Chasteen v. Unisia JECS Corp., 99-1020
| Decision Date | 05 July 2000 |
| Docket Number | No. 99-1020,99-1020 |
| Citation | 216 F.3d 1212 |
| Parties | (10th Cir. 2000) RONALD E. CHASTEEN, Plaintiff, and PACER INDUSTRIES, INC., a Missouri corporation; INJECTION RESEARCH SPECIALISTS, INC., a Colorado corporation, Plaintiffs-Appellants, v. UNISIA JECS CORPORATION, a Japanese corporation; SUZUKI MOTOR CORPORATION, a Japanese corporation; ARCTIC CAT, INC., a Minnesota corporation; ARCTIC CAT SALES, INC., a Minnesota corporation, Defendants-Appellees |
| Court | U.S. Court of Appeals — Tenth Circuit |
Appeal from the United States District Court for the District of Colorado (D.C. No. 97-Z-2606) [Copyrighted Material Omitted] G. Stephen Long, Shughart, Thomson & Kilroy, P.C., Denver, Colorado, (Joseph W. Halpern and Stephen G. Masciocchi, Holland & Hart, LLP, Denver, Colorado; John H. Bernstein, Kutak, Rock, Denver, Colorado; William E. Quirk, Shughart, Thomson & Kilroy, P.C., Kansas City, Missouri, on the briefs), for Plaintiffs-Appellants.
Alan G. Carlson (J. Derek Vandenburgh on the brief), Merchant & Gould, P.C., Minneapolis, Minnesota; Roger P. Thomasch (Jon Bernhardt on the brief), Ballard, Spahr, Andrews & Ingersoll, Denver, Colorado; Barry L. Grossman (Brian P. Akers on the brief), Foley & Lardner, Milwaukee, Wisconsin; (David G. Palmer, Brian L. Duffy, Zevnik, Horton, Guibord, McGovern, Palmer & Fognani, L.L.P., Denver, Colorado; William A. Bianco, Davis, Graham & Stubbs, L.L.P., Denver, Colorado, on the brief), for Defendants-Appellees.
Before MURPHY, Circuit Judge, McWILLIAMS, Senior Circuit Judge, and ROGERS, District Judge*
In 1997, Injection Research Specialists, Inc. and Pacer Industries, Inc. (collectively, "Injection Research")1 filed suit against Arctic Cat, Inc., Arctic Cat Sales, Inc. (collectively, "Arctic Cat"), Suzuki Motor Corp. ("Suzuki") and UNISIA JECS Corp. ("JECS") (collectively, the "Defendants"), claiming the Defendants committed trade secret misappropriation and fraud. Specifically Injection Research alleged the Defendants stole its trade secrets and used them to develop an electronic fuel injection ("EFI") system for two-cycle snowmobile engines. The Defendants moved for summary judgment on both claims, contending Injection Research filed suit after the statutes of limitations had run. Applying a three-year statute of limitations to both the trade secrets and fraud claims pursuant to Colorado state law, the District Court for the District of Colorado granted the Defendants' motion and dismissed the suit as time-barred.
Injection Research now appeals the grant of summary judgment, asserting the following three arguments: (1) the district court erroneously concluded that Injection Research's misappropriation claim accrued more than three years before it filed suit; (2) even if Injection Research filed its misappropriation claim outside the limitations period, the Defendants' wrongful concealment of information equitably tolled the statute of limitations; and (3) the fraud claim should be governed by Minnesota's six-year statute of limitations, and thus, that claim was timely filed.2 This court exercises jurisdiction pursuant to 28 U.S.C. 1291 and affirms.
With Injection Research financing, Ronald Chasteen invented a prototype EFI system for two-cycle engines, which are used in snowmobiles and other vehicles. The EFI system effectively replaces the carburetor in a two-cycle engine, increasing the engine's efficiency and allowing it to operate at an optimum level under variable atmospheric and temperature conditions. Injection Research obtained patents to protect numerous features of its EFI system.
In July 1987, Injection Research contacted Polaris Industries, L.P. ("Polaris"), a major snowmobile manufacturer, in an effort to sell its EFI system to Polaris. Over the next fifteen months, Injection Research worked with Polaris to develop a contractual relationship, which included sharing trade secrets with Polaris. In October 1988, Injection Research discovered that Polaris had hired Gerhardt Maier, a former Injection Research employee who had helped develop its EFI system, though Polaris insisted that Maier would merely assist in cultivating Polaris' interest in EFI and its relationship with Injection Research. In December, however, Polaris informed Injection Research that it had decided EFI technology was too costly and that it no longer was interested in pursuing EFI systems for its snowmobiles. Nonetheless, one year later Polaris began marketing and selling the industry's first EFI-equipped snowmobiles.
When its relationship with Polaris broke down, Injection Research contacted Arctic Cat, a major competitor of Polaris, to once again attempt to sell its EFI system to a snowmobile manufacturer. After Arctic Cat signed a confidentiality and non-disclosure agreement, Injection Research performed a number of field tests for Arctic Cat to demonstrate its EFI system and sold Arctic Cat three prototype EFI units. In the Fall of 1989, however, Arctic Cat informed Injection Research of its intention to collaborate with Suzuki and JECS, one of Suzuki's vendors, to independently develop its own EFI system. In December 1991, Arctic Cat began marketing a snowmobile with an EFI system, and its advertisements boasted that Arctic Cat and its suppliers had developed the system on their own.
In 1990, Injection Research brought suit (the "Polaris action") against Polaris. Injection Research amended its complaint in late 1991 to add as defendants Fuji Heavy Industries, Ltd. ("Fuji"), Polaris' engine supplier, and JECS, which manufactured the EFI system used in the Polaris/Fuji snowmobile engines. Injection Research asserted claims for, inter alia, trade secret misappropriation by Polaris and Fuji and patent infringement by Polaris, Fuji, and JECS. The amended complaint alleged a "conspiratorial scheme" between Polaris, Fuji, and JECS to manufacture "an EFI system which is saturated with [Injection Research] . . . confidential and proprietary information." In the Polaris action, JECS answered Injection Research's interrogatories, claiming it had based the EFI system it developed for Fuji/Polaris on prior design work it had undertaken on behalf of another company. Documents which JECS produced in the Polaris action in 1995, however, indicated to Injection Research that JECS did not independently develop its EFI system, but rather relied on the work done and approach adopted by Injection Research. Ultimately, Injection Research prevailed on its trade secret claim, though the patent infringement claims, the only claims then made against JECS, were dismissed.
On December 12, 1997, Injection Research filed the instant suit against Arctic Cat, Suzuki, and JECS, asserting against all the Defendants one misappropriation of trade secrets claim and one fraud claim. The district court granted the Defendants' motion for summary judgment on both claims, concluding they were time-barred pursuant to Colorado's three-year statute of limitations for both misappropriation of trade secrets and fraud. Injection Research now appeals that ruling.
This court reviews de novo a grant of summary judgment. See Charter Canyon Treatment Ctr. v. Pool Co., 153 F.3d 1132, 1135 (10th Cir. 1998). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A "material fact" is one which could have an impact on the outcome of the lawsuit, while a "genuine issue" of such a material fact exists if a rational jury could find in favor of the non-moving party based on the evidence presented. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). In applying this standard, this court views the evidence and draws reasonable inferences therefrom in a light most favorable to the non-moving party. See Kaul v. Stephan, 83 F.3d 1208, 1212 (10th Cir. 1996).
Col. Rev. Stat. 7-74-107. The statutory definition of "misappropriation" includes both disclosure and use of a trade secret in contravention of a duty to maintain its secrecy. See id. 7-74-102(2)(b)(II). Injection Research filed the instant suit against the Defendants on December 12, 1997. If, therefore, Injection Research knew or should have discovered prior to December 12, 1994 that Arctic Cat, Suzuki, and JECS misappropriated its trade secrets, Injection Research filed its trade secrets misappropriation claim beyond the limitations period.
The Fall 1989 issue of Snowmobiler's Race & Rally magazine contained an article entitled "Fuel Injection Under Development at Arctic Cat." On November 2, 1989, that article was faxed to Injection Research. Ronald Chasteen admitted in his deposition testimony that in the article, a manager at Arctic Cat disclosed trade secrets belonging to Injection Research in violation of Arctic Cat's confidentiality agreement. In November 1989, therefore, more than six years before filing the instant lawsuit, Injection Research had actual knowledge that Arctic Cat had misappropriated its trade secrets by disclosing them when it had a duty to maintain their secrecy. Even though in the instant suit Injection Research more directly complained of Arctic Cat's use of its trade secrets, rather than disclosure of them, the controlling statute of limitations states, "For purposes of this section, a continuing misappropriation...
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