Fluke Corp. v. Milwaukee Electric Tool Corp.

• Decision Date: 11 July 2011
• Docket Number: No. 64408-4-I,64408-4-I
• Court: Washington Court of Appeals
• Parties: FLUKE CORPORATION, a Washington corporation; and DANAHER CORPORATION, a Delaware corporation, Appellants/ Cross Respondents, v. MILWAUKEE ELECTRIC TOOL CORPORATION; a Delaware corporation; EVANS NGUYEN, an individual; and JON MORROW, an individual, Respondents/ Cross Appellants.

FLUKE CORPORATION, a Washington

corporation; and DANAHER

CORPORATION, a Delaware

corporation, Appellants/ Cross Respondents, v. MILWAUKEE ELECTRIC TOOL CORPORATION;

a Delaware corporation; EVANS NGUYEN, an

individual; and JON MORROW, an

individual,

Respondents/

Cross Appellants.

No. 64408-4-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

FILED: July 11, 2011

UNPUBLISHED

Cox, J. — In this second review of this case, Fluke Corporation and its parent company, Danaher Corporation, (collectively "Fluke") appeal the summary dismissals of multiple claims against Milwaukee Electric Tool Corporation (MET), Evans Nguyen, and Jon Morrow. Also before us are the cross-appeals of Morrow and MET of the denial of attorney fees to them.

There are no genuine issues of material fact and both Morrow and METwere entitled to judgment as a matter of law regarding the breach of contract, tortious interference with a business expectancy, breach of fiduciary duties, and trade secret misappropriation claims. The trial court did not abuse its discretion in denying both Fluke's CR 56(f) motion for a continuance and its motion to amend its complaint shortly before trial. We affirm.

Fluke Corporation is a leading product manufacturer in the test and measurement (T&M) market. Morrow and Nguyen formerly worked for Fluke, but now work for MET.

Morrow worked for Jacobs Chuck Manufacturing Company, a South Carolina subsidiary of Fluke's parent company, Danaher. Morrow signed a noncompetition agreement with Jacobs Chuck in the summer of 2004. In November 2004, he ceased working for Jacobs Chuck and transferred to Fluke.

After Nguyen worked for Fluke for a time, he signed an employment agreement that contained a provision not to solicit Fluke employees for one year after leaving Fluke. This agreement contains a paragraph that states that the consideration for the agreement was eligibility to be considered for recommendation of annual option grants.

MET recruited several Fluke employees, including Nguyen and Morrow. Shortly after MET hired Morrow, Fluke commenced this action against him. Fluke then amended the complaint to include MET and Nguyen. The amended complaint included claims for misappropriation of trade secrets, breach of contract, breach of fiduciary duties, and tortious interference with a businessexpectancy.

The trial court entered a temporary restraining order against Morrow. After a preliminary injunction hearing, the trial court entered a preliminary injunction against Morrow and MET. This court granted discretionary review, reversed the preliminary injunction, and remanded for further proceedings.¹

Following remand, the trial court summarily dismissed all of Fluke's claims. It denied Fluke's CR 56(f) motion for a continuance and motion to amend its complaint. The trial court also denied MET's and Morrow's motions for attorney fees.

Fluke appeals. MET and Morrow cross-appeal.

Misappropriation of Trade Secrets

Fluke argues that genuine issues of material fact exist on its trade secret misappropriation claims. We disagree.

This court reviews de novo a summary judgment order, viewing the evidence and reasonable inferences therefrom in the light most favorable to the nonmoving party.² A moving defendant meets its initial burden by pointing out that there is an absence of evidence to support the plaintiff's case.³ Then, the inquiry shifts to the plaintiff to set forth specific facts demonstrating a genuineissue for trial.⁴ Summary judgment should be entered if the nonmoving party fails to establish the existence of an element essential to its case.⁵ Allegations, unsupported by evidence, do not establish a genuine issue.⁶ The nonmoving party "may not rely on speculation, argumentative assertions that unresolved factual issues remain, or in having its affidavits considered at face value."⁷

In order to survive summary judgment, a plaintiff must present evidence creating a genuine issue of material fact that a trade secret exists and was misappropriated by the defendant.⁸

Under the Washington Uniform Trade Secrets Act (UTSA), a "trade secret" is defined as:

[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process that:

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.⁹

In order to have a legally protectable trade secret, a party must establish (1) that the information derives independent economic value from not being generally known or readily ascertainable to others who can obtain economic value from knowledge of its use, and (2) that reasonable efforts have been taken to maintain the secrecy of the information.¹⁰

The UTSA defines "misappropriation" as:

(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(b) Disclosure or use of a trade secret of another without express or implied consent by a person who:

(i) Used improper means to acquire knowledge of the trade secret; or

(ii) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was (A) derived from or through a person who had utilized improper means to acquire it, (B) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, or (C) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or

(iii) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.¹¹

Here, Morrow and MET jointly moved for summary dismissal of Fluke'smisappropriation of trade secrets claims. They met their initial burden by establishing that there was an absence of evidence to support Fluke's case. Thus, our inquiry shifts to whether Fluke set forth specific facts in its response below to demonstrate a genuine issue of material fact for trial.

In opposition to summary judgment below, Fluke stated in its brief that:

Fluke has narrowed its trade secrets claim to twelve specific documents and discrete categories of information that constitute or contain readily identifiable trade secrets that Morrow created, used, or had ready access to in his last months at Fluke.¹²

Fluke cited Plaintiffs' Memorandum in Opposition to Defendants' Joint Motion for CR 37 Sanctions for its narrowed specification of trade secrets.¹³ That pleading included the following list of alleged trade secrets:

1. Portions of Fluke's 2008 Strategic Plan, specifically the portion addressing Fluke's value brands including Amprobe, Fluke 6721-6726 and 7017-7025, and the portion identifying the "white space" market, specifically Fluke 6707-6719 and 6999-7008[;]

2. The Amprobe Policy Deployment Action Plan, Fluke 5512-13;

3. Fluke's daily FY 2008 Bookings Performance Reports, e.g., Fluke 5775-76;

4. Fluke's IG New Product Vitality reports, e.g., Fluke 4694;

5. The Cross Market Analysis prepared by Morrow, Fluke 7107-7166 (and in native format);

6. The Competitive Landscape Report, Fluke 4547-4620 (and in native format)[;]

7. The Updated New Product Initiative Spreadsheet, Fluke 4421-4484 (and in native format);

8. The Amprobe Engineering 2008 Projects document; Fluke 572932;

9. The Asia New Products 2007 Report, Fluke 7527-29 (and in native format);

10. Nonpublic information regarding the strengths and weaknesses of the Ultrasonic Distance Meter developed by Morrow during his Fluke employment;

11. Voice of the Customer information gathered by Morrow in December 2007 and analyzed in the Amprobe Rep Performance Market Research Report; Fluke 4710-17; and

12. Distance Marketing Plan for Leica, Fluke 007660-007665.¹⁴

Fluke argued further that it had "described in detail why each identified trade secret is confidential and the steps it has taken to preserve the confidentiality" of its alleged secrets.¹⁵ It cited the Declaration of Jarek Bras in Opposition to Defendants' Motion for Summary Judgment in support of this argument.¹⁶

We first note that this declaration of Bras, who is identified as Fluke's Amprobe Business Unit Manager, only addresses a limited portion of those items on Fluke's narrowed list of 12 alleged trade secrets. Specifically, this declaration only discusses items numbered 4, 8, and 9 of Fluke's list.¹⁷ Theseare further identified as Fluke 4694, 5729-32, and 7527-29.¹⁸

Bras's declaration primarily discusses what these three excerpts are, how they are generated, and what measures Fluke takes to keep them confidential. There is nothing in this declaration to explain why these excerpts fit the definition of a trade secret. Specifically, it is not evidence to show that this information "[d]erives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use."¹⁹Thus, this evidence does not show that any of these excerpts—items numbered 4, 8, and 9 of the Fluke list—are trade secrets.

Fluke also argued below that the evidence it submitted met the statutory criteria for its trade secrets claim, creating a genuine issue of material fact for trial.²⁰ In support of this argument, Fluke cited the "Sanders Decl., Exs. L&M Conf. Sanders Decl. at Ex. R."²¹

Exhibit L to the "Sanders Decl." is a Declaration of Ken Konopa, who identifies himself as the President of Fluke's Industrial Group.²² This declaration describes a December 19, 2007, e-mail forwarding a marketing plan for adistance meter to Jon Morrow. It states that Fluke had not publicly announced the launch of its laser distance meters. The same declaration also describes marketing plans as...