Diamond Design, Inc. v. Blair

• Docket Number: 997 WDA 2022,1066 WDA 2022,J-A18017-23
• Decision Date: 09 February 2024
• Parties: DIAMOND DESIGN, INC., T/D/B/A DIAMOND DESIGN JEWELERS OF WEXFORD v. ALICIA BLAIR, SCOTT BLAIR AND JEWELRY BY ALICIA AND SCOTT v. DIAMOND DESIGN, INC., T/D/B/A DIAMOND DESIGN JEWELERS OF WEXFORD v. CHARLES DUFFY AND CHRISTYANN DUFFY APPEAL OF: DIAMOND DESIGN, INC., CHARLES DUFFY AND CHRISTYANN DUFFY DIAMOND DESIGN, INC. T/D/B/A DIAMOND DESIGN JEWELERS OF WEXFORD v. ALICIA BLAIR, SCOTT BLAIR AND JEWELRY BY SCOTT AND ALICIA Appellants v. CHARLES DUFFY AND CHRISTYANN DUFFY
• Court: Pennsylvania Superior Court

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DIAMOND DESIGN, INC., T/D/B/A DIAMOND DESIGN JEWELERS OF WEXFORD v. ALICIA BLAIR, SCOTT BLAIR AND JEWELRY BY ALICIA AND SCOTT v. DIAMOND DESIGN, INC., T/D/B/A DIAMOND DESIGN JEWELERS OF WEXFORD v. CHARLES DUFFY AND CHRISTYANN DUFFY

APPEAL OF: DIAMOND DESIGN, INC., CHARLES DUFFY AND CHRISTYANN DUFFY

DIAMOND DESIGN, INC. T/D/B/A DIAMOND DESIGN JEWELERS OF WEXFORD v. ALICIA BLAIR, SCOTT BLAIR AND JEWELRY BY SCOTT AND ALICIAAppellants v. CHARLES DUFFY AND CHRISTYANN DUFFY

No. 997 WDA 2022, 1066 WDA 2022

No. J-A18017-23

Superior Court of Pennsylvania

February 9, 2024

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURTO.P. 65.37

Appeal from the Judgment Entered August 19, 2022, In the Court of Common Pleas of Allegheny County Civil Division at No(s): GD 18-10757, GD-18-010757

Benjamin D. Kohler, Esq.

BEFORE: BENDER, P.J.E., LAZARUS, J., and KUNSELMAN, J.

MEMORANDUM

LAZARUS, J.

The parties, Alicia Blair, Scott Blair, and Jewelry by Scott and Alicia (the Blairs/Defendants/Appellants/Cross-Appellees) and Charles Duffy, Christyann Duffy, and Diamond Design, Inc.(the Duffys/DD/Plaintiffs/Appellees/Cross-Appellants) appeal and cross-appeal, respectively, from the judgment entered on a verdict, after the trial court granted, in part, and denied, in part, Appellants' post-trial motions.^[1]

Appellants Scott and Alicia Blair misappropriated a customer list from Appellees' 40-year-old jewelry business before opening their own jewelry business, located one-and-one-half miles from Appellees' jewelry shop.Alicia is AppelleeChristyann Duffy's daughter and AppelleeCharles Duffy's step-daughter; Scott is Appellees' son-in-law.^[2]

Following a three-day trial, a jury entered a $225,000.00^[3] verdict, for misappropriation of a trade secret, in favor of Appellees, and awarded $5,000.00 to AppellantScott Blair on his counterclaim for violation of Pennsylvania's Wage Payment and Collection Law (WPCL).^[4]Appellants filed post-trial motions, which included a motion to add liquidated damages and a petition for attorneys' fees and costs under the WPCL.Following a hearing, the court denied the motion in part and granted the motion in part.The court's post-trial order molded the verdict by reducing it by $82,600.00 (representing damages for conversion and unfair competition claims), awarding $6,250.00 in liquidated damages^[5] to Scott Blair, and granting an additional $27,642.00 in attorneys' fees and costs to Scott Blair.^[6] After careful consideration, we vacate the portion of the judgment that molded the verdict and denied a judgment notwithstanding the verdict (JNOV) on Alicia's WPCL claim, reimpose the jury's original verdict on the conversion and unfair competition claims and remand for a new trial on Alicia's WPCL claim.We affirm, on the opinion authored by the Honorable Alan Hertzberg, in all other respects.

Diamond Design, Inc.(DD), which closed its doors in June 2018, was the Duffys' family-owned jewelry business.DD opened in 1982 in downtown Pittsburgh and operated for almost 40 years, with its final principal place of business located at 140 Church Road, Wexford, PA.The Blairs^[7] worked as employees of DD until April 13, 2018, when they"left the employment of Diamond Design without any notice."Plaintiffs' Complaint, at 8/20/18, ¶ 12.

Alicia was a salaried DD employee with an annual salary of over $68,000.00,^[8]while Scott worked as an apprentice, in which capacity was taught to do bench work^[9] by Mr. Duffy.Alicia testified that during the holiday season (mid-November through December), she would often work an average of 50-70 hours a week.SeeN.T. JuryTrial, 10/28/21, at 259-61.

In late 2017/early 2018, when the Duffys contemplated retirement, the parties engaged in negotiations to sell DD to the Blairs.SeeN.T. JuryTrial, 10/27/21, at 94(Mr. Duffy testifying intent was to "transfer the store to Alicia and still maintain [a position] within the business when she needed help").On April 6, 2018, the parties drafted a proposed agreement of sale with the purchase price of the business (exclusive of the building) established at $350,000.00.Those negotiations, however, proved unsuccessful.On April 14, 2018, Alicia posted on her Facebook page that she decided to quit working at DD, without giving the Duffys two-weeks' notice.Id. at 91-92.Then, "[w]hen word got out that the customer base had already been taken from the store, it kind of stripped the sale for purposes of the business."Id. at 95.

Three months later, in July 2018, the Blairs started a new jewelry business, "Jewelry by Alicia and Scott," a limited liability corporation with its principal place of business located at 306 Warrendale Road, Warrendale, PA, one and one half miles from DD.Id., 10/28/21, at 309.DD alleges that the Blairs misappropriated DD's customer lists and files, stole DD's tools and equipment, and stole DD's trade secrets, resulting in unfair competition, loss of profits, loss of goodwill, and "[a]ncillary and related costs."Plaintiffs' Complaint, at 9/28/18, ¶¶ 21-33.The Duffys alleged that the customer list was "password protected" on their company computer.SeeN.T. JuryTrial, 10/27/21, at 213.Mr. Duffy testified that, over the years, he developed a customer list for DD, adding new names, addresses, and phone numbers to the list throughout their years in business.Id. at 75-76.The customer list, which was never "put out for public usage[,] . . . was maintained on a computer used by Alicia in her office."^[10]Id. at 87, 89;id. at 87(Mr. Duffy testifying Alicia would take sales slips with customers' names and addresses on them and "transfer all of the information[,] including the sale[,] onto the computer").The customer list contained approximately 5,000 names and "was the basis of the income coming into the store."Id. at 90.At trial, Mr. Duffy testified that a "Grand Opening card" for Jewelry by Alicia and Scott was sent to customers on DD's customer list.Id. at 95.

On August 20, 2018, DD filed a complaint against the Blairs alleging misappropriation of trade secrets under the Pennsylvania Uniform Trade Secrets Act (PUTSA),^[11] libel, unfair competition, breach of duty of loyalty, tortious interference with contractual and business relationships, conversion, computer fraud and abuse, unjust enrichment, and civil conspiracy.Defendants filed an answer, new matter, and counterclaims that included claims for overtime pay under the WPCL, defamation, and tortious interference with business relations.In their answer to Defendants' counterclaims, the Duffys admitted that "Alicia Blair worked as a retail salesperson."Duffys' Answer and New Matter to Complaint to Join Additional Defendants, 4/12/19, at¶ 12.

On February 12, 2022, the Blairs moved for partial summary judgment, arguing that Alicia's WPCL counterclaim should be granted, as a matter of law, where she was classified as a non-exempt employee at DD who was entitled to overtime (1.5 times regular rate of pay for all hours worked in excess of 40 hours/week).See34 Pa. Code § 231.41.The Blairs also argued that judgment should be entered as a matter of law in favor of Scott on his WPCL claim where he received no pay as an employee of DD for a period of months.See43 P.S. § 251.On April 19, 2021, the trial court denied the Blairs' motion for partial summary judgment.

A jury trial was held from October 27-29, 2021.Following trial,^[12] the jury returned the following verdict:

• Defendants violated the PUTSA;

• Damages in amount of $142,400.00 for PUTSA violation;

• Defendants engaged in unfair competition;

• Damages in the amount of $41,300.00 for unfair competition;

• Defendants engaged in conversion;

• Damages in the amount of $41,300.00 for conversion;

• No wages due to Alicia Blair for Plaintiffs' WPCL violation;

• Wages, in the amount of $5,000.00[,] due to Scott Blair for Plaintiffs' WPC[L] violation [back pay and overtime]; and

• The Duffys did not defame the Blairs.

Jury Verdict, 10/29/21at 1-4.The Blairs filed post-trial motions, including claims for $102,417.00 in attorneys' fees and costs under the WPCL, see43 P.S. § 260.9(f),^[13] liquidated damages, the entry of JNOV or a new trial, the molding of Scott Blair's damages award and DD's verdict to avoid double recovery.^[14] Following a hearing, the court entered an order denying in part and granting in part Defendants' post-trial motion.Specifically, the court molded the verdict to $142,400.00 to remove any additional damages for Plaintiffs' conversion and unfair competition claims, included an award of $6,250.00 in liquidated damages to Scott Blair on his WPCL claim, and granted $27,642.00 in attorneys' fees and costs to Scott Blair.SeeOrder, 7/25/22, at 1-2.With regard to the conversion and unjust enrichment claims, the court found that there was no basis for damages in excess of the $142,000.00 verdict for violating the PUTSA because section 5304 of the PUTSA states "damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss."12 Pa.C.S.A. § 5304.

The parties filed timely appeals and cross-appeals, as well as court-ordered Pa.R.A.P. 1925(b) concise statements of errors complained of on appeal.On appeal, Appellants/Cross-Appellees raise the following issues for our consideration:

(1) Whether the trial court committed an error of law and abused its discretion in denying Appellants' post-trial motion for [JNOV] as to Alicia Blair's [WPCL] claim, as no reasonable juror could have concluded that Diamond Design carried its burden of proving that Ms. Blair's primary job responsibilities were administrative in nature[.]

(2) Whether the trial court committed an

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