Danaher Corporation v. Lean Focus, LLC
| Decision Date | 28 July 2021 |
| Docket Number | 19-cv-750-wmc |
| Court | U.S. District Court — Western District of Wisconsin |
| Parties | DANAHER CORPORATION, Plaintiff, v. LEAN FOCUS, LLC, and DAMON BAKER, Defendants. |
In this civil action, plaintiff Danaher Corporation asserts claims against its former employee Damon Baker and Baker's new company, Lean Focus, LLC, centered around their alleged use of plaintiff's trade secrets in violation of federal and state law and provisions of Baker's employment contracts with Danaher. Before the court are the parties' cross motions for summary judgment. (Dkt. ##174, 184.) For the reasons that follow, the court will grant: (1) plaintiff's motion for summary judgment in part as to its Wisconsin Computer Crimes Act Claim as to certain documents (2) defendants' motion for summary as to plaintiff's breach of contract claim as to the assignment of developments provision; and (3) defendants' motion for summary judgment as to plaintiff's conversion claim. In all other respects, however, the parties' motions will be denied.
UNDISPUTED FACTS[1]
Plaintiff Danaher is a Delaware corporation with its principal place of business in Washington, D.C. Defendant Lean Focus is an Illinois limited liability company, with its principal place of business in Waunakee, Wisconsin. Lean Focus has two members: defendant Damon Baker and April Lee. Both Baker and Lee are Wisconsin citizens. Baker is also the founder and CEO of Lean Focus. In addition to founding Lean Focus, Baker had worked for Danaher between 2007 and 2016.
Both Danaher and Lean Focus provide consulting services to clients on “lean” principals, which plaintiff's corporate representative and designated “Trade Secret Custodian” John Sekowski described as originating in the “Toyota Production System.” Danaher acknowledges having developed its “initial lean manufacturing tools, ” referred to as the “Danaher Production System” in the mid-1980s, with the help of a consulting group out of Japan, Shingijutsu. Accordingly, there is no dispute that lean business systems are “common” and do not constitute a trade secret.[2]
Instead, plaintiff maintains that while its “roots” may be in the Toyota Production System, the “Danaher Business System” (“DBS”) is the trade secret claimed in this case based on some of the tools related to “growth” and “leadership” that emerged decades later and have evolved further since then. .) Among other things, the parties dispute the extent to which DBS is modeled after the Toyota Production System, Six Sigma, Lean Six Sigmna, or other so-called lean systems.
Sekowski testified that what distinguishes DBS from other lean business systems is that “DBS is the culture of Danaher, ” which “is the uniqueness.” (Defs.' PFOFs (dkt. #186) ¶ 10.) However, Sekowski also testified that:
DBS is basically the codified best practices on how we do just about everything within the business: How we come up with an idea, . . . how we trystorm[3] it, how we ensure that it works, how [we] refine it over time and how we take seemingly difficult concepts and turn them into something that's simple through how we teach, through our training material, through our support material, through things as simple as acronyms, pictures and others.
.) Finally, Sekowski also testified that one of the best definitions of DBS is “[c]ommon sense vigorously applied, ” although it is “the codified 30-plus year development of how we do what we do.” .)
In creating DBS tools, Danaher at times “will look to the outside for inspiration and help” in finding source materials, including using other companies' materials and hiring outside consultants. (Defs.' PFOFs (dkt. #186) ¶ 32.) However, plaintiff maintains that it has not used proprietary materials of third parties to create DBS tools, and it has hired consultants subject to nondisclosure agreements. One consultant Danaher hired to assist in improving Danaher's problem-solving process, David Meier, acknowledged that he relied on publicly available sources, including The Toyota Way Fieldbook, for which the consultant contributed a chapter. (Defs.' PFOFs (dkt. #186) ¶ 33 (citing Sekowski Dep. (dkt. #193) 113-14).) Sekowski testified at his deposition that Danaher only “sometimes” maintains the source materials used to create a particular DBS tool. In particular, Sekowski testified that he could not “remember exactly” what source material was used to create the “Problem Solving Process” tool, but that he believed the material was “of Danaher origin.” (Sekowski Dep. (dkt. #119) 117.) Sekowski further acknowledged that defendant Baker was the “main person that [he] assigned to” develop this tool and put “in charge” of this project, and Baker, along with a number of other people on the team, would have information about the source material. (Id. at 118-19.)
Baker also recalled that DBS tools were often developed by groups of Danaher associates who were instructed by Sekowski to bring in relevant training materials, tools and templates from current and past work experience.[4] Specifically, Baker cites examples in his initial expert report of other companies' materials being used in the development of DBS tools, and specifically in the development of the Problem Solving Process Tool for which he was principally responsible. (Baker 5/4/21 Decl. (dkt. #190) ¶ 6-7 (citing Baker Expert Rept. (dkt. #190-1) 32-33, 36).) Plaintiff also would dispute that Sekowski instructed employees to use without authorization materials from prior employers, but Baker represents that Sekowski instructed DBS Office employees to upload relevant materials from within or outside Danaher to a document sharing repository for use in creating and revising DBS materials. (Defs.' PFOFs (dkt. #186) ¶ 46 (citing Baker Decl. (dkt. #128) ¶ 3.) Two other, former Danaher employees provide a similar account. (Id. (citing declarations (dkt. ##129, 130).) While plaintiff disputes all of these representations, directing the court to Sekowski's own declaration and deposition testimony in which he averred that he would not have instructed Danaher employees to upload materials from their former employers because this “would be against our guidelines and code of conduct, ” (Sekowski Dep. (dkt. #193) 154; Sekowski 3/2/21 Decl. (dkt. #139) ¶ 5), this merely demonstrates disputes of fact, which require a trial.
(Id. ¶ 56.) Plaintiff rightly points out that White immediately followed the cited statement by described DBS as “novel.” .)[5] However, former Danaher employee Guy Schiller testified at his deposition that creation of materials similar to DBS templates could be done with “effort and available information.” (Defs.' PFOFs (dkt. #186) ¶ 57.) Plaintiff disputes this pointing to the testimony of another former Danaher employee Rene Frauenknecht. However, Frauenknecht, testified that the amount of time to recreate a DBS tool or template based on publicly available materials would depend on the “complexity of that tool or template, ” and that for something “fairly straightforward, ” he could recreate it in “probably 15 to 30 minutes, ” while a more “complicated tool” would “take a lot longer and it's going to require a lot more investment in time and effort.” (Defs.' Reply in Support of Defs.' PFOFs (dkt. #271) ¶ 57 (citing Frauenknecht Dep. (dkt. #218) 196-97).)
Within Danaher, DBS is “embraced by . . . virtually every associate” and “many aspects of DBS” are available to all Danaher associates who “have a [user]name at Danaher or at the operating company with a password” to access Danaher's intranet site, Danaher Connect. (Defs.' PFOFs (dkt. #186) ¶ 12.) Plaintiff does not dispute this, but points out that Danaher Connect's “Terms of Use” impose certain confidentiality obligations on users accessing material on Danaher Connect and that Danaher Connect requires two-factor authentication for access. Furthermore, Danaher points out that its Code of Conduct and Standard Terms and Conditions of Employees restrict Danaher associations from using DBS materials outside of Danaher without proper authorization, restrict use for a nonDanaher business purpose and restrict disclosing information about DBS.
There is also no dispute that most of Danaher's more than 60 000 employees, including administrative personnel such as executive assistants and mail clerks, have access to Danaher Connect. Sekowski explains that (Defs.' PFOFs (dkt. #186) ¶ 16.) Danaher Connect does not track employees' access to and use of DBS materials or prevent employees from downloading, emailing or printing them. While certain DBS...
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