USA Power, LLC v. PacifiCorp

Decision Date16 May 2016
Docket NumberNo. 20130442.,20130442.
Citation2016 UT 20,372 P.3d 629
PartiesUSA POWER, LLC, USA Power Partners, LLC, and Spring Canyon Energy, LLC, Appellees and Cross–Appellants, v. PACIFICORP, Appellant and Cross–Appellee. USA Power, LLC, USA Power Partners, LLC, and Spring Canyon Energy, LLC, Appellants, v. Jody L. Williams and Holme Roberts & Owen, LLP, Appellees.
CourtUtah Supreme Court

Peggy A. Tomsic, James E. Magleby, Eric K. Schnibbe, Salt Lake City, for USA Power, LLC, USA Power Partners, LLC, and Spring Canyon Energy, LLC.

Peter Watson Billings Jr., James S. Jardine, Michael G. Jenkins, P. Bruce Badger, Samuel C. Straight, Timothy K. Clark, Salt Lake City, for PacifiCorp.

Michael D. Zimmerman, Thomas R. Karrenberg, Stephen P. Horvat, Troy L. Booher, Clemens A. Landau, Salt Lake City, for Jody L. Williams and Holme Roberts & Owen, LLP.

Chief Justice DURRANT authored the opinion of the Court, in which Associate Chief Justice LEE, Justice DURHAM, and Judge TOOMEY joined. Having recused himself, Justice HIMONAS does not participate herein; Court of Appeals Judge KATE A. TOOMEY sat. Justice JOHN A. PEARCE became a member of the Court on December 17, 2015, after oral argument in this matter, and accordingly did not participate.

Chief Justice DURRANT, opinion of the Court:

Introduction

¶ 1 This case concerns a dispute about proprietary plans to develop a power plant. USA Power, LLC engaged in extensive work to research and develop a power plant project in Mona, Utah—its Spring Canyon “vision.” It claims that this vision is a trade secret, that PacifiCorp misappropriated it, and that PacifiCorp also breached a confidentiality agreement between the parties. USA Power further claims that its water attorney, Jody L. Williams, and her law firm, Holme Roberts & Owen, LLC (HRO), (collectively, Ms. Williams) breached their fiduciary duties by working for PacifiCorp to acquire water rights on a competing power plant proposal.

¶ 2 USA Power's Spring Canyon vision took two years, thousands of work-hours, and close to $1 million to develop. To advance its proposed power plant project, it made several public disclosures to regulatory bodies. These disclosures included such information as the plant's proposed location, technological specifications, fuel type, water use, and generating capacity. Other information about the proposed plant, such as USA Power's economic and feasibility studies, was not publicly disclosed.

¶ 3 Meanwhile, PacifiCorp had identified a quickly approaching need for energy and was working to meet this demand. As part of its response to its upcoming power needs, PacifiCorp approached USA Power and entered into negotiations to purchase USA Power's Spring Canyon assets. As part of these negotiations, USA Power required PacifiCorp to sign a Confidentiality and Non–Disclosure Agreement before it would divulge its entire Spring Canyon vision, i.e., a compilation of both the already disclosed information and the portions of its vision that had not yet been publicly disclosed. PacifiCorp did so, and USA Power provided PacifiCorp details on its entire project, including the non-public backup studies that validated its public disclosures.

¶ 4 Eventually PacifiCorp terminated the negotiations over the sale and decided to issue a Request for Proposal (RFP) to obtain bids for power sufficient to cover its needs. USA Power submitted its Spring Canyon project in response to PacifiCorp's RFP. PacifiCorp submitted its own competing proposal, however, to build a power plant in Mona—its Currant Creek project. PacifiCorp's project was very similar to the Spring Canyon project proposed by USA Power. PacifiCorp also retained Ms. Williams, USA Power's former attorney, to help it obtain water rights for its Currant Creek project. PacifiCorp selected its own bid over USA Power's bid and, soon after, began construction on its project.

¶ 5 USA Power then brought suit against Ms. Williams asserting malpractice claims based on an alleged breach of her fiduciary duties of confidentiality and loyalty. USA Power later amended its complaint to include PacifiCorp as a defendant, asserting that PacifiCorp had misappropriated USA Power's trade secrets—its “vision” for a plant in Mona, Utah and various components of this vision, which were themselves trade secrets. This case first came to the court in 2010, after the trial court granted summary judgment to both Defendants.1

¶ 6 In USA Power I, we reversed the grant of summary judgment, holding that issues of material fact existed and summary judgment was inappropriate.2 We also clarified that a compilation of publicly available information could, in some circumstances, constitute a trade secret. After USA Power I, a five-week jury trial was held. Both parties moved for a directed verdict on all of USA Power's claims. The court denied these motions except as to USA Power's claim against Ms. Williams for punitive damages. The jury returned a special verdict against PacifiCorp and Ms. Williams, both of whom filed a rule 50 judgment notwithstanding the verdict (JNOV) motion and a rule 59 motion for new trial. The trial court denied PacifiCorp's motions, except to reduce the unjust enrichment award against PacifiCorp, granted Ms. Williams's JNOV motion for lack of evidence related to causation, and determined that USA Power was entitled to attorney fees. The court also denied USA Power's request for exemplary damages and prejudgment interest. The parties appealed all adverse rulings.

¶ 7 We uphold the trial court on all claims. First, we uphold the trial court's denial of PacifiCorp's JNOV on the trade secret issue. As discussed below, under our deferential standard of review, there was a sufficient basis in the evidence from which the jury could reasonably conclude that certain components of USA Power's vision were not generally known or readily ascertainable. It is important to note that PacifiCorp appealed only the issue of whether a trade secret existed, conceding for purposes of appeal that if there was a trade secret, it was misappropriated. Second, as to USA Power's cross-appeal challenging various aspects of the damages award, we affirm the trial court's rulings, holding that the trial court applied the correct standards and did not abuse its discretion. Finally, regarding USA Power's direct appeal of the JNOV granted in favor of Ms. Williams, we affirm the trial court because there is no competent evidence demonstrating that Ms. Williams caused USA Power's damages or that USA Power would have benefitted if Ms. Williams had not breached her fiduciary duties. Accordingly, we affirm the trial court's ruling as to each issue presented on appeal.

Background

¶ 8 This dispute focuses on USA Power's preliminary design of a power plant in Mona, Utah—its Spring Canyon vision—and PacifiCorp's alleged use of that plan to build its own power plant project.3 The preliminary design phase for a power plant involves site specific economic and technological feasibility studies. These studies are necessary for the financing and permitting of the plant. Preliminary design generally costs one to two percent of the plant's total cost and takes between eighteen and twenty-four months if the company starts from scratch.

¶ 9 USA Power claims that PacifiCorp misappropriated its trade secrets, which consisted of its Spring Canyon vision generally as well as the following:

(1) technical information about the size, location, configuration, economics, engineering, and assets of [the Spring Canyon project]; (2) business strategies, goals, and plans including proformas describing cost and profitability; and (3) [USA Power's] first-to-market advantage—i.e., the ability to obtain financing and get to the market first and block potential competitors.

USA Power claims it disclosed these trade secrets to PacifiCorp mainly through three volumes of confidential information it provided PacifiCorp pursuant to the Confidentiality and Non–Disclosure Agreement, though it also disclosed some information related to its vision in emails and other communications between the parties. USA Power expended significant resources conducting preliminary design work for Spring Canyon, including two years, thousands of work-hours, and close to $1 million.

¶ 10 USA Power publicly disclosed various pieces of information about its Spring Canyon proposal on three occasions. First, in February 2002, it filed a Notice of Intent (NOI) with the Utah Department of Air Quality (UDAQ). This document was public and included a description of “the fuels and their use,” the “equipment used in process,” “operation schedules,” “production rates,” and “raw materials used.” The project description also stated that “the use of dry type air-cooled condenser will ... greatly reduce the plant's water usage” and that the plant was “projected to begin operation in September 2003.” From this public disclosure, it was clear that the Spring Canyon plant would be an air-cooled combined-cycle natural gas plant with two GE 7–FA turbines, two heat recovery steam generators, one steam turbine, air inlet chillers, duct firing, and specific emissions controls, and would be located in Mona, Utah.

¶ 11 The second public disclosure occurred in May 2002, when USA Power filed an “Application for Zone Change Permit” with Juab County. The rezoning application was a public document and described the Spring Canyon plant as a “base-load natural gas-fired combined cycle power generation facility.” It also described the plant's capacity, technology,4 and specific location, including a map and site plan. The final disclosure took place after notice from the State that USA Power lacked the emission credits for a two gas turbine configuration. USA Power subsequently resubmitted a NOI for a 1x1 configuration. This application was for the same plant configuration as that filed in February 2002, except for the elimination of one gas turbine.

¶ 12 Although various details about the configuration and location of the plant were publicly...

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