Evans v. General Motors Corp.

• Decision Date: 28 March 2006
• Docket Number: No. 17420.,17420.
• Parties: John W. EVANS et al. v. GENERAL MOTORS CORPORATION.
• Court: Connecticut Supreme Court

893 A.2d 371

277 Conn. 496

John W. EVANS et al. v. GENERAL MOTORS CORPORATION.

No. 17420.

Supreme Court of Connecticut.

Argued October 25, 2005.

Decided March 28, 2006.

COPYRIGHT MATERIAL OMITTED

Frank P. Porcelli, Boston, MA, with whom were Robert J. Silverman, Steven D. Ecker, Hartford, and, on the brief, Susan Dixon, for the appellants (plaintiffs).

Jonathan F. Putnam, New York, NY, pro hac vice, with whom were Jeffrey R. Babbin, New Haven, Lee Ann Stevenson, pro hac vice, and, on the brief, John T. Hickey, Jr., pro hac vice, Jonathan M. Freiman, and Zachary S. Brez, pro hac vice, for the appellee (defendant).

William F. Gallagher, Syracuse, NY, filed a brief for the Connecticut Trial Lawyers Association as amicus curiae.

SULLIVAN, C.J., and BORDEN, NORCOTT, PALMER and ZARELLA, Js.

Opinion

ZARELLA, J.

In this action seeking damages for the alleged misappropriation of a trade secret, the plaintiffs, John W. Evans and Evans Cooling Systems, Inc. (ECS),¹ appeal from the judgment of the trial court rendered in favor of the defendant, General Motors Corporation (General Motors). The plaintiffs claim that the trial court improperly: (1) deprived them of the right to a jury trial on their trade secret claims; (2) failed to impose appropriate sanctions on General Motors after finding that key employees of the company had fabricated evidence and testified falsely about that evidence in their depositions; (3) determined that General Motors' special defenses of license and release barred the plaintiffs' trade secret claims; and (4) precluded the plaintiffs from introducing evidence that the technology used in General Motors' "Gen III" engines was "substantially derived" from the allegedly stolen secret. Because we conclude that the trial court improperly deprived the plaintiffs of the right to a jury trial on their trade secret claims but imposed appropriate sanctions on General Motors for its employees' discovery abuse, we reverse in part the judgment of the trial court and remand the case for a new trial.

The following facts are relevant to our resolution of this appeal. Evans is an inventor of various automotive cooling system techniques and improvements in the field of internal combustion engines. Prior to 1984, he began work on technology to implement an aqueous reverse flow cooling system, which he regarded as a trade secret. Thereafter, beginning in April, 1984, and continuing through February, 1989, Evans was employed by General Motors as a consultant and performed various engineering projects for the company. During that time, none of his work for General Motors involved the technology that he had developed for the aqueous reverse flow cooling system. In February, 1989, however, Evans received a telephone call from Al Gunther, a General Motors engineer, who requested that Evans demonstrate the system to the company. Evans informed Gunther that he would be willing to do so, but, because he considered the technology used in the system to be proprietary in nature, it would have to be a "black box" demonstration "whereby the [technology] would not be disclosed or submitted to [General Motors] and [General Motors] would not compromise the secrecy of [the system]." According to Evans, Gunther agreed to these conditions.

On February 27, 1989, Evans prepared and delivered to Gunther a memorandum setting forth the conditions to which they had agreed. The only consideration that Evans would receive for the "black box" demonstration was access to the written results of the testing and an agreement of nonappropriation between the parties.

On March 16 and 17, 1989, Evans demonstrated the system to General Motors engineers and other employee technicians at a General Motors testing facility in Michigan. Evans claims that, at some time during the two days that he was in Michigan, General Motors violated the terms of the "black box" agreement by examining the test car that was equipped with the protected technology.

Evans later testified at trial that he did not discover the theft until the fall of 1991 when he came across a cover story in an automotive journal announcing an innovative, new cooling system in the Corvette that was identical to the aqueous reverse flow cooling system that he had demonstrated to General Motors in 1989. He testified that only after he read the story did he realize that someone must have broken into the test car on the night of March 16, 1989, approximately two and one-half years earlier, to examine the secret technology.²

In 1994, Evans commenced this action against General Motors seeking to recover damages³ for: (1) misappropriation of a trade secret in violation of the Connecticut Uniform Trade Secrets Act (CUTSA), General Statutes § 35-50 et seq.; (2) misappropriation of a trade secret under the common law of Michigan; (3) violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.; (4) breach of contract; and (5) breach of the implied covenant of good faith and fair dealing. The action was removed to the United States District Court for the District of Connecticut, which subsequently remanded the case to the Superior Court after determining that the patent Evans had obtained for the allegedly misappropriated technology was invalid. In March, 1999, the plaintiffs claimed the case for a jury trial.

In January, 2003, on the eve of trial, General Motors admitted in a hearing before the court that, in the course of the federal and state litigation, John Juriga, a General Motors employee, had forged certain evidence purporting to show that the company independently had developed the reverse flow cooling system used in its "Gen II" engine. General Motors further admitted that Juriga and another employee, Al Schaefer, had given perjured deposition testimony about the company's independent development of the system.

Following disclosure of the forged evidence and perjured testimony, General Motors filed a motion in limine on January 27, 2003, requesting a trial to the court on the trade secret claims. The plaintiffs opposed the motion, arguing in a thirteen page memorandum of law that they had a statutory and constitutional right to a jury trial on those claims. On February 5, 2003, the court issued a memorandum of decision in which it made a "preliminary determination" that the trade secret claims should be severed from the plaintiffs' other claims and tried to the court.⁴ The court also stated that, because all of the plaintiffs' essential claims "appear[ed] to be related to [the] trade secret [issue]," resolution of that issue "would likely resolve the case." The court invited written comment on its "proposal" no later than February 10, 2003.⁵

In their response to the court's memorandum, the plaintiffs stated that they were "willing to proceed according to the [c]ourt's proposal, as long as concession to [the] proposal is not construed as a waiver of [the] [p]laintiffs' right to a jury trial on any claims for which [the] plaintiffs are entitled to such right." General Motors likewise agreed to the proposal, urging the court to "confirm and make final" its February 5, 2003 "[d]ecision" to hold a trial to the court on the trade secret claims.

On February 10, 2003, the plaintiffs filed a motion requesting that the court impose sanctions on General Motors for fabricating evidence and giving false testimony. The plaintiffs specifically requested that the court render a default judgment as to liability against General Motors on all counts or preclude General Motors from advancing arguments or introducing evidence at trial regarding its prior, independent development of Evans' technology. On February 11, 2003, the court ordered that the trade secret and sanctions claims be tried simultaneously to the court and that the plaintiffs' other claims be severed for a subsequent jury trial, if necessary.

The trial commenced on March 7, 2003, and lasted more than four weeks. Substantial posttrial briefing followed. On August 29, 2003, the court issued a memorandum of decision in which it concluded that the plaintiffs' trade secret claims were barred by General Motors' special defenses of license and release. The court also awarded the plaintiffs $556,000 in attorney's fees and costs for General Motors' discovery abuse. Thereafter, the court entered a stipulated order on the sanctions award and rendered judgment for General Motors on the plaintiffs' amended complaint.⁶ The plaintiffs did not seek a trial on their claims alleging a CUTPA violation, breach of contract and breach of the implied covenant of good faith and fair dealing. This appeal followed.

I

The plaintiffs first claim that the trial court improperly denied them a jury trial on their trade secret claims. They argue that they are entitled to a jury trial under the Connecticut constitution and that all other jurisdictions that have considered the issue recognize the right to a jury trial on trade secret claims seeking monetary relief. General Motors responds that the plaintiffs waived their right to appeal from the trial court's decision on the jury trial issue when they voluntarily agreed to a trial to the court. Accordingly, in General Motors' view, there is no final order from which the plaintiffs may appeal. General Motors also argues that, even without these procedural obstacles, there is no constitutional right to a jury trial on claims for damages under CUTSA. We agree with the plaintiffs.

A

We begin by considering whether the plaintiffs properly preserved their right to appeal the jury trial issue. General Motors argues that the plaintiffs' conduct constitutes a waiver of any jury trial claim that they otherwise might have had because they consented in writing to a trial to the court and did not assert their right to a jury trial at any other time during the proceedings. We disagree.

"[T]he right to a jury trial is a right which, like other rights, may be waived but ... is a...