Porex Corp. v. Haldopoulos

• Decision Date: 27 March 2007
• Docket Number: No. A06A1650.,A06A1650.
• Citation: 284 Ga. App. 510,644 S.E.2d 349
• Parties: POREX CORPORATION v. HALDOPOULOS et al.
• Court: Georgia Court of Appeals

284 Ga. App. 510

644 S.E.2d 349

POREX CORPORATION v. HALDOPOULOS et al.

No. A06A1650.

Court of Appeals of Georgia.

March 27, 2007.

Alston & Bird, Martin J. Elgison, John E. Stephenson, Jr., Atlanta, for Appellant.

Bondurant, Mixson & Elmore, Emmet J. Bondurant, Edward B. Krugman, Ronan P. Doherty, Cohen, Pollock, Merlin & Small, David S. Givelber, Atlanta, for Appellees.

ADAMS, Judge.

Porex Corporation appeals from the trial court's grant of partial summary judgment in favor of Kleanthis Dean Haldopoulos, Benjamin T. Hirokawa and MicroPore Plastics, Inc. on the basis of the five-year statute of limitation in the Georgia Trade Secrets Act. For the reasons set forth below, we reverse.

"To prevail on summary judgment, the movant must demonstrate that no genuine issue of material fact exists and that the undisputed facts, when viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law." (Citation omitted.) Sturdivant v. Moore, 282 Ga.App. 863, 865, 640 S.E.2d 367 (2006). And "[a] defendant moving for summary judgment based on an affirmative defense may not rely upon an absence of evidence in the record disproving the affirmative defense." Ward v. Bergen, 277 Ga.App. 256, 260, 626 S.E.2d 224 (2006). Accordingly, MicroPore, Haldopoulos and Hirokawa bear the burden of coming forth with evidence establishing that Porex's claims are barred by the applicable statute of limitation.

Viewed in that light, the evidence shows that Porex is in the business of manufacturing porous plastic products in Georgia. The company asserts that the specific methods and equipment developed by Porex to produce plastic products are trade secrets. Haldopoulos began working for Porex in 1992 after graduating from college and stayed for seven years, working first as a product development engineer and later as a director of domestic sales. When he began his employment with Porex, Haldopoulos signed a "Key Employee Agreement" limiting his ability to compete with Porex and his use of the company's confidential information. Porex terminated Haldopoulos's employment in October 1999. Afterward, his attorney re-negotiated revisions to the employee agreement to omit the noncompetition and nonsolicitation provisions. But under the terms of a "Severance Agreement and General Release" Haldopoulos signed, the key agreement's prohibitions against disseminating or utilizing Porex's trade secrets and other confidential information remained in effect.

In November 1999, Haldopoulos began working to establish his own plastics manufacturing business, which he later incorporated as MicroPore Plastics, Inc. Haldopoulos started out of a facility in Longmont, Colorado owned by Safari Water Filtration Systems, Inc., a former Porex client. Hirokawa left his job at Porex in January 2000 and went to work for MicroPore.

Porex learned of Haldopoulos's activities at the Safari facility in the spring of 2000. Both Safari and Haldopoulos had contractual obligations not to misuse or disclose confidential information from Porex's operations. So on April 20, 2000, Porex's lawyers sent Haldopoulos's attorney a letter reminding him of this obligation, and stating, in pertinent part:

Porex also has strong reason to believe that Mr. Haldopoulos has misappropriated and is continuing to misappropriate Porex's trade secrets and confidential information in the course of manufacturing a product for Safari that Porex previously manufactured for Safari during the time that he was employed with Porex.

Please be advised that Porex is prepared to take all steps necessary to enforce its contractual rights and its rights under other applicable law, to protect its confidential information and trade secrets.

The letter to Haldopoulos's attorney stated, however, that before taking legal action Porex wanted to speak to Haldopoulos "about the nature of his business activities."

Haldopoulos's attorney replied to the letter stating that Haldopoulos had "taken great pains to avoid using any confidential information or trade secrets of Porex" in connection with his new business, but reiterating that Haldopoulos had the right to compete with Porex and to solicit its customers. He declined, however, to disclose the details about the nature of Haldopoulos's business activities.

Porex's attorney responded by saying that the attorney's letter had not provided the assurances the company needed:

Based on Porex's considerable experience in the industry, it is inconceivable that, in a matter of months, Mr. Haldopoulos could have established a competing enterprise housed in the facility of a customer of Porex with projected revenues of $1M simply by using his general industry knowledge, examining some expired patents, gathering information from the public domain and obtaining specifications from customers. Because Haldopoulos refused to provide the information that Porex sought, the company suggested that a neutral third party observe his operations to determine whether he had misappropriated any of Porex's confidential information, while preserving the confidentiality of Haldopoulos's own operations. The letter concluded that "Mr. Haldopoulos will be making a serious error in judgment if he construes this proposal as a lack of resolve on the part of Porex." Haldopoulos did not respond to Porex's proposal.

At the same time, Porex also sent a letter to Safari raising concerns about whether Safari was sharing Porex's confidential information with Haldopoulos in the course of his work at its Colorado facilities. Porex was concerned that Haldopoulos was misusing the company's confidential information and trade secrets to manufacture for Safari a product that Porex had previously supplied to that company. Safari responded by letter stating (1) that Porex was mistaken in its premise that Safari had entered into any business transactions or had any involvement with Haldopoulos's business; (2) that it had not shared any information with Haldopoulos about its methods for making water filters, the only product it manufactured; (3) that it had allowed Haldopoulos to use a small portion of its Colorado facilities "for his own individual purposes"; and (4) that it was terminating its permission for Haldopoulos to use those facilities. Victor L. Marrero, Porex's chief financial officer, stated that Safari's letter provided the assurances that Porex was seeking, and the company took no further action to pursue its suspicions because it believed that the situation had been resolved.

After leaving the Colorado location, MicroPore moved its operations to Stone Mountain and continued the manufacture of plastic products in direct competition with Porex. MicroPore asserts that it did not misappropriate Porex's trade secrets in building its business. Rather, Haldopoulos created his own manufacturing process based upon his general technical knowledge and experience in the industry, publicly available information and information received from third party vendors.

Michael Sutsko, who worked for Porex from April 1999 until October 2000, as a business unit director in the marketing department, had responsibility for monitoring competing businesses. He states that Porex was aware that MicroPore had been founded by two former Porex employees and continued the manufacture of porous plastic products, but the company made the decision not to put MicroPore on its list of key competitors because it was considered "inconsequential." Nevertheless, Sutsko asserts that Porex continued to "monitor" MicroPore's activities (presumably until Sutsko left the company in October 2000). Porex concedes that it was aware that MicroPore remained in the business of manufacturing plastics, but denies that it had any information that MicroPore was using its trade secrets at that time.

MicroPore's business grew over time, and according to Haldopoulos, "[a]lthough Porex was and remains the dominant player in the porous plastic marketplace, MicroPore has become Porex's largest and most significant competitor in this market." In January 2005, Porex approached Haldopoulos about the possibility of acquiring MicroPore. The parties continued negotiations over the next several months, and in August 2005, Marrero and two other Porex employees toured MicroPore's manufacturing facilities in Tucker. Marrero stated that Porex pulled back from the acquisition discussions when it discovered during that tour "that the manufacturing processes it was considering buying actually consisted of Porex's own trade secrets." Porex asserts that this was the first notice the company had that MicroPore had actually misappropriated trade secrets. Porex states that prior to its August 2005 tour of the Tucker facility, it had no knowledge of the specific manufacturing processes that MicroPore was using to make porous plastic products. The company states that it was not possible to determine MicroPore's manufacturing processes through other means, such as reverse engineering on MicroPore's products. Porex subsequently initiated this lawsuit on September 14, 2005.

In granting the defendants' motion for summary judgment,¹ the trial court found that Porex had failed to exercise reasonable diligence to determine whether it had a claim after first becoming suspicious in the spring of 2000 that Haldopoulous may have misappropriated some of the company's trade secrets. The trial court, stated that "[a]ny fact that excites [a plaintiff's] suspicion is the same as actual knowledge of his entire claim," paraphrasing Pilkington Bros. v. Guardian Indus. Corp., 1986 WL 9876, *3 (E.D.Mich. 1986). The trial court found that the information reflected in Porex's correspondence with Haldopoulos and Safari in April and May 2000 was sufficient to start the running of the five-year limitation period under the Georgia Trade Secrets Act. OCGA § 10-1-766. Thus, the court concluded that Porex's misappropriation claims filed in September 2005 were...