LeJeune v. COIN ACCEPTORS

• Decision Date: 13 May 2004
• Docket Number: No. 111,111
• Citation: 849 A.2d 451,381 Md. 288
• Parties: William LeJEUNE v. COIN ACCEPTORS, INC.
• Court: Maryland Court of Appeals

849 A.2d 451

381 Md. 288

William LeJEUNE v. COIN ACCEPTORS, INC.

No. 111, Sept. Term, 2003.

Court of Appeals of Maryland.

May 13, 2004.

David A. Flores (Harmon & Davies, P.C., Lancaster, PA; Ann M. Grillo of Tydings & Rosenberg, Baltimore), all on brief, for Appellant.

Christine B. Cesare (Bryan Cave LLP; Peter F. Axelrad of Council, Baradel, Kosmer & Nolan, P.A., Annapolis; Mark S. Deiermann and Daniel M. O'Keefe of Bryan Cave LLP, St. Louis, MO), all on brief, for Appellee.

Argued Before Bell, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ. BATTAGLIA, Judge.

This case of first impression involves the provisions of the Maryland Uniform Trade Secrets Act, codified under Maryland Code, Sections 11-1201 through 11-1209 of the Commercial Law Article (1975, 2000 Repl.Vol.). William LeJeune appeals from a preliminary injunction issued by the Circuit Court for Anne Arundel County, enjoining him from working for Mars Electronics, Inc. (hereinafter "Mars") in a number of specified industries. The Circuit Court found that, if LeJeune were permitted to work in those industries, his former employer and Mars' principal competitor, Coin Acceptors, Inc. (hereinafter "Coinco"), would suffer irreparable injury because LeJeune had misappropriated trade secrets that would give Mars an unfair competitive advantage. We conclude that the evidence supports a finding of trade secret misappropriation. We also conclude, however, that the Circuit Court erred in relying on the theory of "inevitable disclosure" when ruling on the preliminary injunction. Therefore, we vacate the injunction and remand this case to the Circuit Court for further proceedings consistent with this Opinion.

I. Background

A. Facts

Coinco is a Missouri corporation in the business of designing, manufacturing, and servicing coin acceptors, coin changers, bill validators, and similar machines. Coinco divides its efforts to market and sell these machines into three separate "channels": "Vending," which includes beverage bottlers such as Coke and Pepsi; "Amusement," which includes video game manufacturers and distributors; and "Specialty Markets," which includes transit or transportation companies or companies that offer "self-check-out" services.

LeJeune began his employment with Coinco in 1993 as a "Sales and Field Service Representative." While in this position, he sold currency equipment, performed field service on that equipment, and led seminars on the repair and maintenance of Coinco's machines. In 1997, LeJeune was promoted to the position of Branch Manager and became responsible for managing every aspect of the Baltimore branch office, including the sales and field service of Coinco vending equipment in Maryland, Virginia, Delaware and West Virginia. LeJeune's job title changed again to Area Account Manager in 2002, when Coinco restructured its operations, eliminating the position of Branch Manager and creating three new positions: Area Account Manager (hereinafter "AAM"), Service Center Manager, and Customer Service Representative. As an AAM, LeJeune continued to be responsible for sales of Coinco's vending products but in an expanded region.¹

In January of 2003, Coinco introduced the MC2600 bill acceptor, a new product in the Amusement Market. Although LeJeune traditionally sold vending products, Coinco assigned him the responsibility of marketing and selling the MC2600 because many of the amusement customers were also Coinco's vending customers. LeJeune, however, never sold a single MC2600 in the Amusement Market and, actually, approached only one amusement industry customer to sell that product.

Coinco selected LeJeune in 2002 and 2003 to serve on a team of Coinco employees charged with investigating ways the company could cultivate clients in the Specialty Markets channel. LeJeune, the only AAM selected, attended the team's initial meeting, after which he was told by Coinco leadership to focus his work on the Vending Market and not to let his work on the Specialty Markets team interfere with that focus. LeJeune did not attend any subsequent meetings of the Specialty Markets team. Ultimately, the team generated a strategic plan, which analyzed the Specialty Markets and Coinco's opportunities in those markets. LeJeune received a copy of the plan, but he never reviewed it in detail.

While employed with Coinco, LeJeune never entered into a non-compete or confidentiality agreement with Coinco. He worked in sales and was not involved in manufacturing or research and development. He did, however, develop an extensive understanding of Coinco's products through his service and sales experience. He also learned of Coinco's pricing, pricing strategies, marketing and business initiatives, and selling strategies but was not privy to all information relating to Coinco's contracts with customers. LeJeune worked from his home in Annapolis, where he regularly received company documents.

Considering new employment in May and June of 2003, LeJeune had several interviews with Mars, Coinco's primary competitor in the currency acceptor industry. During an introductory telephone interview in May 2003, LeJeune described his work experience with Coinco and mentioned to the interviewer, Chris Mumford, that "Coinco [had] recently added Money Controls products to [its] portfolio to call on retail/kiosk accounts east of the Mississippi." He also stated that Coinco was concerned that Conlux, a sister company of Mars, was cutting into Coinco's sales. LeJeune later traveled to Lancaster, Pennsylvania, where he interviewed with several other Mars personnel. LeJeune discussed his experience at Coinco and explained why he sought employment with Mars. One of the interviewers, Mary Rampe, twice explained to LeJeune that no confidential Coinco information should be discussed during the interview. On July 7, 2003, LeJeune signed a job-offer letter from Mars and accepted a position as an Amusement OEM (Original Equipment Manufacturer) Manager. The new position would require LeJeune to focus on selling to the amusement industry, although he would have some contact with "full line distributors" that serve both the amusement and vending markets.

On July 14, 2003, LeJeune informed his supervisor, William Morgan, that he was leaving Coinco to work for Mars. On July 16, 2003, Morgan and LeJeune met for several hours to review the status of LeJeune's accounts. Morgan asked LeJeune to continue to work for Coinco for two weeks so that LeJeune could introduce Coinco's clients to LeJeune's successor. During his conversations with Morgan, LeJeune stated that he would be in a "unique" position at Mars because of his experience at Coinco. Morgan understood this to mean that LeJeune intended to use his knowledge of Coinco's business strategies. LeJeune stated that the reference to his "unique" position described his situation as one with extensive experience in the vending industry entering a job with a focus on the amusement market. That same day, LeJeune returned his laptop computer to Morgan along with a box of Coinco documents and materials.

Prior to this meeting with Morgan, LeJeune, on three separate occasions, had transferred or "burned" digital copies of numerous documents from his Coinco laptop to a compact disc ("CD"). On July 8, LeJeune copied, among other documents, Coinco's Executable Budgeting Software, which includes Coinco's manufacturing costs and profit margins. LeJeune conducted a second "burn" on July 8, transferring numerous personal files that had been saved on the Coinco laptop. On July 16, LeJeune again copied various files from the laptop, one of which contained pricing information related to Coinco's Specialty Markets Strategic Plan. Sometime after copying all of the files onto the CD, LeJeune created a second copy of the disc.

LeJeune explained that he had done this because he wanted to retain personal files, such as wedding photographs, that had been saved under the "My Documents" file on the laptop. He stated that, for the sake of simplicity and because he did not know how to save individual files onto a CD, he had "burned" the entire "My Documents" folder and captured some of Coinco's business documents. LeJeune stated that he had not saved any Coinco documents with the intent to use those documents in his work with Mars. An expert in computer forensics testifying on behalf of Coinco, however, stated that, when LeJeune copied the Executable Budgeting Software, that file was not part of the "My Documents" folder. The expert also discovered that LeJeune had erased information from the Coinco laptop in an effort to hide the downloads. The erased information was recovered by computer forensic specialists.

In addition to the computer files, LeJeune also retained hard copies of a number of other Coinco documents. Included among those documents were Coinco's price and cost information, Coinco's service pricing, a list of Coinco's preferred distributors, and detailed technical specifications relating to a Coinco's amusement product, the MC2600, and a Coinco vending product, the Bill Pro Validator. The pricing and cost information is sensitive because Coinco uses a tiered-pricing system.

Coinco's efforts to maintain the confidentiality of company information included limiting access to company documents to only personnel who needed to know the information. To this end, Coinco guarded the computer files on its mainframe computer with a password system, which allowed Coinco to control the employees' access to company information. Coinco also negotiates "non-disclosure" agreements with many of its clients to ensure that those clients do not share pricing information with other Coinco customers or Coinco competitors. In addition, Coinco's "Employee Handbook" states that its business methods are "proprietary," and employees should protect such information as confidential. Many of Coinco's pricing documents and other strategic information, including...