Hauck Mfg. Co. v. Astec Industries, Inc.

• Citation: 375 F.Supp.2d 649
• Decision Date: 14 October 2004
• Docket Number: No. 1:03-CV-166.,1:03-CV-166.
• Parties: HAUCK MANUFACTURING COMPANY, Plaintiff, v. ASTEC INDUSTRIES, INC., Astec, Inc., Bruce Irwin, Frank T.Y. Sun, and Sun Valley Technology, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Tennessee

375 F.Supp.2d 649

HAUCK MANUFACTURING COMPANY, Plaintiff, v. ASTEC INDUSTRIES, INC., Astec, Inc., Bruce Irwin, Frank T.Y. Sun, and Sun Valley Technology, Inc., Defendants.

No. 1:03-CV-166.

United States District Court, E.D. Tennessee, Southern Division.

October 14, 2004.

COPYRIGHT MATERIAL OMITTED

Amy Carpenter Holmes, John R. Ferguson, Thomas R. Lotterman, Swidler, Berline, Shereff, Friedman, Llp, Washington, DC, Russell W. Gray, Thomas O. Helton, Baker, Donelson, Bearman, Caldwell & Berkowitz, Chattanooga, TN, for Plaintiff.

Bret S. Alexander, Christina L. Mack, John G. Jackson, Richard W. Bethea, Jr., Chambliss, Bahner & Stophel, Pc, Russell W. Gray, Baker, Donelson, Bearman, Caldwell & Berkowitz, Robert J Batson, Jr., Michelle C. McFadyen, William A. Lockett, Goins, Carpenter & James, Chattanooga, TN, for Defendants.

MEMORANDUM

COLLIER, District Judge.

Before the Court is a motion to dismiss or, in the alternative, motion for judgment on the pleadings filed by Defendants Astec Industries, Inc., and Astec, Inc. (collectively, "Astec") (Court File No. 101). Astec filed a brief in support of its motion (Court File No. 102), Plaintiff Hauck Manufacturing Company ("Plaintiff") filed a brief in opposition (Court File No. 110), and Astec filed a reply (Court File No. 114). Additionally, Astec filed a motion to supplement its briefing (Court File No. 235). For the following reasons, the Court will GRANT Astec's motion to supplement its briefing and GRANT IN PART and DENY IN PART Astec's motion to dismiss or for judgment on the pleadings.

I. STANDARD OF REVIEW

Courts apply the same analysis to motions for judgment on the pleadings under Federal Rule of Procedure 12(c) as they apply to motions to dismiss under Rule 12(b)(6). E.E.O.C. v. J.H. Routh Packing Co., 246 F.3d 850, 851 (6th Cir.2001). Under either rubric, the Court must construe the complaint in the light most favorable to the plaintiff, accept all the complaint's factual allegations as true, and determine whether "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); see also Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 511-12 (6th Cir.2001). The Court may not grant the motion based upon a disbelief of a complaint's factual allegations. Miller v. Currie, 50 F.3d 373, 377 (6th Cir.1995) (noting courts should neither weigh evidence nor evaluate the credibility of witnesses); Lawler v. Marshall, 898 F.2d 1196, 1199 (6th Cir.1990). The Court must liberally construe the complaint in favor of the party opposing the motion. Miller, 50 F.3d at 377. The complaint, however, must articulate more than a bare assertion of legal conclusions. Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988). "[The] complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Id. (citations omitted).

II. RELEVANT FACTS

The facts underlying this action have been previously set forth in great detail and the Court has made certain preliminary findings of fact in the memorandum accompanying the Court's Order granting Plaintiff's request for a preliminary injunction (Court File No. 53). However, given the nature of the present motion, the Court must limit its consideration to the facts as alleged in Plaintiff's amended complaint (Court File No. 91). Plaintiff is engaged in the business of designing, building, and marketing burners used to dry aggregate in the asphalt-mixing process. Plaintiff has a number of product lines designed for asphalt plant applications, including the EcoStar series of "sealed-in" burners. Astec is engaged in the business of designing, manufacturing, and marketing temporary and/or permanent hot-mix asphalt plants and, prior to the present litigation, had purchased burners from Plaintiff since 1972 for use in its products. Plaintiff alleges over the years Astec undertook several unsuccessful attempts to enter the burner business as a competitor to Plaintiff.

Defendant Bruce Irwin ("Irwin") went to work with Plaintiff in 1988 as an engineering manager, where he participated in the development of the EcoStar series of burners. Upon beginning his employment with Plaintiff, Irwin signed a "confidentiality agreement" which provided he would not "divulge or appropriate to his own use or to the use of others any secret or confidential information or knowledge obtained by him or disclosed to him during his employment at [Plaintiff]" (Court File No. 91, ¶ 28). Plaintiff obtained a patent on the EcoStar in 1993 through the work of Irwin and others. In 1994, Irwin signed a "conflict of interest agreement" which provided it was "in conflict with [Plaintiff's] interests for an employee to perform any services, either as an officer, director, employee, or consultant for another person or entity that is a competitor of, or is doing or seeking to do business with, [Plaintiff]" (id. at ¶ 31).

In 1998, Irwin became responsible for servicing Plaintiff's largest customer, Astec (id. at 32). At this time Plaintiff also undertook the development of the EcoStar II burner, which would employ a new high pressure nozzle to achieve a more efficient air flow, a decrease in pressure drop, and a more stable flame (id. at ¶¶ 33-35). In connection with the development of the EcoStar II, Plaintiff contacted Defendants Frank T.Y. Sun and Sun Valley Technology, Inc. (collectively, "Sun") regarding the design of a new burner nozzle (id. at ¶ 36). On October 26, 1999, Plaintiff and Sun entered into a confidentiality agreement pursuant to which Sun promised to keep confidential for three years all confidential information it received from Plaintiff (id. at ¶ 37). Over the course of several months, Plaintiff provided Sun with confidential environmental test data and confidential results from various tests of Sun's evolving nozzle (id. at ¶ 38). Ultimately, Plaintiff decided not to use the nozzle developed by Sun in the EcoStar II (id. at ¶ 39).

On January 16, 2001, Plaintiff alleges Irwin met with a group of Astec executives and out of this meeting emerged a conspiracy pursuant to which Irwin would use his position with Plaintiff to appropriate Plaintiff's confidential and proprietary information for the purpose of assisting Astec in the development of its own combustion equipment (id. at ¶¶ 47-51). Plaintiff alleges over the next five months Irwin systematically stole and/or disclosed "over 1,000 computer files, drawings, and other propriety information ... vital to the research and development, technology, and pricing" of Plaintiff's burners (id. at ¶¶ 51, 56-58). Astec formally offered Irwin a position on April 5, 2001, which he accepted on April 22, 2001 (id. ¶ 52). Plaintiff claims to have known nothing of any of these activities or agreements until June 22, 2001, when Irwin gave Plaintiff notice of his intention to leave for employment with Astec (id. at ¶ 53).

Irwin officially began his employment with Astec on July 16, 2001, and by March 2002 Astec had begun exhibiting the WhisperJet burner (id. at ¶¶ 60, 64). Plaintiff contends the WhisperJet incorporates significant design elements of the EcoStar II which had been disclosed in Plaintiff's pending patent application to which Irwin had been privy (id. at ¶ 68). Plaintiff further contends Astec purchased nozzles for the WhisperJet from Sun and, in the process, Sun disclosed confidential information regarding Plaintiff's EcoStar II in violation of the confidentiality agreement between Sun and Plaintiff (id. at ¶¶ 42-46). On March 17, 2003, Astec returned to Plaintiff electronic and paper copies of more than 1,000 documents which Plaintiff alleges contained confidential drawings and "other trade secret and proprietary information" (id. at ¶ 74). Plaintiff alleges the actions of Astec, Irwin, and Sun have cost it at least four customers, resulted in a loss of consumer goodwill, and given Astec an unfair advantage in the burner market (id. at ¶ ¶ 75-81).

Plaintiff brought the present action on May 9, 2003, and now asserts causes of action against Astec for (1) misappropriation of trade secrets in violation of the Uniform Trade Secrets Act (Count I); (2) tortious interference with Plaintiffs' contracts with Irwin and Sun (Count IV); (3) unlawful procurement of breach of Irwin and Sun's contracts with Plaintiff in violation of Tenn.Code Ann. § 47-50-109 (Count V); (4) civil conspiracy with Irwin (Count VII); (5) conversion (Count VIII); and (6) unjust enrichment (Count IX) (see Court File No. 91, ¶¶ 82-95, 108-135, 144-162). After a hearing, the Court entered a preliminary injunction restraining and enjoining Astec and Irwin from selling, marketing, manufacturing, or using the WhisperJet burner until a trial on the merits in this matter (Court File No. 69). Astec then filed the present motion seeking dismissal or judgment on the pleadings on all Plaintiff's claims against it with the exception of Count I's alleged misappropriation of trade secrets (Court File No. 101).

III. DISCUSSION

Astec argues Plaintiff's claims for tortious interference with contract (Count IV), unlawful procurement of breach of contract (Count V), civil conspiracy (Count VII), conversion (Count VIII), and unjust enrichment (Count IX) are preempted by Tennessee's version of the Uniform Trade Secrets Act ("UTSA") because they are based on alleged misappropriation of trade secrets (Court File No. 102, pp. 6-13). Plaintiff disagrees, contending each of its challenged causes of action allege "a readily cognizable tort that involves factual allegations and legal elements that go beyond Astec's `mere' misappropriation of trade secrets" (Court File No. 110, p. 5). As an initial matter, the Court will GRANT Astec's motion to supplement its brief in support of its motion (Court File No. 235) with...