HDNet, LLC v. N. Am. Boxing Council

• Decision Date: 10 August 2012
• Docket Number: No. 49A02–1112–PL–1146.,49A02–1112–PL–1146.
• Citation: 972 N.E.2d 920
• Parties: HDNET, LLC, Appellant, v. NORTH AMERICAN BOXING COUNCIL, Appellee.
• Court: Indiana Appellate Court

972 N.E.2d 920

HDNET, LLC, Appellant,

v.NORTH AMERICAN BOXING COUNCIL, Appellee.

No. 49A02–1112–PL–1146.

Court of Appeals of Indiana.

Aug. 10, 2012.

Judy S. Okenfuss, Thomas E. Mixdorf, Brian J. Paul, Stephen E. Reynolds, Ice Miller, LLP, Indianapolis, IN, for Appellant.

Gary P. Price, Sara R. Blevins, Matthew S. Tarkington, Lewis & Kappes, P.C., Indianapolis, IN, for Appellee.

OPINION

DARDEN, Senior Judge.

STATEMENT OF THE CASE

HDNET LLC (“HD”) appeals the trial court's grant of partial summary judgment in favor of North American Boxing Council (“NABC”).

We reverse and remand.

ISSUES

1. Whether the trial court erred in determining as a matter of law that the Indiana Uniform Trade Secrets Act (“IUTSA”) did not preempt NABC's common law claim for idea misappropriation where the claim did not rise to the level of a statutorily-defined trade secret.

2. Whether the trial court erred in determining as a matter of law that the IUTSA did not preempt NABC's statutory claim for civil conversion of its idea.

FACTS

HD is a television channel that broadcasts exclusively in high-definition via cable and satellite. Its programming is varied and has included mixed martial arts (“MMA”). NABC is a professional boxing and MMA sanctioning body.

In 2007, HD and NABC exchanged a series of e-mails discussing a broadcast arrangement involving HD's broadcast of MMA events and the future development of weekly broadcasts of a MMA fight series. Included in one of the e-mails was information wherein NABC outlined how NABC and HD could develop a “unique branded fight series for [HD]” that was significantly different from the “single entity” model then in use by the major players in the MMA industry. (App. 19). Further discussions between the parties fleshed out the information outlined in the e-mail. The parties did not enter into a contract; however, NABC considered the information communicated to HD to be a protectable commercial idea.

On March 17, 2008, NABC filed a complaint against HD in which it alleged the following facts:

On or about August 22, 2007, [Mark Cuban, HD's owner] formed HDNet Fights. HDNet Fights is a Delaware corporation with principal offices in Dallas, Texas and Denver, Colorado. HDNet Fights, upon information and belief, was formed for the purpose of operating a business that sanctions, promotes and broadcasts mixed martial arts using the confidential and proprietary information of NABC.

* * * *

NABC has been deprived of the value of its confidential, proprietary information, despite the promises of HDNet. NABC seeks recovery of all monies derived from HDNet's unlawful usurpation of NABC's information and business opportunity.(App. 22, 24). Based upon these facts, NABC alleged the following: Count I: Idea Misappropriation; Count II: Unfair Competition; Count III: Breach of Oral Contract; Count IV: Breach of Implied Covenant of Good Faith and Fair Dealing; Count V: Negligence; Count VI: Misappropriation of Trade Secrets; Count VII: Conversion of Trade Secrets; and Count VIII: Promissory Estoppel.

In its May 31, 2011 scheduling order, the trial court acted upon a request by the parties and instructed them to file appropriate motions and supporting memoranda addressing the preemption provision of the IUTSA and its application to NABC's idea misappropriation and conversion claims. On June 10, 2011, NABC filed a motion for partial summary judgment addressing the preemption provision and NABC's claim of Count I: Idea Misappropriation and Count VII: Conversion of Trade Secrets,¹ and HD filed a response. The trial court held a hearing on the matter, and on October 18, 2011, it granted partial summary judgment, finding that NABC's claims were not preempted under the IUTSA.

On November 15, 2011, HD filed a motion to certify the trial court's order for interlocutory appeal, which the trial court granted. On February 3, 2012, we granted HD's motion to accept jurisdiction.

DECISION

Standard of Review

HD contends that the trial court erred in granting partial summary judgment on NABC's claim that the IUTSA does not preempt NABC's common law idea misappropriation and civil conversion counts. Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). Questions of statutory construction are particularly amenable to resolution by summary judgment, as they are pure questions of law. Koppin v. Strode, 761 N.E.2d 455, 460 (Ind.Ct.App.2002), trans. denied. We review questions of law de novo and owe no deference to the trial court's legal conclusions. Id.

Background of the Uniform Trade Secrets Act (“UTSA”) and the IUTSA

The UTSA was drafted by the National Conference of Commissioners on Uniform State Laws (“Commissioners”) in 1979 and amended in 1985. 14 Uniform Laws Annotated, Uniform Trade Secrets Act With 1985 Amendments, 529, 530 (historical notes) (2005). The Commissioners expressed the following rationale for drafting of the UTSA:

Notwithstanding the commercial importance of state trade secret law to interstate business, this law has not developed satisfactorily. In the first place, its development is uneven ... Secondly, even in states in which there has been significant litigation, there is undue uncertainty concerning the parameters of trade secret protection, and the appropriate remedies for misappropriation of a trade secret.

Id. at 531. The Commissioners intended that the UTSA “be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this Act among states enacting it.” Id. § 8 at 656 (brackets omitted). This general purpose has been stated as follows:

[T]o create a uniform business environment [with] more certain standards for protection of commercially valuable information, and to preserve a single tort action under state law for misappropriation of trade secret as defined in the statute and thus to eliminate other tort causes of action founded on allegations of misappropriation of information. If the UTSA's preemption provision only preempted claims of misappropriation of information that meets the statutory definition of a “trade secret,” the provisions purpose would be undermined. In every instance where a plaintiff could not meet the statutory requirements of the Uniform Act, the court would be forced to re-analyze the claim under the various common law theories. Such a result would undermine the uniformity and clarity that motivated the creation and passage of the Uniform Act.

Firetrace USA, LLC v. Jesclard, 800 F.Supp.2d 1042, 1048–49 (D.Ariz.2010), reconsideration denied (citations omitted).

In 1982, Indiana adopted the UTSA “substantially as promulgated by the [Commissioners].” Amoco Prod. Co. v. Laird, 622 N.E.2d 912, 917 (Ind.1993). The Prefatory Note to the UTSA declares not only that the act is “a substitution for unitary definitions of trade secret, but that it ‘also codifies the results of the better reasoned cases concerning the remedies for trade secret misappropriation.’ ” Id. (quoting 14 Uniform Laws Annotated, Uniform Trade Secrets Act With 1985 Amendments, 435 (prefatory note) (1990)). “It is thus apparent that Indiana legislators, adopting the UTSA, sought the uniform application of the UTSA definitions of trade secret consistent with the application of the act in other adopting jurisdictions.” Id. Therefore, “case law from other UTSA jurisdictions becomes relevant authority for construction of trade secret law in Indiana.” Id. at 918.

The IUTSA contains two provisions that are central to the case before us. Indiana Code section 24–2–3–1(b) provides that the IUTSA “shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject matter of this chapter among states enacting the provisions of this chapter.” Indiana Code section 24–2–3–1(c), the preemption provision, provides that the IUTSA “displaces all conflicting law of this state pertaining to the misappropriation of trade secrets, except contract law and criminal law.” ² This preemption provision is stronger than that found in either the 1979 or 1985 versions of the UTSA. Infinity Prod., Inc. v. Quandt, 810 N.E.2d 1028, 1033 (Ind.2004); AGS Capital, 884 N.E.2d at 307.

Rules of Statutory Construction

In statutory construction, our primary goal is to ascertain and give effect to the intent of the legislature. U.S. Steel Corp. v. Northern Ind. Pub. Serv. Co., 951 N.E.2d 542, 553 (Ind.Ct.App.2011), trans. denied. The language of the statute itself is the best evidence of legislative intent, and we must give all words their plain and ordinary meaning unless otherwise indicated by the statute. Id. Furthermore, we presume that the legislature intended statutory language to be applied in a logical manner consistent with the statute's underlying policies and goals. Id. We must read the statute as a whole and excessive reliance on a strict literal meaning should be avoided. Jones v. Farmers Mut. Ins. Co., 926 N.E.2d 116, 121 (Ind.Ct.App.2010).

1. Idea Misappropriation

NABC contends that the IUTSA is unambiguous, and that if the language of the preemption provision of Indiana Code section 24–2–3–1 is given its plain meaning, then it applies only to actions where a “conflicting law” that “pertains” to the misappropriation of “trade secrets” is at issue. NABC reasons that the preemption provision applies only to “trade secrets” and that its claim of idea misappropriation does not “pertain” to a “trade secret” as the term is used in the IUTSA. Thus, NABC concludes that its idea misappropriation claim cannot be “conflicting law.” NABC claims that any other construction would read more into the statute than the plain language allows. NABC's Br. at 12–13.

As stated above, one essential goal of the UTSA is to make uniform the law of the states adopting it. Indeed, our legislature specifically adopted this goal in Indiana Code section...