Reinforced Molding Corp. v. General Elec. Co.

• Citation: 592 F. Supp. 1083
• Decision Date: 21 August 1984
• Docket Number: Civ. A. No. 81-183.
• Parties: REINFORCED MOLDING CORPORATION, Plaintiff, v. GENERAL ELECTRIC COMPANY, a corporation, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

592 F. Supp. 1083

REINFORCED MOLDING CORPORATION, Plaintiff, v. GENERAL ELECTRIC COMPANY, a corporation, Defendant.

Civ. A. No. 81-183.

United States District Court, W.D. Pennsylvania.

August 21, 1984.

Henry E. Rea, Jr., Brandt, Milnes, Rea & Wagner, Pittsburgh, Pa., for plaintiff.

Frederick N. Egler, Egler, Anstanding, Garrett & Riley, Pittsburgh, Pa., for Defendant.

OPINION

MANSMANN, District Judge.

This matter comes before the Court for resolution on the merits after trial nonjury. In conformity with the findings of fact and conclusions of law set forth below, this Court finds that Defendant misappropriated Plaintiff's trade secret and awards Plaintiff damages in the amount of $1997.05. This Court further finds that the record does not support an award of punitive damages and denies this request by Plaintiff.

This Court hereby makes the following findings of fact and conclusions of law pursuant to FED.R.CIV.P. 52(a):

FINDINGS OF FACT

1. Plaintiff, Reinforced Molding Corporation is a Pennsylvania corporation engaged in the business of manufacturing reinforced fiberglass products, among other items. Edward J. Sinnott ("Sinnott") is Plaintiff's founder and president.

2. Defendant, General Electric Company is a New York corporation which manufactures, inter alia, electrical alternators for use in large off-road vehicles at its plant in Erie, Pennsylvania.

3. This action was commenced in the Court of Common Pleas of Allegheny County, Pennsylvania, and was removed to this Court on the petition of the Defendant pursuant to 28 U.S.C. § 1441, based upon diversity of citizenship.

4. Plaintiff seeks damages from Defendant, claiming that Defendant misappropriated its trade secrets concerning the manufacturing process of coil brace parts (used by Defendant in its manufacture of electrical alternators).

5. Defendant filed a counterclaim based upon allegedly unpaid invoices submitted to the Plaintiff, but has since withdrawn the counterclaim when Plaintiff produced documents at trial which evidenced payment.

6. Defendant manufactures and sells electrical alternators for use in large off-road vehicles. The alternators consist of electrical coils which must be kept separated and insulated. During operation of the alternators, due to centrifugal forces, the electrical coils tend to migrate towards one another. The coil brace part which is the subject of this lawsuit separates and insulates these coils.

7. The concept of coil brace parts and its "preferred embodiment" is the subject of a General Electric patent dated December 12, 1971, patent no. 3,740,600 also known as the "Turley Patent."

8. Prior to the time that Plaintiff became involved in the making of coil brace parts, Defendant utilized a metal coil brace part which, for various reasons, became unsatisfactory.

9. In 1971, Defendant created design drawing No. 41A237239 which illustrates the configuration of the coil brace part. The drawing further specifies that the material to be used is "polyester resin glass impregnated purchased from Reinforced Molding ... or equivalent."

10. In 1971 Defendant approached Sinnott with the drawing referenced above and asked him if he could "create" a coil brace part which would be suitable for use in the alternators of the off-road vehicles.

11. Sinnott worked on the product for approximately one year, and within six months he brought a sample coil brace part to Defendant's plant in Erie. Sinnott was assured that he was "on the right track" but told that the product still needed work. By the end of one year, the product was developed to Defendant's satisfaction.

12. During the period of product development, Sinnott spent the most time ascertaining appropriate materials and researching optimal combinations and proportions. Although Defendant evaluated the end product, supplied the configuration and suggested the general material, it did not have other input, nor know of details of the manufacturing process.

13. In 1971, Plaintiff began to manufacture coil brace parts for Defendant and was its sole vendor. In accordance with their oral agreement, Plaintiff did not sell this part to others.

14. Plaintiff manufactured the coil brace by means of a pultrusion molding process utilizing fiberglass cloth and fiberglass roving as the reinforcing materials. The Plaintiff's process involved the pulling of glass cloth and rovings through a resin bath so as to impregnate these materials. The materials were subsequently drawn through a heated mold in a continuous motion which had the effect of curing the materials, resulting in a rigid end product which was then cut to size.

15. The pultrusion process is general knowledge in the industry. However, the special combination of the various ingredients used by Plaintiff in its manufacturing process was not general knowledge in the industry, although the materials and ingredients themselves were "readily available" and not a trade secret.

16. The shape of the cavity portion of the mold used by the Plaintiff to manufacture the coil brace for Defendant was specifically designed to conform to the configuration and dimensions supplied to Plaintiff by Defendant.

17. One of the specifications of the coil brace part was that it was required to meet a specific performance criterion in a pull test administered by Defendant. Although the record is not clear on the original requirements, in 1978 the increased specifications required the brace part to pass a pull test of 100 pounds per inch.

18. During this same year Plaintiff experienced difficulty in obtaining the 2½ inch woven fiberglass tape used in its manufacturing process and was unable to find a suitable substitute.

19. From 1971 through 1977 if a particular brace part was not "up to specs", it would be rejected by the Defendant and replaced by the Plaintiff. During this period less than five per cent of all parts shipped were rejected.

20. However, in 1978, probably due to an increase in Defendant's pull test requirements and Plaintiff's difficulty in obtaining the 2½ inch woven fiberglass tape, Plaintiff experienced difficulty in producing the required quantity of coil brace parts which would meet Defendant's newly imposed strength requirements.

21. As indicated above, Plaintiff's coil brace part was used to separate and insulate electrical coils contained in electric alternators used in very large off-road vehicles. These electric alternators were sold by General Electric for thousands of dollars.

22. The brace part, although comparatively inexpensive, was necessary in the manufacture of the alternator, and therefore a very important item to Defendant.

23. When Plaintiff was unable to produce and ship sufficient quantities of acceptable coil brace parts, Defendant became concerned as its ability to manufacture and ship the alternators was interrelated.

24. During 1978 and 1979 several of Defendant's employees John Kossbiel ("Kossbiel"), George Haas ("Haas") and Hal Olson ("Olson"), visited the Plaintiff's manufacturing plant.

25. Plaintiff testified that he required that every plant visitor sign nondisclosure statements prior to being given a plant tour.

26. Plaintiff's nondisclosure statement entitled "Visitor's Entrance Permit" provides in pertinent part:

In consideration of permission granted to enter plants or other facilities of Reinforced Molding Corporation on ______ (dates) for the purpose of inspecting such plants and facilities, where secret and confidential information belonging to Reinforced Molding Corporation relating to equipment, materials, and processes existing or being used in such plants and other facilities may come to my attention, I agree to maintain all such information in confidence and will not disclose or make any use of such information whatsoever...

27. Each of these three individuals had a different function in the employ of Defendant and a disparate purpose in visiting Plaintiff's plant.

28. Kossbiel was a sales employee or "expediter" of Defendant. It was his function to see that a sufficient quantity of acceptable parts would be shipped.

29. Haas was a "quality control" employee of Defendant. The purpose of his visit was for him to offer advice to the Plaintiff in order to attempt to improve the quality control of the manufacturing of the coil braces.

30. Olson was an "advanced manufacturing concepts engineer" and a "trouble shooter" of Defendant. Even assuming, as Defendant submits, that Olson's original purpose in visiting Plaintiff's plant was to evaluate the pultrusion process and attempt to determine the reasons for the Plaintiff's inability to produce conforming parts consistently, it is clear that during the days he spent observing the manufacturing of the brace parts, he acquired knowledge which later greatly assisted Defendant in subsequently manufacturing the parts themselves.

31. Plaintiff produced as exhibits the visitor permits signed by Kossbiel and Haas. With respect to Olson, however, Sinnott testified that Olson signed the nondisclosure statement, where Olson testified to the contrary.

32. This Court finds it unnecessary to resolve this conflict as Olson acknowledged that the information acquired during these plant visits was confidential.

33. Because Defendant's employees executed nondisclosure agreements, or at least Sinnott thought this to be the case, Sinnott spoke freely about the manufacturing process and materials of coil brace parts. However, he did not "volunteer" information but rather responded to specific questions propounded by Defendant's employees.

34. During the plant visits, the entire manufacturing process was discussed, including components, suppliers of materials, types of fiberglass cloths, resins, catalysts and amounts of materials used as well as heat and time requirements.

35. The day after Olson returned from Plaintiff's plant, specifically on February 15, 1979, he began to work on the manufacture of the brace part. By the end of...