Dynamics Research Corp. v. Analytic Sciences Corp.

• Decision Date: 27 February 1980
• Citation: 9 Mass.App.Ct. 254,400 N.E.2d 1274
• Parties: , 209 U.S.P.Q. 321 DYNAMICS RESEARCH CORPORATION v. The ANALYTIC SCIENCES CORPORATION et al.
• Court: Appeals Court of Massachusetts

Page 1274

400 N.E.2d 1274

9 Mass.App.Ct. 254, 209 U.S.P.Q. 321

DYNAMICS RESEARCH CORPORATION v. The ANALYTIC SCIENCES CORPORATION et al.

Appeals Court of Massachusetts, Middlesex.

Argued Dec. 15, 1978.

Decided Feb. 27, 1980.

John M. Reed, Boston (Roger D. Matthews, Boston, with him), for plaintiff.

Thomas R. Murtagh, Boston (Bertram E. Snyder, Boston, with him), for defendants.

Before GOODMAN, GRANT and ARMSTRONG, JJ.

GOODMAN, Justice.

The plaintiff, Dynamics Research Corporation (DRC), brought this action against the defendant Robert Bicknell, formerly employed by the plaintiff, and the defendant The Analytic Sciences Corporation (Analytic), by whom Bicknell was hired after he resigned from the plaintiff. The plaintiff sought to enjoin the defendants from "using for their own benefit the proprietary system of plaintiff known as TIRAS (an acronym for 'technical information retrieval and analysis system') and from interfering with business relationships between plaintiff and customers of plaintiff with respect to projects in which defendant Bicknell took part during his employment by plaintiff." The plaintiff also sought "such damages as the Court determines plaintiff has sustained by virtue of defendants' unfair competition." (The complaint includes a general prayer "(f)or such other and further relief as may be appropriate.")

Preliminary relief was denied, and the case was referred to a master on June 30, 1972. There were seventeen days of evidentiary hearings ending on January 29, 1973 (a stenographer had been appointed pursuant to G.L. c. 221, § 91C), and the master heard oral argument and received briefs on April 11, 1973. On November 21, 1973, the master at his own request heard reargument of the case and on August 8 1974, ¹ forwarded his draft report. The final report was filed on April 9, 1975. The master concluded that "the structure and function of the TIRAS system is a trade secret" and "that both (defendants) intentionally and knowingly used trade secrets and other confidential information of the (plaintiff) to the benefit of the (defendants) and the damage of the (plaintiff)." He also assessed damages for "unfair competition" against Bicknell in the amount of $15,000 and against Analytic in the amount of $30,000.

The defendants filed objections to the master's report challenging his conclusions as unsupported by subsidiary findings and challenging various subsidiary findings as unsupported by the evidence. They moved to recommit the report so that the master might make findings specifically describing the "secret features of the 'structure and function of TIRAS' " and specifically setting out the factual basis for the various elements legally necessary for entitlement to protection as a trade secret, which were matters not addressed in the master's report. They also asked that the master make subsidiary findings on the question of damages. In addition, the motion to recommit asked for summaries of the evidence material to the requested findings and to certain of the original findings. See Superior Court Rule 49(7) (1974). The motion was accompanied by an affidavit of counsel, setting out suggested summaries of the evidence. The plaintiff moved that the master's report be confirmed and adopted.

By order entered May 12, 1975, a judge denied the plaintiff's motion and recommitted the report to the master. His accompanying order set out in detail, substantially as requested by the defendants, the matters on which the master was to make specific findings and summaries of the evidence. About a year later, on April 27, 1976, the master filed "Additional Subsidiary Findings" which purported to contain summaries of the evidence as requested by the judge's order. The master's findings with reference to the elements of the alleged trade secret will be discussed at a later point in this opinion; he made no findings as to damages, stating that "the finding made by the Master in his Report should be vacated in favor of a new hearing." ²

The plaintiff moved that the master's report as supplemented by his "Additional Subsidiary Findings" be confirmed and that the court order a further hearing on the issue of damages as suggested by the master. In support of its request for a further hearing on the issue of damages, the plaintiff's counsel filed an additional affidavit setting forth the evidence before the master which, he contended, supported a finding of at least some damages against the defendants. The defendants filed objections to the additional subsidiary findings and to the "attempted summaries" of the evidence which the master had made. They moved that portions of the original report and the additional subsidiary findings be struck, that no further hearing be held on the question of damages, and that judgment be entered dismissing the action. The defendants alleged that the subsidiary findings did not support the master's ultimate conclusion and emphasized that "the Master did not provide brief, accurate and fair summaries of the evidence as required by the order so as to allow the Court to determine whether his findings were adequately supported by the evidence." The defendants in their motion suggested that "(i)f the Master has not been able to justify such findings in more than three years then it is time for the Court to conclude that there is little or no chance that the Master will be able to do so in the future." Accordingly, they requested "that the Court should review the evidentiary record itself and conclude that the Master's findings cannot be supported . . . ." The defendants also made a "Motion in the Alternative to Recommit Master's Report" for the making of additional findings of fact and for the making of proper summaries of evidence. Their motions were supported by an affidavit of their counsel purporting to show what would be proper summaries of the evidence, and they filed a motion that the judge make an express finding as to the truth or falsity of statements in the affidavit. Counsel for the plaintiff filed a counter-affidavit, setting out further summaries of the evidence.

The judge filed a "Memorandum and Order" in which he held that, except as to damages, the original and additional supplementary findings "are not clearly erroneous and are confirmed and adopted." The court allowed the defendants' motion that the court make an express finding as to the truth or falsity of statements by the defendants' attorneys in their affidavit and found that "the statements as set forth in their (defendants' counsels') affidavits, as supplemented by the plaintiff's counter-affidavits are true and accurate." He treated the defendants' motion to recommit "as waived" and ordered that the original transcript and exhibits be filed with the court. The judge further ruled that there should not be a hearing before another master or the court on the issue of damages ³ and that, "(t)here being a failure of proof of that part of the action seeking tort damages, the defendants are entitled to a finding on damages. Nominal damages would be appropriate if that part of the action sounded in contract." See note 2, supra. The judge, however, ordered a further hearing on the issue of injunctive relief.

Such a hearing was held before another judge on February 7, 1977. As set out in his memorandum accompanying the judgment, the plaintiff sought an injunction in the language set out in the margin. ⁴ At the hearing, neither party offered evidence, and "(a)rgument was had solely on the record, particularly the Master's Original Report and Additional Subsidiary Findings." On February 22, 1977, judgment was entered denying both injunctive relief and damages. The plaintiff appealed. ⁵

1. Before proceeding to the merits we must consider whether the designated portions of the transcript of the evidence before the master reproduced in the record appendix and the exhibits are properly before us. An order that the master file the evidence for perusal by the court is rarely made; such a practice ordinarily defeats the main objective of referring a case to a master. Peters v. Wallach, 366 Mass. 622, 626, 321 N.E.2d 806 (1975), and cases cited. Jet Spray Cooler, Inc. v. Crampton, --- Mass. ---, --- n.4 ^a, 385 N.E.2d 1349 (1979). See the full discussion in Michelson v. Aronson, 4 Mass.App. 182, 184-187, 344 N.E.2d 423 (1976), and Covich v. Chambers, --- Mass.App. ---, --- - --- ^b, 397 N.E.2d 1115 (1979). Nevertheless, even when the original order of reference to a master provides that the master not report the evidence, the judge may subsequently order that the evidence be reported "if satisfied that in the interests of justice the evidence should be brought before him." Shelburne Shirt Co. v. Singer, 322 Mass. 262, 265, 76 N.E.2d 762, 764 (1948), and cases cited. Spiegel v. Beacon Participations, Inc., 297 Mass. 398, 406-407, 8 N.E.2d 895 (1937). Jet Spray Cooler, Inc. v. Crampton, --- Mass. at --- n.4 (last par.) ^c, 385 N.E.2d 1349 n.4. USM Corp. v. Marson Fastener Corp., --- Mass. ---, --- n.17 (last par.) ^d, 393 N.E.2d 895 (1979). Greaney, Trials Before Masters A Procedural and Substantive Primer for the Practicing Lawyer, 63 Mass.L.Rev. 195, 204 (1978). See Goldberg v. Goldberg, --- Mass.App. ---, --- n.3 ^e, 391 N.E.2d 267 (1979). Cf. Shaw v. United Cape Cod Cranberry Co., 332 Mass. 675, 679-680, 127 N.E.2d 296 (1955); Michelson v. Aronson, 4 Mass.App. at 186, 344 N.E.2d 423 Covich v. Chambers, --- Mass.App. at --- ^f, 397 N.E.2d 1115 cases in which the existence of discretion was confirmed though the discretion was not exercised. The present case is one of the rare cases in which it appears that the judge, in the exercise of his discretion (Minot v. Minot, 319 Mass. 253, 258, 66 N.E.2d 5 (1946)), ordered that the evidence be filed for his perusal.

The affidavits of both the defendants' and the plaintiff's counsel, which the judge found to be true (Minot v. Minot, 319 Mass. at 261, 66 N.E.2d 5),...