SCR-Tech LLC v. Evonik Energy Services LLC
| Decision Date | 22 July 2011 |
| Docket Number | 08 CVS 16632 |
| Court | Superior Court of North Carolina |
| Parties | SCR-TECH LLC, Plaintiff, v. EVONIK ENERGY SERVICES LLC, EVONIK ENERGY SERVICES GMBH, EVONIK STEAG GMBH, HANS-ULRICH HARTENSTEIN, and BRIGITTE HARTENSTEIN, Defendants. |
King & Spalding LLP, by Timothy G. Barber, Antonio E. Lewis for Plaintiff SCR-Tech LLC.
Alston Bird LLP by Mark Vasco, Benjamin F. Sidbury, Scott Stevens, and Debra Lofano for Defendants Evonik Energy Services GmbH and Evonik Steag GmbH.
K&L Gates LLP by Beverly A. Carroll and Daniel v. Mumford for Defendants Evonik Energy Services LLC, Hans-Ulrich Hartenstein, and Brigitte Hartenstein.
ORDER AND OPINION (REDACTED VERSION)
{1} THIS MATTER is before the Court on Defendants' Joint Motion for Summary Judgment on the Non-Existence of Trade Secrets or Confidential Information ("Motion"), filed pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. For the reasons stated below, the Motion is GRANTED IN PART AND DENIED IN PART.
{2} Plaintiff SCR-Tech LLC ("SCR-Tech") and Defendant Evonik Energy Services LLC ("Evonik") are the only two companies in the business of Selective Catalytic Reduction ("SCR") in the United States at relevant times. SCR-Tech claims that Evonik misused SCR-Tech's protected information, consisting of both trade secrets and confidential information, to enter the American market. The Motion attacks these claims on the basis that any information that SCR-Tech seeks to protect has been publicly disclosed. SCR-Tech, in turn, claims that facts based on limited discovery defeat the Motion and there are other material factual issues that preclude determining the claims summarily.
{3} The Court finds that there are some material issues which it cannot determine summarily, but that undisputed facts allow the claims to be narrowed, and specifically to exclude from claimed trade secrets that information which has been sufficiently disclosed publicly to preclude protection.
{4} SCR-Tech filed this action in Mecklenburg County on July 30, 2008, and amended its Complaint on August 29, 2008, to correct a clerical error. Its claims include breach of contract, breach of fiduciary duty, and usurpation of corporate opportunities by Hans-Ulrich and Brigitte Hartenstein (collectively, "the Hartensteins"), tortious interference by Evonik, and misappropriation of trade secrets and unfair and deceptive trade secrets by all Defendants. On October 1, 2008, Evonik answered and asserted counterclaims for defamation/trade libel, abuse of process, and unfair and deceptive trade practices. The Hartensteins answered some claims but filed a Rule 12(b)(6) motion to dismiss the claims of breach of fiduciary duty and usurpation of corporate opportunity.
{5} The case was assigned to this Court after these initial motions. Subsequently, Defendants Evonik Energy Services GmbH, Evonik Steag GmbH, and Evonik Industries AG (collectively, "the German Defendants") moved to dismiss all claims against them pursuant to Rule 12(b)(6), and Evonik Industries AG moved to dismiss all claims pursuant to Rule 12(b)(2). By Order dated May 6, 2009, Judge Ben F. Tennille granted Evonik Industries AG's Rule 12(b)(2) motion and the Hartensteins' Rule 12(b)(6) motion. The Hartensteins then counterclaimed, alleging defamation and unfair and deceptive trade practices. The remaining German Defendants filed counterclaims asserting unfair and deceptive trade practices and requesting a declaratory judgment.
{6} On September 1, 2009, SCR-Tech provided its Second Amended Response to Defendant Evonik Energy Services LLC's Interrogatory No. 1, pursuant to the Court's requirement that SCR-Tech identify its claimed trade secrets.1[] By Order dated December 30, 2009, Judge Tennille found that Plaintiff had sufficiently identified its claimed trade secrets to justify discovery moving forward. On February 25, 2010, Defendants filed their Joint Motion for Summary Judgment on the Issues of Statute of Limitations, Release, and Lack of Standing, as well as the Motion which is the subject of this Order and Opinion. On July 12, 2010, Judge Tennille issued an Order denying the first motion but holding this Motion in abeyance pending further development of a factual record based on limited discovery specified in his Order, relating primarily to AES Somerset, SCR-Tech's former customer and the customer through which Evonik entered the United States market.2[] Plaintiff and Defendants filed supplemental memoranda following this discovery. The Court then heard oral argument based on the discovery and supplemental memoranda.
{7} The Court does not make findings of fact on contested issues in reaching its ruling on a motion for summary judgment, but it appropriately recites established facts as background for its rulings. The facts are stated from that perspective, and, except where areas of material factual disputes are noted, the Court believes the facts to be uncontested.3[]
{8} SCR-Tech is a North Carolina corporation, having its principal place of business in Mecklenburg County. It was formed in May 2001 as an American subsidiary of a German company, SCR-Tech GmbH, to engage in the business of cleaning and regenerating SCR catalysts and to provide consulting services related to SCR system operations. SCR-Tech GmbH was formed by two German companies, Envica Kat GmbH ("Envica") (now Ebinger Katalysatorservice GmbH ("Ebinger")), an SCR technology company, and Energy & Environmental Consultants GmbH, a German consulting company owned by the Hartensteins. Prior to forming SCR-Tech, Envica had been active in the European SCR market but had no SCR operations in the United States. In March 2002, the German company EnBW Energy Solutions GmbH ("EnBW") became a shareholder of SCR-Tech GmbH, and in 2003, it became a direct shareholder of SCR-Tech. Envica granted SCR-Tech through its German parents a license for Envica's patented SCR catalyst regeneration technologies for use in North America.
{9} The corporate defendants are related. Evonik is a North Carolina corporation, having its principal place of business in Craven County. It cleans and regenerates SCR catalysts and provides engineering and consulting services related to the operation of power plants. Plaintiff alleges that Evonik is an American subsidiary of Evonik Energy Services GmbH, which, allegedly, is a subsidiary of Evonik Steag GmbH. Plaintiff alleges that Evonik Steag GmbH is a subsidiary of Evonik Industries AG. These related entities are each located in Essen, Germany and together have significant capabilities in chemical and power generation industries.
{10} The Hartensteins entered into employment agreements with SCR-Tech on December 31, 2001. The agreements include covenants against competition. Their employment terminated in March 2005. They executed the Settlement Agreement and Mutual Release (the "Settlement Agreement") with SCR-Tech in December 2005, eliminating the covenants against competition but including confidentiality agreements. Hans-Ulrich Hartenstein was SCR-Tech's President. He is now Evonik's President. Brigitte Hartenstein was SCR-Tech's Vice President of Contract Management and Chief Financial Officer. She is now Evonik's Chief Financial officer.
{11} Selective Catalyst Reduction is a chemical process by which harmful nitrogen oxide contained in coal-burning power plants' exhaust gas is converted into harmless nitrogen gas and water.4[] Nitrogen oxide causes acid rain and smog, 5[] and power plants are required to control its release into the environment. Ammonia is sprayed into a power plant's combustion gases.6[] The ammonia mixture then contacts numerous SCR catalysts, which generally consist of a ceramic carrier and active catalytic components.7[] SCR catalysts contain certain metal atoms that help break the atomic bonds in the nitrogen oxide molecules.8[]
{12} Coal naturally contains small amounts of various elements, such as arsenic, sodium, potassium, and phosphorous.9[] These elements appear in coal burning exhaust flumes.10[] Over time, SCR catalysts become unusable because they become plugged with undesirable compounds as well as with particulate matter called "fly ash."11[] Power companies may either purchase new SCR catalysts or, at less cost, clean and regenerate the used catalysts.12[] Without more, cleaning merely removes the physical pluggage; regeneration includes re-impregnating the catalyst with the metals that facilitate the desired chemical reaction.13[] SCR-Tech's process cleans and regenerates SCR catalysts in an economically sustainable process for reuse in its customers' power plants.14[]
{13} SCR technology was invented and originally patented in the 1950s.15[]The SCR catalyst type used today was invented in Japan in the 1980s.16[] SCR-Tech's process has its roots in more current technology developed in Germany in the mid-1990s.17[] At that time, EnBW, Plaintiff's future shareholder, developed a cleaning and rejuvenation process to be conducted on-site at power plants.18[] Envica (now Ebinger) created a method for cleaning, rejuvenating, and regenerating SCR catalysts, and, in 1997, partnered with a German utility to develop an off-site process that could restore up to 100% of the catalysts' initial activity.19[] This Envica (or Ebinger) process has been commercialized throughout Germany, and Ebinger has captured more than 90% of the regeneration market there.20[] Its main competitor in the German market is Integral Engineering und Umwelttechnik GmbH ("Integral"). The Defendant Evonik companies have secured a license from Integral.
{14} From 2001 through 2003, SCR-Tech focused on establishing an American market presence and building a regeneration facility in Charlotte, North Carolina. SCR-Tech hired the Hartensteins as officers to spearhead its market entry.21[] SCR-Tech's employees...
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