RGI, Inc. v. Unified Industries, Inc.
| Decision Date | 29 April 1992 |
| Docket Number | No. 91-1442,91-1442 |
| Citation | 963 F.2d 658 |
| Parties | RGI, INCORPORATED, Plaintiff-Appellant, v. UNIFIED INDUSTRIES, INCORPORATED; Gary K. Dearing, Defendants-Appellees, v. John J. RACHEL; David Vowell; Gerard Ostrander; United States of America, Third Party Defendants. Fourth Circuit |
| Court | U.S. Court of Appeals — Fourth Circuit |
Edward Jay Tolchin, Fettmann & Tolchin, Fairfax, Va., argued, for plaintiff-appellant.
Thomas A. Trimboli, Unified Industries, Inc., Springfield, Va., Robert Michael LaBelle, Powers & Lewis, Washington, D.C., argued, for defendants-appellees.
Before SPROUSE and LUTTIG, Circuit Judges, and CHAPMAN, Senior Circuit Judge.
Appellant RGI, Inc., and appellee Unified Industries, Inc., (UII) compete in selling high technology computer programming and software to government customers. RGI brought the underlying action in Virginia state court against UII and Gary Dearing, a former RGI employee, alleging that (1) Dearing had breached his employment contract by disclosing to UII proprietary information about RGI's computer system and software contracts with the United States Navy, (2) UII had tortiously interfered with the RGI-Dearing contract, and (3) UII and Dearing had both violated Virginia's business conspiracy statute, Va.Code § 18.2-499 et seq.
After the action was removed to the United States District Court for the Eastern District of Virginia, 1 that court granted summary judgment to both defendants, concluding that RGI had not sufficiently established that it could prove any damages as a result of the conduct of UII and Dearing. RGI appeals, contending principally that it had established a genuine issue of material fact relating to damages. RGI also claims that the trial court's deliberations were prejudiced by UII's filing a sealed pleading with the district court in camera. The contents of the sealed pleading were not disclosed to RGI but included documents relating to a qui tam 2 action which had been filed against RGI by UII in the United States District Court for the District of Columbia. We affirm.
For over ten years, RGI has provided a computer program called Source Data System to the United States Navy. Gary Dearing was originally employed under contract by RGI and worked on the Source Data System project. He left RGI and was hired by UII. It is undisputed that, after Dearing was hired by UII, Dearing disclosed internal RGI cost information regarding the Source Data System to UII. UII admits that it obtained the information from Dearing, but it maintains that it promptly turned the information over to the Naval Intelligence Service as evidence of wrongdoing by RGI.
In April 1990, before the case sub judice was instituted in the Virginia state court, UII had filed a qui tam action against RGI in the United States District Court for the District of Columbia, alleging fraudulent and criminal acts by RGI in collusion with Naval personnel. Pursuant to the requirements of the False Claims Act, the complaint was not served on RGI, 3 and RGI apparently had no knowledge that the complaint had been filed against it.
The following month, RGI brought the action we now review against UII and Dearing. RGI claimed that, by disclosing information to UII, Dearing breached a contractual promise to keep RGI's information confidential, that UII tortiously interfered with the RGI-Dearing contract by inducing Dearing to breach it, and that this conduct by UII and Dearing amounted to a business conspiracy in violation of Va.Code § 18.2-499 et seq. In a counterclaim, UII alleged that RGI and Navy personnel conspired to deprive UII of Navy business in violation of several federal statutes dealing with government procurement. 4
RGI's complaint alleged $500,000 in compensatory damages against Dearing for breach of contract, $500,000 in compensatory and $500,000 in punitive damages against UII for interference with the employment contract, and $500,000 against both Dearing and UII for the conspiracy count (to be trebled pursuant to Virginia law). UII and Dearing moved for summary judgment below on all counts, attaching an affidavit of UII's attorney and excerpts from deposition testimony of two RGI employees having knowledge of RGI's contract with the Navy. By the affidavit and depositions, UII purported to show that RGI could not prove any damages from Dearing's disclosure.
Specifically, UII's attorney averred in his affidavit that RGI continued to contract for and supply the Source Data System. He stated further that contracts for all other services for the project were still being awarded to RGI. The deposition testimony of RGI's Vice President for Administration and Finance indicated that RGI suffered no decrease in work on the Source Data System project as a result of UII and Dearing's actions. RGI's Vice President also stated that he did not know how the $500,000 damage figures were determined. In the second deposition excerpt which accompanied UII's motion, RGI's project manager for the Source Data System stated that he did not know how the damages estimates were derived, and that RGI had not lost any Source Data System work since Dearing left RGI.
RGI opposed the motion with a single affidavit, signed by its President, which stated with regard to damages:
RGI competes directly with Unified Industries, Inc. Defendant Gary Dearing took information from RGI and gave it to UII. This action puts RGI at a tremendous competitive disadvantage with respect to UII.... The fact of this damage cannot be denied. Indeed, UII has advised RGI that the United States Navy has excluded UII from a certain competition because of the unfair competitive advantage UII has obtained over RGI.... RGI's disadvantage results directly in lost profits for RGI. RGI's competitors' knowledge of the manner in which RGI prices and staffs its projects forces RGI to adopt less profitable strategies in order to win contracts.
The district court ruled that RGI's affidavit was merely conclusory with regard to the claim that RGI suffered lost profits and was therefore insufficient to raise a genuine issue of material fact with regard to damages. Accordingly, it granted summary judgment to UII and Dearing.
RGI moved the court to reconsider its decision, styling its action as a "Notice of Motion ... to reconsider [the court's] grant of defendants' motion for summary judgment or to vacate that judgment under Fed.R.Civ.P. 59(e)." In support of its motion, it attached a new affidavit of its President which it describes as "supplemental" and "reworked." In the supplemental affidavit RGI's president stated, in pertinent part:
UII currently is competing with RGI in a procurement. Because UII has RGI's information, it knows the minimum RGI can bid for the contract and how RGI will staff and support its contract. UII can now match or beat RGI in all these areas. RGI is being required to cut its profit margins in order to win the contract. The result of this effort is lost profits to RGI of no less than $200,000. These lost profits result from proposal alterations which UII and Dearing have forced upon RGI.
RGI also has suffered legal costs in enforcing its contractual rights with Dearing. In this regard, RGI has been forced to sue a third party (UII) because Dearing gave RGI's proprietary information to that company. RGI also has incurred legal costs suing UII and Dearing for conspiracy. RGI's legal costs to date exceed $20,000.
RGI has lost approximately $400,000 because of delays in a particular Navy procurement which have arisen because of UII and Dearing's use of RGI's data. This loss is a result of reduced work loads and inefficient staffing brought about by the Navy being unable to award a follow on contract for a particular procurement--all as a result of UII and Dearing's activities.
The district court rejected RGI's supplemental affidavit and its postjudgment motion, stating that "no justified reason [had been] shown why the additional material ... was not presented" earlier. This appeal followed.
Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment shall be rendered if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Summary judgment should be entered, after adequate time for discovery and upon motion, against a party who fails to demonstrate that evidence exists which would be sufficient to establish an element of that party's case on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). In a motion for summary judgment, the initial burden of showing the absence of a genuine issue of material fact rests on the moving party. However, once a motion is made and supported, the nonmoving party must produce evidence showing a genuine issue for trial.
RGI first challenges the district court's ruling on the motion for summary judgment. It contends that UII's motion only required RGI to establish the fact that it was damaged, because UII's attack on its complaint focused solely on RGI's failure to show any damages, and that the affidavit of RGI's President was sufficient to establish that RGI had in fact been damaged. The argument misses the mark. It is true, of course, that RGI was not required to prove its case at the summary judgment stage, but UII's motion obligated RGI to show evidence that it would produce at trial sufficient to establish that it had been damaged by UII's conduct. The affidavit of RGI's President contains bald allegations of damages but indicates no facts contemplated to be proven. We share the view of the district court that the affidavit was simply too conclusory to establish a genuine issue of material fact with regard to damages.
RGI argues alternatively that the supplemental affidavit raised a genuine issue of...
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