Opinion
Civil Action 99-D-286-N, Civil Action 99-D-878-N.
January 20, 2001.
ORDER
Before the court are two related motions filed by KW Plastics. These are: (1) Motion To Exclude U.S. Can's Designations On Trade Secrets And Confidential Information; and (2) Motion In Limine #2. U.S. Can has responded to the same. After careful consideration of the arguments of counsel, the applicable law, and the record as a whole, the court finds that the Motion To Exclude is due to be granted in part and denied in part, and that Motion In Limine #2 is due to be denied as moot.
The court interprets ¶ 1.1 of the 1996 Agreement's definition of "Confidential Information" to read more broadly than a protection of "trade secrets." See, e.g., Barrett v. Shanks, 47 N.E.2d 481, 485 (Ill. 1943) (each contractual provision should be given full effect and should not be read as merely redundant).
I. INTRODUCTION
Summary judgment has "an important, and ever increasing, role in stemming the tide of explosive litigation, greatly congested dockets, increasing delay in claims being adjudicated, and spiraling — indeed, unimaginable litigation costs." Calpetco v. Marshall Exploration, Inc., 989 F.2d 1408, 1415 (5th Cir. 1993).
KW moved for summary judgment on U.S. Can's claims of misuse of trade secrets and breach of contract via disclosure of confidential information. KW argued that: (1) "[t]he only information U.S. Can identifies as a protectable trade secret is the financial information it provided to KW Plastics at the January 1998 meeting"; (2) this information "is stale and without value to U.S. Can or KW Plastics"; and (3) "the evidence demonstrates that KW Plastics never misappropriated this allegedly confidential information for its own benefit." (KW Mot. Summ. J. at 46-47.)
Moreover, in a section of its brief titled "U.S. Can Did Not Provide KW Plastics Trade Secrets or Confidential Information," KW argued in good faith that U.S. Can had come forward with only one piece of protected information, and that this information was stale and had not been used by KW Plastics. (Id. at 26.) KW could have done no more than what it did to satisfy its Rule 56 burden of showing that KW had not misused U.S. Can's information to misappropriate Behr, a major nationwide paint customer.
KW's motion placed U.S. Can on notice that it was in no position to "'hold back' on any of the things that [it] contended met the legal requirement of trade secrets" or confidential information. Nilssen v. Motorola, 963 F. Supp. 664, 674 (N.D. Ill. 1997) (Shadur, J.); see also Scott v. Dixie Homecrafters, 2000 WL 1902432 at *3 (M.D.Ala. 2000) (limiting plaintiff to nominal damages when, in response to summary judgment motion arguing lack of damages, Plaintiff failed to designate admissible evidence of the same). After all, on matters involving trade secrets or confidential information, "a motion for summary judgment is the 'functional equivalent' of a trial in which it is asserted that material facts are not in dispute." Nilssen, 963 F. Supp. at 674. Thus, the burden rested squarely upon U.S. Can to designate the protectable information it believed was at issue in this case. See id.
In a prior Order, the court noted that, well after summary judgment, U.S. Can repeatedly failed to identify this information with specificity and particularity, even in the face of interrogatory requests by KW Plastics. On more than one occasion, KW attempts to obtain production were rebuffed.
The fact that KW filed a motion in limine, but did not file a motion to compel disclosure of the disputed trade secrets last fall, is not dispositive. "A party may not free itself of the burden to fully comply with the rules of discovery by attempting to place a heretofore unrecognized duty of repeated requests for information on its adversary."Kifle v. Parks History Ass'n, 1998 WL 1109117 at *2 (D.D.C. 1998) (quoting Arthur v. Atkinson Freight Lines Corp., 164 F.R.D. 19, 20 (S.D.N.Y. 1995)). This case does not present a situation where the plaintiff has slept on its rights. Cf. Cash v. State Farm Acc. Ins. Co., 2000 WL 1863362 at *2 (M.D.Ala. 2000) (denying motion to exclude because plaintiff had filed zero motions prior to that time). U.S. Can must be held accountable for its summary judgment and discovery choices, which the court finds have been neither justified nor harmless, and have prejudiced KW's ability to prepare for this trial.
In late November 2000, the court continued this case to February 1, 2001 and ordered U.S. Can to designate the specific materials it planned to use to support its claims of misappropriation and breach of contract. The court's various orders were designed to provide KW with the information it would need to prepare for trial and to prevent U.S. Can from adding to the list of materials it had designated at the summary judgment stage. With respect to confidential information and trade secrets, a party simply cannot neglect its obligations at summary judgment and add to its evidentiary arsenal afterwards. See Nilssen, 963 F. Supp. at 674; FED. R. Civ. P. 1, 8, 26(e), 37, 56.
There is a difference between claims for misuse of protected information and breach of contract by misuse of protected information (trade secrets and confidential material) and other claims. The tort in a misappropriation case is the misuse of the item in question itself. Thus, the "material facts" that must be in genuine dispute, per Rule 56, are whether items X, Y, and Z were misappropriated or wrongfully disclosed. It follows, then, that the non-moving party must designate X, Y, and Z at summary judgment in response to an allegation that there is no genuine dispute of material fact for trial.
II. EVIDENCE THAT MAY BE PRESENTED AT TRIAL
The court has carefully reviewed the materials designated by U.S. Can to support its trade secrets claim. The court also has given considerable attention to the arguments of both parties with respect to KW's motion to exclude. The record reflects that U.S. Can designated at summary judgment a bundle of information that was disclosed to KW during a meeting between the parties in Oakbrook, Ill., in January 1998. Although KW has attacked each item separately, the court cannot find as a matter of law that these materials, when taken as a whole, do not constitute "trade secrets" as defined by Illinois law.
In Illinois, trade secrets include "technical or nontechnical data" and "financial information" that is "sufficiently secret to derive economic value" and is the subject of reasonable efforts to maintain secrecy or confidentiality. See Illinois Trade Secrets Act, 765 ILCS 1065/2(d). U.S. Can must show that the information was: (1) not generally known in the industry; (2) misappropriated; and (3) used in KW's business. See Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1265-66 (7th Cir. 1992); Nilssen, 963 F. Supp. at 675 ("the key to secrecy is the ease with which information can be readily duplicated without involving considerable time, effort or expense"; this determination is "ordinarily a question of fact.")
Trade secrets can include such information as "information regarding suppliers, sales, employee history, gross profits, revenues, expenses, financing agreements, investor lists, marketing plans, and special customer relationships." MJ Partners Restaurant Ltd. v. Zadikoff, 10 F. Supp.2d 922, 933 (N.D.Ill. 1998). "[T]he touchstone of the inquiry . . . focuses fundamentally on the secrecy of such information." Id. Moreover, "under Illinois law a trade secret may exist in the combination of a number of elements of information, even if each discrete element may be found in the public domain." Nilssen, 963 F. Supp. at 677.
The record reflects a genuine factual dispute as to whether the financial information provided during the January 1998 meeting was the subject of reasonable efforts to maintain secrecy. (Submiss. Part I.A. at 3-5.) KW argues that the information it provided Behr was not news to Behr, for U.S. Can had already disclosed parts, if not all, of it to Behr previously. U.S. Can responds that, because it had confidentiality agreements with both KW and Behr, it made reasonable efforts to keep this information under wraps. In this situation, the reasonableness of U.S. Can's efforts is a jury question. See ILG Indus. v. Scott, 273 N.E.2d 393, 396 (Ill. 1971); Mangren Research Dev. Corp. v. National Chem. Co., 87 F.3d 937, 942-43 (7th Cir. 1996). There also is sufficient circumstantial evidence for a jury to find that KW acted upon this information while it was of value. (Summ. J. Order at 44-45.) Such material shall not be excluded.
This Behr-U.S. Can agreement was not attached with the pleadings. The court accepts as true the representations of counsel that such an agreement exists and applies.
U.S. Can's failure to file under seal does not change this analysis. The case cited by KW does not apply Illinois law, see Littlejohn v. Bic Corp., 851 F.2d 673 (3d Cir. 1988), and the court finds that it is unpersuasive authority, given that this case involves the alleged misuse of information supposedly acquired, and of value some two to three years ago.
The court also finds that U.S. Can may argue that its methods of "quality control" constitute trade secrets. (Submiss. Part II-III at 7-11.) At summary judgment, U.S. Can noted that among its trade secrets were "quality control problems" that its employee, Donna Baltz, discussed with KW. If Baltz discussed these problems generally, her discussions would necessarily have drawn upon the protectable materials designated in U.S. Can's ordered submission. The court draws all reasonable inferences on this point in U.S. Can's favor. See Augusta Iron Steel Works, Inc. v. Employer's Ins. of Wausau, 835 F.2d 855, 856 (11th Cir. 1988) (per curiam) (reasonable inferences from same facts are resolved in non-movant's favor). The record reflects that this information may be specific, particular, and the product of highly technical training. (Baltz Aff.; Borders Dep. at 203-04.) Therefore, there is a question of fact whether these materials are trade secrets, were misappropriated, and were used in KW's business.
The court did not find at summary judgment to the contrary.
III. EVIDENCE THAT SHALL BE EXCLUDED
Some evidence specified by U.S. Can, however, is due to be excluded. The first is "information regarding the future growth of Plastite." (Submiss. Part I.A at 4-5.) Baltz made clear that her reference to "forecasts for future business," which was cited at summary judgment, is at most a discussion of forecasts she personally provided to KW employee Linda Meadows, not information that might have been relayed to KW by other U.S. Can employees. (Baltz Aff. ¶ 5.) Moreover, even in its specified submission, U.S. Can has failed to describe this information with specificity and particularity, thereby evading KW's discovery requests and the court's express orders. This failure has prejudiced KW Plastics in its trial preparation, as well as made it impossible for the jury to apply the Illinois Trade Secrets Act. For these reasons, this information be and the same is hereby EXCLUDED. See Nilssen, 963 F. Supp. at 674; AMP, Inc. v. Fleischhacker, 823 F.2d 1199, 1203-06 (7th Cir. 1987) (plaintiff cannot produce "long lists of general areas of information which contain unidentified trade secrets"), Id. at 1203; FED. R. CIV. P. 37(b)(2)(B), 37(c), 56; M.D.ALA. L.R. 26.1.
In addition, the court finds that U.S. Can did not designate any admissible evidence at the summary judgment stage of trade secrets that may have been discussed during a meeting in Peachtree City, Ga., in December 1997, as opposed to January 1998. (Submiss. Part I.B at 5-6.) Accordingly, references to this meeting — and the discussions held during it — be and the same are hereby EXCLUDED. See Nilssen, 963 F. Supp. at 674; FED. R. Civ. P. 56.
Finally, the court finds that any discussion about the research and development of a "711 can" is due to be excluded for any number of reasons. (Submiss. Part IV at 11-14.) First, the court finds that no reference to this material is fairly gleaned from U.S. Can's summary judgment designation. See Nilssen, 963 F. Supp. at 674; FED. R. Civ. P. 56.
In the alternative, the court finds that U.S. Can did not raise this potential issue until November 21, 2000, even though U.S. Can executives possessed KW's containers as early as April 2000. A party is obliged to disclose not only information of which it is aware, but also information of which it should have been aware. See Arthur, 164 F.R.D. at 20. The court finds it inconceivable that U.S. Can and its attorneys could not have become aware of this material if they had acted diligently. Moreover, although U.S. Can official Robert MacKenzie tested KW's cans in October 1999 and possessed KW's publicly-available cans in April 2000, U.S. Can did not include MacKenzie on its trial witness list in October 2000. Thus, the evidence is due to be excluded. See FED. R. Civ. P. 16, 26(e).
The court finds that U.S. Can's attorneys ought to have been aware of this information well before summary judgment. This acrimonious, protracted litigation was no doubt known to U.S. Can executives as well as U.S. Can's law firm. Thus, under these facts, the failure to designate the materials at summary judgment cannot be excused. See Arthur, 164 F.R.D. at 20. Cf. Bankatlantic v. Blythe Eastman Paine Webber. Inc., 12 F.3d 1045, 1049 (11th Cir. 1994).
In addition, the record reflects that MacKenzie either discarded or destroyed the cans that he tested. (MacKenzie's Dep. at 98-99, 118-20.) The court finds that MacKenzie's spoliation of evidence and U.S. Can's disregard of the Uniform Scheduling Order has irreconcilably prejudiced KW's ability to respond to MacKenzie's testimony. For all of the above reasons, all references to research and development of the "711 can," be and the same are hereby EXCLUDED. See Hancock v. Hobbs, 967 F.2d 462, 467-68 (11th Cir. 1992); Nilssen, 963 F. Supp. at 674; FED. R. Civ. P. 16, 26, 37, 56; M.D.ALA. L.R. 26.1; see also Patel v. Gayes, 984 F.2d 214, 220-21 (7th Cir. 1993); Burlington N. R.R. Co. v. Nebraska, 802 F.2d 994, 1005 (8th Cir. 1986).
IV. ORDER
Accordingly, it is CONSIDERED and ORDERED that KW's Motion To Exclude U.S. Can's Designations On Trade Secrets And Confidential Information be and the same is hereby GRANTED IN PART AND DENIED IN PART, as set out herein.8 It is further CONSIDERED and ORDERED that KW's Motion In Limine #2 be and the same is hereby DENIED AS MOOT.