Modular Min. Systems v. Jigsaw Technologies

• Decision Date: 30 April 2009
• Docket Number: No. 2 CA-CV 2008-0118.,2 CA-CV 2008-0118.
• Citation: Modular Min. Systems v. Jigsaw Technologies, 212 P.3d 853, 221 Ariz. 515 (Ariz. App. 2009)
• Parties: MODULAR MINING SYSTEMS, INC., an Arizona corporation, Plaintiff/Appellant, v. JIGSAW TECHNOLOGIES, INC., an Arizona corporation; Jonathan Olson and Nayade Olson, husband and wife; and Sergio Blacutt and Gail Blacutt, husband and wife, Defendants/Appellees.
• Court: Arizona Court of Appeals

212 P.3d 853

221 Ariz. 515

MODULAR MINING SYSTEMS, INC., an Arizona corporation, Plaintiff/Appellant, v. JIGSAW TECHNOLOGIES, INC., an Arizona corporation; Jonathan Olson and Nayade Olson, husband and wife; and Sergio Blacutt and Gail Blacutt, husband and wife, Defendants/Appellees.

No. 2 CA-CV 2008-0118.

Court of Appeals of Arizona, Division 2, Department A.

April 30, 2009.

Haralson, Miller, Pitt, Feldman & McAnally, P.L.C. By Gerald Maltz and Peter T. Limperis, Tucson, Attorneys for Plaintiff/Appellant.

Lewis & Roca, LLP By John N. Iurino and Sivan R. Korn, Tucson, Attorneys for Defendants/Appellees.

OPINION

ESPINOSA, Judge.

¶ 1 Modular Mining Systems, Inc. ("Modular") challenges the trial court's grant of summary judgment in favor of appellees Jigsaw Technologies, Inc.; Jonathan Olson and Nayade Olson; and Sergio Blacutt and Gail Blacutt (collectively, "Jigsaw"). We affirm.

Factual and Procedural Background

¶ 2 On appeal from a summary judgment, we view the facts in the light most favorable to the party against whom judgment was entered and draw all justifiable inferences in its favor. Ratliff v. Hardison, 219 Ariz. 441, ¶ 2, 199 P.3d 696, 697 (App.2008); Nat'l Bank of Ariz. v. Thruston, 218 Ariz. 112, ¶ 17, 180 P.3d 977, 981 (App.2008). "However, we consider as true those facts alleged by [the moving party]'s affidavits that [the nonmoving party] did not controvert." Jennifer G. v. Ariz. Dep't of Econ. Sec., 211 Ariz. 450, ¶ 3, 123 P.3d 186, 188 (App.2005).

¶ 3 Modular manufactures a mine-management system known as "Dispatch," which is a combination of hardware and software that gathers data about a mine's equipment and calculates the equipment's optimal use. The Dispatch system consists of a central server and one or more field units that are attached to mobile mining equipment, such as trucks and mining shovels. Each Dispatch field unit is equipped with a wireless transceiver that sends and receives messages from the central server regarding the equipment's location and operation.

¶ 4 Jonathan Olson is a former employee of Modular. He resigned his position as Modular's chief technical officer in August 2003 but continued to work as a part-time consultant through March 2004. Olson and Sergio Blacutt, another former employee of Modular, formed Jigsaw in October 2003, initially to create software products for the quarry industry, a market Modular does not serve. Less than a year later, however, Jigsaw expanded its products to include the mining industry, placing Jigsaw in direct competition with Modular. Jigsaw's mine-management system is marketed under the name "MineOps." Like Dispatch, MineOps provides mine monitoring and optimization through wireless communications between a central server and field units mounted on the mine's mobile equipment.

¶ 5 Modular filed this action in 2004. Its original complaint named Jigsaw and eight individual defendants and included claims of misappropriating trade secrets in violation of Arizona's Uniform Trade Secrets Act,¹ unfair competition, intentional interference with business relationships, intentional interference with contract, "aiding and abetting," and conspiracy, as well as claims of breach of employment agreements and breach of the covenant of good faith and fair dealing. Modular also sought a preliminary injunction against Jigsaw. The trial court denied the requested injunction in May 2005 after a five-day evidentiary hearing, and this court affirmed on appeal. Modular then amended its complaint in August 2007. The amended complaint sought only injunctive relief and punitive damages, named half of the original individual defendants, and abandoned Modular's claims of conspiracy, aiding and abetting, and breach of the covenant of good faith and fair dealing.

¶ 6 In its statutory trade secrets claim, Modular contended Jigsaw had misappropriated two computer configuration codes ("commands") and used them to allow Jigsaw's field units to communicate with Modular's field units aboard selected vehicles at two mines in Peru and Argentina.² Modular sought injunctive relief prohibiting Jigsaw from utilizing these commands.

¶ 7 Jigsaw moved for summary judgment on all of Modular's claims in January 2008. In its reply to Modular's opposition to its motion, Jigsaw asserted it had been unaware Modular considered the particular commands to be trade secrets until Jigsaw took the deposition of Modular's expert in February 2008.³ Jigsaw further asserted that, upon learning Modular considered the commands to be trade secrets, it immediately discontinued their use and implemented an alternate procedure using a command contained in Modular's published guides and manuals. Jigsaw disputed Modular's assertion that the two commands at issue were trade secrets, and it maintained that, in any event, the Dispatch systems would be decommissioned in both mines by the end of 2008.⁴ Modular did not dispute that Jigsaw was using the commands only at the two specified mines in Peru and Argentina or its assertion that both mines stopped using Dispatch during 2008.

¶ 8 The trial court granted Jigsaw's summary judgment motion in its entirety. As part of its decision, the court determined Modular's claim for injunctive relief was moot. It also awarded Jigsaw its requested attorney fees, in the amount of $510,561.50, pursuant to A.R.S. §§ 12-341.01 and 44-404. We have jurisdiction over Modular's appeal pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(B).

Discussion

¶ 9 Modular argues the trial court erred in finding its claim for injunctive relief moot, in granting summary judgment on its trade secrets claim, and in awarding attorney fees.⁵ "We review a superior court's `grant of summary judgment on the basis of the record made in [that] court, but we determine de novo whether the entry of [summary] judgment was proper.'" Nat'l Bank, 218 Ariz. 112, n. 3, 180 P.3d at 980 n. 3, quoting Schwab v. Ames Constr., 207 Ariz. 56, ¶ 17, 83 P.3d 56, 60 (App.2004) (alterations in Nat'l Bank). In determining whether the court properly granted summary judgment, we apply the same standard a trial court uses in ruling on a summary judgment motion. Id.

¶ 10 The entry of summary judgment is appropriate "if the pleadings, deposition[s], answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Ariz. R. Civ. P. 56(c)(1).

When a moving party meets its initial burden of production by showing that the nonmoving party does not have enough evidence to carry its ultimate burden of proof at trial, the burden then shifts to the nonmoving party to present sufficient evidence demonstrating the existence of a genuine factual dispute as to a material fact.

Nat'l Bank, 218 Ariz. 112, ¶ 26, 180 P.3d at 984. "To defeat the motion, the non-moving party must call the court's attention to evidence overlooked or ignored by the moving party or must explain why the motion should otherwise be denied." Id.

¶ 11 Applying these principles, we first address Modular's argument that the trial court erroneously found moot its request for an injunction prohibiting Jigsaw from "using, directly or indirectly, [Modular's] confidential, proprietary, or trade secret information." Modular argues the court erred in making its determination "without hearing from the witnesses" and contends it "is entitled to have the trier of fact evaluate the evidence and determine whether Jigsaw infringed and whether injuncti[ve] relief against future infringement is warranted."

¶ 12 "The issue of injunctive relief is moot when the `events make it absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur.'" SAL Leasing, Inc. v. State ex rel. Napolitano, 198 Ariz. 434, ¶ 39, 10 P.3d 1221, 1229 (App.2000), quoting State ex rel. Babbitt v. Goodyear Tire & Rubber Co., 128 Ariz. 483, 486, 626 P.2d 1115, 1118 (1981). "[T]he burden of proof ... in any action for injunction ... is upon the plaintiff to show a likelihood that the defendant will in the future engage in the conduct sought to be enjoined." Babbitt, 128 Ariz. at 487, 626 P.2d at 1119. "Factors that may point to a danger of future violations include past violations, involuntary cessation of the violations, and their continuance in disregard of the lawsuit." SAL Leasing, 198 Ariz. 434, ¶ 39, 10 P.3d at 1229. Although "the mere cessation of illegal conduct does not necessarily render a case moot ... the `necessary determination is that there exists some cognizable danger of recurrent violation, something more than the mere possibility which serves to keep the case alive.'" Winokur v. Bell Fed. Sav. & Loan Ass'n, 560 F.2d 271, 274 (7th Cir.1977), quoting United States v. W.T. Grant Co., 345 U.S. 629, 632-33, 73 S.Ct. 894, 97 L.Ed. 1303 (1953).

¶ 13 Here, the trial court reasoned that Modular's claim for injunctive relief was moot, because: "Plaintiff has not contested Defendants' factual assertion that as soon as Jigsaw learned of the newest allegation in February 2008, it terminated the challenged form of reconfiguration and implemented an alternative method which did not use any of the information Plaintiff alleged to be secret." Accordingly, the court found, "[T]he sole remedy sought by Plaintiff is an injunction, [and] there is nothing to enjoin."

¶ 14 On appeal, Modular contends its expert, Dr. Sandeep Chatterjee, "controverted Jigsaw's contention that its assertion that it would discontinue integrating its products with Modular's at two identified mine sites in the future renders its use of Modular's configuration code `moot.'" Modular relies on the following portion of Chatterjee's affidavit:

I disagree with this assessment [that the issue is moot] and I believe that the information used by Jigsaw to integrate its systems with those of Modular is central to this matter, in general, and to...