Specialized Tech. Res., Inc. v. JPS Elastomerics Corp.

• Decision Date: 23 November 2011
• Docket Number: No. 11–P–776.,11–P–776.
• Citation: 80 Mass.App.Ct. 841,957 N.E.2d 1116
• Parties: SPECIALIZED TECHNOLOGY RESOURCES, INC. v. JPS ELASTOMERICS CORP. & another.1
• Court: Appeals Court of Massachusetts

80 Mass.App.Ct. 841

957 N.E.2d 1116

SPECIALIZED TECHNOLOGY RESOURCES, INC.

v.JPS ELASTOMERICS CORP. & another.1

No. 11–P–776.

Appeals Court of Massachusetts, Hampshire.

Argued Sept. 6, 2011.Decided Nov. 23, 2011.

John C. Englander (Henry C. Dinger with him), Boston, for the defendants.

Bruce S. Meyer (Patrick J. O'Toole, Jr., Boston, with him) for the plaintiff.

Present: KAFKER, GREEN, & GRAINGER, JJ.

GREEN, J.

During the 1990s, the plaintiff, Specialized Technology Resources, Inc. (STR), developed an innovative method to produce a specialized encapsulant used in making solar cells. The defendant James P. Galica oversaw the project team within STR that developed the method. Galica left STR in June, 2005, and joined the defendant JPS Elastomerics Corp. (JPS) in September, 2006. Within a year after Galica joined JPS, it began marketing and producing an encapsulant product using a method substantially identical to the one developed by STR. STR commenced this action in the Superior Court, claiming, inter alia, breach of contract and misappropriation of trade secrets, and violation of G.L. c. 93A, § 11. The common-law claims were tried to a jury, while the trial judge reserved the c. 93A claim to herself. In response to special verdict questions, the jury found that the method developed by STR is a trade secret, but that Galica and JPS did not misappropriate it.² However, the judge concluded, on the same evidence, that Galica and JPS misappropriated the trade secret and that such misappropriation constituted an unfair and deceptive act or practice within the meaning of c. 93A. She directed entry of judgment awarding $1,075,556 in damages (which she trebled as authorized by the statute) and granting injunctive relief. She also awarded $3,902,595 in attorney's fees and $1,108,731 in costs.

In their appeal, the defendants claim a myriad of errors. They challenge the propriety of the finding of liability under c. 93A, asserting that the judge was without authority to make findings contrary to those of the jury, and that in any event no liability under c. 93A can lie because STR's claims arise out of its employer-employee relationship with Galica. They further contend that the scope of the injunction is overboard, even if the defendants may be held liable under c. 93A. We have reviewed the several lengthy and thorough written memoranda of decision entered by the trial judge, and carefully considered the various arguments advanced by the parties. Our review persuades us that the defendants have shown no cause to disturb the judgment, and we affirm it.

Background. We briefly summarize the findings of fact recited by the trial judge in her memorandum of decision in which she found the defendants liable on the c. 93A claim.³

STR manufactures plastic sheeting materials used to encapsulate solar cells, extruded from ethylene vinyl acetate (EVA). STR holds approximately twenty-five percent of the global market for EVA, due in significant measure to its development of “low shrink” EVA ⁴ which prevents premature deterioration of encapsulated solar cells exposed to the elements. STR developed its method for producing low shrink EVA following an intensive five-year research and design effort that began in late 1990. The lead project engineer on the team that developed STR's method for producing low shrink EVA was Robert Yorgensen, who is now STR's president. The defendant Galica was director of STR's materials science division during the time STR developed its method to produce low shrink EVA, and in that capacity was the executive responsible for overseeing the development process.

Early in his efforts to develop a method to produce low shrink EVA, Yorgensen developed a hypothesis about what caused EVA to shrink. In a series of experiments thereafter, Yorgensen tested his hypothesis and found it to be correct. He then set about devising a method to modify the manufacturing process in order to reduce or avoid the influence of factors causing shrinkage. ⁵ Galica thereafter conducted several experiments to verify Yorgensen's results. As a result of the successful efforts of the project team, STR began manufacturing and selling low shrink EVA by the end of 1996.

As observed in the introduction, Galica left STR in June, 2005, and joined JPS in September, 2006. Within a year thereafter, JPS began marketing and producing low shrink EVA using a method substantially identical to the one developed by STR, and STR commenced this action. A Superior Court jury concluded that STR's method for producing low shrink EVA constituted a trade secret, but that JPS and Galica did not misappropriate the trade secret. However, the trial judge (who had reserved STR's c. 93A claim for determination) concluded that JPS and Galica had misappropriated STR's trade secret, and that such misappropriation violated c. 93A. She awarded damages, injunctive relief, and attorney's fees. This appeal followed. We address the defendants' various claims of error in turn.

Effect of jury verdict on judge's determination of c. 93A claim. In posttrial briefs submitted to the trial judge, and on appeal, the defendants contend that the jury's conclusion (expressed in their response to special verdict questions) that the defendants did not misappropriate STR's trade secret precludes a contrary conclusion by the trial judge. The defendants acknowledge that there is no right to a jury trial on a c. 93A claim, and that many Massachusetts cases have held that a jury's verdict on related common-law claims is not binding on a judge who has reserved determination of a c. 93A claim to herself. See, e.g., Poly v. Moylan, 423 Mass. 141, 151, 667 N.E.2d 250 (1996), cert. denied, 519 U.S. 1114, 117 S.Ct. 956, 136 L.Ed.2d 843 (1997); Kattar v. Demoulas, 433 Mass. 1, 12–13, 739 N.E.2d 246 (2000); Chamberlayne Sch. & Chamberlayne Jr. College v. Banker, 30 Mass.App.Ct. 346, 354–355, 568 N.E.2d 642 (1991); Wyler v. Bonnell Motors, Inc., 35 Mass.App.Ct. 563, 567, 624 N.E.2d 116 (1993); Velleca v. Uniroyal Tire Co., 36 Mass.App.Ct. 247, 251, 630 N.E.2d 297 (1994); Bank of America, N.A. v. Prestige Imports, Inc., 75 Mass.App.Ct. 741, 769, 917 N.E.2d 207 (2009). See also Wallace Motor Sales, Inc. v. American Motors Sales Corp., 780 F.2d 1049, 1063–1067 (1st Cir.1985). See generally Gilleran, Law of Chapter 93A § 12.21, and cases cited (2d ed. 2007). The defendants nonetheless contend that such cases are not controlling, since (they assert) no decision of the Supreme Judicial Court has squarely held that a trial judge is free to decide questions of fact on a c. 93A claim in a manner directly contrary to the findings of a jury on common-law claims tried as part of the same action, and since the decisions of the Appeals Court cited by the trial judge are distinguishable.⁶ The defendants further contend that their position is compelled by the reasoning of the Supreme Judicial Court in Dalis v. Buyer Advertising, Inc., 418 Mass. 220, 227–228, 636 N.E.2d 212 (1994), derived in turn from the reasoning of the United States Supreme Court in Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959). We are unpersuaded.

As a threshold matter, we observe that the defendants waived at trial the argument they now press. The defendants specifically requested in their pretrial memorandum that the trial judge reserve STR's c. 93A claim to herself. The defendants' present contention that their request merely attached to the trial judge's determination of the c. 93A claim itself, but did not anticipate that the judge would weigh and determine factual questions contrary to the jury's findings, is belied by the argument they advanced in support of their motion for a directed verdict, in which they observed that “c. 93A authorizes the Court to make independent findings of fact, which will not be overturned on appeal as an impermissible ‘inconsistent judgment’ even if those findings are contrary to the jury's findings.” Only after the jury returned their verdict in the defendants' favor did they reverse course and argue to the trial judge that she was bound by the jury's responses to special verdict questions.⁷

In any event, the defendants' argument finds no support in Massachusetts law, and the defendants' efforts to distinguish or explain away the rich body of precedent supporting a trial judge's authority to enter findings inconsistent with those of the jury are ultimately unavailing. ⁸ Though many cases that have discussed the issue do not involve the precise circumstances here (in which a jury responded to special verdict questions), in at least one case we have upheld a judge's contrary conclusion in precisely such circumstances. See Velleca v. Uniroyal Tire Co., 36 Mass.App.Ct. at 251, 630 N.E.2d 297. Though the judge in that case found no liability under c. 93A despite a jury's finding for the plaintiff on a breach of warranty claim (in contrast to the posture of the present case in which the judge found liability under c. 93A despite a jury's finding for the defendants on the related common-law claims), the trial judge in Velleca made specific factual findings, essential to his conclusion on the question of causation, that were directly contrary to the jury's answers to special verdict questions, and our opinion specifically upheld his authority to do so in response to an appellant's argument to the contrary. Ibid. We do not understand the defendants to argue that a judge who has reserved a c. 93A claim is bound by a jury's factual findings only if they favor the defendant rather than the plaintiff, but that is the only ground on which Velleca may be distinguished.⁹

Applicability of c. 93A. The defendants separately assert that c. 93A is inapplicable to STR's claim in the present case, as it arises out of an employer-employee relationship between STR and Galica. See Manning v. Zuckerman, 388 Mass. 8, 12–15, 444 N.E.2d 1262 (1983); Informix, Inc. v....