Colorado Supply Co., Inc. v. Stewart
Citation | 797 P.2d 1303 |
Decision Date | 30 August 1990 |
Docket Number | No. 89CA0989,89CA0989 |
Parties | COLORADO SUPPLY COMPANY, INC., a Colorado corporation, Plaintiff-Appellant, v. David STEWART, and Aspen Maintenance Supply, Inc., a Colorado corporation, Defendants-Appellees. . III |
Court | Court of Appeals of Colorado |
Robert T. Bettenberg, Wheat Ridge, for plaintiff-appellant.
Poland & Wheeler, Scott Poland, Lakewood, for defendant-appellee David Stewart.
Oates, Hughes & Knezevich, P.C., John M. Ely, Aspen, for defendant-appellee Aspen Maintenance Supply, Inc.
Opinion by Judge DUBOFSKY.
Plaintiff, Colorado Supply, Inc., appeals the judgment dismissing plaintiff's claims for breach of contract, misappropriation of trade secrets, and injunctive relief against defendant David Stewart and claims for misappropriation of trade secrets and injunctive relief against defendant Aspen Maintenance Supply, Inc. Plaintiff also appeals the judgment granting attorney fees to Aspen. We affirm in part and reverse in part.
Prior to January 1988, Stewart worked as a sales representative for plaintiff pursuant to a series of written agreements. The parties stipulated that Stewart was an independent contractor, rather than an employee of plaintiff.
In January 1988, Stewart notified plaintiff that he would no longer be working for it. Stewart then began employment with Aspen, a competitor of plaintiff, as a sales representative. His sales territory partially overlapped the territory that he had previously worked for plaintiff.
Plaintiff first argues that the trial court erred in its determination that a covenant not to compete in Stewart's sales representative agreements with plaintiff was void. We disagree.
Section 8-2-113(2), C.R.S. (1986 Repl.Vol. 3B) provides:
The trial court concluded that none of the four enumerated exceptions applied here. Consequently, it held the noncompetition agreement to be void.
Plaintiff argues on appeal that, since Stewart was an independent contractor, the trial court erred in applying § 8-2-113(2) to his contracts. However, that statute does apply to independent contractors. See Smith v. Sellers, 747 P.2d 15 (Colo.App.1987). Accordingly, the trial court did not err in holding the non-competition covenants in his employment contracts to be void. See Colorado Accounting Machines, Inc. v. Mergenthaler, 44 Colo.App. 155, 609 P.2d 1125 (1980).
Plaintiff next argues that the trial court erred in finding that plaintiff had no trade secrets entitled to protection pursuant to the Colorado Uniform Trade Secrets Act. We disagree.
Plaintiff alleges that under § 7-74-102(4), C.R.S. (1986 Repl.Vol. 3A), its customer lists, price lists, and product formulas qualify as trade secrets. It further alleges that Stewart and Aspen misappropriated these trade secrets.
Section 7-74-102(4) provides:
(emphasis added)
What constitutes a trade secret is a question of fact for the trial court. Network Telecommunications, Inc. v. Boor-Crepeau, 790 P.2d 901 (Colo.App.1990).
Although an exact definition of a trade secret may not be possible, the following factors may be considered in the determination whether a trade secret exists:
Network Telecommunications, supra.
Furthermore, the alleged secret must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Extreme and unduly expensive procedures need not be taken. Reasonable efforts have been held to include advising employees of the existence of a trade secret, limiting access to a trade secret on a "need to know basis," and controlling plant access. Network Telecommunications, supra.
Here, the trial court concluded that plaintiff's customer lists were not trade secrets because: (1) the information was developed by Stewart, who was an independent contractor, rather than by plaintiff; (2) the names on the list can be obtained fairly easily, by reading through the business section of the telephone directory and by asking prospective customers from whom they purchase certain products; and (3) there was no exclusivity as to customers, in that customers purchased the products from more than one vendor.
As to price lists, the trial court found that: (1) they were published by plaintiff to customers, employees, and independent contractors; (2) there are no fixed prices at which the products are sold; and (3) there was no evidence that Stewart knew plaintiff's costs of the products. Hence, it concluded the price lists were not trade secrets.
The evidence demonstrated that the "formulas" were not unique to plaintiff and were versions of formulas from products not created by or unique to the plaintiff.
The trial court also found that the precautions taken to protect all of this information were not those taken to protect trade secrets--they were only normal business precautions. Furthermore, dissemination of this information was not limited to certain employees. Even independent contractors, who were hired as salespersons, were provided the information.
Finally, the trial court determined that there was no misappropriation because there was no improper acquisition of the information and because the sales representative agreements imposed no duty on Stewart regarding disclosure of the information. See § 7-74-102, C.R.S. (1986 Repl.Vol. 3A).
These findings are in accord with decisions from other jurisdictions. See Jet Spray Cooler, Inc. v. Crampton, 361 Mass. 835, 282 N.E.2d 921 (1972) ( ); Smith Oil Corp. v. Viking Chemical Co., 127 Ill.App.3d 423, 82 Ill.Dec. 250, 468 N.E.2d 797 (1984) (...
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