Metso Minerals Indus. v. FLSmidth-Excel LLC

• Decision Date: 07 May 2010
• Docket Number: Case No. 07-CV-926
• Citation: 733 F.Supp.2d 969
• Court: U.S. District Court — Eastern District of Wisconsin
• Parties: METSO MINERALS INDUSTRIES, INC., Plaintiff, v. FLSMIDTH-EXCEL LLC, Excel Foundry & Machine, Inc., Joseph P. Martinez, Cheryl A. Sullivan, Richard A. Parsons, Douglas M. Parsons, Kenneth L. Olson, and Christopher P. Wade, Defendants.

733 F.Supp.2d 969

METSO MINERALS INDUSTRIES, INC., Plaintiff,

v.FLSMIDTH-EXCEL LLC, Excel Foundry & Machine, Inc., Joseph P. Martinez, Cheryl A. Sullivan, Richard A. Parsons, Douglas M. Parsons, Kenneth L. Olson, and Christopher P. Wade, Defendants.

Case No. 07-CV-926.

United States District Court,

E.D. Wisconsin.

May 7, 2010.

David R. Cross, Johanna M. Wilbert, Michael J. Gonring, Raymond D. Jamieson, Cheri L. Baden, Jeffrey Morris, Patrick J. Murphy, Quarles & Brady LLP, Milwaukee, WI, Josephine K. Benkers, Quarles & Brady LLP, Madison, WI, for Plaintiff.

Amy L. Lindner, Leslie S. Miller, David G. Hanson, Thomas M. Phillips, Reinhart Boerner Van Deuren SC, Milwaukee, WI, Jedidiah L. Dooley, Jennifer S. Coleman, John V. Picone, III, Jennifer E. Pawlowski, Hopkins & Carley, San Jose, CA, Rodney L. Cubbie, Rodney L. Cubbie Attorney at Law SC, Wauwatosa, WI, for Defendants.

ORDER

J.P. STADTMUELLER, District Judge.

On October 17, 2007, plaintiff Metso Minerals Industries, Inc. ("Metso") filed suit against FLSmidth-Excel LLC ("Excel"). In the ensuing years, Metso filed several amended complaints, adding numerous new defendants. In Metso's fifth, and final, amended complaint, it alleged that all of the defendants (excluding Cheryl Sullivan) partook in misappropriation of certain trade secrets from Metso. Defendants ¹ have moved for summary judgment as to Metso's trade secret misappropriation claims related to the HP400,² arguing that Metso does not own the relevant trade secrets and thus does not have standing to assert a claim for their misappropriation. After consideration of the parties' arguments, the court concludes that Metso does have standing to pursue these claims, and thus the defendants' motion for summary judgment on these claims is denied.

BACKGROUND

Metso is engaged in the manufacture and sale of high performance conical rock crushers, including the model HP400. In December of 2002, Metso sold all of the engineering, design information, and intellectual property rights (except for patent and trademark rights) related to the HP400 to Metso Minerals Macon ("Macon"), a separate legal entity located in Macon, France. As part of that transaction,Macon granted to Metso a non-exclusive, royalty-free right to continue to use the technology for service and warranty repair for the products sold by Metso.

Metso contends that two of the individual defendants, Messrs. Wade and Martinez, misappropriated trade secrets relating to the HP400. Martinez was previously employed by Metso, and Wade was previously employed by one of Metso's authorized repair facilities; both are currently employed by Excel. Metso alleges that Wade impermissibly took HP400 technical data sheets and other Metso detailed design information to his new job at Excel Foundry & Machine, Inc. ("Foundry"), and then to Excel where he transferred a year later. Metso alleges that Martinez impermissibly took a copy of the HP400 General Assembly, Master Layout CAD ³ file with him to his new job at Excel. Metso also maintains that Richard Parsons and Douglas Parsons, both high ranking officers in both Foundry and Excel, knew of (or had reason to know of) and actively encouraged such acquisition of confidential information pertaining to the HP400. According to Metso, defendants used the HP400 trade secret information to design and build the XL400, a conical rock crusher sold by Excel. Metso claims that since the XL400 entered the market, Metso has lost at least thirty-four HP400 sales to Excel.

ANALYSIS

Defendants have moved for summary judgment on Metso's claims pertaining to HP400 trade secrets. Defendants claim that because Metso did not "own" the HP400 trade secrets when they were taken, but rather merely possessed such information pursuant to a non-exclusive license ⁴ with Macon, Metso, therefore, does not have standing to sue defendants for the misappropriation of such trade secrets. Defendants also assert, without any argument in support thereof, that Metso is not the "Real Party in Interest" as required by Fed.R.Civ.P. 17(a)(1).

I. Summary Judgment Standard

Summary judgment is appropriate where the movant establishes that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Material facts" are those facts which "might affect the outcome of the suit," and a material fact is "genuine" if a reasonable finder of fact could find in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate where a party has failed to make "a showing sufficient to establish the existence of an element essential to that party's case and on which the party will bear the burden of proof at trial." Celotex, 477 U.S. at 317, 106 S.Ct. 2548. A party opposing summary judgment may not rest upon the mere allegations or denials of the adverse party's pleading, but must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). Any doubt as to the existence of a material fact is to be resolved against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

II. Standing

Federal courts are, per Article III of the Constitution, limited to adjudicating actual "cases" and "controversies." From this limitation emerges the requirement that a litigant have "standing" to invoke the power of a federal court. To have constitutional standing, "[a] plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) (citation omitted). The test for constitutional standing is a three-part inquiry:

1. The plaintiff must have suffered an injury in fact-an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.

2. There must be a causal connection between the injury and the conduct complained of.

3. It must be likely as opposed to merely speculative that the injury will be redressed by a favorable decision.

See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Defendants' argument focuses exclusively on the first question-whether plaintiff has suffered the invasion of a legally protected interest.

Metso's cause of action for misappropriation of trade secrets arises from Wisconsin's version of the Uniform Trade Secrets Act, Wis. Stat. § 134.90. Thus, for Metso to demonstrate that misappropriation of its HP400 trade secrets constituted the invasion of a legally protected interest, it must show that its interest in those trade secrets is protected by § 134.90. The statute reads in relevant part:

(2) Misappropriation. No person, including the state, may misappropriate or threaten to misappropriate a trade secret by doing any of the following:

(a) Acquiring the trade secret of another by means which the person knows or has reason to know constitute improper means.

Wis. Stat. § 134.90(2). Thus, the question before the court is whether § 134.90 requires that a plaintiff "own" the trade secret in order to bring suit for the trade secret's misappropriation. Both parties agree that this is a question that the Wisconsin courts have not addressed. Defendants maintain that the plain language of the statute requires ownership, and that persuasive case law requires ownership. Metso argues that the plain language of the statute does not require ownership, and that persuasive case teaches that possession of the misappropriated trade secret is sufficient to confer standing under the act.

Clearly, the above cited portion of § 134.90 does not expressly limit protection under the statute to those who own the trade secret in question. Defendants argue that the statute's utilization of the phrase: "the trade secret of another " (emphasis added) implicitly limits trade secret protection to owners. However, the phrase "of another" on its face simply describes the relationship between the misappropriator and the trade secret-namely that the trade secret belongs to one other than the misappropriator. The phrase does not, implicitly or otherwise, limit protection only to the "owner" of the trade secret. Presumably, if the legislature had wanted to so limit the protection of the act it would have used language explicitly stating as much. See Wis. Stat. § 943.205 (making it a Class I felony to "with intent deprive or withhold from the owner thereof the control of a trade secret") (emphasis added).

Rather, the legislature adopted the language of NCCUSL's ⁵ Uniform Trade Secrets Act ("UTSA"). Such language appears not to be designed to limit standing to "owners" as evidenced by a comment to the UTSA which states: "Where more than one person is entitled to trade secret protection with respect to the same information, only that one from whom misappropriation occurred is entitled to a remedy." Uniform Trade Secrets Act §§ 2, 3 cmt. (2005). This comment is certainly not dispositive to the instant issue because the comment assumes the parties in question are entitled to trade secret protection, which is not something the court can assume since that is the very question the court is seeking to answer. However, the comment is useful in that it clearly contemplates that multiple parties could be entitled to trade secret protection as to the trade secret. Somewhat telling is the fact that the comment uses the phrase: "[w]here more than one person is entitled to trade secret protection" rather than stating "where two people are entitled to trade secret protection." According to defendants the most parties that would ever be capable of having trade secret protection would be two (the owner of the trade secret and an exclusive licensee of the trade secret). The comment teaches away...