Am. Air Filter Co. v. Price, 2018 NCBC 68.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF WAKE 16 CVS 13610
AMERICAN AIR FILTER COMPANY, INC. d/b/a AAF INTERNATIONAL, OPINION AND ORDER ON Plaintiff, PLAINTIFF’S MOTION FOR PARTIAL SUMMARY JUDGMENT, v. DEFENDANTS’ MOTION FOR SAMUEL C. PRICE, JR. and SUMMARY JUDGMENT, AND CAMFIL USA, INC. d/b/a CAMFIL DEFENDANTS’ MOTION TO STRIKE AMERICAS,
Defendants.
THIS MATTER comes before the Court on Plaintiff American Air Filter
Company, Inc.’s Motion for Partial Summary Judgment (ECF No. 44); Defendants
Samuel C. Price, Jr. and Camfil USA, Inc.’s Motion for Summary Judgment (ECF No.
48) (collectively with Plaintiff’s Motion for Partial Summary Judgment, the
“Motions”); and Defendants’ Motion to Strike (“Motion to Strike”; ECF No. 74).
THE COURT, having considered the Motions and the Motion to Strike, the
briefs in support of and in opposition to the Motions and the Motion to Strike, the
evidentiary materials filed by the parties, the arguments of counsel at the hearing,
and other appropriate matters of record, concludes that the Motion to Strike should
be DENIED, and that the Motions should be GRANTED, in part, and DENIED, in
part, in the manner and for the reasons set forth below.
Young Moore and Henderson, P.A. by Christopher A. Page and Jonathan L. Crook for Plaintiff American Air Filter Company, Inc.
Smith Moore Leatherwood LLP by Jeffrey R. Whitley and George J. Oliver for Defendants Samuel C. Price, Jr. and Camfil USA, Inc. McGuire, Judge.
FACTUAL AND PROCEDURAL BACKGROUND
1. While findings of fact are not necessary or proper on a motion for
summary judgment, “it is helpful to the parties and the courts for the trial judge to
articulate a summary of the material facts which he considers are not at issue and
which justify entry of judgment.” Collier v. Collier, 204 N.C. App. 160, 161–62, 693
S.E.2d 250, 252 (2010). Therefore, the Court limits its recitation to the undisputed
facts necessary to decide the Motion and not to resolve issues of material fact.
2. Plaintiff American Air Filter Company, Inc. (“Plaintiff”) is in the
business of providing and servicing clean air products, such as air filters, dust
collection equipment, HVAC equipment, and nuclear equipment and filters. (Ver.
First Am. Compl., ECF No. 5, at ¶ 6.) Plaintiff has operations across the world and
conducts business throughout the United States, including in Wake County, North
Carolina.
3. Defendant Camfil USA, Inc. (“Camfil”) is in the same business as
Plaintiff and is one of Plaintiff’s “primary competitors.” (Id. at ¶ 10.) Camfil also
conducts business throughout the United States, including in Wake County, North
4. Plaintiff hired Defendant Samuel C. Price (“Price”; together with
Camfil, “Defendants”) to be a Branch Manager in 1989. Plaintiff employed Price as
either a Branch Manager or a District Manager until his resignation on August 12,
2016. (Price Dep., ECF No. 45.4, at pp. 56, 60–63.) His duties in those positions involved sales, sales management, and warehouse support. (Id. at p. 56.) As a
condition of employment, Plaintiff required Price to sign employment agreements
which set out the respective rights and responsibilities of Price and Plaintiff in
relation to Price’s employment with the company, the first of which was executed on
December 11, 1989. (ECF No. 5, at ¶ 38.) Thereafter, Plaintiff periodically entered
into new agreements with Price during the remainder of his employment. (Id. at
¶ 42.)
5. During his employment, Price had access to and used in performing his
duties several different computer-based programs that contain information and data
that Plaintiff considers to be “trade secrets”: the Total Cost of Ownership Diagnostics
(the “TCOD”) program, Salesforce.com (“Salesforce”), and the SAP (“SAP”), an
enterprise resource planning software. (Price Dep., ECF No. 61, at pp. 89–90, 107.)
The TCOD is a proprietary program that utilizes custom “engines” (algorithms) to
calculate the total cost of using Plaintiff’s air filters versus competitors’ air filters
over time and generates reports (“TCOD reports”) that contain the results of those
calculations. (Am. Air Filter’s Ver. Resps. Defs.’ First Set Interrogs. Req. Produc.
Docs., ECF No. 45.3, at pp. 13–17, 19–20; ECF No. 45.4, at p. 100; TCOD Report, ECF
No. 45.5.) Plaintiff has compiled within the TCOD a database of information
including test reports for various air filters and information regarding the filtration
needs of specific customers. (ECF No. 45.3, at p. 14; ECF No. 45.4, at p. 106.) Price
testified that he considered the information in the TCOD to be proprietary to
Plaintiff. (ECF No. 45.4, at p. 102.) 6. Plaintiff provides copies of TCOD reports to customers and prospective
customers. TCOD reports contain the following statement purporting to restrict
customers from further disclosing the reports: “The information in this document is
the property of American Air Filter Company, Inc. (‘AAFCI’) and may not be copied
or distributed to any third party, used for any purpose other than that for which it is
supplied, without the express written consent of AAFCI.” (ECF No. 45.3, at pp. 18–
19.) Plaintiff, however, has granted access to the TCOD to three distributors but has
not obtained agreements from the distributors regarding the confidentiality of the
information in the TCOD. (Id. at p. 18.)
7. Salesforce is a web-based tool used by Plaintiff for customer and sales
management. Plaintiff has compiled information in Salesforce regarding its
customers, including custom payment terms, payment history, order history, notes
prepared by sales representatives, reports prepared by sales representatives
analyzing current filtration needs, and currently used products. (ECF No. 45.3, at
pp. 19–20.) Salesforce also contains information regarding Plaintiff’s prospective
customers, including identities of prospective customers, the estimated value of the
relationship if secured, notes prepared by sales representatives, and price quotes
made by Plaintiff for prospective customers. (Id. at p. 20–21.) Finally, Salesforce
contains audit reports that Plaintiff’s sales professionals create at the physical
location of customer facilities to assess and analyze customers’ current air filtration
products, sizes, specifications, and other issues; the audit reports are then used to
sell products based on the customer’s needs. (Id.) 8. SAP contains, among other information, a compilation of data that
includes customer-specific pricing, information about national accounts and
confidential rebates and other discounts offered to national customers, and a sales
history for each customer. (Id. at 20–21.) SAP also contains information regarding
the costs of raw materials used in Plaintiff’s manufacturing process and other data
regarding Plaintiff’s production costs. (Id. at p. 21.) Price testified that the
information compiled in Salesforce and SAP was confidential and valuable to
Plaintiff. (ECF No. 45.4, at pp. 87–88, 90–94.)
9. The TCOD, Salesforce, and SAP each permit users to manipulate the
compiled data contained within the programs to run various reports, quotes,
projections, and estimates. (ECF No. 45.3, at pp. 17–18, 20.) Each of the three
programs are username and password protected. (ECF No. 45.4, at pp. 80–81.)
10. In 2016, Price became unhappy working for Plaintiff because of a new
compensation plan Plaintiff had implemented and because Price was turned down for
a promotion. (Id. at pp. 193–94, 221–22.) On July 12, 2016, Price had dinner with
Tom Rumpler (“Rumpler”), Camfil’s Director of Branch Operations – East. (Rumpler
Dep., ECF No. 45.9, at p. 73.) Rumpler proposed that Price take the position of
Branch Manager for Camfil’s Carolinas territory. (Id. at p. 74.) Camfil had been
attempting to recruit Price for five years. (ECF No. 45.4, at p. 181.) In fact, Camfil’s
Vice President of Sales and Marketing, Kevin Wood (“Wood”), wrote in an internal
email on July 19, 2016 that hiring Price would “send a message to [Plaintiff’s]
employees that we are the force to deal with.” (ECF No. 45.9, Ex. 33.) 11. Following his dinner with Rumpler, Price emailed his most recent
employment agreement with Plaintiff to his wife’s Gmail account and then forwarded
the agreement from his wife’s Gmail account to Rumpler’s wife’s Gmail account.
(ECF No. 45.4, at p. 208.) The purpose of using their wives’ Gmail accounts was to
ensure that Price’s negotiations with Camfil were kept secret from Plaintiff. (ECF
No. 45.4, at p. 212; ECF No. 45.9, at pp. 84–85.) Price testified that he “probably”
deleted the email that he sent from his work email to his wife’s Gmail account. (ECF
No. 45.4, at pp. 208.) Price also testified that if Plaintiff had learned of his
negotiations with Camfil, he would have been “immediately terminated.” (Id. at 220.)
12. On July 22, 2016, Camfil offered Price employment. Price negotiated
the terms of that employment until on or around August 1, 2016 using his wife’s
Gmail account. (ECF No. 45.4, at pp. 228–29.) Price officially signed an employment
agreement with Camfil on August 1, 2016. (Id. at p. 236.)
13. On August 5, 2016, Price informed Plaintiff that he was resigning
effective August 12, 2016. (ECF No. 61, at pp. 239–40 and Ex. 17.) Price informed
various co-workers that he was “burned out” and that he was taking time off to be
with his first grandchild. (Id. at 225.) Price did not notify Plaintiff that he had
accepted employment with Camfil. When two co-workers asked if Price was leaving
to go work for a competitor, Price said that he was not. (ECF No. 45.3, at p. 5.) Price
testified that he was aware that Plaintiff’s policy was to terminate the employment
of an employee if Plaintiff learned the employee may be leaving to join a competitor.
(ECF No. 45.4, at pp. 219–20.) 14. From the time that Price began negotiating with Camfil until his
resignation from Plaintiff on August 12, 2016, Price utilized several of Plaintiff’s
programs. He logged into Salesforce on July 29, August 4, and August 6, 2016, and
he executed numerous “transactions” in SAP between August 2 and August 12, 2016.
(Price Aff., ECF No. 15, Ex. 1 at ¶ 38; Megonnell Aff., ECF No. 52, at ¶¶ 4–6.) Price
testified that he accessed the Salesforce and SAP programs as part of fulfilling his
job duties for Plaintiff. (ECF No. 15, Ex. 1 at ¶ 38; ECF No. 45.4, at p. 94.)
15. Price accessed the TCOD on July 30 and August 1, 2016, during which
he generated several TCOD reports. Price testified that he generated those reports
as part of his training on the TCOD. (ECF No. 61, at p. 254.) He also testified that
he generated some of the TCOD reports “in preparation of . . . seeing some
comparisons between some Camfil product” and the products Plaintiff sold. (Id. at
p. 255.) Price noted that these reports were “generic” and based on numbers that
Price put in while he was “playing around with [the TCOD], like a calculator.” (Id.)
The reports were never sent to any customer. (Id.) There is no evidence in the record
that Price retained those TCOD reports. (Id. at p. 305.)
16. While employed by Plaintiff, Price worked with one of Plaintiff’s
customers, Cape Fear Valley Medical Center (“CFVMC”), on an air filtration quality
control project. (ECF No. 61, at pp. 241–43.) Price created a spreadsheet for the
project (the “CFV Spreadsheet”) that used formulas based on a survey of CFVMC’s
facility to calculate and automate CFVMC’s blanket purchase orders of Plaintiff’s
products. (Id. at p. 241; ECF No. 45.4, Ex. 24.) On August 10, 2016, Price sent the CFV Spreadsheet to Richard Logsdon (“Logsdon”) at CFVMC, and Price informed
Logsdon that he would be leaving Plaintiff to work for another company. (ECF No.
61, at pp. 240–42; ECF No. 45.4, Ex. 23.)
17. Upon his resignation on August 12, 2016, Price was required by Plaintiff
to return all company property, equipment, and manuals using an Exit Checklist.
(ECF No. 5.1, Ex. E; ECF No. 45.3, at p. 10.) On August 16, 2016, Plaintiff also
terminated Price’s electronic accounts, backed up his user data, and forwarded key
emails to another employee in order to transition Price’s customer relationships.
(ECF No. 45.3, at p. 10.)
18. After joining Camfil, Price received an email from Logsdon containing
the CFV Spreadsheet and asking Price to make certain changes to the CFV
Spreadsheet. Price informed Logsdon that he now worked for Camfil and that he
would help them “facilitate continuing to do business with [Plaintiff]” by adjusting
the CFV Spreadsheet per CFVMC’s request. (ECF No. 61, at p. 243.) Logsdon “really
pushed” Price to find out why Price had left Plaintiff. (Id. at 242.) Although Price
did not think CFVMC would want to work with Camfil instead of Plaintiff for its air
filtration needs, Price then sent a modified version of the CFV Spreadsheet to
Logsdon that included Camfil’s price list and had Camfil’s name and logo at the top
of the spreadsheet. (Id. at p. 244.)
19. Shortly after August 12, 2016, Plaintiff discovered that Price had gone
to work for Camfil. (ECF No. 5, at ¶ 69.) On August 17, 2016, Plaintiff’s counsel sent
a letter to Price reminding him of his obligations under his employment contract with Plaintiff, as well as reminding him of his affirmation upon his resignation that he
would keep secret certain confidential matters of Plaintiff and its customers. (ECF
No. 5, Ex. F.) Plaintiff’s counsel sent a similar letter on September 1, 2016 to
Armando Brunetti (“Brunetti”), Executive Vice President of Camfil. (Id. at Ex. G.)
Brunetti then spoke to Price about whether Price had contacted any of Plaintiff’s
customers. Price subsequently sent an email to Brunetti detailing the interactions
he had had with Plaintiff’s customers since he began employment with Camfil,
including his correspondence with Logsdon at CFVMC, and attached the modified
CFV Spreadsheet that he had sent Logsdon. (ECF No. 45.2, at pp. 111, 115; ECF No.
45.4, Ex. 23.)
20. On November 4, 2016, Plaintiff commenced this lawsuit by filing a
Complaint. (ECF No. 1). Plaintiff subsequently filed its Verified First Amended
Complaint on December 5, 2016 (“Amended Complaint”; ECF No. 5.) The Amended
Complaint asserted claims for: breach of contract against Price; breach of fiduciary
duty against Price; tortious interference with contract against Camfil; violation of the
North Carolina Trade Secrets Protection Act (“NCTSPA”), N.C. Gen. Stat. § 66-152
et. seq. (hereinafter, “G.S.”) against Price and Camfil; violation of the North Carolina
Unfair and Deceptive Trade Practices Act (“UDTPA,” G.S. § 75-1.1 et. seq.) against
Price and Camfil; and civil conspiracy against Price and Camfil.
21. On December 9, 2016, Plaintiff filed a Motion for Preliminary
Injunction. (ECF No. 11.) On February 3, 2017, the Court issued an order granting in part and denying in part the Motion for Preliminary Injunction. (Order Mot.
Prelim. Inj., ECF No. 25.)
22. On January 17, 2017, Defendants filed a Motion to Dismiss. (ECF No.
18.) On June 26, 2017, the Court granted in part and denied in part the Motion to
Dismiss, dismissing the claims against Price for breach of contract and breach of
fiduciary duty, and the claim against Camfil for tortious interference with contract.
(Op. Order Defs.’ Mot. Dismiss Pl.’s First Am. Compl., ECF No. 39, at p. 28.)
23. On January 26, 2018, Plaintiff filed its Motion for Partial Summary
Judgment and accompanying brief, exhibits, and affidavits. (ECF Nos. 44–47.)
Plaintiff seeks partial summary judgment in its favor on its claims for
misappropriation of trade secrets and for unfair and deceptive trade practices.
Defendants filed their Motion for Summary Judgment and accompanying brief and
exhibits on the same day, moving for summary judgment on the claims of
misappropriation of trade secrets, unfair and deceptive trade practices, and civil
conspiracy. (ECF Nos. 48–49.) On February 26, 2018, both Plaintiff and Defendants
filed their respective responses to the other side’s motion for summary judgment
(ECF Nos. 66 and 70), and on March 8, 2018, Plaintiff and Defendants filed their
respective replies (ECF Nos. 80 and 84). On February 26, 2018, Defendants also filed
a Motion to Strike the affidavits of Kim Megonnell and Danny Hornback. (ECF No.
74.) Plaintiff filed its response to the Motion to Strike on March 19, 2018 (ECF No.
90), and Defendants did not file a reply. The Court held a hearing on the Motions and on the Motion to Strike on March 29, 2018. The Motions and the Motion to Strike
are now ripe for resolution.
ANALYSIS
I. Motion to Strike
24. In the Motion to Strike (ECF No. 74), Defendants argue that the
affidavits of Kim Megonnell and Danny Hornback (ECF Nos. 52 and 46, respectively)
should be stricken as untimely. Defendants assert that Plaintiff withheld the
information contained in the affidavits until after discovery had closed before filing
the affidavits with the Court, in violation of the discovery rules. (Mem. Supp. Defs.’
Mot. Strike, ECF No. 75, at p. 2.) Plaintiff argues that it did in fact disclose the
information contained in the affidavits to Defendants and that it identified Megonnell
as a key witness whom Defendants chose not to depose; and that in any event
Defendants have not been prejudiced by the affidavits. (Br. Resp. Defs.’ Mot. Strike,
ECF No. 90, at p. 3.)
25. Motions to strike are addressed to the sound discretion of the Court.
Kingsdown, Inc. v. Hinshaw, 2016 NCBC LEXIS 15, *8 (N.C. Super. Ct. Feb. 17,
2016) (citing Broughton v. McClatchy Newspapers, Inc., 161 N.C. App. 20, 25, 588
S.E.2d 20, 25 (2003)). The Court, in its discretion, will consider the above-referenced
affidavits submitted by Plaintiff. Defendants’ Motion to Strike the affidavits is
DENIED. II. Motions for Summary Judgment
A. Summary Judgment Standard
26. Plaintiff and Defendants have both moved for summary judgment on
Plaintiff’s claims for misappropriation of trade secrets and for violation of the
UDTPA. The Court must determine if the dispositive facts involved in these claims
are undisputed and, if so, which party, if any, is entitled to summary judgment on
those claims. In addition, Defendants have moved for summary judgment on
Plaintiff’s allegation of civil conspiracy.
27. “Summary judgment is appropriate if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if any,
show that there is no genuine issue of material fact and that any party is entitled to
judgment as a matter of law.” Variety Wholesalers, Inc. v. Salem Logistics Traffic
Servs., LLC, 365 N.C. 520, 523, 723 S.E.2d 744, 747 (2012) (internal quotations
omitted). An issue is “material” if “resolution of the issue is so essential that the
party against whom it is resolved may not prevail.” Unitrin Auto & Home Ins. Co. v.
McNeill, 215 N.C. App. 465, 467, 716 S.E.2d 48, 50 (2011). The moving party bears
“the burden of clearly establishing lack of a triable issue to the trial court.” N.C.
Farm Bureau Mut. Ins. Co. v. Sadler, 365 N.C. 178, 182, 711 S.E.2d 114, 116 (2011)
(internal quotations omitted). The moving party may meet this burden by “proving
an essential element of the opposing party’s claim does not exist, cannot be proven at
trial, or would have been barred by an affirmative defense.” Variety Wholesalers, 365
N.C. at 523, 723 S.E.2d at 747. In considering a motion for summary judgment, all evidence is viewed in the light most favorable to the nonmoving party. Mosely v.
WAM, Inc., 167 N.C. App. 594, 597, 606 S.E.2d 140, 142 (2004).
28. “If the movant demonstrates the lack of a genuine issue of material fact,
the burden shifts to the non-movant to present specific facts which establish the
presence of a genuine factual dispute for trial.” Friends of Crooked Creek, L.L.C. v.
C.C. Partners, Inc., 802 S.E.2d 908, 911–12, 2017 N.C. App. LEXIS 568, at *8 (2017)
(quoting In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008)). In
determining whether the non-movant has met its burden, the judge “unavoidably
asks whether reasonable jurors could find by a preponderance of the evidence that
the plaintiff is entitled to a verdict . . . .” Sloan v. Miller Bldg. Corp., 119 N.C. App.
162, 165–66, 458 S.E.2d 30, 32 (1995) (quoting Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 252 (1986)) (emphasis omitted). As recently reiterated by the North
Carolina Court of Appeals, the burden on the nonmovant goes beyond merely
producing some evidence, or a scintilla of evidence, in support of its claims. Rather,
[i]f the movant meets [its] burden, the nonmovant must take affirmative steps to set forth specific facts showing the existence of a genuine issue of material fact. An adverse party may not rest upon the mere allegations or denials of his pleading. A genuine issue of material fact is one that can be maintained by substantial evidence. Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion and means more than a scintilla or a permissible inference.
Khashman v. Khashman, 2017 N.C. App. LEXIS 715, at *15 (Sept. 5, 2017) (internal
citations and quotation marks omitted). In summary, this Court must decide “not
whether there is literally no evidence, but whether there is any [evidence] upon which a jury could properly proceed to find a verdict for the party producing it, upon whom
the onus of proof is imposed.” Anderson, 477 U.S. at 251.1
B. Misappropriation of Trade Secrets
29. In the Amended Complaint, Plaintiff alleges that Price and Camfil
violated the NCTSPA by misappropriating Plaintiff’s trade secrets. Specifically,
Plaintiff claims that while employed with Plaintiff, Price had access to Plaintiff’s
trade secrets and that he “accessed, disclosed, and/or used [Plaintiff’s] trade
secrets . . . without the knowing and voluntary authority or consent, written or
otherwise, of [Plaintiff]” while acting as an agent of Camfil. (ECF No. 5, at ¶¶ 109,
111.) The trade secrets that Plaintiff alleges Price misappropriated are the TCOD
and confidential information in the TCOD; confidential information within SAP and
Salesforce; and information contained in the CFV Spreadsheet.2 Defendants argue
that the information in the TCOD, Salesforce, and SAP are not trade secrets under
the NCTSPA and that Plaintiff has failed to provide substantial evidence of
misappropriation. (Defs.’ Resp. Opp. Pl.’s Mot. Partial Summ. J., ECF No. 70, at pp.
1 The Supreme Court of North Carolina has held that “Federal Rule 56 is substantially the
same as our Rule 56, and we therefore look to the Federal decisions for guidance in applying our rule.” Singleton v. Stewart, 280 N.C. 460, 464, 186 S.E.2d 400, 403 (1972); see also Dendy v. Watkins, 288 N.C. 447, 452, 219 S.E.2d 214, 217 (1975) (“Federal Rule 56 is substantially the same as Rule 56 of Chapter 1A-1 of the General Statutes and, therefore, it is proper for us to look at the federal decisions and textbooks as well as our own for guidance in applying the rule.”). 2 To the extent that Plaintiff alleged that Defendants misappropriated other programs or information that Plaintiff uses, such as its Territory Data Sheets, Sales Scorecards, Qlikview, and The Sales Portal, (see ECF No. 5, at ¶ 19; ECF No. 45.3, at p. 21), Plaintiff has not pointed the Court to any evidence nor made argument regarding misappropriation of those programs or information contained in those programs. The Court does not consider these programs as part of Plaintiff’s claim for misappropriation of trade secrets. 2–13.) Plaintiff and Defendants both seek summary judgment on Plaintiff’s claim for
misappropriation of trade secrets.
30. Under the NCTSPA, “misappropriation” is defined as the “acquisition,
disclosure, or use of a trade secret of another without express or implied authority or
consent, unless such trade secret was arrived at by independent development, reverse
engineering, or was obtained from another person with a right to disclose the trade
secret.” G.S. § 66-152(1). In order to evaluate a claim for misappropriation of trade
secrets, the Court must first consider whether the alleged information constitutes a
trade secret. A “trade secret” is defined as
business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that:
a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and
b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
G.S. § 66.152(3).
31. “Trade secret protection is generally precluded for information that is
widely available or generally known in the relevant industry.” RoundPoint Mortg.
Co. v. Florez, 2016 NCBC LEXIS 18, at *31 (N.C. Super. Ct. Feb. 18, 2016). Public
information such as client names, customer contact information, or published prices
for products is usually not considered a trade secret. See Safety Test & Equip. Co. v.
Am. Safety Util. Corp., 2015 NCBC LEXIS 40, at *26 (N.C. Super. Ct. Apr. 23, 2015) (citing Combs & Assocs. v. Kennedy, 147 N.C. App. 362, 370–71, 555 S.E.2d 634, 640
(2001)). However, “in some instances, a trade secret can be found if the information
or process has particular value as a compilation or manipulation of information, even
if the underlying information is otherwise publicly available.” RoundPoint, 2016
NCBC LEXIS 18, at *32.
32. This Court has held that “where an individual maintains a compilation
of detailed records over a significant period of time,” such that they have particular
value as a compilation or manipulation of information, “those records could constitute
a trade secret even if ‘similar information may have been ascertainable by anyone in
the . . . business.’” Koch Measurement Devices, Inc. v. Armke, 2015 NCBC LEXIS 45,
at *13 (N.C. Super. Ct. May 1, 2015) (quoting Byrd’s Lawn & Landscaping, Inc. v.
Smith, 142 N.C. App. 371, 376, 542 S.E.2d 689, 692 (2001)); see also State ex rel. Utils.
Comm’n v. MCI Telecomms., Corp., 132 N.C. App. 625, 634, 514 S.E.2d 276, 282
(1999) (concluding that a “compilation of information” involving customer data and
business operations which has “actual or potential commercial value from not being
generally known” is sufficient to constitute a trade secret under the NCTSPA);
RoundPoint, 2016 NCBC LEXIS 18, at *31–32; Red Valve v. Titan Valve, 2018 NCBC
LEXIS 41, at *27 (N.C. Super. Ct. Apr. 17, 2018) (citing Koch, Byrd’s, and
RoundPoint).
i. The CFV Spreadsheet is not a trade secret
33. The undisputed evidence establishes that the CFV Spreadsheet is not a
trade secret under the NCTSPA. Plaintiff, through Price, provided the spreadsheet to CFVMC while Price was still employed with Plaintiff and in an effort to secure a
sale from CFVMC. Plaintiff does not argue and presents no evidence that Plaintiff
asked CFVMC to maintain the spreadsheet or the pricing contained therein in
confidence. Generally, when a party discloses proprietary information to a third
party without taking measures to maintain its confidentiality, the information cannot
be considered a trade secret under the NCTSPA. See Bldg. Ctr., Inc. v. Carter Lumber
of the North, Inc., 2017 NCBC LEXIS 85, at *24–25 (N.C. Super. Ct. Sept. 21, 2017)
(generally, “a price quote, once provided to the customer” can no longer “be considered
a trade secret”); Computer Design & Integration, LLC v. Brown, 2017 NCBC LEXIS
8, at *25 (N.C. Super. Ct. Jan. 27, 2017) (holding that plaintiff failed to establish
adequate measures to maintain secrecy of its quotes to customers because, inter alia,
“the evidence of record shows that [plaintiff] did not require its customers to maintain
the confidentiality of this information”).
34. In addition, Defendants provided unrebutted evidence that the prices
paid by CFVMC are publicly available to Camfil because CFVMC is a public hospital.
(ECF No. 49, at p. 17; ECF No. 55.17.)
35. Because the CFV Spreadsheet is not a trade secret, Plaintiff’s Motion is
DENIED, and Defendants’ Motion is GRANTED, as to Plaintiff’s claim for
misappropriation of trade secrets regarding the CFV Spreadsheet.
ii. There is no evidence that Defendants misappropriated any proprietary algorithms or “engines” used in the TCOD
36. To the extent Plaintiff is attempting to allege that Price and Camfil
misappropriated the algorithms or underlying “engines” that perform the calculations in the TCOD, Plaintiff has not put forth any evidence to support such a
claim. Although Price had access to the TCOD, there is no evidence he had access to
the underlying algorithms upon which the TCOD functioned or had any knowledge
of the specific operations of the underlying “engines.” Accordingly, to the extent that
Plaintiff’s claim for misappropriation of trade secrets includes misappropriation of
the algorithms or “engines” underlying the TCOD or any other of Plaintiff’s programs,
Plaintiff’s Motion is DENIED, and Defendants’ Motion is GRANTED.
iii. There is a dispute of material fact regarding whether the data in the TCOD is a trade secret
37. The evidence in the record regarding the data and information compiled
in the TCOD is muddled. There is evidence suggesting that the TCOD contains data
and information acquired from Plaintiff’s customers and prospective customers, but
the TCOD may also contain certain testing information regarding air filters and filter
systems that is widely available.
38. Furthermore, the evidence regarding Plaintiff’s efforts to maintain the
confidentiality of the TCOD is less than clear. On the one hand, Plaintiff has
admitted that it provided three distributors access to the TCOD and that those
distributors have not signed Plaintiff’s standard TCOD Program Usage Application
Agreement. (ECF No. 45.3, at p. 18.) On the other hand, Plaintiff has presented
evidence that each TCOD report includes a condition stating that the information
may not be copied or distributed without Plaintiff’s express written consent. (Id. at
pp. 18–19.) It is unclear from the evidence presented what level of access the distributors had to the TCOD and what exact efforts were taken to maintain the
confidentiality of the TCOD reports.
39. On the present record, there are disputed facts regarding whether or not
the information compiled in the TCOD is a protectable trade secret under the
NCTSPA. Accordingly, to the extent that Plaintiff’s claim for misappropriation of
trade secrets includes misappropriation of the data and information compiled in the
TCOD, Plaintiff’s Motion is DENIED, and Defendants’ Motion is DENIED.
iv. The data and information compiled in Salesforce and the SAP are trade secrets
40. Plaintiff has presented evidence that it has compiled in Salesforce and
SAP customer-specific data and information that constitute trade secrets within the
definition of the NCTSPA. The information goes far beyond the mere identities and
sales histories of Plaintiff’s customers. The programs generally permit the
manipulation of data to perform calculations and create unique reports. The ability
of these programs to compile data and allow for the manipulation of that data for
specific customers brings the data maintained by Plaintiff in these programs into the
realm of trade secrets. Defendants make no substantial argument that the customer-
specific data, information, and reports, as compiled within Plaintiff’s Salesforce and
SAP, are not trade secrets. (Mem. Supp. Defs.’ Mot. Summ. J., ECF No. 49, at pp.
21–22; ECF No. 70, at p. 6.) In fact, Camfil’s corporate representative testified that
Camfil considers the same information that it has compiled within its own sales and
enterprise planning programs to be confidential and proprietary. (ECF No. 45.2, at
pp. 35, 40–43.) 41. The Court must next consider whether Plaintiff has established a prima
facie case that Defendants misappropriated information compiled in the TCOD,
Salesforce, or SAP. A prima facie case of misappropriation is established by
introducing “substantial evidence” that the defendant: “(1) knows or should have
known of the trade secret; and (2) has had a specific opportunity to acquire it for
disclosure or use or has acquired, disclosed, or used it without the express or implied
consent or authority of the owner.” G.S. § 66-155. A prima facie case of
misappropriation may be established by circumstantial evidence. TSG Finishing,
LLC v. Bollinger, 238 N.C. App. 586, 595, 767 S.E.2d 870, 878 (2014).
42. Preliminarily, Plaintiff has not produced evidence that Defendants have
actually used or disclosed information compiled in the TCOD, Salesforce, or SAP
programs. Plaintiff cannot identify any specific documents or information
downloaded or taken by Price. (ECF No. 45.3, at pp. 8–9.) Price expressly denies
that he downloaded or took any trade secret information from Plaintiff’s programs.
(ECF No. 61, at pp. 246, 251, 305–06.) In addition, while it is undisputed that Price
contacted some of Plaintiff’s customers after joining Camfil, Plaintiff does not claim
that Camfil has successfully solicited away any of Plaintiff’s customers or provided
other evidence that might raise an inference of misappropriation. See, e.g., Medical
Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649, 659, 670 S.E.2d 321, 329 (2009)
(holding that a former employee’s accessing of employer’s trade secret information
during last few weeks of employment along with, inter alia, “evidence of a substantial
turnaround in [the defendant]’s business, as well as a concurrent, substantial decrease in [the employer]’s business in the same market, during the same time
period” supported inference that defendant used the plaintiff’s trade secret
information); Sunbelt Rentals, Inc. v. Head & Engquist Equip., LLC, 174 N.C. App.
49, 57–58, 620 S.E.2d 222, 229 (2005) (holding that circumstantial evidence of the
defendant’s access to trade secrets combined with a substantial increase in the
defendant’s business, and concurrent, substantial decrease in the plaintiff’s business
in the same locations, during the same time period, was sufficient to establish a prima
facie case of misappropriation of trade secrets); Byrd’s Lawn & Landscaping, 142 N.C.
App. 371, 376–377, 542 S.E.2d 689, 693 (2001) (holding that evidence that former
employee accessed historical pricing data immediately before resigning to create
competing landscaping business and then underbid former employer on eight out of
eleven projects was circumstantial evidence of use of trade secrets).
v. The facts are disputed as to whether Price’s access to the TCOD, Salesforce, and SAP support an inference of actual misappropriation
43. Plaintiff relies on the inferences to be drawn from the facts surrounding
Price’s accessing the TCOD, Salesforce, and SAP programs after accepting
employment with Camfil and before his last day of employment with Plaintiff as
evidence of Price’s actual misappropriation of the trade secrets. This Court
previously looked to the Fourth Circuit Court of Appeals’ analysis in RLM
Communications, Inc. v. Tuschen, 831 F.3d 190 (4th Cir. 2016) in determining
whether a plaintiff established a prima facie case of misappropriation under G.S.
§ 66-155 based solely on access and opportunity to acquire the trade secret. Am. Air Filter Co. v. Price, 2017 NCBC LEXIS 9, at *20–24 (N.C. Super. Ct. Feb. 3, 2017). In
RLM, the court held that a plaintiff could establish a prima facie case creating an
inference of misappropriation based solely on access to its trade secrets in one of two
ways. First, the plaintiff could
show that the defendant [h]as had a specific opportunity to acquire [the trade secret] for disclosure or use . . . without the express or implied consent or authority of the owner . . . the employer would have to prove not merely that its employee had access to trade secrets, but also that the employee abused such access—the employer would have to show knowledge and an unauthorized opportunity to acquire or use trade secrets.
RLM, 831 F.3d at 201 (quoting G.S. § 66-155) (emphasis in original).
44. Alternatively, the plaintiff could establish an inference of
misappropriation by showing merely that the defendant had knowledge of the trade
secret and opportunity to acquire it. Id. The defendant could then rebut the inference
“by showing that the circumstances surrounding the opportunity were not
suspicious,” including showing that the opportunity was “provided with consent.” Id.
at 202; see also Sunbelt Rentals, Inc. v. Head & Engquist Equip., LLC, 2002 NCBC
LEXIS 2, at *43 (N.C. Super. Ct. July 10, 2002) (“Once plaintiff establishes a prima
facie case [of misappropriation], the burden shifts to defendants to show that the
trade secret was not acquired improperly.”). If the defendant meets its rebuttal
burden, the plaintiff could prove misappropriation by producing “evidence sufficient
to raise an inference of actual acquisition or use.” RLM, 831 F.3d at 202. The Court
recognized that the practical impact of this second alternative proof scheme is that if
an employee accessed trade secrets at a time when he was authorized to do so, “the framework will collapse into the question whether the [plaintiff] has sufficient
evidence of misappropriation to raise an inference of actual acquisition or use of its
trade secrets.” Id.
45. Plaintiff argues that the undisputed factual evidence raises an inference
of actual acquisition of Plaintiff’s trade secrets which entitle Plaintiff to judgment in
its favor. (Pl.’s Br. Supp. Mot. Partial Summ. J., ECF No. 45, at pp. 20–21; Pl.’s Br.
Resp. Defs.’ Mot. Summ. J., ECF No. 66, pp. 17–20.) Plaintiff contends it is
undisputed that Price accessed the TCOD, Salesforce, and SAP after he had agreed
to employment with Camfil in or around the last few days of July 2016, but without
Plaintiff’s knowledge that Price was going to work for Camfil. Plaintiff asserts that
Price’s access after he accepted employment with Camfil was unauthorized because
Plaintiff has a policy and practice of terminating employees once Plaintiff learns they
have accepted employment with a competitor. As evidence of this policy, Plaintiff
points to Price’s testimony that he believed Plaintiff would likely have terminated
him had he disclosed that he had accepted a job with Camfil. (ECF No. 45, at p. 11;
ECF No. 66, at pp. 6–7.) Plaintiff argues the inference of misappropriation also is
supported by the undisputed facts surrounding Price’s secretive negotiation of
employment with Camfil and his lack of candor with Plaintiff regarding the reason
he was resigning his employment. (ECF No. 45, at pp. 20–21.)
46. Defendants, however, argue that the facts surrounding Price’s access to
the TCOD, Salesforce, and SAP establish that he did not acquire or use Plaintiff’s
trade secrets. (ECF No. 49, at pp. 10–17; ECF No. 70, at pp. 9–14.) Plaintiff continued to provide Price access to the TCOD, Salesforce, and SAP for a week after
Price notified Plaintiff of his resignation, albeit without disclosing his employment
with Camfil. (ECF No. 70, at pp. 15–16.) Defendants also have introduced evidence
that Plaintiff is unable to identify any other employee to which it has applied its
alleged policy of terminating access of employees who accept employment with a
competitor. (ECF No. 45.3, at pp. 8–9.) Defendants also contend that Price’s
testimony that he accessed the TCOD, Salesforce, and SAP only for purposes of
completing his job duties with Plaintiff is unrebutted. (ECF No. 70, at pp. 16–17.)
Finally, Defendants argue that Plaintiff has produced no evidence that Defendants
have used Plaintiff’s trade secrets to acquire Plaintiff’s customers or create new
technologies, or that Plaintiff has suffered any actual damages as a result of the use
of Plaintiff’s trade secrets. (ECF No. 70, at pp. 12–13.)
47. The Court concludes that the facts surrounding Price’s access to the
TCOD, Salesforce, and SAP are in dispute and create genuine issues regarding
whether Defendants actually acquired Plaintiff’s trade secrets that must be resolved
by a jury. Plaintiff’s Motion for Partial Summary Judgment is DENIED as to
Plaintiff’s claim for misappropriation of trade secrets regarding information compiled
in the TCOD, SAP, and Salesforce, and Defendants’ Motion for Summary Judgment
is DENIED as to Plaintiff’s claim for misappropriation of trade secrets regarding the
TCOD, SAP, and Salesforce.
vi. Plaintiff has presented no evidence of actual damages arising from misappropriation of its trade secrets 48. Finally, Defendants argue that they should be granted summary
judgment on the issue of actual damages under the NCTSPA because Plaintiff has
not put forth any evidence that it suffered actual damages as a result of Price’s alleged
misappropriation. (ECF No. 49, at pp. 22–23.)
49. The Court agrees that Plaintiff has not presented any evidence that it
suffered actual damages. In addition, Plaintiff does not make any argument in
opposition to Defendants’ request for summary judgment on the issue of actual
damages but merely notes that it may still seek punitive damages under the NCTSPA
based on an award of nominal damages. (ECF No. 66, at p. 25, citing Hawkins v.
Hawkins, 101 N.C. App. 529, 532, 400 S.E.2d 472, 474 (1991) (“Once a cause of action
is established, plaintiff is entitled to recover, as a matter of law, nominal damages,
which in turn support an award of punitive damages.”).) Accordingly, the facts
regarding Plaintiff’s entitlement to actual damages on its claims under the NCTSPA
are not in dispute, and Defendants are entitled to summary judgment in their favor
on this issue. Defendants’ Motion for Summary Judgment is GRANTED as to
Plaintiff’s claim for actual damages under the NCTPSA.
C. Unfair and Deceptive Trade Practices
50. Plaintiff and Defendants both move for summary judgment in their
respective favors on Plaintiff’s claim for unfair and deceptive trade practice in
violation of the UDTPA. (ECF No. 5, at ¶¶ 117–121.) A claim for unfair and deceptive
trade practices requires that the plaintiff show “(1) an unfair or deceptive act or
practice, (2) in or affecting commerce, and (3) which proximately caused injury to plaintiffs.” Walker v. Fleetwood Homes of N.C., Inc., 362 N.C. 63, 71–72, 653 S.E.2d
393, 399 (2007).
51. Misappropriation of trade secrets may form the basis of a UDTPA claim
if the misappropriation satisfies the three required elements for an unfair trade
practices claim. Drouillard v. Keister Williams Newspaper Services, Inc., 108 N.C.
App. 169, 172, 423 S.E.2d 324, 326 (1992) (“If the violation of the Trade Secrets
Protection Act satisfies this three prong test, it would be a violation of [G.S.] § 75-
1.1.”) The Court already has concluded that issues of fact remain for resolution by a
jury regarding Plaintiff’s claim for misappropriation of trade secrets, and such claim
could support Plaintiff’s claim under the UDTPA.
52. Defendants argue that Plaintiff’s unfair trade practices claim fails
because Plaintiff has not provided evidence that it suffered actual damages as a result
of the alleged misappropriation of its trade secrets. (ECF No. 49, at p. 24.)
Defendants are incorrect. In this case, if Plaintiff prevails on its claim for
misappropriation of trade secrets, it would be entitled to an award of nominal
damages even absent evidence of actual damages, which would be sufficient to
support the claim under the UDTPA. Estate of Hurst v. Moorehead I, LLC, 228 N.C.
App. 571, 583–85, 748 S.E.2d 568, 578 (2013) (“[A]n award of actual damages is not
required to support a finding that plaintiffs were injured by the acts complained of.
Rather, as the trial court instructed, the jury need only find that defendants’ unfair
or deceptive act or practice proximately caused an injury to plaintiffs . . . [and an] award of nominal damages are sufficient to support [a claim] for unfair and deceptive
trade practices.”).
53. Plaintiff has not established that it is entitled to summary judgment on
its claim for misappropriation of trade secrets because disputed issues of fact remain.
Accordingly, Plaintiff’s partial motion for summary judgment should be DENIED as
to Plaintiff’s claim for unfair and deceptive trade practices. However, since Plaintiff’s
claim for misappropriation of trade secrets survives the motion for summary
judgment and could support a claim for unfair and deceptive trade practices,
Defendants’ motion for summary judgment should also be DENIED.
D. Conspiracy
54. Plaintiff also claims that Price and Camfil “maliciously, willfully,
wantonly, and intentionally conspired” to misappropriate and illegally use Plaintiff’s
trade secrets and to commit unfair and deceptive trade practices. (ECF No. 5, at
¶ 123.) Defendants move for summary judgment on Plaintiff’s allegation of
conspiracy, arguing that Plaintiff has not provided any evidence of an actual
agreement between Price and Camfil that would support such a claim.
55. Civil conspiracy is not an independent cause of action in North Carolina;
rather, liability for civil conspiracy must be alleged in conjunction with an underlying
claim for unlawful conduct. Toomer v. Garrett, 155 N.C. App. 462, 483, 574 S.E.2d
76, 92 (2002). To state a claim for civil conspiracy, a plaintiff must show: “(1) an
agreement between two or more individuals; (2) to do an unlawful act or to do a lawful
act in an unlawful way; (3) resulting in injury to plaintiff inflicted by one or more of the conspirators; and (4) pursuant to a common scheme.” Piraino Bros., LLC v.
Atlantic Fin. Grp., Inc., 211 N.C. App. 343, 350, 712 S.E.2d 328, 333 (2011).
“[S]ufficient evidence of the agreement must exist to create more than a suspicion or
conjecture in order to justify submission of the issue to a jury.” Boyd v. Drum, 129
N.C. App. 586, 592, 501 S.E.2d 91, 96 (1998) (internal quotations omitted).
56. Plaintiff has not put forth evidence in this case that Price entered into
any agreement with Camfil to misappropriate trade secrets. The most Plaintiff has
shown is that, after Plaintiff notified Camfil of Price’s alleged obligations under his
employment agreement, Brunetti discussed the issue with Price and Price
subsequently sent Brunetti a list of Plaintiff’s customers he had contacted, as well as
a copy of the CFV Spreadsheet. (ECF No. 45.2, at pp. 111, 115; ECF No. 58.4, Ex.
23.) This is not, however, evidence that Camfil and Price made an agreement that
Price would misappropriate trade secrets from Plaintiff or engage in any other
unlawful conduct. Defendants’ motion for summary judgment should be GRANTED
as to Plaintiff’s allegation of civil conspiracy.
THEREFORE, IT IS ORDERED that:
57. Defendants’ Motion to Strike is DENIED.
58. Plaintiff’s Motion for Partial Summary Judgment is DENIED and
Defendants’ Motion for Summary Judgment is GRANTED as to Plaintiff’s claim for
misappropriation of trade secrets regarding the CFV Spreadsheet.
59. Plaintiff’s Motion for Partial Summary Judgment is DENIED and
Defendants’ Motion for Summary Judgment is GRANTED as to Plaintiff’s claim for misappropriation of trade secrets regarding of the algorithms or “engines” underlying
the TCOD or any other of Plaintiff’s programs.
60. Plaintiff’s Motion for Partial Summary Judgment and Defendants’
Motion for Summary Judgment are DENIED as to Plaintiff’s claim for
misappropriation of trade secrets regarding information compiled in the TCOD,
Salesforce, and SAP.
61. Defendants’ Motion for Summary Judgment is GRANTED as to
62. Plaintiff’s Motion for Partial Summary Judgment and Defendants’
Motion for Summary Judgment are DENIED as to Plaintiff’s claim for violation of
the UDTPA.
63. Defendants’ Motion for Summary Judgment is GRANTED as to
64. Except as expressly granted herein, Plaintiff’s Motion for Partial
Summary Judgment and Defendants’ Motion for Summary Judgment are DENIED.
SO ORDERED, this the 10th day of July, 2018.
/s/ Gregory P. McGuire Gregory P. McGuire Special Superior Court Judge for Complex Business Cases