Lemmon v. Hendrickson, 96-99
| Decision Date | 19 February 1997 |
| Docket Number | No. 96-99,96-99 |
| Citation | 559 N.W.2d 278 |
| Parties | Gayle LEMMON d/b/a Do-Rite Pest Control Company, Appellant, v. Jack P. HENDRICKSON, Jr., and Brad Golay d/b/a Revenge Pest Control, Appellees. |
| Court | Iowa Supreme Court |
Jerry C. Estes, of Estes Law Firm, Fort Dodge, for appellant.
David L. Updegraff of David L. Updegraff, P.C., Sioux City, for appellee Golay.
Joseph B. McCarville, Fort Dodge, for appellee Hendrickson.
Considered by LARSON, P.J., and NEUMAN, SNELL, ANDREASEN, and TERNUS, JJ.
Appellant, Gayle Lemmon, appeals from an order of the district court dismissing her complaint against the appellees for injunctive relief and damages from alleged breach of employment contract. We affirm.
Gayle Lemmon is the owner of Do-Rite Pest Control Company, located in Dakota City, Iowa. Do-Rite provides pest control services to the surrounding rural community. From 1990 to 1992, appellee Jack Hendrickson worked as a full-time service technician for Do-Rite. As part of his employment, Hendrickson provided service to Do-Rite's customers for eradication of birds, moles, gophers, and other pests. Do-Rite supplied Hendrickson with a specialized tool, developed and used by the company, for baiting birds in the rafters of farm buildings. Use of this pole was a significant marketing tool in Do-Rite's solicitation of new business.
In August 1992, Hendrickson terminated his employment with Do-Rite and entered into business for himself selling feed fortifier. On September 1, 1994, after the feed business proved to be unprofitable, Hendrickson and appellee Brad Golay commenced a joint venture, Revenge Pest Control, located in Coon Rapids, Iowa. Revenge also provided rural pest control service, with Hendrickson performing the actual field work for the customers and Golay primarily providing the capital. In the course of its business, Revenge serviced seven of Do-Rite's former customers. At one point, Hendrickson attempted to construct a bird pole similar to the one utilized by Do-Rite, but abandoned the effort shortly thereafter when it appeared replication was not practical.
In January 1995, Lemmon filed a lawsuit against Hendrickson and Golay seeking injunctive relief and damages for alleged breach of an employment contract signed by Hendrickson while working for Do-Rite. The contract contained a two-year non-compete provision and prohibited disclosure of certain trade secrets and customer information after the termination of employment. Lemmon alleged that Hendrickson misappropriated trade secrets involving Do-Rite's customer list and its telescopic bird pole, in violation of the agreement and of the common law.
On December 18, 1995, the district court entered a ruling dismissing Lemmon's petition. The court concluded that the employment agreement did not prohibit Hendrickson from servicing former customers after the two-year period had lapsed. The court also determined that the bird pole did not constitute a trade secret subject to protection under common law or the employment contract. It is from this order that plaintiff appeals.
As this case was tried in equity, our review on appeal is de novo. Iowa R.App.P. 4. We give weight to the fact findings of the trial court, especially when considering the credibility of witnesses, but are not bound by them. Iowa R.App.P. 14(f)(7).
Lemmon contends that Revenge has misappropriated Do-Rite's bird pole device, which she alleges is a trade secret under the common law. She asserts that its status as a protected trade secret and Hendrickson's past attempt to duplicate it necessitates an injunction. We disagree.
There are three recognized prerequisites for relief based on the appropriation of a trade secret: (1) existence of a trade secret, (2) acquisition of the secret as a result of a confidential relationship, and (3) unauthorized use of the secret. Basic Chems., Inc. v. Benson, 251 N.W.2d 220, 226 (Iowa 1977). The plaintiff has the burden to establish each of these elements by a preponderance of the evidence. Id.
The parties disagree over whether the bird pole sufficiently constitutes a trade secret such that it falls within the statutory and common law protection. But assuming, arguendo, that it can be classified as such, we find that Lemmon has failed to meet the burden of proof on the third element. There is no indication in the record that Revenge has engaged in unauthorized use of the bird pole.
The trial court found there was no evidence that Hendrickson had used the pole or successfully duplicated its design while at Revenge, or that he intended to do so in the future. There was credible testimony that although Hendrickson did at one time attempt to replicate the pole, he abandoned those efforts after replication proved to be infeasible. There is insufficient evidence to prove that any misappropriation occurred.
Lemmon correctly notes that section 550.3(1) of the Iowa Code empowers a court to award an injunction for "actual or threatened misappropriation" of a trade secret. Iowa Code § 550.3(1) (1995). But in this case, we find that there was neither actual nor threatened appropriation. Even if the bird pole was found to be a trade secret, an injunction would not be warranted in this case. Hendrickson testified that he has no further plans to attempt to use the telescopic pole. As we have previously noted:
"Equity interposes by injunction to prevent future rather than past acts, and so acts and practices will not, as a rule, furnish a basis for injunctive relief when they have been discontinued or abandoned before institution of the suit to restrain them, or even after such suit is begun, particularly where there is nothing to indicate a probability that they will be resumed...."
Conley v. Warne, 236 N.W.2d 682, 686 (Iowa 1975) (quoting 42 Am.Jur.2d Injunctions § 5, at 731 (1969)).
Lemmon further alleges that Revenge has impermissibly used Do-Rite's customer list to solicit new business. This claim is based both on an assertion that Do-Rite's customer list should be protected under the common law as a trade secret and that the employment agreement signed by Hendrickson prohibits the disclosure of the list to competitors.
The trial court found that the list was not a trade secret and that the employment agreement only prohibited competition for two years. The court further found that while the agreement forbade the disclosure of the list to third parties, it did not prohibit Hendrickson from servicing the former customers himself. We agree with the trial court's determination of this issue.
Lemmon asks us to consider whether the customer list is afforded protection as a trade secret under common law. We have previously noted that a customer list can be a protected trade secret under certain conditions. See Basic Chems., 251 N.W.2d at 230. But we need not reach the issue of whether this particular list can be classified as a trade secret. There is no indication in the record that Hendrickson either appropriated the list for his own use or disclosed its contents to third-party competitors. Although it is undisputed that Hendrickson failed to return any customer lists in his possession upon termination of his employment, Lemmon offers no proof that Hendrickson retained a list to use to Do-Rite's disadvantage. Instead, Lemmon merely asserts, without support in the record, that Revenge used the list to solicit Do-Rite's customers two years after Hendrickson left.
The trial court noted Hendrickson's credible testimony that he did not retain a copy of the list upon leaving and that he does not intend to solicit business from it. Although Revenge provides pest control services to seven of Do-Rite's former customers, there is no evidence that these clients were gained through misappropriation of Do-Rite's customer list. Rather, Hendrickson testified he remembered the names of some former customers and solicited from that recollection. He further testified that Revenge operates in...
To continue reading
Request your trial
-
Sun Media Systems, Inc. v. Kdsm, LLC
...acquisition of the trade secret as the result of a confidential relationship; and 3) unauthorized use of the secret. Lemmon v. Hendrickson, 559 N.W.2d 278, 279 (Iowa 1997); see also E.W. Bliss Co. v. Struthers-Dunn, Inc., 408 F.2d 1108, 1112 (8th Cir.1969). To satisfy this burden, Sun Media......
-
Catalyst & Chemical Serv. V. Global Ground Support
...(Fed.Cir.2002); see also Computer Mgmt. Assistance Co. v. Robert DeCastro, Inc., 220 F.3d 396, 403 (5th Cir.2000); Lemmon v. Hendrickson, 559 N.W.2d 278, 279 (Iowa 1997). 1. Existence of a Trade Secret The "threshold inquiry" in every trade secret case is "whether or not there [is] a trade ......
-
Central States Indus. Supply, Inc. v. McCullough
...of the secret as a result of a confidential relationship, and (3) unauthorized use of the secret.'" Id. (quoting Lemmon v. Hendrickson, 559 N.W.2d 278, 279 (Iowa 1997)). a. "Trade This court also addressed what constitutes a "trade secret" under Iowa law in Walker, as follows: IOWA CODE § 5......
-
Wachovia Securities, L.L.C. v. Stanton
...910 (Iowa 1986), and American Express Financial Advisors, Inc. v. Yantis, 358 F.Supp.2d 818, 829 (N.D.Iowa 2005); Lemmon v. Hendrickson, 559 N.W.2d 278, 282 (Iowa 1997); Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376, 381 (Iowa 1983); and Cogley Clinic v. Martini, 253 Iowa 541, 112 N.W.......