Union Pac. Railroad Co. v. Mower, 98-36140

• Decision Date: 08 March 2000
• Docket Number: No. 98-36140,98-36140
• Citation: 219 F.3d 1069
• Parties: (9th Cir. 2000) UNION PACIFIC RAILROAD COMPANY, Plaintiff-Appellee, v. BRENT MOWER, Defendant-Appellant. Office of the Circuit Executive
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1069

219 F.3d 1069 (9th Cir. 2000)

UNION PACIFIC RAILROAD COMPANY, Plaintiff-Appellee, v. BRENT MOWER, Defendant-Appellant.

No. 98-36140

Office of the Circuit Executive

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted March 8, 2000--Portland, Oregon

Filed July 19, 2000

[Copyrighted Material Omitted]

Paul S. Bovarnick, Rose, Senders and Bovarnick, Portland, Oregon, for the defendant-appellant.

Thomas R. Jayne, Thompson Coburn, St. Louis, Missouri, and Thomas W. Brown, Timothy J. Coleman, and Randall B. Kester, Cosgrave, Vergeer & Kester, Portland, Oregon, for the plaintiff-appellee.

Appeal from the United States District Court for the District of Oregon, Robert E. Jones, District Judge, Presiding; D.C. No. CV-98-00486-REJ

Before: John T. Noonan, Susan P. Graber, and Raymond C. Fisher, Circuit Judges.

FISHER, Circuit Judge:

Brent Mower is a former employee of Union Pacific Railroad Company ("UP"). UP obtained a broad injunction against Mower, prohibiting him from disclosing or revealing to third parties any confidential information he obtained while employed by UP. Mower appeals the issuance of that injunction. The basis of the district court's jurisdiction was 28 U.S.C. S 1332, and we have jurisdiction pursuant to 28 U.S.C. S 1291.¹ We reverse and vacate the injunction.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Resignation Agreement

UP employed Mower from 1979 to 1992. During that time, Mower rose from a low-level claims adjuster position to Director of Occupational and Environmental Issues. In his management position, Mower's primary responsibility was the investigation and resolution of thousands of occupational illness claims filed against UP. Mower worked closely with UP's legal department on certain issues and, for a portion of his career, was considered a member of the legal department.

In 1992, UP asked Mower to resign, and the parties entered into a resignation and consulting agreement on November 20, 1992 (the "Resignation Agreement"). The Resignation Agreement provided that Mower would serve as a consultant to UP for a period of three years. The Resignation Agreement also stipulated that, from November 1992 until December 31, 1995, Mower would not (1) reveal UP's confidential and privileged information or any other information "harmful" to UP's best interests, (2) "communicate with anyone with respect to the business or affairs of [UP], " or (3) consult with any person asserting claims against UP. It is undisputed on appeal that Mower complied with the terms of the Resignation Agreement through December 31, 1995.

B. The Idaho Case

In May 1997, Mariano Ybarra filed a complaint against UP in Idaho, alleging that he had sustained personal injuries while employed at UP and that such injuries were the result of UP's negligence. Ybarra moved to supplement his witness list during March 1998 to add Mower as a witness. In a sworn affidavit, Mower stated that he would testify about a particular study he conducted during 1989, relating generally to Ybarra's type of injury, and about a position paper he prepared in connection with the study and presented to senior management at UP. UP objected, claiming that Mower's proffered testimony related to privileged information. The Idaho trial court deferred ruling on the issue to afford UP's counsel the opportunity to depose Mower.

C. The Injunction

In April 1998, while the issue of Mower's testimony was still pending in the Idaho case, UP filed its complaint for an injunction against Mower in the federal district court in Oregon². In its complaint, UP argued that, if allowed to testify in the Idaho case or in any other case, Mower would reveal UP's confidential information and trade secrets and would violate, among other things, the attorney-client privilege, the workproduct doctrine and Mower's fiduciary duty to preserve confidential information. In particular, UP protested Mower's intention to testify regarding the particular study and position paper discussed in Mower's affidavit in the Idaho case. UP alleged that it would suffer irreparable damage from Mower's disclosure of the position paper or any other confidential information, because such information "may be used . . . in a number of lawsuits against [UP]." UP asked the district court to enjoin Mower from disclosing confidential information in any lawsuit, in order to "prevent a multiplicity of litigation."

Mower objected to UP's complaint on several grounds. Mower argued, among other things, that the information in question -in particular, the study and position paper discussed in his affidavit -was neither confidential nor privileged. He emphasized the publicly available resources he had consulted during the study, including on-line databases and various professionals and academics who were not associated with UP. Mower also contended that the Resignation Agreement's expiration at the end of 1995 left him free to disclose such information, even if confidential or privileged.

The district court granted UP's motion for a preliminary injunction against Mower, finding that the information obtained by Mower during his employment was highly confidential and that Mower owed UP an implied duty of confidentiality.³ The preliminary injunction read, in relevant part, as follows:

Based upon the foregoing FINDINGS OF FACT and CONCLUSIONS OF LAW, . . . it is now

ORDERED, ADJUDGED AND DECREED that defendant Mower be and he hereby is RESTRAINED and ENJOINED until otherwise ordered by this court from disclosing or revealing to any person any information or communication of a confidential nature, including the information and communications described in the accompanying findings of fact and conclusions of law, that he acquired learned, or helped to generate during his employment by [UP] or while he was a consultant for plaintiff.

. . . .

This PRELIMINARY INJUNCTION should not be interpreted as foreclosing courts in Colorado or Idaho, where cases are now pending, or courts in other states from ruling upon the admissibility of the evidence referred to herein.

Subject to the foregoing qualification, this PRE LIMINARY INJUNCTION shall be binding upon all persons in active concert or participation with defendant Mower or who might seek to cause him to reveal or disclose such information, who have actual knowledge hereof.

The district court's findings of fact and conclusions of law focused only on the study and position paper at issue in the Idaho case and did not identify what other information might be of a "confidential nature." In addition, the district court's findings regarding the study and position paper did not address Mower's contention that portions (if not all) of the paper are not properly considered "confidential " because they were available in, and obtained from, the public domain.

Following the district court's grant of the preliminary injunction, UP and Mower stipulated to the issuance of a substantially similar permanent injunction; however, Mower reserved his rights to object to the form of the injunction and to appeal. The district court entered the permanent injunction against Mower on October 14, 1998, and this appeal followed.

DISCUSSION

We review the district court's grant of a permanent injunction "for an abuse of discretion or an erroneous application of legal principles." Easyriders Freedom F.I.G.H.T. v. Hannigan, 92 F.3d 1486, 1493 (9th Cir. 1996). On appeal, Mower argues that the district court erred in concluding that he owes a continuing duty of confidentiality to UP and in issuing an injunction on that basis. Mower also suggests that the district court erred in concluding that the information held by Mower, particularly the study and position paper, was entirely confidential. As explained below, we conclude that the injunction is inappropriate.

A. The Implied Duty of Confidentiality and the Resignation Agreement

The district court issued the injunction against Mower based on its conclusion that, "[a]fter his employment and his services as a consultant terminated, defendant Mower remained under an implied duty not to disclose [UP's] confidential business information." The district court reasoned that Mower's duty of confidentiality "goes way beyond any express agreement that expired in 1995, but extends for his lifetime." The district court was correct only if Oregon law recognizes an implied duty of confidentiality and the Resignation Agreement either could not, as a matter of law, or did not, pursuant to its terms, serve to limit Mower's implied duty of confidentiality.⁴

Oregon law imposes on every employee a legal duty to protect an employer's trade secrets and other confidential information, an obligation that continues beyond the term of employment. In McCombs v. McClelland, 223 Or. 475, 354 P.2d 311 (1960), the Oregon Supreme Court held that exemployees are under "an implied obligation . . . not to use [their former employers'] trade secrets or confidential information for [their] own benefit or that of third persons . . . ." Id. at 483, 354 P.2d at 315-16 (noting that"[t]he law is well settled" on this issue (quoting Annotation Implied Obligation of Employee Not to Use Trade Secrets or Confidential Information for His Own Benefit or That of Third Persons After Leaving the Employment, 165 A.L.R. 1453, 1454 (1946)) (internal quotation marks omitted)). Thus, the district court properly concluded that Oregon law recognizes an implied duty of confidentiality.

However, Oregon also generally permits parties to alter by negotiation duties that would otherwise be governed by state law. In Owings v. Rose, 262 Or. 247, 497 P.2d 1183 (1972), for example, the Oregon Supreme Court held that, "where the parties have made an express contract of indemnity[,] its terms will control" despite Oregon's recognition of indemnity actions based on implied contract. Id. at 263, 497 P.2d at 1190; see also Eggiman v. Mid-Century Ins. Co., 134 Or. App. 381,...