Diamond Power Intern., Inc. v. Davidson

Decision Date01 October 2007
Docket NumberCivil Action No. 1:04-CV-0091-RWS-CCH.,Civil Action No. 1:04-CV-1708-RWS-CCH.
PartiesDIAMOND POWER INTERNATIONAL, INC., Plaintiff, v. Wayne DAVIDSON, Defendant. Diamond Power International, Inc., Plaintiff, v. Clyde Bergemann, Inc., Defendant.
CourtU.S. District Court — Northern District of Georgia

Brett E. Coburn, Warren R. Hall, Jr., Patrick J. Flinn, Alston & Bird, Atlanta, GA, for Diamond Power International, Inc.

David Paul Thatcher, Chamberlain Hrdlicka White Williams & Martin, Jeffrey D. Mokotoff, Leanne C. Mehrman, Ford & Harrison, Natalie Nicole Turner, Epstein Becker & Green, Atlanta, GA, for Wayne Davidson.

Leanne C. Mehrman, Jeffrey D. Mokotoff, Renee A. Canody, Ford & Harrison, Atlanta, GA, for Clyde Bergemann, Inc.


RICHARD W. STORY, District Judge.

These cases come before the Court on Defendant Wayne Davidson's Motion for Summary Judgment [68] in Case No. 1:04-CV-0091-RWS-CCH and Defendant Clyde Bergemann's Motion for Summary Judgment [210] in Case No. 1:04-C1708-RWS-CCH. After reviewing the entire record, the Court enters the following Order.1


Plaintiff Diamond Power International, Inc. ("Diamond Power") alleges that its former manager of service operations, Defendant Wayne Davidson, misappropriated various trade secrets for the benefit of Diamond Power's main competitor, Defendant Clyde Bergemann, Inc. ("Bergemann"). In Case No. 1:04-CV-0091-RWS-CCH, Diamond Power brings claims against Davidson for misappropriation of trade secrets, violations of the Computer Fraud and Abuse Act, conversion, breach of fiduciary duty, and breach of contract. In Case No. 1:04-CV-1708-RWS-CCH, Diamond Power brings claims against Bergemann for misappropriation of trade secrets, violations of the Computer Fraud and Abuse Act, conversion, unjust enrichment, tortious interference with business relations, and tortious interference with contractual relations. As these cases come before the Court on Defendants' requests for summary judgment, the Court considers the evidence in a light most favorable to Diamond Power.

Diamond Power and Bergemann are each in the business of manufacturing and repairing mechanical systems commonly referred to as sootblowers, which are designed to clean massive industrial and utility coal-fire boilers. They are the two dominant participants in the industry, and as such, are fierce competitors. Diamond Power manufactures approximately 70% of the industrial sootblowers that are sold the United States, and Bergemann manufactures most of the remaining 30%. In addition to manufacturing, each company provides rebuild and repair services and sells aftermarket parts for both its own and its competitor's systems. Diamond Power and Bergemann have competed since 1988. (See Pl.'s Counterstatement of Mat. Facts & Resp. to Bergemann's St. of Mat. Facts [257-3] [hereinafter "PSMF"] ¶¶ 1-6, i-ii.)2

I. Diamond Power's P-Drive and Oracle Networks

At the time of the commencement of this litigation, Diamond Power had approximately 350 employees. (See Michael Dep. II [240-24] at 231-35.) With the exception of factory workers, all Diamond Power employees were authorized to access Diamond Power's main network, the "Drive," by using a company-issued computer username and password. (Id. at 218-19.) The P-Drive network was firewall-protected, and physical security measures were instituted at Diamond Power's various offices to ensure that outsiders could not gain entry. Diamond Power's employees were required to execute a one-page "Computer Security and Non-Disclosure Agreement," in which they agreed to maintain the username and password in a confidential manner and use Diamond Power systems only for authorized purposes. (See Bergemann's St. of Mat. Facts [257] [hereinafter "DSMF"] ¶ 17; D-0012.) Nevertheless, neither that agreement nor any other Diamond Power policy restricted Diamond Power employees from transferring electronic documents taken from the P-Drive network to their own personal computers, and it was common for employees to work at home. (DSMF ¶ 19; Stang Dep. at 33-34.)

Diamond Power also maintained a much more restricted network, the "Oracle network," principally for confidential financial record keeping. The Oracle system was accessible only to a limited group of Diamond Power employees responsible for accounting and financial activities. These employees were issued a second password in addition to the password assigned to them for access to the P-Drive network. Diamond Power further restricted access to the Oracle network by permitting those with authorization only to access files containing information necessary to their work tasks. (PSMF ¶ v-vii.) Approximately eighteen employees had access to the part of the Oracle network at issue in this case. (Id. ¶ vii.)

II. Wayne Davidson's Role at Diamond Power

In 2001, Wayne Davidson was in his seventeenth year as an employee of Diamond Power, and in his eleventh year as manager of one of Diamond Power's three United States Service Centers. That year, Davidson earned a promotion to the position of Manager of Diamond Power's national service operations. As Manager, Davidson oversaw the repair and rebuild operations of Diamond Power's three U.S. Service Centers, prepared budgets relating to Diamond Power's service and rebuild operations, set pricing schedules, and managed inventory. In 2002, Davidson was additionally appointed to manage and oversee the manufacture of a new Diamond Power sootblower system, the PowerTrain. Through his experience and position at Diamond Power, Davidson developed substantial knowledge of Diamond Power's products and original equipment manufacturer (OEM) parts and was authorized by Diamond Power to access both Diamond Power's P-Drive network and its more restricted Oracle network.

III. Davidson Accepts Employment with Bergemann

In September of 2003, Diamond Power's principal competitor, Clyde Bergemann, began looking for an individual to manage its repair and rebuild operations. At the time, Joey Payne, an employee of Bergemann, was overseeing Bergemann's rebuild and repair operations, but no one formally held the position of Manager of Rebuild Operations. (Davidson Dep. I at 81-82.) Bergemann hired a headhunter, who in turn contacted Davidson to gauge his interest in the job. Davidson agreed to meet with Bergemann's Chief Executive Officer. On September 21, over a Sunday lunch, Davidson met Bergemann CEO Hans Schwade and Bergemann Director of Human Resources Daniel Scheiber, who expressed interest in having Davidson manage Bergemann's rebuild operations. Davidson in turn expressed interest in the job. (Id. at 80-90.)

Two days later, on September 23, Mr. Scheiber sent Davidson a formal letter offering Davidson the position of Manager of Rebuild Activities, reporting directly to Mr. Schwade. (Ex. 1 to Davidson Dep. III.) On September 30, Davidson returned a letter to Mr. Scheiber accepting Bergemann's offer of employment to begin on Monday, November 3, 2003. (Ex. 2 to Davidson Dep. III.) Later that day, Davidson sent an email to his superiors at Diamond Power, informing them that he was planning to "retire" effective October 31.3 (Davidson Dep. I at 69.)

For the next month, Davidson continued in his role as Diamond Power Manager of U.S. Service Centers, and took several weeks of vacation in between. He mentioned to several co-workers that he planned to retire, and did not disclose at any time in the month leading to his departure that he had accepted a management position with Diamond Power's principal competitor. (Davidson Dep. I at 96-102.) Instead, Plaintiff claims, under the guise of retirement, but as an agent of Bergemann, Davidson began using his access at Diamond Power to extract sensitive accounting, financial, and product information for the benefit of Bergemann.

IV. Davidson Downloads Diamond Power Financial Information, Has Lunch with Bergemann CEO

On the day that Mr. Davidson accepted employment with Bergemann, Davidson downloaded from Diamond Power's restricted Oracle network an electronic file he titled "Cost.Data," containing a detailed report of the cost, materials, and labor and overhead cost components for approximately 20,000 Diamond Power parts by part number. (PSMF ¶¶ xliv-xlv.) In similar fashion, he copied a 500-page document referred to by the parties as the Bill of Materials Structure Report ("BOM Report"), which identified virtually all Diamond OEM parts by part number and the assembly sequence necessary to perform a rebuild to Diamond's specification.4 (Id. ¶ xxvi.) He transferred both files from Diamond's computer system to a portable hard disk (a "zip drive"), and then later that day transferred the files to his home computer.

Several weeks later, on October 21, Davidson met with CEO Schwade for lunch.5 A day earlier, Mr. Schwade had sent an email to his European superiors speculating on the internal design of Diamond Power's PowerTrain system. "From what we can put together and heard so far," Mr. Schwade reported to his superiors, "the changes [instituted by the PowerTrain design] are the following ... ceramic silicon nitride hub bearing (all other bearings are conventional), no oil or grease[,] hardened bevel gears with dry film lubricant (molybdenum?)[,] no lubricant oil or grease in the hub ...." (Ex. 38 to Schwade Dep. III.) The next day, however, after Mr. Schwade's lunch meeting with Davidson, his understanding of the PowerTrain system significantly improved. In an email sent to his superiors later that day, he wrote, "I have been told that [the PowerTrain bearing] has a graphite cage that provides lubrication to the balls and otherwise is a standard roller bearing. It apparently was first used by Diamond Superior in Sweden and said to be in service for 50,000 hours.... (Ex. 41 to Schwade Dep. III.)

On the same day as his lunch with Mr....

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