Connors v. Howard Johnson Co., 89-P-507

• Decision Date: 24 June 1991
• Docket Number: No. 89-P-507,89-P-507
• Citation: 30 Mass.App.Ct. 603,571 N.E.2d 427
• Parties: Elaine A. CONNORS, administratrix, 1 v. HOWARD JOHNSON COMPANY.
• Court: Appeals Court of Massachusetts

Page 427

571 N.E.2d 427

30 Mass.App.Ct. 603

Elaine A. CONNORS, administratrix, ¹ v. HOWARD JOHNSON COMPANY.

No. 89-P-507.

Appeals Court of Massachusetts Suffolk.

Argued April 9, 1990.

Decided May 16, 1991.

Further Appellate Review

Denied June 24, 1991.

Stephen S. Young, Joshua C. Krumholz with him, Boston, for plaintiff.

Laurie S. Gill, Francis C. Lynch with her, Boston, for defendant.

Before ARMSTRONG, KASS and SMITH, JJ.

ARMSTRONG, Justice.

Thirteen years after the death of Paul H. Beckner, who had been employed as a quality control manager at the Howard Johnson Company's ice cream manufacturing plant in Brockton, his administratrix brought this action for damages for breach of contract, breach of trust, and misappropriation of trade secrets. The theory of the action was that Beckner, who had been employed by another ice cream maker, Lewis Sherry, in the 1940s and had then gone unsuccessfully into business for himself, was hired by the defendant in 1952 to take advantage of his superior formulas for ice creams; that they entered into a written contract in 1958, giving the defendant proprietary rights to ice cream flavors and formulas developed by Beckner for the defendant (but not for those he developed earlier); that the defendant continued to use the early Beckner formulas after his death in 1968, which constituted a breach of contract and a misappropriation of trade secrets; and that the defendant's secret use of the early formulas after Beckner's death, and its failure to compensate his estate for such use, constituted a breach of fiduciary duty to Beckner's estate. After a jury returned verdicts for the estate totaling $1,250,000, ² the judge entered a judgment for the defendant notwithstanding the verdict, from which judgment the plaintiff has appealed.

At the foundation of the plaintiff's various theories of liability was an assumption that the defendant's right to use the formulas that Beckner brought with him when he began his employment with the defendant terminated at Beckner's death. There was in the evidence no basis for that assumption. We can assume, with the plaintiff, that the formulas for making the four flavors at issue (see note 2) could be the subject of a trade secret, compare Peggy Lawton Kitchens, Inc. v. Hogan, 18 Mass.App.Ct. 937, 466 N.E.2d 138 (1984), and that the evidence supported findings that the defendant switched to Beckner's formulas for manufacturing the flavors in question after Beckner was hired in 1952 and continued to use them to the time of trial. But the defendant's use of the formulas was obviously consensual and of right, and nothing in the record shows that the right was the subject of restriction or condition. The evidence that the formulas were kept as a guarded secret, shared only by Beckner and a small group of authorized personnel, may tend to show that the formulas were guarded from discovery and use by competitors but not that they were guarded by Beckner from use by the defendant.

In Chadwick v. Covell, 151 Mass. 190, 191, 23 N.E. 1068 (1890), it was said of medicines formulated and marketed by a Dr. Spencer that he "had no exclusive right to use of his formulas. His only right was to prevent any one from obtaining or using them through a breach of trust or contract. Any one who came honestly to the knowledge of them could use them, without Dr. Spencer's permission and against his will." See also Wireless Specialty Apparatus Co. v. Mica Condenser Co., 239 Mass. 158, 165, 131 N.E. 307 (1921) ("The fact that an invention is patentable does not compel the taking out of a patent, nor prevent the person entitled to it from keeping it secret, nor bar him from equitable relief against those disclosing its existence and details in violation of trust and confidence, nor as against those who obtain knowledge through such violation with notice and purpose to make use thereof. The fundamental requirement for relief is a violation of trust and confidence. Any one who gets the knowledge honestly can use it provided he is not restrained by the relationship under which he acquired it. [Citations omitted]"). The principle was reaffirmed more recently in Jet Spray Cooler, Inc. v. Crampton, 377 Mass. 159, 165, 385 N.E.2d 1349 (1979): "The essence of an action for the wrongful use of trade secrets is the breach of the duty not to disclose or to use without permission confidential information acquired from another. [Citations omitted.] See generally Restatement of Torts § 757 (1939)...." ³

There was no evidence of any agreement, oral or written, between the defendant and Beckner in 1952 concerning the use of the formulas. The plaintiff may be correct in contending that the evidence warranted a finding that the defendant's purpose in hiring Beckner was to use those formulas and to employ Beckner's skill in devising new or improved formulas; but there is no showing that the defendant violated any obligation it had assumed under that oral employment contract. In 1958 Beckner signed a five-year employment agreement with the defendant which provided that "any and all inventions, processes, methods, formulae, or other improvements created or developed by the Employee [i.e., Beckner], in connection with his employment, shall belong to the Employer, shall be fully disclosed to the proper officers of the Employer and shall be transferred to the Employer upon request." ⁴ The effect of...