AGC, Inc. v. Daniel J. Baillargeon et al.
MEMORANDUM OF DECISION RE APPLICATION FOR A TEMPORARY INJUNCTION
Before the court is an application brought by the plaintiff, AGC, Inc. (“AGC”), for a temporary injunction against the defendants, Daniel J. Baillargeon and Twin Manufacturing Co. (“Twin”). In its amended complaint (# 136), AGC alleges four causes of action: (1) violation of the Connecticut Uniform Trade Secrets Act (CUTSA), General Statutes § 35–50 et seq., against both defendants; (2) violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42–110a et seq., against both defendants; (3) breach of fiduciary duty against Baillargeon; and (4) tortious interference with business and contractual relations against both defendants. For the reasons set forth below, the court denies in part and grants in part the application for a temporary injunction.
On May 12, 2010, AGC brought the present application and sought an ex parte temporary injunction. That same day the court granted the ex parte temporary injunction in part, enjoining Baillargeon from “[u]sing or disclosing any trade secrets, confidential information or proprietary materials of AGC” and enjoining Twin from “[a]cquiring, using or disclosing any trade secrets, confidential information or proprietary materials belonging to AGC.”
On that day, the court also set the date for a hearing on the temporary injunction application and granted AGC's motion to conduct expedited discovery. On May 13, 2010 and May 14, 2010, AGC served the application and relevant court orders on Twin and Baillargeon, respectively.
The hearing on the temporary injunction application occurred over eight days: June 10, 2010, June 11, 2010, June 16, 2010, July 14, 2010, July 15, 2010, July 21, 2010, July 22, 2010, and July 23, 2010. At the time of the hearing, discovery had not yet been completed. Following the hearing, on August 30, 2010, AGC filed a posthearing brief as well as proposed findings of fact. On September 30, 2010, both Baillargeon and Twin filed their posthearing briefs. Of the defendants, only Twin filed proposed findings of fact. On October 15, 2010, AGC filed its reply brief. The court heard oral argument on the application on November 22, 2010.1
FINDINGS OF FACT
The court finds the following facts. Additional facts will be set forth later when relevant to address the parties' legal claims.
AGC is a company with approximately 140 employees located in South Meriden, Connecticut. It has been in existence since 1951. One of the services provided by AGC is the performance of rubber injection molding work on aircraft engines.
In the manufacture or repair of an aircraft engine part, rubber injection molding is a process by which rubber of appropriate shape and thickness is attached to various parts within the aircraft engine. The basic process requires the construction of a mold designed to fit onto the part at the appropriate location. Once the mold is constructed, the mold is attached to the part and liquid rubber is injected into the mold. The rubber then cools and hardens in place, the mold is removed from the part and the rubber remains attached to the aircraft part.
In the 1980s, AGC began performing rubber injection molding work as an original equipment manufacturer (OEM) of aircraft engine parts, including parts for Pratt & Whitney's PW4000, JT8D and JT9D engines. In other words, it used rubber injection molding to create the rubber components of newly constructed parts. As part of its OEM business, AGC was required to create molds for each part and to determine the best method to inject the liquid rubber into the mold.
Beginning in the early 1990s, AGC entered into the related business of rubber injection molding overhaul and repair (O & R) of aircraft engine parts. This work involves the replacement of the rubber components of existing parts using basically the same rubber injection molding process it uses in its OEM business. The O & R process undertaken by AGC involves removing the old rubber from a part and injecting new rubber onto the part. In order to start up its O & R business, AGC was required to set up a fluorescent penetrate inspection line, which is used to examine a part to determine whether it can be repaired; to develop stands and racks; to create new molds where necessary; and to set up a clean room in which the repairs are made.
AGC's Claimed Trade Secrets1Rubber Injection Mold Drawings
One of AGC's customers for O & R work was Pratt & Whitney—Cheshire (PWC). Among the parts PWC sent to AGC for O & R work were shrouds and stators 2 for the PW2000 engine and its military counterpart, the F117 engine. Because AGC was not an OEM for the shrouds and stators for these engines and thus did not have existing molds for these parts, AGC was required to create new molds in order to perform this O & R work, which it did sometime in the 1990s. The molds used for the PW2000 and the F117 parts are the same.
The complete process of designing the rubber injection mold for a PW2000/F117 shroud or stator based on a part drawing took AGC approximately forty total hours, regardless of whether the designer had previously created a mold for a similar part. AGC created each new mold by first directing its process engineer to develop a “tool concept sketch,” i.e., a rough sketch of what the mold should look like. Because the design of a mold depends on the dimensions of the part onto which the mold will attach, one of the tasks undertaken by the process engineer was to obtain all of the dimensions for the part to be repaired. Once the process engineer completed the tool concept sketch, a designer would translate the sketch into a formal drawing. Thereafter, the drawing would be checked for accuracy.
To create the PW2000/F117 molds, the process engineer obtained the dimensions for the parts either from the part manual provided by PWC, the part blueprints, which were also provided by PWC, or by measuring the parts themselves. In designing rubber injection molds for these parts, AGC's engineer also had access and referred to at least four actual rubber injection molds that Pratt & Whitney had designed and created in the past because PWC historically had performed some O & R work itself.
The molds provided to AGC by PWC included a first stage stator assembly and three shroud molds. These molds were round in shape, layered, had multiple screws holding the layers together and had injection ports for the liquid rubber. AGC regularly used these four molds to perform rubber injection onto parts. AGC made some minor modifications to the PWC molds at some point after receiving them to improve their utility. AGC's engineers specifically relied upon the design of these PWC molds in designing and creating its own molds, as PWC expressly intended.
The dimensions of the aircraft engine part to be repaired dictate the shape and size of the outer surface of the mold. The other features of the mold, however, do not depend on the part. Therefore, AGC designed these features of the PW2000/F117 molds based on experimentation and the knowledge and experience of its process engineer.
The molds AGC designed were similar to and had many of the same features as those created by other companies in the industry. The features of the molds that AGC claims render such molds a trade secret included the following: (1) the design of the inner diameter of the molds, (2) the use of T6 aluminum rather than steel in the molds, (3) the separation of the molds into layered portions, (4) the use of O-rings, which are placed between the pieces of the mold to act as a seal to prevent liquid rubber from leaking from the seams between mold's layers, (5) the location and number of injection ports into which the liquid rubber would be injected onto the part, (6) the use of pry bar slots to allow the mold pieces to be easily removed from a finished part, (7) the location and number of clamp screws to keep the mold pieces together while the rubber injection molding process is underway.
These design features were included in molds used by other companies and were generally known or readily ascertainable by those in the industry. Moreover, some of the features did not significantly affect the functionality of the mold.
First, the shape of the inner diameter is not an important design feature. Second, other companies, including PWC, use T6 aluminum in their molds, as it is cheaper than steel and easier to handle. Third, it is common in the industry to create a layered mold, which is more cost effective and easier to use, and PWC, Twin and Adchem, among other companies in the industry, use layered molds. Fourth, many other companies, including PWC, Adchem, AAR, and UNC Aerospace, use O-rings in the appropriate places to prevent leakage between the pieces of the mold, as the use of such was an obvious solution to the problem. Fifth, an injection port is necessary for the injection process, but the number and exact location are relatively unimportant; AGC used two ports, although it could have used four. Sixth, as AGC concedes, a slot for a pry bar is an obvious solution if the mold sticks to the part. Indeed, many other companies, including Adchem, use pry bar slots on their molds. Seventh, because a layered mold must be held together, a set of screws is an obvious solution.
Although AGC had “proprietary” and “confidential” stamps at the facility, it did not use them to stamp drawings created prior to 1996. All of the drawings used to create the molds in dispute in this case were not stamped as confidential or proprietary at the time they were made.3 It did not stamp documents other than drawings with a “confidential” stamp until 2009. AGC did not have a process to review whether a document to be sent outside of the company should be stamped as such.
Drawings created before 1996 were stored in a closed records room within the engineering department on the second floor of AGC's facility. The records room was maintained by an attendant during work hours and was locked during non-work hours. Drawings created after 1996 were stored on the online system on which they were created. Access to the online system was password protected and restricted to certain employees, mainly those in the engineering department.
The Rubber Injection Apparatus
As AGC began to perform rubber injection molding, it needed to adopt a means of injecting liquid rubber into the molds and onto the parts. AGC initially used a hand-operated commercially available caulking gun, but was unsatisfied with it. Ultimately, AGC chose to make certain design modifications to a “Semco gun,” one of the commercially-available caulking guns, to improve its functionality with respect to injecting liquid rubber into the molds. These modifications included: (1) an Acme threaded drill rod propelled by a pneumatic drill; (2) a urethane plug attached to the end of the rod and separated from it by a metal plate; (3) a metal bar to prevent the bracket from spinning as the gun was being operated; and (4) a welded nut that operated to pull back the gun casing and push the plug forward, thereby pushing the rubber into the mold. AGC also constructed a device to pour liquid rubber into a Semco cartridge for injection.
The development of the apparatus took only a couple of days. Based on a small amount of testing over approximately one week, AGC decided to weld an arm to the apparatus to improve its stability during use.
Although AGC's rubber injection apparatus had some minor advantages over other available injection methods, it was not the absolute best method available. There existed other methods with significant advantages over AGC's apparatus, including a commercially available Dynamite Pump—a more modern rubber injection device. The Dynamite Pump, like AGC's modified Semco gun, also did not waste rubber because it allowed the user to store mixed rubber for later use.
AGC orally trained the appropriate employees to use the apparatus. There were no written instructions. Although a person watching an AGC employee using the apparatus or viewing a photograph of it could not see how it operated down to the very last detail, many of its design features were readily visible.
AGC utilized a specific process for determining what to charge a customer for its O & R work. It first determined the base cost of each individual repair for a particular part. This base cost was known as a “menu price.” AGC's menu prices were kept on a separate directory from other pricing information. This directory was password protected and limited only to those employees who had a need to know the information. Of all AGC's employees, only about six had access to the directory. Financial analysis and strategic planning documents were also stored on AGC's computer system.
In general, a customer of AGC would need several repairs done on each part or aircraft engine it sent for O & R work. When AGC determined the price to quote for such repairs, it typically totaled all the menu prices for each needed repair as a baseline and then added a markup or discount based upon factors related to the individual customer. AGC often quoted “typical” prices to customers, which are prices “typically” charged for a particular set of repairs. AGC did not maintain its typical or quoted prices as trade secrets or proprietary information.
If a customer specifically asked for a per-repair breakdown, AGC permitted its employees to give out menu prices. Customers were not asked to sign a confidentiality agreement with respect to this information. Customers were completely free to disclose all price quotes, including menu prices, to AGC's competitors. Up until late 2009, AGC had no confidentiality agreement with its sales representatives with respect to its information, including menu pricing. In fact it was common practice in the industry to freely give out a variety of pricing information.
AGC's Relationship with Twin before 2009
AGC obtained O & R work either from customers such as PWC directly or from other aircraft engine repair companies that, for whatever reason, did not do rubber injection molding. One such company was Twin, which also did O & R work for aircraft engine parts. Twin had been in the O & R business for many years and was a preferred vendor of Pratt & Whitney. Prior to 2009, however, Twin did not have the capability to repair the rubber components of the aircraft engine parts on which they worked. Therefore, Twin would often subcontract the rubber repair jobs to AGC. In fact, Twin and AGC jointly marketed their repair capabilities to potential customers.
AGC openly revealed its prices to Twin when Twin offered it O & R subcontracting work. Twin would ask AGC what it would charge for a set of rubber component repairs and then Twin would add a markup and factor the total into the price it quoted to the customer. Furthermore, AGC complied whenever Twin requested a per-repair breakdown of its price, including for work on PW2000/F117 parts, by giving out the menu prices. AGC did not tell Twin that the menu prices were secret or require it to sign a confidentiality agreement. In fact, AGC revealed its complete pricing structure to Twin in order to facilitate the companies' joint marketing.
The only confidentiality agreement that AGC entered into with Twin was executed in 2004 and lasted for one year. It required each party to keep confidential any information that the other party marked with a legend. AGC did not make use of the legend and the agreement was not renewed in 2005 or any time thereafter.
Baillargeon's Employment with AGC1Baillargeon's Hiring and Promotion
AGC hired Daniel Baillargeon, a sales and marketing professional, on February 11, 2002. Baillargeon had previous experience in the rubber injection molding O & R business. By the end of his tenure at AGC, Baillargeon was AGC's most significant contact with PWC with respect to the O & R business.
AGC never entered into a noncompete agreement with Baillargeon. On the day he was hired, however, Baillargeon signed a copy of AGC's “prohibited conduct policy,” which obligated Baillargeon to refrain from disclosing confidential company information. On November 2, 2002, Baillargeon also signed a form acknowledging that he had received the 2001 employee handbook, which was in effect when he was hired. The 2001 handbook contained a “non-disclosure of confidential and other sensitive information policy,” which prohibited disclosure of confidential information and trade secrets.
Until 2001, AGC had no confidentiality policy in any handbook or required any confidentiality agreements with its employees. It was not until 2006 that AGC included a confidentiality policy in its employee handbook; which stated: “No one is permitted to remove or make copies of any AGC Incorporated records, reports or documents without prior management approval.” The policy, however, did not define what is “confidential.”
In February 2003, AGC promoted Baillargeon to engineering and business development manager for AGC's O & R department. In that capacity, he was responsible for writing new process sheets, soliciting new business and setting prices for new products. In October 2003, he was further promoted to O & R business manager. In this new position, he kept his previous responsibilities but gained the added responsibility of overseeing O & R operations, ensuring that established turnaround times were met and that the O & R business was profitable.
In March 2005, Baillargeon became the O & R general manager, with his responsibilities effectively remaining the same but having to report directly to AGC's president, who at the time was Walter Layman.
Baillargeon' s Marketing ActivitiesiPresentations
As part of his duties, Baillargeon engaged in marketing AGC to potential customers. His marketing activities included attending the materials repair and overhaul (MRO) 4 trade show, which was held annually. Baillargeon attended the 2009 MRO trade show and showed a Powerpoint presentation entitled “MRO Capability Presentation,” using space in a booth purchased and used by Twin. The presentation ran on a loop and was designed to showcase AGC's O & R capabilities to the thousands of attendees, which included many AGC competitors. No one attending the MRO trade show was required to sign any confidentiality agreement.
Among other things, AGC's presentation contained color photographs of an AGC employee performing rubber injection molding repairs in its clean room using AGC's rubber injection apparatus. A number of the parts of the apparatus were visible in the photographs, including the modified Semco gun, a threaded rod, the metal bar and the nut. Even if a particular feature could not be seen, a viewer could, with little effort, deduce what such feature was from the elements depicted in the photograph. Moreover, both inner and outer shroud molds were visible and the injection ports, into which the employee injected the rubber, could be seen. The photographs also depicted blast cabinets, a stand and a table used in the injection process as well as the device used to pour rubber into the Semco cartridge prior to injection.
One of the photographs shown in the PowerPoint presentation that showed the clean room had been taken by a professional photographer and used by AGC in other promotional materials, and it had been displayed on AGC's web page. AGC was comfortable with the photograph being shown publicly and no one in management told Baillargeon he could not show the photographs.
Baillargeon gave the presentation to many customers and potential customers all over the world. This was a typical marketing activity undertaken by companies in the industry. Baillargeon even put the presentation on a memory stick and gave it to these customers, which included MTU, Lufthansa Techniks, Rolls Royce and SR Technics. No customer was asked to sign a confidentiality agreement prior to viewing or receiving the presentation. The presentation was reviewed and approved by AGC's management.
In addition to its outside activities, AGC marketed itself by giving tours of its facility, which Baillargeon routinely conducted. The purpose of the tours was the same as that of the presentations, to showcase AGC's capabilities to potential customers, some of whom also engaged in rubber injection molding O & R work. Each tour included visits to nearly every room in its facility. Participants did not have to sign a confidentiality agreement prior to taking the tour. AGC's upper management approved of and encouraged the tours.
With respect to ACG's rubber injection molding O & R department, tour participants were typically taken to the clean room where the rubber injection is performed. Participants were able to view the molds used and were sometimes able to view, from a distance of approximately a few feet, an employee operating the rubber injection apparatus. They could see the different features of the apparatus, including the drill turning the threaded rod, pushing the plunger forward and injecting the rubber into the mold. A person viewing the apparatus from six feet away or closer could see specifically that a threaded rod was used.
Baillargeon explained to tour participants how a rubber injection mold worked, including how the rubber entered into the mold and where it would fit. Many aspects of the molds were visible to participants, including the pry bar slots, injection ports and screw locations. He explained how AGC manufactured O-rings for use in the molds, showing participants AGC's stock of O-rings. Baillargeon would also explain how the apparatus operated, how a rod was used to force the rubber through a cartridge into the injection port. He showed how the rubber was poured into the Semco cartridge.
Tour participants sometimes included representatives of companies who were also in the O & R business, including Dan Peach, the president of Twin. Peach took at least two full tours of AGC's facility, one in the late 1990s or early 2000s. This tour was conducted by Jim Cultrera, AGC's vice president of operations. The second tour occurred in 2006 or 2007 and was conducted by Baillargeon. Peach was able to view, among other things, the operation of the injection apparatus, the details of the apparatus itself, the molds used, and AGC's clean room. Peach was not required to sign a confidentiality agreement before taking either tour and no one told him that anything visible on the tour was confidential.
Interactions with Customers
When Baillargeon negotiated business with potential customers on behalf of AGC, he typically revealed menu prices upon request. He gave out menu prices to customers such as MTU, Pratt & Whitney Columbus, Aerothrust and Air India. He also revealed menu prices to Twin as part of AGC's attempt to obtain subcontract work from Twin. He was never advised by AGC that its menu prices were a trade secret or proprietary or that he was forbidden from revealing menu prices to other companies, including Twin.
AGC granted Baillargeon access to Pratt & Whitney's Supplier Delivery System (SDS) for the purpose of tracking orders submitted to AGC by PWC. SDS is a database that stores information regarding purchase orders that PWC places with its suppliers, including pricing information, the parts sent, delivery information, and commitment dates. A person with access through a particular company could only access information related to that company's orders and not orders of competitors. Baillargeon used his work e-mail address and a password given to him by AGC to access SDS.
Baillargeon's Termination by AGC
In fall 2008, Bruce Andrews replaced Layman as AGC's president on a temporary basis. Soon thereafter he concluded that AGC historically had not adequately protected its confidential information and trade secrets. Until this lawsuit was filed, Andrews was unaware of many of AGC's practices including its disclosure of menu prices, the scope of facility tours, and that Baillargeon gave the presentation at the 2009 MRO trade show.
In September 2008, Baillargeon asked Thomas Holder, AGC's new products development manager, to gather all the blueprints for the rubber injection molds used in its O & R department and put them in a binder. Baillargeon told Holder that he needed it in case AGC should need to create a second set of molds. Holder compiled the binder by looking through the file cabinets in the engineering department and obtaining relevant drawings. Some of these drawings were full size and others were size “11X17.” He made copies of the drawings and put them in plastic sleeves which he then placed in a three-and-one-half-inch–thick three-ring binder. While he was not working on the project, Holder stored the binder on top of the file cabinets in AGC's O & R department.
In November 2008, Andrews had a conversation with Baillargeon about his work performance. Andrews believed that Baillargeon lacked maturity and insufficiently supported Andrews' plans for company growth. Moreover, Andrews felt that Baillargeon, in managing the O & R work, did not cooperate with AGC's OEM business. Thus, in January 2009, by which time he had become president of AGC on a permanent basis, Andrews changed Baillargeon's title to Vice President of MRO and Sales and Engineering. Baillargeon's duties remained the same except he no longer had operational control over the O & R business.
In February 2009, Baillargeon began to copy about one thousand pages of documents stored in AGC's computer system onto a memory stick. The documents included presentations, strategic plans, personnel information, work hour reports, confidentiality agreements, customer quotes and pricing information, including menu prices. Baillargeon knew that the information was the property of AGC.
Baillargeon knew that AGC planned to lay off employees on July 10, 2009, because of economic difficulties. In 2009, AGC imposed three furlough weeks on its employees due to this economic downturn. Approximately one month prior to the scheduled layoff date, Baillargeon spoke with Peach. Peach told him that if he lost his job, Peach would try to hire him at Twin.
One or two weeks prior to the scheduled layoff date, Baillargeon found the three-ring binder that Holder had compiled. Baillargeon took it out of the O & R department and put it in his personal office.
On July 8, 2009, Andrews met with Baillargeon and Tracy Waller, AGC's human resources manager, in Andrews' office. Andrews told Baillargeon that he was being laid off due to a downturn in business. Baillargeon was one of eleven employees laid off. Baillargeon told Andrews that he would regret terminating his employment. Waller and Ken Payne, senior vice president of sales and marketing, then escorted Baillargeon to his office to watch him pack his belongings.
While Baillargeon packed his belongings into boxes, Waller noticed that he put a white three-ring binder into a box. This was the same binder that Holder had been compiling. Waller inquired as to what was in the binder and Baillargeon told her that it contained blueprints belonging to AGC. She told him that he could not take the binder. She removed it from his box and placed it on a shelf in his office. Nevertheless, Baillargeon took the binder from his office when he was left unobserved. He also took the memory stick he created earlier that year.
The next day, July 9, 2009, Holder noticed that the binder was missing and immediately reported that fact to Payne. Despite this discovery, AGC made no attempt to contact Baillargeon about the binder for almost six months. AGC also neglected to terminate immediately Baillargeon's access to SDS and did not do so until July 2010.
Twin's Hiring of Baillargeon
Baillargeon called Peach on July 9, 2009, and informed him of his termination from AGC. He asked Peach for a job. He did not tell Peach that he had any property belonging to AGC. Peach told Baillargeon to speak with him on the following Monday, July 13, 2009. When the two met, they did not discuss the possibility that Twin develop rubber injection molding O & R capability and Baillargeon did not tell Peach that he had property belonging to AGC. Peach knew, however, that Baillargeon had managed AGC's O & R department and had been AGC's top contact with PWC. At the conclusion of the meeting, Peach offered Baillargeon a job as a sales engineer commencing July 21, 2009.
During the month of July, Peach considered whether Twin should enter into the rubber injection molding O & R business. He decided that the volume of rubber injection molding work from the PW2000/F117 parts sent by PWC, if Twin could obtain such work, would be enough to justify entry into the business. Peach believed that Twin could obtain the O & R work that PWC then sent to AGC by providing PWC with a greater overall value, a component of which is a competitive price.
Baillargeon, after he began working at Twin, was involved in its development of rubber injection molding O & R capability. He asked Kevin Salisbury, manager of sales and marketing at Twin, to upload the information Baillargeon had put on the memory stick onto Twin's computer network. Baillargeon thought such information would be helpful to Twin in starting up its business.
Baillargeon worked with other Twin employees throughout the process, making recommendations as to drawings, equipment, prices, processes and other details. Baillargeon showed information taken from the memory stick to employees of Twin, including pictures of equipment used by AGC, including a blast stand and a transportation rack. Twin subsequently developed and used a similar blast stand. Baillargeon also showed pictures of AGC's rubber injection apparatus to Twin employees.
Twin's Development of a Rubber Injection Molding Business
Twin thereafter began to develop a rubber injection molding O & R operation. Using PWC's engine manual, Twin had all the information it needed to create a proper clean room. Climate control for the clean room was established with the assistance of Twin's vice president of operations, Craig Wurmnest. John Pelto and Richard Shea created a set of process travelers, i.e, a step-by-step guide to making repairs, from PWC's engine manual. Pelto was an engineer with experience in rubber injection molding O & R work at Quantum, a company in Wallingford that was a former PW2000/F117 rubber injection molding O & R vendor for PWC. In total, Twin spent hundreds of hours of engineering time to develop the capability to perform O & R work for PW2000/F117 engine parts. Twin was not ready to perform O & R work for shrouds until October 2009, and for stators until late February or early March 2010.
The drawings needed to create Twin's molds were created by its tool 5 designer, Steve Dussault. He had been designing tools since the 1970s and designed nearly 250 tools for Twin in his nearly five-year tenure. With respect to the PW2000/F117 stators and shrouds, Dussault created twenty drawings. He drafted a total of thirty-seven pages of drawings. Among the eighteen parts for which Dussault designed molds were the second, third and fourth stage stators, each of which had different dimensions and different configurations than the other stators, because each is located in a different section of an aircraft engine. Six of the drawings were of shrouds and fourteen were of stators.
Dussault's work papers indicated that he spent substantial time creating the drawings. They also contained Dussault's detailed notes. The notes depicted the information that he gathered and what sources he used to obtain such information. In other words, when Dussault recorded a particular part dimension, he made a notation next to such dimension indicating the source. He used the term “basic” to mean that he gathered the measurement from a PWC provided source such as the engine manual or a part blueprint.
Indeed, in creating his drawings, Dussault relied upon information provided by PWC, including: (1) the engine manual, (2) portions of part blueprints, (3) the actual parts themselves and (4) three tool drawings relating to PW2000/F117 stator assemblies, including the shrouds used in the assemblies. These tool drawings had been obtained by Twin prior to the time Dussault commenced his work. They depicted various features of the molds including the use of layered pieces, the use of bolts to hold the pieces together, the use of T6 aluminum, the use and placement of injection ports, and O-rings. These tool drawings provided Dussault with the critical dimensions needed to create a mold drawing.
Dussault also reviewed three mold drawings belonging to AGC, which his work papers indicated were of a first stage stator assembly, one configuration of a second stage shroud and one configuration of a third stage shroud. He did not, however, rely on them in any significant manner in creating the drawings for Twin. There were a total of six notations on three of the twenty drawings created by Dussault showing that he referenced drawings belonging to AGC.
Baillargeon had given Dussault these drawings belonging to AGC in August 2009. Baillargeon did so without the knowledge of Peach, who, until December 2009, had been unaware that Twin had any drawings belonging to AGC. Baillargeon believed, albeit mistakenly, that AGC's drawings would be significantly helpful to Dussault in the creation of Twin's drawings. He had three or four conversations with Dussault about AGC's drawings.
After obtaining all the necessary part dimensions, Dussault designed the features of the mold based on those dimensions. He directed the molds to be created out of aluminum because it was light and because the shrouds were themselves made of aluminum. He called for the use of O-rings, as the PWC tool drawings did, because he knew that the rubber needed to be sealed within the sections of the molds once injected. He designed the molds to have injection ports because it was the obvious way to introduce the rubber into the mold. Overall, Twin's drawings had much more detail than AGC's drawings.
Dussault, in creating the twenty mold drawings, worked approximately 400 hours between August 2009, and February 2010. Between August 2009, and December 2009, he spent about two-thirds of his work time on the drawings and he spent one-third of his time on the drawings in January 2010, and February 2010.
Once the molds were manufactured based on the completed drawings, Twin tested the molds and made modifications to the design of the molds as it felt necessary. As a result, Twin's molds were somewhat different from the molds used by AGC. For example, with respect to one of the molds for which Dussault referenced AGC drawings, Twin used four injection ports as opposed to the two used by AGC. Also, Twin's mold had three layers while AGC's had four. While AGC used pins or dowels to hold the pieces together, Twin used a notch called a “mating diameter.” The flange on AGC's mold was flat while the flange on Twin's mold had a groove.
Another example demonstrating the differences between the designs of AGC and Twin can be found in the companies' respective mold drawings for the first stage stator assembly outer shroud and inner shroud. Twin's inner shroud mold drawing showed that it used two equal size top pieces and a third smaller piece connected to the other two at a two-degree angle; by contrast, AGC used three equal size pieces. Moreover, Twin's outer shroud mold drawing contained two O-rings, while AGC's used none. There are also variations with respect to the third stage shroud segment molds, which include Twin's use of sixteen clamp screws and four injection ports versus AGC's use of nine clamp screws and two injection ports.
Of the approximately twelve drawings contained in the binder that Baillargeon took from AGC's facility, five were related to parts on which Twin does not perform O & R work. For three other drawings, the corresponding drawing created by Dussault was markedly different. Some of the other AGC drawings were for parts for engines other than the PW2000/F117, the only engines for which Twin does O & R work.
Twin's Rubber Injection Apparatus
Twin designed and created multiple rubber injection apparatuses, each of which took approximately ten to twelve hours to complete. In aid of this endeavor, Baillargeon showed pictures of AGC's apparatus and recommended it. The photographs depicted nothing more than that which was already revealed to anyone participating on a tour of AGC's facility or viewing a presentation given by employees of AGC. Although Twin decided to use a modified Semco gun as its apparatus, as AGC did, Twin's apparatus had significant differences from AGC's. Twin did not use an Acme threaded rod or a nut.
Peach was responsible for developing Twin's pricing structure for O & R work. Baillargeon attempted to involve himself, however, in the setting of prices. Using the username and password provided by AGC, Baillargeon accessed SDS with the knowledge of Peach to ascertain the prices that AGC charged PWC for its rubber repairs. Baillargeon relayed the information he learned from SDS to Peach and recommended that he obtain business from PWC by offering a lower price. Peach did not immediately forbid Baillargeon from accessing SDS to obtain AGC's pricing information. Baillargeon accessed SDS in this manner approximately twenty to twenty-nine times before February 2010, when he stopped at the request of Peach.
Twin's Use of and Failure to Return Information Belonging to AGC
Sometime in December 2009, AGC's attorney sent Baillargeon a letter regarding information belonging to AGC. In the letter, AGC requested that Baillargeon immediately return all information that he had belonging to AGC. If he did not, the letter continued, he could be liable for damages or subject to an injunction. Baillargeon read and understood the letter.
Peach, by that time, had seen a mold drawing with AGC's logo inscribed on it and knew that Baillargeon had uploaded information belonging to AGC onto Twin's computer network. Peach then told Baillargeon to “get rid of' anything belonging to AGC that he had in his possession. Baillargeon did not interpret this as a command to destroy such information. Peach did not specifically tell Baillargeon to return the information to AGC or not to destroy it, however. Instead of returning AGC's drawings, Baillargeon shredded some or all of them.
Shortly after Twin gained the capability to do O & R repair work on rubber components of shrouds and stators for the PW2000/F117, it informed PWC. In February 2010, PWC began diverting such work from AGC to Twin. By April 2010, PWC had completely shifted the work to Twin.
The PWC orders taken by Twin represented 10 percent of AGC's annual sales or $1.7 million per year. As a result of the loss of the business, AGC laid off another ten employees and reduced the hours and salaries of seven other employees in June 2010.
WHETHER AGC IS ENTITLED TO A TEMPORARY INJUNCTION
“The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits.” (Internal quotation marks omitted.) Clinton v. Middlesex Mutual Assurance Co., 37 Conn.App. 269, 270, 655 A.2d 814 (1995). “The standard for granting a temporary injunction is well settled. In general, a court may, in its discretion, exercise its equitable power to order a temporary injunction pending final determination of the order, upon a proper showing by the movant that if the injunction is not granted he or she will suffer irreparable harm for which there is no adequate remedy at law ․ A party seeking injunctive relief must demonstrate that: (1) it has no adequate remedy at law; (2) it will suffer irreparable harm without an injunction; (3) it will likely prevail on the merits; and (4) the balance of equities tips in its favor ․ The plaintiff seeking injunctive relief bears the burden of proving facts which will establish irreparable harm as a result of that violation ․ Moreover, [t]he extraordinary nature of injunctive relief requires that the harm complained of is occurring or will occur if the injunction is not granted. Although an absolute certainty is not required, it must appear that there is a substantial probability that but for the issuance of the injunction, the party seeking it will suffer irreparable harm.” (Citations omitted; internal quotation marks omitted.) Aqleh v. Cadlerock Joint Venture II, L.P., 299 Conn. 84, 97–98, 10 A.3d 498 (2010).6 For the sake of expediency, the court will first consider whether AGC has shown a sufficient likelihood of prevailing on the merits of any of its claims before analyzing whether the other elements are met.
Likelihood of Prevailing on the Merits
There is no appellate authority establishing the standard of proof that an applicant must meet to show that it is “likely” to prevail on the merits of its claim. Moreover, judges of the Superior Court have arrived at different answers as to this question: some judges hold the applicant to a stricter standard than the standard used by federal courts, which is itself used by some other Superior Court judges. R. Langer, J. Morgan & D. Belt, 12 Connecticut Practice Series: Unfair Trade Practices, Business Torts and Antitrust (2010), § 6.9, p. 735. The court agrees with those judges adopting the stricter standard; that is, refusing to grant a temporary injunction unless “the rights of the parties are clear and it is reasonably certain that, in the end, the plaintiff will prevail.” Nicoli v. Frouge Corp., 34 Conn.Sup. 74, 77, 376 A.2d 1122 (1977); see R. Langer, J. Morgan & D. Belt, supra, § 6.9, p. 735. The court is persuaded to use a greater level of caution because of the common-law rule in Connecticut that, with statutory exceptions not applicable here,7 a party may not immediately appeal the grant or denial of a temporary injunction. Clinton v. Middlesex Mutual Assurance Co., supra, 37 Conn.App. 270. The cases adopting the stricter standard generally note this disability, which, incidentally, does not exist in the federal system. R. Langer, J. Morgan & D. Belt, supra, § 6.9, p. 735; see, e.g., Torrington Drive–In Corp. v. I.A.T.S.E.M.P.M.O. Local 402, A.F.L., 17 Conn.Sup. 416, 418 (1951).
Count One: CUTSA Claim
In count one, AGC alleges that Baillargeon and Twin violated CUTSA by misappropriating its trade secrets. AGC argues that it has proven that it will likely prevail on the merits of its CUTSA claim with respect to three categories of information: (1) its PW2000/F117 rubber injection mold designs, specifically the combination of the elements of such designs, as denoted on its drawings, (2) its rubber injection apparatus design and (3) its menu prices. The court finds that the plaintiff is not likely to prevail on the merits of its CUTSA claim as to any of the three categories of information.
CUTSA is Connecticut's version of the Uniform Trade Secrets Act (UTSA) and is codified at General Statutes § 35–50 et seq.8 Under General Statutes § 35–52(a), “[a]ctual or threatened misappropriation may be enjoined upon application to any court of competent jurisdiction.” Thus, a plaintiff must prove a misappropriation, whether existing or potential, to obtain an injunction under CUTSA.
“Misappropriation” is defined by General Statutes § 35–51(b) as “(1) [a]cquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (2) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was (i) derived from or through a person who had utilized improper means to acquire it; (ii) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use ․ or (iii) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.” 9 Under CUTSA, therefore, proof of misappropriation requires proof of the existence of a “trade secret.”
The term “trade secret” is a term of art that is defined by § 35–51(d) as “information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” It is in establishing that the three categories of information constitute “trade secrets” that AGC's CUTSA case falls short. The court will analyze each of the three categories of information separately.
AGC's Mold Designs
The court finds that the evidence fails to support AGC's position that its molds, containing a particular combination of features, provided it with independent economic value from being not generally known or readily ascertainable. AGC argues that it derived independent economic value from its mold designs not being generally known or readily ascertainable. It contends that the specific mold designs for rubber repairs it created were products of its substantial investment of time and effort and the experience of its designer and were the foundation of its business. AGC further asserts that, even if the individual features of the designs were known, the specific manner in which AGC combined them was not generally known or readily ascertainable. If a competitor obtained the design information contained on its drawings, AGC states, the competitor would gain an unfair advantage by being able to avoid the necessary investment of time and effort to create such designs. Moreover, AGC points to Baillargeon's act of taking the drawings as evidence of their value as trade secrets.
The defendants contend that AGC's mold designs are easily ascertainable by any company because they are largely based on the corresponding dimensions of the part to be repaired and are thus relatively easy to duplicate. The defendants also state that each of the specific features of the mold designs that AGC contends are trade secrets are generally known, obvious, or unimportant to the functionality of the mold. The defendants finally argue that there is no evidence that the specific combination of features that AGC uses provided it any competitive advantage.
Under certain circumstances, a party's “ability to combine [common, commercially available] elements into a successful ․ process, like the creation of a recipe from common cooking ingredients, is a trade secret entitled to protection ․ [T]he fact that every ingredient is known to the industry is not controlling for the secret may consist of the method of combining them which produces a product superior to that of competitors.” (Internal quotation marks omitted.) Elm City Cheese Co. v. Federico, 251 Conn. 59, 74–75, 752 A.2d 1037 (1999). If, however, the combination of elements produces an end product that is not unique or original, but is essentially the same, as the end product available to the rest of the industry, the combination cannot be a trade secret. See Buffets, Inc. v. Klinke, 73 F.3d 965, 968 (9th Cir.1996).
Indeed, the “independent economic value” requirement has been interpreted to mean that the item of information must give the owner a competitive advantage over others in the industry. Elm City Cheese Co. v. Federico, 251 Conn. 88 n.27. Moreover, the competitive advantage must accrue because the information is not generally known or readily ascertainable. General Statutes § 35–51(d)(1). In other words, information must provide the owner a competitive advantage that would be lost if the information were publicly disclosed.10 See Bank of New York v. Bell, 120 Conn.App. 837, 859, 993 A.2d 1022, cert. dismissed, 298 Conn. 917, 4 A.3d 1225 (2010); see, e.g., Uncle B's Bakery, Inc. v. O'Rourke, 920 F.Sup. 1405, 1428 (N.D.Iowa 1996) (unique share of market based on status as only company producing “fresh, never-frozen” bagels for supermarket distribution), modified, 938 F.Sup. 1450 (N.D.Iowa 1996); Religious Technology Center v. Netcom On-line Communication Services, Inc., 923 F.Sup. 1231, 1253 (N.D.Cal.1995) (licensing fee revenue paid to creator of texts for use in religious instruction).
Based on the evidence presented, AGC's mold designs are practically the same as the designs used by everyone else in the rubber injection molding O & R industry. In that industry molds are designed primarily with respect to the specific part to be repaired. Therefore, the bulk of the information used to design the molds comes from part dimension information provided by the customer or third parties, which anyone else seeking to create a mold to repair a specific part could easily obtain. The other elements of the molds, such as the use and location of O-rings, the number and location of injection ports, and the use of layered pieces, are generally known and commonly used in the industry or are features that would naturally occur to someone seeking to design a mold.
Nothing about the specific combination of features in AGC's molds distinguished them in any significant and practical way from any other company's molds. Cf. Buffets, Inc. v. Klinke, supra, 73 F.3d 968 (holding buffet food recipes were not trade secrets because recipes were for dishes served in almost every buffet restaurant in America); Daktronics, Inc. v. McAfee, 599 N.W.2d 358, 362–63 (S.D.1999) (holding that device, comprised of radar gun, console and display, designed to detect and display baseball pitch speed and type was not trade secret because elements were known in industry, device could easily be duplicated and was little different than others already in use in industry). The evidence does not indicate, for example, that AGC was, because of its particular mold designs, able to make repairs more quickly, more cheaply or of a higher quality than anyone else in the industry. Cf. Enterprise Leasing Co. of Phoenix v. Ehmke, 197 Ariz. 144, 150, 3 P.3d 1064 (Ariz.App.1999) (holding customer service documents containing market research and outlining strategies for running rental car branch office based on such research was at least “slight advance over common knowledge” and thus constituted trade secret).
Moreover, the evidence does not show that AGC used its specific mold designs to perform repairs that no one else in the industry did. Cf. Elm City Cheese Co. v. Federico, supra, 251 Conn. 89 (holding “filler cheese” business operation was trade secret where cheesemaker's production of “filler cheese” that it sold to three customers for use in cheese products constituted special niche in local cheesemaking industry). Likewise, there is no evidence that AGC derived any monetary revenue or other benefit from its exclusive possession of the designs. Cf. Reingold v. Swiftships, Inc., 126 F.3d 645, 650 (5th Cir.1997) (finding trade secret where owner of ship mold costing $1 million and taking nine months to create derived economic value from lease agreement revenue). In other words, AGC's specific designs did not give it any advantage in the market that could be lost if those designs were revealed to the rest of the industry.
AGC's argument that the competitive advantage derived from the time and effort it put into creating the mold designs, which a competitor could avoid by obtaining AGC's designs, misses the point. The purpose of CUTSA is not merely to prevent theft. Rather, the purpose is to reward companies that have invested the time and money needed to create unique or superior methods and processes; CUTSA accomplishes this purpose by protecting, from potential usurpers, any competitive advantages that accrue to these companies as a result. Lydall, Inc. v. Ruschmeyer, 282 Conn. 209, 233–34, 919 A.2d 421 (2007). Just because a mold design took time and effort to create does not necessarily mean that the design conferred a competitive advantage within the contemplation of CUTSA. Moreover, that Baillargeon thought that AGC's mold designs would be useful to Twin also does not necessarily mean that they gave AGC a competitive advantage or even that such designs were actually useful to Twin.
Not only did AGC fail to show that it derived a competitive advantage from its mold designs “not being generally known or readily ascertainable,” it also failed to show that it made reasonable efforts to keep the designs secret. AGC argues that, after 1996, a legend was automatically printed onto the drawings noting that they were “confidential” and “proprietary” and that drawings created prior to 1996 were stored in a records room maintained by an attendant and locked during non-work hours. AGC also contends that tour participants were not allowed to view or copy the drawings and that it did not make them publicly available. AGC concludes that these efforts were reasonable under the circumstances.
The defendants dispute AGC's argument that it made reasonable efforts to preserve the secrecy of the mold designs. They contend that AGC allowed tour participants to view the molds without requiring confidentiality agreements and that AGC showed pictures of molds that displayed the allegedly secret features in promotional materials. Furthermore, the defendants argue that AGC failed to take action for months after it realized the drawings were missing.
“The question of whether, in a specific case, a party has made reasonable efforts to maintain the secrecy of a purported trade secret is by nature a highly fact-specific inquiry ․ What may be adequate under the peculiar facts of one case might be considered inadequate under the facts of another. According to § 35–51(d)(2), the efforts need only be reasonable under the circumstances ․” (Citation omitted; internal quotation marks omitted.) Elm City Cheese Co. v. Federico, supra, 251 Conn. 80.
Some common, but not required, methods for preserving secrecy include: “requiring employees to sign confidentiality agreements or otherwise advising them of the confidential nature of the process; posting of warning or cautionary signs, or placing legends on documents; taking precautions regarding visitors, by requiring them to sign confidentiality agreements, having them sign in, and shielding the process from their view; segregating information, so that no one person or written source discloses the entire manufacturing process; ․ using unnamed or coded ingredients [and keeping secret documents locked away].” (Internal quotation marks omitted.) Id., 79, 79 n.22, 80, citing 1 R. Milgrim, Trade Secrets (1999) § 104, pp. 1–178 through 1–189.
As AGC indicates, “absolute secrecy is not essential and the plaintiff does not abandon [its] secret by delivering it or a copy to another for a restrictive purpose, nor by a limited publication.” (Internal quotation marks omitted.) Plastic & Metal Fabricators, Inc. v. Roy, 163 Conn. 257, 268, 303 A.2d 725 (1972); accord 14 ULA, Civil Procedural and Remedial Laws, Uniform Trade Secrets Act with 1985 Amendments (2005) § 1, comment, p. 539 (“[C]ontrolled disclosure [of a trade secret] to employees and licensees is consistent with the requirement of relative secrecy”). By contrast, “the voluntary disclosure ․ of any alleged ‘trade secret’ as part of a business transaction without reservation or agreement of confidentiality prevents recognition of the information as a ‘trade secret.’ “ Turner v. Great American Opportunities, Inc., 716 S.W.2d 40, 44 (Tenn.App.1986); cf. Evans v. General Motors Corp., 51 Conn.Sup. 44, 56, 976 A.2d 84 [44 Conn. L. Rptr. 216] (2007) (“The law is well established that voluntary disclosure destroys the protection afforded a trade secret ․”).
The evidence shows that employees of AGC gave tours of its facility, with the approval of AGC's management, to customers, potential customers, and even competitors. No one had to sign a confidentiality agreement to take a tour. AGC gave these tours in order to market its capabilities. Anyone taking a tour would have access to AGC's actual molds, even if not the drawings for those molds. Baillargeon, who gave these tours, would explain how a rubber injection mold worked, including how the rubber entered into the mold and where it would fit. Many aspects of the molds were visible to participants, including the pry bar slots, injection ports and screw locations. He explained how AGC manufactured O-rings for use in the molds, showing participants AGC's stock of O-rings. Tour participants also saw the molds in use on occasion. The president of Twin himself took two tours. No one told him that anything visible on the tour was confidential, nor did he have to sign a confidentiality agreement. Moreover, shroud molds were visible in the presentations that Baillargeon distributed outside of the company.
Essentially, AGC put its mold designs on public display for marketing purposes, even if the actual drawings were not made available to the public. This was not a controlled and limited disclosure. This activity was inconsistent with the preservation of secrecy. Accordingly, the court finds that AGC is not likely to prevail on its CUTSA claim as to the mold designs.
The Design of the Rubber Injection Apparatus
The court finds that AGC has failed to demonstrate that it derived any economic value or competitive advantage from the design of its rubber injection apparatus. AGC argues that the economic value of its rubber injection apparatus derives from the logistical advantages of such apparatus, which were a product of AGC's time, effort and experimentation. Specifically, the claimed advantages included: that a user did not have to use an entire can of rubber, that there were no hoses that needed to be replaced after every use and that there was less cleanup necessary after use. AGC contends that its unique combination of commercially available components to create the apparatus makes the design of the apparatus a trade secret.
The defendants assert that there is no independent economic value deriving from the secrecy of the design of the apparatus. They argue that the design is an application of basic physics, i.e., applying rotary force using a rod to push rubber out of a gun, and that there are apparatuses of superior design on the market.
The law applicable to the issue of whether the mold designs provided AGC with economic value from not being generally known or readily ascertainable is equally applicable here. AGC created its apparatus, modified from a Semco gun, in only a week. Although AGC's apparatus wasted less rubber than some other available methods, the commercially available Dynamite Pump is unquestionably a superior rubber injection method. Thus, the apparatus does not give AGC a competitive advantage because it does not put AGC in any superior position in the market. Moreover, like the rubber injection molds, the apparatus is not a unique end product. Its function is the same as a Dynamite pump or any other type of rubber injection device used by all other companies in the industry: to inject liquid rubber into a mold. Therefore, it does not give AGC a competitive advantage in the market. Finally, there is no evidence that AGC derives any monetary revenue or other benefit from its exclusive possession of the apparatus.
The court also finds that the evidence presented shows that AGC failed to make reasonable efforts to preserve the secrecy of the design of its rubber injection apparatus. AGC contends that it made reasonable efforts to maintain the secrecy of the design of its rubber injection apparatus. It points out that any exposure that a member of the public had to the apparatus did not allow him or her to view every detail as to how it was operated. Furthermore, it contends that it forbade tour participants, who may have viewed the apparatus in use, from taking pictures or notes.
The defendants contend that AGC failed to make reasonable efforts to preserve the secrecy of the apparatus. They contend that AGC put pictures of the apparatus in its promotional materials, and that tour participants were allowed to come within mere feet of the apparatus as it was being used. A tour participant, the defendants argue, could see that the apparatus was driven by a threaded rod and that Baillargeon, as tour guide, explained how the apparatus worked.
Again, as to this issue, the same law applicable with respect to the mold designs applies to the apparatus design. The evidence demonstrates that AGC depicted its apparatus in promotional materials, including the presentation that Baillargeon gave to potential customers and others in the industry, showing many of its features, including: the air drill, the threaded rod, the metal bar and the nut. The presentation was approved by management, freely given and no viewer was required to sign a confidentiality agreement. With AGC's consent, Baillargeon gave tours of its facility to competitors and potential customers. During these tours, participants saw the apparatus in use from mere feet away. They could see that AGC specifically used an Acme threaded rod. Baillargeon also explained how the apparatus operated and explained how rubber was poured into a Semco cartridge before injection. AGC allowed these tours because it felt that showing its capabilities to potential customers would provide it with a marketing advantage. It did not ask any tour participant, including Peach, who took two tours, to sign a confidentiality agreement prior to taking the tour.
AGC never specifically indicated to Baillargeon or any other employee that its apparatus was a secret and should not be depicted in the course of marketing activities. No one in AGC management told Baillargeon that he could not showcase the apparatus or describe it in giving his presentations or in giving tours of the facility.
These facts indicate that AGC failed to make reasonable efforts to preserve the secrecy of the apparatus. Cf. Pressure Science, Inc. v. Kramer, 413 F.Sup. 618, 627–28 (D.Conn.1976) (finding failure to make reasonable effort to preserve secrecy of process of manufacturing C-seals where manufacturer failed to have procedure to inform employees that process was secret, where employees were allowed to give tours of facility to those with ability to reproduce process, and where employee giving tours was not required to sign confidentiality or non-disclosure agreement), aff'd, 551 F.2d 301 (2d Cir.1976).
The analogous case cited by AGC in support of its argument that it made reasonable efforts, Space Aero Products Co. v. R.E. Darling Co., 238 Md. 93, 208 A.2d 74, cert. denied, 382 U.S. 843, 86 S.Ct. 77, 15 L.Ed.2d 83 (1965), is distinguishable. In that case, R.E. Darling Co. (Darling) developed a process for manufacturing certain types of oxygen breathing hoses for military aircraft pilots, and became the only company producing and selling hoses of these types. Id., 102. It sold these hoses to the United States military. Id. Former employees of Darling formed another company, Space Aero Products Co. (Space Aero), which then began to produce the same hoses. Id. Space Aero submitted its hoses to the military and the military began purchasing hoses from Space Aero. Id., 103. The Court of Appeals of Maryland was faced with the question of whether the trial court was correct to grant a permanent injunction against Space Aero's production of the hoses on the basis that Space Aero misappropriated Darling's trade secret. See id., 104.
The Court found that Darling's process was a trade secret, in part because Darling had made reasonable efforts to keep the process secret. See id., 112. There are important differences between that case and the present. First, while Darling gave in-house demonstrations of the hose production process, there is no finding as to whether anyone taking tours or viewing the demonstrations executed confidentiality agreements; see id., 111–12. By contrast, the evidence shows that AGC did not require those viewing the apparatus to sign confidentiality agreements. Second, unlike in the present case, there was substantial evidence in Space Aero that Darling made its employees aware that the process was to be kept secret. Id., 110–11. Finally, unlike in the present case, there was no indication that Darling described the process in promotional materials freely sent outside of the company. See id., 110–12. Therefore, the court finds that AGC is not likely to prevail on its CUTSA claim as to the rubber injection apparatus.
The court finds that AGC has failed to prove that its menu prices provided it with economic value from not being generally known or readily ascertainable. AGC asserts that its menu prices are a trade secret because a competitor could gain an advantage over it by obtaining such prices. It bolsters its contention by noting that Twin's president admitted it could get a competitive advantage from having such prices and that Baillargeon would not have obtained the menu prices if they did not provide a competitive advantage. It also explains that menu prices are kept secret in order to prevent haggling by customers.
The defendants take the position that neither of them misappropriated menu prices because there is no evidence that Baillargeon ever obtained any menu pricing related to the PW2000/F117. Therefore, even if the menu prices gave AGC a competitive advantage, they argue, neither Twin nor Baillargeon could be liable under CUTSA.
A pricing structure may constitute a trade secret under CUTSA, in proper circumstances. See Smith v. Snyder, 267 Conn. 456, 463–64, 839 A.2d 589 (2004). To determine whether the menu prices provided AGC with economic value from not being generally known or readily ascertainable, the court applies the same law that it did with respect to the mold designs and the design of the apparatus. The problem with AGC's argument is that the record does not demonstrate what economic advantage, if any, arises by knowing the menu prices.
The price that AGC would charge a customer was the total of the menu prices for each repair adjusted by a markup or discount, if AGC felt an adjustment was warranted in that customer's case. If a customer wanted a per-repair breakdown of a quote, AGC provided the menu prices. AGC did not require that a customer or potential customer agree to keep price quotes, or even menu prices, confidential.
If a competitor knew AGC's menu prices, the competitor still would not know how AGC would adjust the total price for any particular customer, if at all. Without that other piece of information, a competitor could not guarantee that it could reliably undercut AGC's price with respect to any customer. Moreover, if a competitor wanted to undercut AGC's price, it could simply ask the customer what AGC quoted it, and then charge a lower price. The customer would be free to disclose any pricing information AGC gave to it. On the basis of the evidence presented, the court cannot determine what economic loss AGC would suffer if its menu prices were known in the industry.
The present case is distinguishable from the case cited by AGC, LCD Lighting, Inc. v. Voltarc, Inc., Superior Court, judicial district of New Haven, Docket No. CV 020462839 (March 24, 2003, Munro, J.). In LCD Lighting, Honeywell Corp., which was contracted by Boeing Corp. to construct the cockpit of the Boeing 777 aircraft, sought to contract with a company to produce a specific lamp known as a DU lamp to be used in the cockpit. Id. The only company that was able to create a DU lamp that met Honeywell's specifications was LCD Lighting, Inc. Id. Honeywell was unsatisfied with having only one supplier, however, so it sought to have Voltarc, Inc. produce the DU lamp as well. Id. John Andros, the vice president and general manager of LCD Lighting, learned of Honeywell's intent to add Voltarc as a supplier. Id. In his position, Andros was aware of, among other things, how much Honeywell wanted to pay for a DU lamp, how much LCD Lighting was charging Honeywell and the nature of LCD Lighting's cost structure, sales data and other pricing information. Id. Voltarc was able to successfully recruit Andros to leave his job to work for it. Id. Andros did not have a noncompete agreement with LCD Lighting. Id. As a monetary incentive, Voltarc agreed with Andros to increase his income if he were to undercut the prices of LCD Lighting and other customers. Id.
The court held that the pricing information constituted a trade secret. See id. It reasoned that, only because of Andros's experience with LCD Lighting was Voltarc able to ascertain exactly what LCD lighting charged for a DU lamp and what Honeywell was willing to pay. See id. It determined that Voltarc obtained an unfair advantage by being able to know at what price it would undercut LCD Lighting. See id.
The present case, as explained above, is markedly different. Twin, even if it did know all of AGC's menu prices, would not know exactly what AGC charged PWC for a set of rubber repairs (unless PWC told it) and could not know what it needed to charge to undercut that price. The knowledge of menu prices would not necessarily inform Twin what PWC wanted to pay for any particular set of repairs either.
Furthermore, AGC has failed to show that it took reasonable steps to preserve the secrecy of its menu prices. AGC argues that it took reasonable steps to preserve secrecy because it put its menu prices on a separate computer directory from other information, that it password protected the information and gave only six employees access to the information.
The defendants argue that AGC routinely revealed its menu prices to customers and potential customers upon request without seeking a confidentiality agreement. Further, they contend that AGC never told Baillargeon not to send out menu prices to a potential customer. The defendants argue that AGC made no effort to keep the menu prices secret as evidenced by their willingness to provide such information to a customer upon request.
The court finds that, under the relevant law as stated above, AGC failed to make reasonable efforts to preserve the secrecy of its menu prices because of its practice of unrestrictedly disclosing such prices upon request. As with the rubber injection apparatus, the question with respect to whether disclosure of a purported secret negates trade secret status is whether such disclosure is limited and controlled or public and unrestricted.
There is no evidence that, at the time Baillargeon was employed with AGC, anyone in AGC's management expressed to any employee or customer that its menu prices were confidential. The evidence shows that employees of AGC, including Baillargeon, routinely revealed menu prices to its customers upon request without requiring a confidentiality agreement. Consequently, it left the customers free to reveal such prices to competitors to attempt to negotiate a better deal, regardless of whether it was common practice for them to actually do so. AGC even revealed menu prices to Twin to facilitate the companies' joint marketing without expressing that such information was secret or requiring a confidentiality agreement.
The case cited by AGC, NewInno, Inc. v. Peregrim Development, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 01 0390074 (December 3, 2002, Stevens, J.) is distinguishable. That case involved, inter alia, a “sales database” containing information about the customers and business leads of the plaintiff, NewInno, Inc. Id. Unlike in the present case where AGC revealed menu prices to any customer who requested it without seeking to preserve its confidentiality, the information on NewInno's sales database was not generally distributed to customers, but any disclosure of the information for marketing purposes was “limited.” Id. Moreover, unlike in the present case, the company “insist[ed]” that employees sign non-disclosure agreements specifically stating that this information in the sales database was confidential. Id. Thus, the court finds that AGC is not likely to prevail on its CUTSA claim as to its menu prices.
Count Two: CUTPA Claim
In count two, AGC alleges that the defendants violated CUTPA based on (1) Baillargeon's theft and use of the drawings to create a competing O & R business and eventual destruction of the drawings, (2) Baillargeon's unauthorized access of SDS and (3) Baillargeon's theft of the information stored on a memory stick to help Twin build its competing business. For the reasons set forth below, the court concludes that AGC is likely to prevail on its CUTPA claim as to Baillargeon but not as to Twin.
General Statutes § 42–110b(a) provides: “No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce. Under General Statutes § 42–110g(a), “[t]he court may, in its discretion, ․, provide such equitable relief as it deems necessary or proper” to remedy a violation of CUTPA. The equitable relief available under that section includes injunctive relief. Jacques All Trades Corp. v. Brown, 57 Conn.App. 189, 197, 752 A.2d 1098 (2000).
Section 42–110g(a) provides in relevant part: “Any person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42–110b, may bring an action ․ to recover actual damages.” In order to maintain a CUTPA claim, a plaintiff must prove “that the defendant engaged in unfair or deceptive acts or practices in the conduct of any trade or commerce and that as a result of the use of the act or practice prohibited by § 42–110b(a), the plaintiff suffered an ascertainable loss of money or property.” (Internal quotation marks omitted.) D'Angelo Development & Construction Corp. v. Cordovano, 121 Conn.App. 165, 181, 995 A.2d 79, cert. denied, 297 Conn. 923, 998 A.2d 167 (2010).
As a preliminary matter, Baillargeon argues that AGC's CUTPA claim is preempted by CUTSA because it is based upon the alleged misappropriation of trade secrets. The court disagrees. General Statutes § 35–57 provides in relevant part: “Unless otherwise agreed by the parties, the provisions of [CUTSA] supersede any conflicting tort, restitutionary, or other law of this state pertaining to civil liability for misappropriation of a trade secret.” Neither the Appellate Court nor the Supreme Court has spoken on the issue of whether CUTPA claims are preempted by CUTSA.
Baillargeon may not have it both ways. The court has already agreed with his argument that none of the three categories of information constitutes a trade secret. Baillargeon may not now argue that they are actually trade secrets and that AGC is limited to CUTSA in seeking redress for their theft. Because AGC's CUTPA claim is not based on misappropriation of trade secrets, it cannot be preempted by CUTSA.
AGC argues that Baillargeon and Twin conspired to take advantage of AGC's planned July 2009 layoff by having Baillargeon remove AGC's confidential and proprietary information so that Twin could hire him and make use of such information to set up a competing O & R business. AGC contends that Baillargeon's removal of the binder containing the drawings and the memory stick, Twin's subsequent reliance on such items to set up its business, and Baillargeon's use of SDS to obtain AGC's pricing information all violated CUTPA.
The defendants deny that there was a conspiracy to obtain AGC's confidential and proprietary information. They argue that there is no evidence that AGC suffered any loss because of Baillargeon's actions, and even if there was such a loss, it was avoidable and thus not recoverable under CUTPA. They contend that there was no evidence that anyone at Twin relied on any materials stored on the memory stick or on any information in SDS and that any dimensions Dussault obtained from AGC's drawings were readily available from other sources.
The evidence does not show that Baillargeon and Twin conspired, prior to Baillargeon's hiring by Twin, to wrongfully obtain property from AGC to use in creating a competing business. Although Baillargeon knew about the impending layoff, he did not know that he would be included in the reduction. AGC does not argue to the contrary. Moreover, the evidence does not show that at any point prior to his hiring at Twin, Baillargeon and anyone from Twin discussed the prospect of Twin developing a rubber injection molding O & R business. Finally, Peach did not know that Baillargeon had property belonging to AGC at the time he hired him. Therefore, the court must analyze the CUTPA claim against Baillargeon and Twin separately.
The court finds that AGC is likely to prevail on its CUTPA claim against Baillargeon. First, the evidence supports the conclusion that Baillargeon committed an unfair or deceptive trade practice. “It is well settled that in determining whether a practice violates CUTPA [the Supreme Court has] adopted the criteria set out in the ‘cigarette rule’ by the federal trade commission for determining when a practice is unfair: (1)[W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise—whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [competitors or other businessmen] ․ All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.” (Internal quotation marks omitted.) Fink v. Golenbock, 238 Conn. 183, 215, 680 A.2d 1243 (1996). “It is well settled that whether a defendant's acts constitute ․ deceptive or unfair trade practices under CUTPA, is a question of fact for the trier ․” (Internal quotation marks omitted.) Harley v. Indian Spring Land Co., 123 Conn.App. 800, 834, 3 A.3d 992 (2010).
Simply, Baillargeon stole drawings belonging to AGC, his former employer, and used them to assist Twin in establishing a competing business. This conduct strongly implicates the first prong of the cigarette rule because, not only is there a public policy against theft generally; see, e.g., General Statutes § 52–564; 11 there is a specific public policy that protects property of an employer from theft and misuse by a former employee. Under common-law principles, “[a]n agent has a duty ․ not to use property of the principal for the agent's own purposes or those of a third party and ․ not to use or communicate confidential information of the principal for the agent's own purposes or those of a third party.” 2 Restatement (Third), Agency § 8.05, p. 314 (2006). Importantly, “[t]ermination of [the] agency relationship does not end an agent's duties regarding property of the principal. A former agent who continues to possess property of a principal has a duty to return it ․” Id., § 8.05, comment b, p. 315. “For purposes of this rule, ‘property’ of a principal is defined broadly and includes intangible as well as tangible assets.” Id., p.316.
Baillargeon's conduct also clearly implicates the second prong. The theft and misuse of another's property constitutes “immoral, unethical, oppressive, or unscrupulous” conduct, as Connecticut courts have repeatedly held. See, e.g., Votto v. American Car Rental, Inc., 273 Conn. 478, 485, 871 A.2d 981 (2005) (holding that misuse by rental car company of customer's signature on credit card slip to make unauthorized charges “was without question unscrupulous, immoral and oppressive”); Blackwell v. Mahmood, 120 Conn.App. 690, 704, 992 A.2d 1219 (2010) (upholding trial court finding that deliberate refusal by real estate seller to return deposit money totaling $40,000 to buyer, despite seller's knowledge that buyer was entitled to such under financing contingency clause, was “immoral, unethical and unscrupulous”); Utzler v. Braca, 115 Conn.App. 261, 279–81, 972 A.2d 743 (2009) (upholding finding that conduct of real estate developer toward investor was “unethical and unscrupulous,” where developer made fraudulent misstatement as to profit on previous project to induce investment by investor, and where developer misused invested funds for personal and unrelated business purposes without informing investor).
As discussed more fully below, in the analysis of AGC's CUTPA claim as to Twin, the third prong is not met because AGC could have avoided the injury it suffered. Nevertheless, because of the high degree to which Baillargeon's conduct meets the first two prongs, the court finds that AGC will likely establish that Baillargeon committed an unfair or deceptive trade practice.
Baillargeon fails to support his contention that the removal of property containing information belonging to another cannot be a CUTPA violation unless the removal deprives the other of access to the information contained in the property. Coria v. Libert, Superior Court, judicial district of New Haven, Docket No. CV 97 0400353 (July 9, 1997, Hodgson, J.), cited by Baillargeon, does not stand for this proposition.
Second, the evidence supports the conclusion that the unfair or deceptive trade practice caused harm to AGC. The “harm” remediable by CUTPA is an “ascertainable loss.” Artie's Auto Body, Inc. v. Hartford Fire Ins. Co., 287 Conn. 208, 217–18, 947 A.2d 320 (2008). “An ‘ascertainable loss is a loss that is capable of being discovered, observed or established ․ The term ‘loss' necessarily encompasses a broader meaning than the term ‘damage,’ and has been held synonymous with deprivation, detriment and injury ․ To establish an ascertainable loss, a plaintiff is not required to prove actual damages of a specific dollar amount ․ [A] loss is ascertainable if it is measurable even though the precise amount of the loss is not known ․
“A plaintiff also must prove that the ascertainable loss was caused by, or a result of, the prohibited act ․ When plaintiffs seek money damages, the language ‘as a result of’ in § 42–110g(a) requires a showing that the prohibited act was the proximate cause of a harm to the plaintiff ․ [P]roximate cause is [a]n actual cause that is a substantial factor in the resulting harm ․ The question to be asked in ascertaining whether proximate cause exists is whether the harm which occurred was of the same general nature as the foreseeable risk created by the defendant's act ․
“When plaintiffs seek only equitable relief [however], ascertainable loss and causation may be proven by establishing, through a reasonable inference, or otherwise, that the defendant's unfair trade practice has caused the plaintiff [injury] ․ The fact that a plaintiff fails to prove a particular loss or the extent of the loss does not foreclose the plaintiff from obtaining injunctive relief and [attorney's] fees pursuant to CUTPA if the plaintiff is able to prove by a preponderance of the evidence that an unfair trade practice has occurred and a reasonable inference can be drawn by the trier of fact that the unfair trade practice has resulted in a loss to the plaintiff.” (Citations omitted; internal quotation marks omitted.) Id., 218–19.
Because Baillargeon gave Twin AGC's drawings, some of which Dussault referenced in creating Twin's drawings, Twin was subsequently able to, at the expense of AGC, gain a minor, albeit ascertainable, “head start” in setting up Twin's rubber injection molding O & R business. Each dimension that Dussault took from an AGC drawing was one for which he did not have to spend time searching in another source. Thus, Twin saved time creating the drawings, which allowed it to set up their business more quickly than it normally would have. Consequently, it obtained PWC's business more quickly than it otherwise would have, thereby causing an ascertainable financial loss to AGC. This ascertainable loss is represented by the business that AGC would have received from PWC in the period of time after PWC actually switched its business to Twin and before PWC would have switched to Twin had Baillargeon never given the drawings to Dussault.12
Baillargeon's reliance on McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558, 569–70, 473 A.2d 1185 (1984), as establishing the existence of a requirement that an ascertainable loss be “unavoidable” is inapposite. That case discusses such requirement in context of the third prong of the cigarette rule and not the ascertainable loss requirement.
Although the evidence shows that Baillargeon likely violated CUTPA, it does not support the claim that Twin violated CUTPA. First, the evidence does not establish that anyone at Twin relied upon the information on the memory stick and the pricing information accessed via SDS. It only establishes that Baillargeon revealed this information to employees of Twin, but there is no evidence as to what Twin did with the information. Thus, the evidence does not show that Baillargeon's revealing of such information proximately caused any ascertainable loss to AGC. Accordingly, AGC has failed to demonstrate that it is likely to prevail on a CUTPA claim against Twin based on these categories of information.
Second, the evidence shows that Twin was, at most, negligent when Dussault relied on the drawings Baillargeon provided without inquiring as to how he obtained them. Dussault put substantial time and effort over several months creating Twin's drawings. He did not merely copy AGC's drawings, rather he relied upon them for only six dimensions on three of twenty total drawings. The drawings were not stamped “confidential” or “proprietary.” Importantly, he also relied on other, legitimately obtained, third-party sources including: the engine manual, part blueprints, the parts themselves, and other drawings previously obtained by Twin depicting stator assembly molds for PW2000/F117 engine parts. Thus, the mere fact that Baillargeon gave him drawings that happened to be from AGC does not by itself establish that Dussault, and by extension Twin, actually knew that Baillargeon had wrongfully obtained such drawings.
This case is analogous to A–G Foods, Inc. v. Pepperidge Farm, Inc., 216 Conn. 200, 579 A.2d 69 (1990). In that case Pepperidge Farm, Inc. had a consignment agreement with Anthony Spinelli, a distributor, which gave Spinelli the right to distribute Pepperidge Farm's bakery products to stores in a particular area. Id., 204. Spinelli would purchase Pepperidge Farm's products and resell them to retail groceries for a profit. Id., 204–05. Pepperidge Farm was unaware of which products Spinelli sold in which stores, although Spinelli was expected to keep records of his purchases and sales and Pepperidge Farm retained the right to inspect those records. Id.
A–G Foods, Inc., one of Spinelli's customers, discovered that Spinelli had taken advantage of the “lax check-in procedure” at A–G Foods by altering their invoices to inflate the quantity of goods he had delivered. Id. 205. Thereby, Spinelli fraudulently induced A–G Foods to pay him for products he had not delivered, an offense for which he was eventually arrested. Id., 205. Pepperidge Farm was unaware of this and received no overpayment as a result. Id.
A–G Foods brought, inter alia, a CUTPA claim against Pepperidge Farm on the basis that it failed to adequately supervise Spinelli and failed to discover Spinelli's fraud. Id., 214. Pepperidge Farm appealed the trial court's upholding of the jury's verdict in favor of A–G Foods on this claim. Id. The Supreme Court held that Pepperidge Farm's negligence in failing to exercise its power to inspect Spinelli's books and discover his fraud violated neither the second nor the third prong of the “cigarette rule.” See id., 216–17. It then held that Pepperidge Farm could not have violated CUTPA because, unless the second or third prong of the “cigarette rule” is met, a CUTPA claim cannot be maintained when grounded solely in negligent conduct. Id., 217.
Under A–G Foods, if the second or third prongs are met, then it might be possible to find that Twin violated CUTPA merely by failing to discover Baillargeon's wrongful conduct, i.e., failing to discover that the AGC drawings that Dussault was using were wrongfully obtained by Baillargeon. The court finds, however, that neither the second nor the third prong is met.
In A–G Foods, the Supreme Court flatly stated, in terms of the second prong, that “[c]learly Pepperidge Farm's negligence did not constitute an ‘immoral, unethical, oppressive or unscrupulous' practice.” Id., 216–17. Similarly, the court finds that Twin's mere failure to discover Baillargeon's wrongful conduct did not meet the second prong of the cigarette rule.
As to the third prong, the Supreme Court in A–G Foods noted that, to come under that prong, the injury must be one that “that consumers themselves could not reasonably have avoided.” (Internal quotation marks omitted.) Id., 216. Noting that the jury had found A–G Foods 40 percent at fault, it held that A–G Foods could have reasonably avoided the injury. See id., 217. As evidence of A–G Foods' negligence, the Court stated that A–G Foods had lax check-in procedures, Spinelli had defrauded no other grocery stores and A–G Foods' employees had failed to follow proper procedures for taking deliveries. See id., 217 n.10.
In the present case, the court finds that AGC reasonably could have avoided its injury by taking steps that would have either prevented the theft or alerted Twin to Baillargeon's unauthorized possession of the drawings. Although AGC had “proprietary” and “confidential” stamps, it did not stamp any of the drawings taken by Baillargeon. Although Holder and Payne learned that the binder in which the drawings were kept was missing the day after Baillargeon was terminated, AGC made no attempt to contact Baillargeon or anyone at Twin to inquire about the missing binder for six months. Furthermore, Waller knew that Baillargeon had attempted to take the binder on his last day and had, at first, prevented him from doing so. But, instead of putting the binder in a safe place where he could not access it, she merely put it back on the shelf in Baillargeon's office, allowing him another opportunity to take it. Therefore, the court finds that the third prong is not met.
On the authority of A–G Foods, therefore, AGC has failed to demonstrate that it is likely to prevail on its CUTPA claim against Twin. As discussed above, however, AGC has shown that it is likely to prevail on its CUTPA claim as to Baillargeon.
Count Three: Breach of Fiduciary Duty
In count three, AGC alleges that Baillargeon breached his fiduciary duty by taking its drawings, the documents on the memory stick and pricing information and giving these items to Twin for use in creating Twin's rubber injection molding O & R business. Because the court has already found that AGC is likely to prevail on its CUTPA claim against Baillargeon, it need not discuss this count.
Count Four: Tortious Interference with Business and Contractual Relations
In count four, AGC alleges that the defendant's tortiously interfered with its business relationship with PWC. The court will only analyze this claim as to Twin, because AGC has already shown it is likely to prevail on the merits of its CUTPA claim as to Baillargeon. The court finds that the AGC will not likely prevail on its tortious interference claim against Twin.
“A successful action for tortious interference with business expectancies requires the satisfaction of three elements: (1) a business relationship between the plaintiff and another party; (2) the defendant's intentional interference with the business relationship while knowing of the relationship; and (3) as a result of the interference, the plaintiff suffers actual loss.” (Internal quotation marks omitted.) American Diamond Exchange, Inc. v. Alpert, 101 Conn.App. 83, 90, 920 A.2d 357, cert. denied, 284 Conn. 901, 931 A.2d 261 (2007).
“Our case law has recognized that not every act that disturbs a business expectancy is actionable. [A] claim is made out [only] when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself ․ Accordingly, the plaintiff must plead and prove at least some improper motive or improper means ․ [F]or a plaintiff successfully to prosecute such an action it must prove that ․ the defendant was guilty of fraud, misrepresentation, intimidation or molestation ․, or that the defendant acted maliciously ․ In the context of a tortious interference claim, the term malice is meant not in the sense of ill will, but intentional interference without justification ․ In other words, the [plaintiff] bears the burden of alleging and proving lack of justification on the part of the [defendant] ․ Our Supreme Court has recognized that the legal theory of tortious interference with a business expectancy encompasses a broad range of behavior.” (Citations omitted; internal quotation marks omitted.) Id., 90–91.
There is no bright line rule as to whether an actor's “interference” is improper or without justification. Rather, courts consider several factors elucidated in the Restatement (Second) of Torts, § 767, including: “(a) the nature of the actor's conduct, (b) the actor's motive, (c) the interests of the other with which the actor's conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor's conduct to the interference and (g) the relations between the parties.” (Internal quotation marks omitted.) Id., 91 n.4.
As it argued in support of its CUTPA claim, AGC contends that the defendants conspired to obtain AGC's confidential and proprietary information and use it to set up a competing business for the purpose of taking PWC's business from AGC. It argues that this conspiracy showed the defendant's intent to interfere and that they used improper means or had improper motives. Twin contends that the evidence is insufficient to show that its conduct rises to the level of an intentional interference because AGC failed to show that it had improper or malicious motives or used improper means. Twin argues that it, acting as a competitor, merely solicited O & R work from a company who happened to be a customer of AGC.
As noted above with respect to AGC's CUTPA claim, the evidence does not support the conclusion that Twin and Baillargeon conspired to obtain AGC's information so Twin could use it to build its rubber injection molding O & R business. Twin created a business that competed with AGC's largely through its substantial investment of time and effort. The evidence does show, however, that Twin obtained three of AGC's mold drawings and used them to learn six of the multitude of dimensions necessary to create a functional set of drawings. As the court concluded above, this gave Twin nothing more than a minor head start at the expense of AGC in creating the business.
Notwithstanding that Twin got this head start, there is no evidence that Twin acted fraudulently or made misrepresentations in obtaining PWC as a customer. Twin's management did not even know, at the time, that Baillargeon wrongfully possessed the drawings he gave to Dussault. There is also no evidence that Twin acted with malice toward AGC. On the contrary, the two companies had a harmonious and mutually beneficial relationship. Twin, in soliciting a customer, was merely acting as a competitor in a free market, an action that this state has a public policy interest in promoting. See Electronics Associates, Inc. v. Automatic Equipment Development Corp., 185 Conn. 31, 34, 440 A.2d 249 (1981) (stating that public policy supports “encouraging full, fair, and free economic competition”). It was not wrong of Twin to solicit PWC as a customer simply because Twin may have relied on a few of AGC's drawings to create its business more quickly than it would have otherwise. The evidence does not, therefore, support the conclusion that Twin's entry into the rubber injection molding O & R business was “improper” or “without justification.”
Irreparable Harm for which There Is No Adequate Remedy at Law
Because AGC has failed to demonstrate that it will likely prevail against Twin on any of its claims, the application survives only to the extent AGC seeks relief against Baillargeon. Next, the court will consider whether AGC has shown that it will suffer irreparable harm for which there is no adequate remedy at law if Baillargeon is not enjoined. The court finds that AGC has met these requirements.
AGC argues that, because it seeks a temporary injunction pursuant to statutory authority, including CUTPA, it need not make a specific showing of the probability of irreparable harm for which there is no adequate remedy at law. Nevertheless, AGC contends that it will suffer such harm if the conduct of the defendants is not enjoined. Specifically, AGC asserts that the wrongful conduct of the defendants has caused it to lose its competitive advantage in the marketplace, resulting in a present loss of nearly 10 percent of its business. If not enjoined, AGC argues that the defendants, who do not acknowledge that their conduct was wrong, will continue to benefit from such conduct by (1) seeking to obtain rubber injection molding O & R work from other customers of AGC and (2) expanding Twin's O & R business into other engines also serviced by AGC. Furthermore, AGC contends that it has not uncovered the full extent of the defendants' wrongdoing and that the injunction is necessary to protect it from the fruits of such unknown conduct.
Baillargeon argues that there is no appellate authority standing for the proposition that a plaintiff seeking an injunction pursuant to statutory authority need not prove irreparable harm for which there is no adequate remedy at law. He also argues that any harm suffered by AGC fails to meet the requirement because AGC has calculated the dollar amount of the loss, which can be compensated by damages. Furthermore, Baillargeon contends that he has no more of AGC's property and that there is no risk of future harm.
“Irreparable harm need not be shown in a statutory injunction case ․ [T]he enactment of the statute by implication assures that no adequate alternative remedy exists and that the injury was irreparable, that is, the legislation was needed or else it would not have been enacted ․ Proof of a violation, however, does not deprive the court of discretion and does not obligate the court automatically to grant every injunction sought for every violation.” (Citations omitted; internal quotation marks omitted.) Dept. of Transportation v. Pacitti, 43 Conn.App. 52, 58, 682 A.2d 136, cert. denied, 239 Conn. 937, 684 A.2d 707 (1996); accord Burns v. Barrett, 212 Conn. 176, 193–94, 561 A.2d 1378 (1989) (“[W]here a statute expressly provides for equitable remedies in addition to the ordinary legal ones, it may be presumed that there is no adequate legal remedy, because the legislature would not have provided the additional remedies if they were not needed” [emphasis added] ); cert. denied, 493 U.S. 1003, 110 S.Ct. 563, 107 L.Ed.2d 558 (1989). Thus, a statute providing for equitable relief, such as § 42–110g(a), essentially creates a presumption that an injured party has suffered irreparable harm for which there is no adequate remedy at law. Such a statute does not require the court to make this finding.
The evidence does not rebut the presumption that AGC has proven irreparable harm for which there is no adequate remedy at law. The binder contained many more drawings than the three that Baillargeon claimed he took. The court cannot, however, determine exactly how many drawings were in the binder, in no small part due to Baillargeon's destruction of drawings after being told to return them to AGC. The court also notes that discovery has not yet been completed in this case. Thus, the possibility exists that Baillaregon retains property of AGC and could continue to use such property to give Twin an unfair head start with respect to other engine parts repaired by AGC.
Furthermore, if Baillargeon is free to continue to use AGC's property without fear of penalty, AGC is left exposed potentially to a series of recurring violations that might result in the loss of additional revenue to it. Even though each of those violations may be remedied by damages, the court is empowered to fashion equitable relief to prevent the need to bring recurring claims. See Berm v. Olson, 183 Conn. 337, 342–43, 439 A.2d 357 (1981). Therefore, the court finds that AGC has demonstrated irreparable injury for which there is no adequate remedy at law.
Balance of Equities
AGC argues that injunctive relief is necessary to prevent AGC from further losses of business. It also argues that any harm to Twin is acceptable because its business was based on its wrongful use of AGC's property and Bailiargeon would still be able to use his marketing skills to work with Twin in any capacity that does not compete with it.
The defendants argue that an injunction would cause it to sever a legitimate and voluntary business relationship with a customer and to violate its contracts with that customer. Moreover, the injunction would not force PWC to resume business with AGC. If Baillargeon is enjoined from working on rubber injection molding O & R, Twin would lose its key contact with PWC.
The issue to be determined with respect to this element is whether the harm that AGC would suffer if the injunction were denied outweighs the harm that would befall Baillargeon if it were granted. See Griffin Hospital v. Commission on Hospitals & Health Care, 196 Conn. 451, 457, 493 A.2d 229 (1985); Cavallo v. SK Pest Elimination, Superior Court, judicial district of New Haven, Docket No. CV 10 6010095 (April 30, 2010, Keegan, J.).
The court finds that the balance of equities supports an injunction that is more limited in scope than that which AGC requests. In essence, AGC requests that Baillargeon be enjoined from three acts: (1) continuing employment with Twin in any capacity that competes with AGC; (2) the solicitation of any customer of AGC with respect to the rubber injection molding O & R business; and (3) the acquiring, using or disclosing of any trade secrets, confidential information or proprietary materials belonging to AGC.
The court finds that the balance of equities does not favor enjoining Baillargeon's employment with Twin in competition with AGC. The evidence shows that Baillargeon stole property belonging to AGC believing it would help Twin's establishment of an O & R business. Although Baillargeon thought that having the property would be an immense help to Twin, the real impact of Baillargeon's actions was minor. Twin lawfully invested substantial time and effort in creating its business and its solicitation of PWC was not in itself improper. Baillargeon, in the mere act of seeking and obtaining employment with Twin, violated no rights of AGC. By contrast, denying Baillargeon the ability to make use of his valuable contacts with PWC and his knowledge of and experience in the rubber injection molding O & R business would unduly affect Twin. The court therefore finds that the harm from enjoining Baillargeon's employment with Twin in competition with AGC would be disproportionate to the harm to be avoided.
Furthermore, for the same reasons, the court also finds that an injunction of Baillargeon from soliciting any customers of AGC is not supported by the balance of the equities. Again, Baillargeon is under no legal obligation not to compete with AGC or not to use his marketing skills or his relationship with customers to help his new employer. The wrong here is the misuse of AGC's property in creating the competing business, which led to Twin obtaining merely a head start. The harm caused by such an injunction would be disproportionate to the harm to be remedied.
The court finds, however, that an order enjoining Baillargeon from using or disclosing property and confidential or proprietary information belonging to AGC, if he has any, is justified by the balance of the equities. Baillargeon has no legal right and thus no legitimate interest in using property and confidential or proprietary information belonging to AGC to benefit Twin's competing business. Such an injunction would prevent continuing violations of AGC's property rights.
CONCLUSION AND ORDER
On the basis of the above reasoning, the court finds that AGC will likely prevail on its CUTPA claim against Baillargeon, that AGC will suffer irreparable harm for which there is no adequate remedy at law and that the balance of the equities favors a temporary injunction to the limited extent discussed above. The court also finds, however, that AGC has failed to prove entitlement to a temporary injunction against Twin because AGC has failed to show that it is likely to prevail on any of its claims against Twin.13 Thus, the court grants AGC's application in part and denies it in part.
Accordingly, the court orders the following: Until such time as judgment is rendered in this matter or AGC's claims against him are otherwise resolved, Baillargeon, to the extent he retains any unlawfully obtained property of AGC, is enjoined from making any use of such property in competition with AGC or disclosing the same to Twin or third parties and is ordered to immediately return any such property to AGC.
BY THE COURT
FN1. Some of the relevant documents have been ordered sealed, including: AGC's proposed findings of fact, Twin's posthearing brief and proposed findings of fact and Baillargeon's posthearing brief. The parties have also filed a redacted copy of each of these documents.. FN1. Some of the relevant documents have been ordered sealed, including: AGC's proposed findings of fact, Twin's posthearing brief and proposed findings of fact and Baillargeon's posthearing brief. The parties have also filed a redacted copy of each of these documents.
FN2. A “shroud” is a metal covering that has an inner and outer portion. The inner and outer shrouds are connected to each other by vanes to form a “stator,” which is a stationary part within the aircraft engine.. FN2. A “shroud” is a metal covering that has an inner and outer portion. The inner and outer shrouds are connected to each other by vanes to form a “stator,” which is a stationary part within the aircraft engine.
FN3. These drawings were later stamped as confidential as part of the discovery process in this case.. FN3. These drawings were later stamped as confidential as part of the discovery process in this case.
FN4. The materials repair and overhaul, or MRO, business is essentially another name for the O & R business.. FN4. The materials repair and overhaul, or MRO, business is essentially another name for the O & R business.
FN5. A mold is a type of tool.. FN5. A mold is a type of tool.
FN6. AGC argues that it is not required to prove the existence of irreparable harm for which there is no adequate remedy at law for injunctions sought under statutory authority such as CUTPA or CUTSA. This issue will be discussed below.. FN6. AGC argues that it is not required to prove the existence of irreparable harm for which there is no adequate remedy at law for injunctions sought under statutory authority such as CUTPA or CUTSA. This issue will be discussed below.
FN7. Exceptions are granted for temporary injunction decisions “[in cases] arising out of labor disputes; General Statutes § 31–118; French v. Amalgamated Local Union 376, 203 Conn. 624, 628 n.6, 526 A.2d 861 (1987); [and in cases] involving matters of substantial public interest. General Statutes § 52–265a; Laurel Park, Inc. v. Pac, 194 Conn. 677, 678 n.1, 485 A.2d 1272 (1984).” (Internal quotation marks omitted.) Clinton v. Middlesex Mutual Assurance Co., supra, 37 Conn.App. 270 n.1. Neither General Statutes § 35–52, which provides for injunctive relief in under CUTSA, nor General Statutes § 42–110g(a), which provides for equitable relief under CUTPA, explicitly permits appeals of temporary injunction decisions.. FN7. Exceptions are granted for temporary injunction decisions “[in cases] arising out of labor disputes; General Statutes § 31–118; French v. Amalgamated Local Union 376, 203 Conn. 624, 628 n.6, 526 A.2d 861 (1987); [and in cases] involving matters of substantial public interest. General Statutes § 52–265a; Laurel Park, Inc. v. Pac, 194 Conn. 677, 678 n.1, 485 A.2d 1272 (1984).” (Internal quotation marks omitted.) Clinton v. Middlesex Mutual Assurance Co., supra, 37 Conn.App. 270 n.1. Neither General Statutes § 35–52, which provides for injunctive relief in under CUTSA, nor General Statutes § 42–110g(a), which provides for equitable relief under CUTPA, explicitly permits appeals of temporary injunction decisions.
FN8. UTSA is a uniform act, the general purpose of which is “to make uniform the law with respect to the subject of this [act] among states enacting it.” (Internal quotation marks omitted.) Evans v. General Motors Corp., 277 Conn. 496, 513, 893 A.2d 371 (2006), quoting General Statutes § 35–58. With respect to a statute based on a uniform act, the Supreme Court looks to case law in other jurisdictions adopting the act for aid in interpreting the statute. See Friezo v. Friezo, 281 Conn. 166, 187–88, 914 A.2d 533 (2007); see also Evans v. General Motors Corp., supra, 513–15 (noting that its finding of constitutional right to jury trial in CUTSA case was consistent with law of other UTSA jurisdictions, which provide for jury trials). Accordingly, the court will cite to cases from other CUTSA jurisdictions when there is no adequate Connecticut case law standing for a particular proposition.. FN8. UTSA is a uniform act, the general purpose of which is “to make uniform the law with respect to the subject of this [act] among states enacting it.” (Internal quotation marks omitted.) Evans v. General Motors Corp., 277 Conn. 496, 513, 893 A.2d 371 (2006), quoting General Statutes § 35–58. With respect to a statute based on a uniform act, the Supreme Court looks to case law in other jurisdictions adopting the act for aid in interpreting the statute. See Friezo v. Friezo, 281 Conn. 166, 187–88, 914 A.2d 533 (2007); see also Evans v. General Motors Corp., supra, 513–15 (noting that its finding of constitutional right to jury trial in CUTSA case was consistent with law of other UTSA jurisdictions, which provide for jury trials). Accordingly, the court will cite to cases from other CUTSA jurisdictions when there is no adequate Connecticut case law standing for a particular proposition.
FN9. “Improper means” as defined by § 35–51(a), “includes theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means, including searching through trash.”. FN9. “Improper means” as defined by § 35–51(a), “includes theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means, including searching through trash.”
FN10. This result logically follows from the premise that, under General Statutes § 35–51(d)(1), a competitive advantage must “[d]erive ․ from,” i.e., be caused by, an item of information not being generally known or readily ascertainable. If the cause were to be removed, then the effect would fail to occur, i.e., the competitive advantage would disappear if the item of information were to be made known.. FN10. This result logically follows from the premise that, under General Statutes § 35–51(d)(1), a competitive advantage must “[d]erive ․ from,” i.e., be caused by, an item of information not being generally known or readily ascertainable. If the cause were to be removed, then the effect would fail to occur, i.e., the competitive advantage would disappear if the item of information were to be made known.
FN11. General Statutes § 52–564 provides: “Any person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner treble his damages.”. FN11. General Statutes § 52–564 provides: “Any person who steals any property of another, or knowingly receives and conceals stolen property, shall pay the owner treble his damages.”
FN12. To put this concretely, assume for the sake of illustration only that Twin's rubber injection molding O & R business only became fully operational on March 1, 2010, at which time PWC diverted its business to Twin from AGC. Now, assume, again for the sake of illustration only, that without saving time by using AGC's drawings, Twin's business would not have become fully operational until April 1, 2010, and only then would PWC have diverted its business to Twin. The ascertainable loss to AGC in this hypothetical is represented by all the business PWC would have sent to AGC between March 1 and April 1, 2010, had Baillargeon never shown AGC's drawings to Twin.. FN12. To put this concretely, assume for the sake of illustration only that Twin's rubber injection molding O & R business only became fully operational on March 1, 2010, at which time PWC diverted its business to Twin from AGC. Now, assume, again for the sake of illustration only, that without saving time by using AGC's drawings, Twin's business would not have become fully operational until April 1, 2010, and only then would PWC have diverted its business to Twin. The ascertainable loss to AGC in this hypothetical is represented by all the business PWC would have sent to AGC between March 1 and April 1, 2010, had Baillargeon never shown AGC's drawings to Twin.
FN13. Because the court has made this finding with respect to Twin, it need not consider the contention, made solely by Twin, that AGC's application is barred by laches.. FN13. Because the court has made this finding with respect to Twin, it need not consider the contention, made solely by Twin, that AGC's application is barred by laches.
Prescott, Eliot D., J.
Was this helpful?