Double Eagle Alloys v. Hooper

134 F.4th 1078
Court of Appeals for the Tenth Circuit·Decided April 22, 2025·No. 24-5089·Published·Cited by 9 cases

Opinion

FILED

United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS April 22, 2025

Christopher M. Wolpert

FOR THE TENTH CIRCUIT Clerk of Court

DOUBLE EAGLE ALLOYS, INC., Plaintiff - Appellant, v. No. 24-5089

MICHAEL HOOPER; ACE ALLOYS, LLC,

Defendants - Appellees.

Appeal from the United States District Court for the Northern District of Oklahoma (D.C. No. 4:19-CV-00243-JDR-CDL)

Jason S. Taylor (Hayley N. Stephens and Kayla Finnegan, with him on the briefs) of Conner & Winters, LLP, Tulsa, Oklahoma, for Plaintiff-Appellant.

Ryan A. Ray (David R. Ross, with him on the brief) of Norman Wohlgemuth, LLP, Tulsa, Oklahoma, for Defendants-Appellees.

Before BACHARACH, SEYMOUR, and PHILLIPS, Circuit Judges.

PHILLIPS, Circuit Judge.

Double Eagle Alloys, Inc. appeals the district court’s order granting summary judgment to Ace Alloys, LLC and Michael Hooper on all claims. This litigation arises from Michael Hooper’s possession of digital files containing

Double Eagle’s business information. After a decade-long career at Double Eagle, Hooper jumped ship for competitor Ace Alloys. He also took 2,660 files downloaded from his Double Eagle computer with him. Double Eagle later discovered the download and sued both Hooper and Ace Alloys, alleging trade- secret violations, misappropriation of confidential business information, and civil conspiracy. After the parties conducted discovery, they cross-moved for summary judgment. The district court granted summary judgment to Hooper and Ace Alloys on all claims.

On appeal, Double Eagle challenges the district court’s rulings on three fronts. First, Double Eagle asserts that it had identified the alleged trade secrets with sufficient particularity to maintain its trade-secret claims. Second, Double Eagle contends that its business information was confidential to sustain its misappropriation claim. And third, Double Eagle argues that the trade-secret and misappropriation claims qualify as underlying torts to support the civil- conspiracy claim. We disagree and so, exercising our jurisdiction under 28 U.S.C. § 1291, we affirm.

BACKGROUND

I. Factual Background 1

1 “In reciting the facts of this case, we view the evidence in the light most favorable to the non-moving party, as is appropriate when reviewing a grant of summary judgment.” Deherrera v. Decker Truck Line, Inc., 820 F.3d 1147, 1151 n.1 (10th Cir. 2016) (internal quotation marks omitted).

A. Hooper’s Job Change Double Eagle and Ace Alloys are specialty-metals distributors. They buy and resell alloys for companies in the oil-and-gas industry. 2 Double Eagle is the established player, while Ace Alloys is the industry upstart. Ace Alloys directly competes with Double Eagle. Michael Hooper is a former Double Eagle employee who now works for Ace Alloys. His conduct during that job transition is the subject of this litigation.

Hooper had worked as the Inside Sales Manager at Double Eagle for nearly five years before resigning and joining Ace Alloys. 3 When he left for Ace Alloys, he took his handwritten notes and 2,660 digital files, which he downloaded from his Double Eagle computer to an external storage device. The digital files contained Double Eagle’s important sales information. Double Eagle later discovered the download and filed suit.

B. The Alleged Trade Secrets Double Eagle contends that the financial, technical, and business information contained in the downloaded files qualifies as trade secrets. On appeal, Double Eagle categorizes the downloaded files into three types of trade

2 An alloy is a fused substance composed of two or more metals or a metal and a nonmetal. Alloy, Merriam-Webster.com, https://www.merriamwebster .com/dictionary/alloy (last visited Apr. 21, 2025).

3 Before becoming the Inside Sales Manager, Hooper had worked as a saw operator and in an inside-sales position for Double Eagle from 2007 to 2014.

secrets: (1) pump-shaft-quality (PSQ) specifications, (2) pricing, and (3) customer drawings. 4 We provide an overview of each trade-secret category.

1. PSQ Specifications Within the specialty-metals industry is a sub-industry for supplying PSQ material to the oil-and-gas industry. Companies that sell PSQ material often develop specifications for PSQ alloys that they supply to their customers. These specifications list the packaging requirements, chemical composition, mechanical properties, bar condition, and other standards for the PSQ-alloy product. PSQ specifications aggregate the preferences of various customers and allow the distributor to purchase material suitable to multiple customers, as opposed to a single customer.

Double Eagle is no exception. It has developed its own specifications for various PSQ materials, including the 718 and K500 PSQ specifications. See Sealed App. vol. III, at 503–06. According to Double Eagle, its PSQ specifications qualify as trade secrets and disclosure of these specifications would cause substantial competitive harm.

4 In the district court, Double Eagle identified its trade secrets as “PSQ specifications, pricing, margins, costs, and customer drawings.” Double Eagle Alloys, Inc. v. Hooper, No. 4:19-CV-00243-JDR-CDL, 2024 WL 3166921, at *2 (N.D. Okla. June 25, 2024) (internal quotation marks omitted). On appeal, Double Eagle subsumed margins and costs into the pricing category.

2. Pricing

The downloaded files also contain information on Double Eagle’s pricing. Double Eagle sets prices based on the published surcharge, machining costs, material costs, and customer-specific target margins. 5 Sealed App. vol. VI, at 1117. The material costs and customer-specific target margins are, according to Double Eagle, “highly confidential.” Id. Double Eagle maintains detailed spreadsheets of its machining costs, material costs, inventory levels, and customer purchasing history (actual and targeted margins). Sealed App. vol. III, at 507–14, 522–24. Though Double Eagle shares its prices with customers, it does not share its pricing model. Sealed App. vol. VI, at 1117. Double Eagle claims its pricing model as a trade secret.

3. Customer Drawings

Finally, the downloaded files include customer drawings. As routine business practice, customers prepare and share drawings of requested parts with distributors. See Sealed App. vol. II, at 333 (example drawing). The distributors, in turn, quote prices for the requested parts based on the drawings. A specialty-metals distributor must have these customer drawings to quote prices for various parts. Double Eagle contends that these customer drawings are trade secrets.

5 “Margin” refers to a markup. Sealed App. vol. I, at 115.

II. Procedural Background After discovering the file download, Double Eagle sued Ace Alloys and Hooper. The complaint made five claims for relief, four of which are relevant to this appeal: violation of the Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836 et seq.; violation of the Oklahoma Uniform Trade Secrets Act (OUTSA), Okla. Stat. tit. 78, § 86; misappropriation of business information; and civil conspiracy. 6 Double Eagle and Defendants cross-moved for summary judgment.

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Double Eagle Alloys v. Hooper, 134 F.4th 1078 (10th Cir. 2025).

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