment with Burbank and began to work for United Liquid as a sales and customer service representative. United Liquid provides waste and cake sludge waste hauling services to industrial, municipal, and commercial clients in Wisconsin, as well as glass, can, and plastic recycling. United Liquid had the ability to handle grease trap collection, but that was a small part of its business. In October 2001, Sokolowski and the shareholders and officers of United Liquid formed United Grease, which began collecting fry grease, trap grease, and industrial grease.

¶ 5. According to Sokolowski's testimony, sometime after United Grease was formed, he discovered that he still had materials at home from projects he had worked on at home while employed by Burbank. The materials relevant to this appeal are: (1) a hardcopy of a December 2000 partial list of Burbank's grease trap customers, containing about 2,400 names, phone numbers and addresses, sometimes a contact person, the total gallons for the grease traps, and pricing for the small restaurants but no pricing for chain restaurants and large industrial customers;⁵ (2) on a computer disk, a 1998 spreadsheet of Burbank's industrial clients that showed the amount of grease collected from each customer times the market rate less a processing fee, which determined what Burbank would pay the customer for the material collected; and (3) also on the computer disk, a spreadsheet showing the amount of collections and revenues per customer for certain drivers in 1998, organized by the driver's route. We will refer to these three items of information collectively as Burbank's "customer information."⁶ It is undisputed that, although Burbank authorized Sokolowski to take home information to work on projects for Burbank, including customer information, when Sokolowski left Burbank's employ, Burbank did not ask Sokolowski whether he had any customer or other information from Burbank at home or ask him to return any such information.

¶ 6. Sokolowski testified that, after United Grease had been in operation several months, he brought the December 2000 grease trap customer list and the computer disk to work. He entered information from the 2000 grease trap customer list into United Liquid's computer system, including the name of the restaurant, phone number, address, approximate size of the grease trap, and the approximate pricing, and he used this information to solicit customers for United Grease. Sokolowski also testified that he used the 1998 spreadsheet of Burbank's industrial clients to create his own spreadsheet to use in soliciting industrial customers for United Grease. He did not, he testified, use the 1998 driver spreadsheet.

¶ 7. According to Sokolowski, United Grease acquired about eighty fry grease customers, almost all former Burbank customers, and 157 grease trap customers, of which all but sixty to seventy were former Burbank customers. As for industrial customers, the evidence shows that United Grease acquired either one or two of Burbank's former customers.

¶ 8. Eventually Burbank became aware that Sokolowski was soliciting its customers and filed this action. The complaint alleged: (1) Sokolowski misappropriated propriated Burbank's trade secrets in violation of WIS. STAT. § 134.90; (2) Sokolowski breached his fiduciary duty to his principal, Burbank; (3) United Grease and United Liquid Waste aided and abetted Sokolowski in breaching his fiduciary duty; and (4) Sokolowski willfully and knowingly took possession of computer data from Burbank's computer system without authorization in violation of WIS. STAT. § 943.70(2). All parties filed motions for summary judgment and the circuit court granted the defendants' motions, dismissing the complaint.

¶ 9. The circuit court agreed with the parties that there were no genuine issues of material fact. With respect to the trade secret claim, the circuit court concluded that no independent economic value was derived from the customer information because it was generally known and readily ascertainable by proper means such as approaching restaurant personnel and inquiring about their rates and, alternatively, Burbank did not make reasonable efforts to maintain the secrecy of the information. With respect to the two breach of fiduciary duty claims, the court agreed with the defendants that these claims were preempted by WIS. STAT. § 134.90(6). Finally, in addressing Burbank's arguments that Sokolowski committed a computer crime under WIS. STAT. § 943.70(2), the court concluded there was no violation of subd. (2)(a)4 because Sokolowski was authorized to take possession of the computer disks at the time he took possession. The court declined to address Burbank's arguments that Sokolowski violated other subdivisions of para. (2)(a) because Burbank had not pleaded those violations in its complaint. Burbank challenges on appeal the circuit court's grant of summary judgment against it on these four claims.⁷

DISCUSSION

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¶ 10. In reviewing the grant or denial of a summary judgment, we apply the same methodology as the trial court and review de novo the grant or denial of summary judgment. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315-17, 401 N.W.2d 816 (1987). Summary judgment is proper if there are no genuine issues of material fact and one party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2). In evaluating the evidence, we draw all reasonable inferences from the evidence in the light most favorable to the non-moving party. Grams v. Boss, 97 Wis. 2d 332, 339, 294 N.W.2d 473 (1980). Whether an inference is reasonable and whether more than one reasonable inference may be drawn are questions of law. Hennekens v. Hoerl, 160 Wis. 2d 144, 162, 465 N.W.2d 812 (1991).

I. Misappropriation of a Trade Secret, WIS. STAT. § 134.90

¶ 11. WISCONSIN STAT. § 134.90(2) provides that "[n]o person . . . may misappropriate ... a trade secret by ... [a]cquiring the trade secret of another by means which the person knows or has reason to know constitute improper means . . . or by disclosing or using without express or implied consent the...