Forrester v. Wheelabrator

2011 DNH 212

• Court: District Court, D. New Hampshire
• Decided: December 16, 2011
• Docket: CV-10-154-JL
• Status: Published

Opinion

Forrester v . Wheelabrator CV-10-154-JL 12/16/11

UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

Forrester Environmental Services, Inc. and Keith E . Forrester

v. Civil N o . 10-cv-154-JL Opinion N o . 2011 DNH 212 Wheelabrator Technologies, Inc.

MEMORANDUM ORDER

The present action arises from a contentious dispute between

two New Hampshire companies that compete with one another in the

field of stabilizing heavy metals in incinerator ash. Plaintiffs

Keith Forrester and his company Forrester Environmental Services,

Inc. sued Forrester's former employer, Wheelabrator Technologies,

Inc., for allegedly interfering with Forrester's contractual

relationship with a Taiwanese waste treatment company, Kobin

Environmental Enterprise Co., Ltd. Forrester claims that, after

Kobin became dissatisfied with Wheelabrator’s technology, he

invented a special treatment to stabilize the lead in Kobin's

incinerator ash. He further alleges that when Wheelabrator

learned that Kobin had switched to Forrester’s treatment, it made

false claims that its patents covered Forrester's treatment and

demanded that Kobin pay it for using that treatment. Plaintiffs have asserted claims for (1) unfair and deceptive

trade practices in violation of the Consumer Protection Act, N.H.

Rev. Stat. Ann. § 358-A, (2) tortious interference with

contractual relationship, (3) tortious interference with

prospective advantage, and (4) trade secret misappropriation in

violation of the Uniform Trade Secrets Act, N.H. Rev. Stat. Ann.

§ 350-B. Wheelabrator has asserted an amorphous counterclaim

against the plaintiffs, alleging that they are using methods and

technologies that are actually owned by Wheelabrator. The

counterclaim asks for a declaration of Wheelabrator’s ownership,

an accounting of profits, and injunctive relief. This court has

jurisdiction under 28 U.S.C. § 1331 (federal question) because

Forrester’s right to relief necessarily depends on resolution of

substantial questions of federal patent law, including whether

Wheelabrator misrepresented to Kobin the scope of the parties’

respective patent rights.

Both parties moved for summary judgment. Wheelabrator filed

two separate motions for summary judgment on plaintiffs’ claims,

arguing that (1) they are barred by the three-year statute of

limitations set forth in N.H. Rev. Stat. Ann. § 508:4, (2) they

are not supported by the record evidence, and (3) the Consumer

Protection Act does not apply here because most of the allegedly

wrongful conduct took place in Taiwan, not New Hampshire.

2 Plaintiffs moved for partial summary judgment on the first three

counts of their complaint, arguing that there is no genuine

dispute as to any material fact regarding Wheelabrator’s

liability on those counts and that the only issue for trial is

the amount of damages. In addition, plaintiffs moved for summary

judgment on Wheelabrator’s counterclaim, arguing that i t , too, is

barred by the statute of limitations.

Except insofar as Wheelabrator seeks summary judgment on

plaintiffs’ claim for violation of the Uniform Trade Secrets Act,

the motions are denied. Because plaintiffs have not presented

any evidence that Wheelabrator acquired, disclosed, or used any

of their trade secrets, or indeed that Wheelabrator even

possessed the secrets at issue, Wheelabrator is entitled to

summary judgment on the trade secret claim. With respect to

plaintiffs’ remaining claims, however, genuine issues remain as

to a number of material facts. These include when plaintiffs

first learned of Wheelabrator’s alleged misconduct, which marks

the time at which the statute of limitations began running, and

whether any of that misconduct took place in New Hampshire.

Summary judgment is therefore inappropriate. Plaintiffs’ motion

for summary judgment on Wheelabrator’s counterclaim, which is

premised solely upon the statute of limitations, is denied

3 because plaintiffs failed to plead that affirmative defense in

their answer and have not sought leave of court to add i t .

I. Applicable legal standard

Summary judgment is appropriate where “the movant shows that

there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(a). A dispute is “genuine” if it could reasonably be

resolved in either party’s favor at trial. See Estrada v . Rhode

Island, 594 F.3d 5 6 , 62 (1st Cir. 2010) (citing Meuser v . Fed.

Express Corp., 564 F.3d 5 0 7 , 515 (1st Cir. 2009)). A fact is

“material” if it could sway the outcome under applicable law.

Id. (citing Vineberg v . Bissonnette, 548 F.3d 5 0 , 56 (1st Cir.

2008)). In analyzing a summary judgment motion, the court must

“view[] all facts and draw[] all reasonable inferences in the

light most favorable to the non-moving party.” Id. But the

court need not credit “conclusory allegations, improbable

inferences, or unsupported speculation.” Meuser, 564 F.3d at 515

(quotation omitted).

4 II. Background

A. Factual history1

1 . WES-PHix and FESI-BOND DRY

Forrester is a former employee of the corporate predecessor

to Wheelabrator, which is primarily engaged in the business of

operating municipal waste-to-energy facilities (in lay terms,

burning trash to generate energy). Forrester claims that while

working at Wheelabrator in the late 1980s and early 1990s, he

oversaw the invention of a process, “WES-PHix,” that employed

phosphate chemicals to immobilize toxic heavy metals such as lead

and cadmium in incinerator ash. (Wheelabrator disputes

Forrester’s role in the invention of WES-PHix, but this dispute

is ultimately immaterial.) The WES-PHix process involves adding

the phosphates to the ash, where they are chemically bonded to

the heavy metals. The new compounds that result from the

chemical bonding process are more stable and less soluble than

the original chemical forms of the heavy metals, preventing the

metals from leaching in dangerous concentrations.

1 The following factual summary attempts to set forth the facts in the manner dictated by Rule 56 and applicable precedent. The court’s task was needlessly complicated by the fact that nary an assertion of fact in any of the parties’ memoranda has gone unchallenged. That fairly accurately reflects the equivocal state of the evidence in this case. Both sides could have saved themselves a great deal of effort and expense if they had candidly assessed the record before filing their motions.

5 Wheelabrator owns the U.S. patents for some of the aspects

of WES-PHix, two of which name Forrester as inventor.2

Wheelabrator asserts that there are also other, proprietary

aspects of WES-PHix which it has chosen not to publicize. The

patents teach methods of immobilizing lead and cadmium through

the use of “water soluble phosphates,” which they define as

phosphates “soluble in water at about 20N C at least to the

extent of about five weight-volume percent.” Notwithstanding

these teachings, Wheelabrator contends that WES-PHix will work

with virtually any phosphate--even those substantially less

soluble than those identified in its patents. Where WES-PHix has

been practiced in the United States, phosphoric acid is the most

commonly employed phosphate, though triple super phosphate has

also been used in some applications.

Forrester resigned or was terminated from Wheelabrator in

1992. In conjunction with the end of his employment, Forrester

executed an agreement in which, among other things, he agreed not

to disclose any confidential information learned during his time there.3

2 See U.S. Patents Nos. 4,737,356 (filed Nov. 2 8 , 1986), 5,245,114 (filed May 2 1 , 1991), and 5,430,233 (filed Mar. 2 2 , 1991). 3 Wheelabrator asserts that the agreement also obligated Forrester “to assign to [Wheelabrator] any and all technology

6 Forrester then started a competing business, Forrester

Environmental Services, Inc. (“FESI”), and patented other methods

for using phosphates to stabilize heavy metals.4 Forrester also

developed a new--or at least what he says is a new--process for

immobilizing heavy metals in incinerator ash, which FESI markets

under the name “FESI-BOND DRY.” Like WES-PHix, FESI-BOND DRY

uses phosphates to immobilize the metals, but the phosphates used

in FESI-BOND DRY are significantly less soluble than those

disclosed in Wheelabrator’s patents. Forrester also contends

that while WES-PHix involves a “wet” application, wherein water

is added to the mixture of phosphate and ash, FESI-BOND DRY has a

“dry” application that does not require water. Both Wheelabrator

and FESI license or sell the right to practice their respective

processes to companies that need to stabilize the heavy metals in

their ash.

that he had developed, worked o n , or invented arising out of his employment relationship with [Wheelabrator].” Document n o . 118 at 7 . That language, however, does not appear in the agreement and Wheelabrator has pointed to no other record evidence supporting this assertion. 4 See U.S. Patents Nos. 5,860,908 (filed Oct. 7 , 1996), 6,050,929 (filed Oct. 8 , 1996), and 7,530,939 (filed Mar. 5 , 2007).

7 2 . Kobin

In February 2001, Wheelabrator granted Bio-Max Environmental

Engineering Company, Ltd. an exclusive license to practice WES-

PHix in Taiwan through December 3 1 , 2005. Bio-Max’s license

permitted it to sub-license the right to others in Taiwan. Later

in 2001, Bio-Max granted Kuo-bin Ceramic, Inc. Co., Ltd.

(“Kobin”) 5 a sub-license to practice WES-PHix at its Taipei,

Taiwan facility through December 3 1 , 2011. Kobin’s facility

processes incinerator bottom ash that is generated off-site; ash

processed there is later sold for use in concrete, fill, and

asphalt, among other things.

Both the license and sub-license defined WES-PHix as “the

process of stabilizing metals, such as lead and cadmium, in solid

residues . . . using chemicals such as lime [and/or] phosphate,

which has been developed by [Wheelabrator].” The sub-license did

not require Kobin to use WES-PHix to treat ash at its facility,

but for each ton of ash it treated with WES-PHix, Kobin was

required to pay a royalty to Bio-Max. The sub-license also

5 Kuo-Bin Ceramic, Inc. C o . subsequently changed its name to Kobin Environmental Enterprise Co., Ltd. As the name change is is not material to the issues presented in the parties’ motions, the court adopts the parties’ practice of referring to the company as “Kobin” both pre- and post-name change

8 provided that if Bio-Max’s license with Wheelabrator terminated

or expired, Kobin would pay the royalty directly to Wheelabrator.

In mid-2004, FESI learned that Kobin was dissatisfied with

WES-PHix--in part because of a strong odor it supposedly caused--

and began discussions with Kobin about potentially licensing

FESI-BOND DRY for use at Kobin’s Taipei facility. On August 2 4 ,

2004, Kobin entered into a “Stabilization Chemical Supply

Agreement” with FESI, under which FESI granted Kobin an exclusive

right to use FESI’s heavy-metal-stabilization process in Taiwan

and to market the process to other Taiwanese companies. Kobin,

in turn, agreed to purchase phosphates from FESI. The agreement

had a ten-year term, renewable at Kobin’s election.

To treat the ash at Kobin’s facility in a way that reduced

the unpleasant odor associated with WES-PHix, Forrester developed

a variation of the FESI-BOND DRY method that involved the use of

dicalcium phosphate dihydrate powder, or “DCPDHP”--an off-the

shelf phosphate typically used as a dietary supplement for

animals. Kobin’s engineers, with FESI’s guidance, later

conducted field testing to determine the appropriate “dosage” of

DCPDHP to use. Plaintiffs contend that the resulting method

constituted a trade secret, and that they took steps to maintain

its confidentiality. But Wheelabrator contends that Kobin, with

9 plaintiffs’ authorization, disclosed the method publicly on more than one occasion.6

In connection with Kobin’s adoption of FESI’s special

method, FESI began to sell Kobin DCPDHP that it obtained from a

supplier in Shanghai under the name “FESI-BOND DRY DCPDHP.”

Though FESI’s sales of DCPDHP to Kobin were not uniform, from

April 2005 through the fall of 2006 Kobin made regular monthly

purchases of the chemical, paying FESI approximately $573,000

over that period.

Kobin’s involvement with FESI did not go unnoticed. In the

fall of 2004, Wheelabrator learned that Kobin might replace WES-

PHix with FESI’s technology. In e-mail exchanges with its

Taiwanese agent7 in late 2004 and early 2005, Wheelabrator

considered how to respond to inquiries from Bio-Max regarding

6 Wheelabrator asserts that Kobin--with plaintiffs’ blessing --presented a paper that disclosed parts of the method, including the use of DCPDHP and the best methods for its application, at the North American Waste-to-Energy Conference in May 2006. It also asserts that a less detailed version of the presentation was made available to a Taiwanese environmental protection agency. Plaintiffs maintain that these presentations did not disclose many of the finer points of the FESI method, such as the use of DCPDHP, what source of DCPDHP was used, or the means of applying DCPDHP to the ash. 7 Plaintiffs have filed a motion to have certain statements of this agent, Jen W u , deemed admissions of a party-opponent for purposes of Federal Rule of Evidence 801(d)(2). That motion is denied as premature. The court will, if necessary, rule on the hearsay status and admissibility of M r . Wu’s statements at trial.

10 whether the use of FESI-BOND DRY required Kobin to pay royalties

under the WES-PHix license arrangement. During these exchanges,

Wheelabrator expressed the opinion that Forrester’s “phosphate

treatment process would infringe our earlier bottom ash treatment

patent.” From the record evidence, it does not appear that this

opinion was passed on to Bio-Max or Kobin. However, in April

2005, an attorney for Wheelabrator wrote a letter to Forrester

accusing plaintiffs of using Wheelabrator’s proprietary

information and improperly interfering with its relationships

with Bio-Max and Kobin. Plaintiffs promptly responded, with

Forrester sending a letter to Wheelabrator’s attorney accusing it

of “provid[ing] misinformation relating to FESI-BOND technology

to its licensee in Taiwan, and disparag[ing] FESI and myself.”

Despite reciprocal threats of legal action, neither party filed

suit against the other at that time.

On April 4 , 2006, Forrester authored a letter to Kobin in

which he expressed an opinion that Wheelabrator had committed

“intellectual property fraud” against Bio-Max and Kobin by

claiming to hold Taiwanese patents for its technology, when in

fact it held no patents in Taiwan. Forrester’s letter further

stated that, because he had been financially impacted by “this

apparent fraud,” he had requested that the U.S. Attorney General

investigate. He also suggested that Kobin retain legal counsel

11 and consider requesting a refund of any money paid to

Wheelabrator under the WES-PHix sublicense.

3 . Kobin’s new license with Wheelabrator

In early December 2005, Kobin informed Bio-Max that Kobin

had stopped using WES-PHix and had started using FESI-BOND DRY.

Shortly thereafter, Bio-Max’s license to practice WES-PHix in

Taiwan expired, and Kobin became obligated, under its sub-

license, to pay a royalty directly to Wheelabrator for any use of

WES-PHix. In March 2006, Wheelabrator wrote to Kobin to address

what it viewed as Kobin’s failure to pay these royalties, arguing

that “the definition of WES-PHix in the Sublicense Agreement

covers the use of any solid, liquid or chemical form of

phosphate.” The letter also stated that Kobin’s use of any

“phosphate-based process to treat municipal waste combustion ash”

--which, though not explicitly expressed, would have included the

use of FESI-BOND DRY and DCPDHP--amounted to a use of WES-PHix.

The letter closed by threatening legal action if the required

royalties were not paid. While plaintiffs maintain that Kobin

subsequently paid Wheelabrator royalties for its use of DCPDHP

and other FESI technology, that contention is not supported by

the record evidence plaintiffs rely upon.8

8 Other than FESI’s own interrogatory responses (which are not based on personal knowledge of the royalties Kobin paid), the

12 Kobin and Wheelabrator met in Florida on March 2 8 , 2006, to

resolve their royalty dispute. At the meeting, Kobin agreed in

principle to sign a new license to use WES-PHix. Over the next

several months, Wheelabrator and Kobin negotiated the details of

the new license. Rather than licensing the right to use WES-PHix

directly from Wheelabrator, Kobin asked that, for tax reasons,

the new license be granted to EMMA Best Industrial Limited, an

affiliated entity, which would then grant a sub-license to Kobin.

Kobin also asked for assurances that it would be able to use

a “solid form (powder)” of WES-PHix rather than the “liquid type”

it had originally used. In response, Wheelabrator provided Kobin

with an edited version of a 1996 paper about WES-PHix. While the

original version of the paper stated that “virtually any soluble

phosphate will . . . work in the WES-PHix process,” the edited

version stated that “virtually any phosphate source will work in

the WES-PHix process” (emphasis added). Plaintiffs see this as

further evidence that Wheelabrator deliberately overstated the

evidence plaintiffs cite in support of this contention indicates only that (1) at some undetermined point, Wheelabrator learned that Kobin was using triple super phosphate to treat ash at its facility, and (2) it did not learn that Kobin was using DCPDHP until after this action was filed. See document n o . 116 at 9 (cited references). It does not indicate that Kobin paid Wheelabrator any royalties for its use of DCPDHP (or, for that matter, for its use of any other phosphate). Royalties are not discussed at all in the excerpt of deposition testimony to which plaintiffs point.

13 scope of its intellectual property rights in order to “steal”

Kobin’s business away from FESI.

On November 8 , 2006, Wheelabrator and EMMA executed the new

license, and EMMA and Kobin executed a sub-license. In contrast

to Kobin’s prior arrangement, the new license and sub-license

required Kobin “to use WES-PHix to treat all solid residues” at

its Taipei facility. Furthermore, the definitions of WES-PHix

included in the 2006 agreements differed from that set forth in

the original agreements. Borrowing language from Wheelabrator’s

March 2006 letter, the definition--which was also drafted by

Wheelabrator--identified WES-PHix as

the patented . . . and proprietary process of immobilization of metals, such as lead and cadmium in solid residues . . . using any solid, liquid or chemical form of phosphate and/or lime. WES-PHix embodies Confidential Technical Information that is not in the public domain and that is only disclosed to licensees.

Like Kobin’s 2001 sub-license, neither the new license nor

the sub-license specified which chemicals should be used with

WES-PHix or required Kobin to purchase chemicals from any

particular source. During the course of the 2006 contract

negotiations, though, Kobin had asked Wheelabrator to recommend a

solid form of phosphate to use with the WES-PHix process.

Wheelabrator recommended the use of ordinary superphosphate

(“OSP”), but also identified several other possibilities,

14 including triple super phosphate (“TSP”). According to

Wheelabrator, Kobin ultimately decided to use TSP.

Shortly thereafter, Kobin stopped purchasing DCPDHP from

FESI, and did not place another order for the phosphate with FESI

for over a year.

4 . Kobin suspends its relationship with FESI

In early December 2006, Forrester began to suspect that

Kobin’s sudden cessation of purchases might mean that it had

started dealing with Wheelabrator again. On January 1 9 , 2007, he

sent a letter to Kobin expressing concern that Kobin could be

considering resuming the use of WES-PHix at its plant in Taipei

or purchasing DCPDHP from a local source, reminding Kobin of the

comparative advantages of FESI-BOND DRY. And, in an apparent

reference to his April 4 , 2006 letter, Forrester “remind[ed]

KOBIN that FESI has proven that Wheelabrator and/or its agent

[misled] KOBIN regarding [Wheelabrator’s] patent rights in

Taiwan.”

In March 2007, Hangshin Shih, FESI’s agent in Taiwan, also

contacted someone at Kobin to try to confirm whether it had

decided to stop using FESI-BOND DRY. From the record before the

court, it appears that Kobin did not respond to either

Forrester’s letter or Shih’s inquiry. At some point during the

next several months, FESI apparently concluded that Kobin had

15 decided to stop using FESI-BOND DRY and resume its use of WES-

PHix. In a letter dated May 3 0 , 2007, Forrester expressed

surprise “that KOBIN would reuse the WES-PHix process,” but

indicated that he “remain[ed] open to contract price and terms

negotiations with Kobin that will allow Kobin to utilize our

process while also meeting any budgetary demands of [its] bottom

ash stabilization operations.” Again, Kobin does not appear to

have responded.

At or around the same time, Kobin approached Wheelabrator

and asked to restructure the existing license arrangement so

Kobin could license the right to use WES-PHix directly from

Wheelabrator, rather than sub-licensing it from EMMA.

Wheelabrator agreed and prepared the appropriate documents, which

cancelled the 2006 EMMA license and licensed WES-PHix directly to

Kobin, for execution.

Dennis Chao, the Managing Director of Kobin’s Project

Division at this time, recalls that he negotiated the terms of

the 2007 license with Mark Lyons of Wheelabrator and made edits

to Wheelabrator’s draft on behalf of Kobin.9 Among other things,

9 Wheelabrator has filed a series of motions to strike Chao’s testimony, alleging that he was paid for serving as a witness (which plaintiffs dispute) and engaged in criminal conduct related to Kobin, and that his testimony is therefore inherently untrustworthy. As this court has observed on more than one occasion, though, it “is not permitted to make credibility

16 Chao recalls that Kobin--doubting that Wheelabrator’s patents

covered any solid form of phosphate--requested that the phrase

“any solid form of phosphate and/or lime” be deleted from the

license’s definition of WES-PHix. He has testified that

Wheelabrator insisted that the phrase remain and “guaranteed”

that its WES-PHix patents covered any solid, liquid or chemical

form of phosphate. Wheelabrator’s witnesses claim that they

never made any such guarantee.

It was on the basis of this guarantee, Chao claims, that

Kobin believed that Wheelabrator alone owned the patent rights to

determinations at the summary judgment stage.” Antaeus Enters., Inc. v . Davidson, 774 F. Supp. 2d 409, 416 (D.N.H. 2011); see also Pure Barnyard, Inc. v . Organic Labs., Inc., 2011 DNH 035, 27 n.13 (“[C]redibility determinations are for the factfinder at trial, not for the court at summary judgment.”). Though the court may, in some circumstances, disregard summary judgment affidavits that are “inherently untrustworthy” insofar as they contradict earlier sworn testimony without providing any explanation for the discrepancy, see Fin-Brand Positioning, LLC v . Take 2 Dough Prods., Inc., 2011 DNH 2 0 0 , 13-14, that is not the situation here. The remaining arguments Wheelabrator makes in support of its motions--including that much of Chao’s testimony lacks foundation, that his deposition was improper, and that his statements impermissibly seek to expand the scope of his agency--are also not grounds for disregarding his testimony at present, though Wheelabrator may of course renew these objections to that testimony at trial. As to the balance of Wheelabrator’s motions to strike, which challenge certain documentary evidence and testimony from Forrester, Hangshin Shih, and plaintiffs’ experts, the motions are denied as moot, as the court has not considered the evidence in question when ruling on the parties’ motions for summary judgment. The motions are therefore denied, without prejudice to Wheelabrator renewing its objections at trial.

17 a process using solid phosphates in the treatment of incinerator

ash. Under a separate agreement with the local government, Kobin

was obligated to contract only with companies owning the patent

to certain technologies. Accordingly, Kobin believed that it had

no choice but to sign the new license agreement with Wheelabrator

and to cease doing business with FESI entirely.

After the language of the new agreement had been finalized

and approved by Kobin’s management, Chao traveled to Hampton, New

Hampshire on June 1 4 , 2007, to meet with Lyons and formally sign

the document. Lyons maintains that there were no substantive

negotiations of any kind at that meeting, and that Wheelabrator

made no false statements to Kobin. Chao, however, recalls that

before he formally signed the agreement, he asked Lyons to re-

confirm that the WES-PHix patents covered any solid form of

phosphate and/or lime, and that Lyons did s o .

After learning that Kobin had signed a new license with

Wheelabrator, Shih and Forrester met with Chao and Jerry Chen of

Kobin in Taipei on June 2 7 , 2007. At the meeting, Chao and Chen

told Forrester that Kobin was terminating its supply agreement

with FESI. They also told him that Wheelabrator had claimed it

held patents on the use of all solid phosphates, including

DCPDHP. Forrester maintains that this meeting was the first time

he became aware of Wheelabrator’s claims that its patents covered

18 the use of FESI’s DCPDHP method. Indeed, Forrester asserts that

because Wheelabrator’s published patents taught the use of

phosphates that are “soluble in water at about 20N C at least to

the extent of about five weight-volume percent,” he had no reason

to believe that Wheelabrator would consider DCPDHP--which does

not meet that definition--as suitable for WES-PHix. After the

meeting, Chao sent FESI a copy of the definition of WES-PHix

contained in Kobin’s new license agreement because he wanted to

prove that Wheelabrator had actually made that claim.

FESI was later able to persuade Kobin to resume purchasing

DCPDHP from i t . Kobin only did s o , however, after demanding that

FESI agree to a significantly reduced price that left it with

less than a 20% profit margin on its sales of DCPDHP--as compared

to the nearly 100% profit margin it had earned on its previous

sales to Kobin. Though Kobin purchased DCPDHP from FESI at this

reduced price from early 2008 to early 2009, FESI has made no

sales of DCPDHP to Kobin since the second quarter of 2009. At

his deposition in this case, Forrester admitted that he did not

know why Kobin stopped purchasing DCPDHP from FESI again in 2009.

Kobin has continued to use WES-PHix at its Taiwan facility

under various license agreements with Wheelabrator. Hangshin

Shih approached Forrester about possibly renegotiating a sales

agreement with Kobin in August 2010. Forrester vetoed the idea,

19 responding that he had “no further energy, funds, trust, or time

to devote to the Taiwan or China market.”

B. Procedural history

Forrester and FESI initially brought suit against

Wheelabrator in this court in late 2007. See Forrester Enviro.

Svcs., Inc. v . Wheelabrator Techs., Inc., N o . 07-cv-404-JD

(D.N.H. Dec. 1 4 , 2007). They asserted federal claims for patent

infringement, see 35 § U.S.C. 2 7 1 , and a Lanham Act violation,

see 15 U.S.C. § 1125(a), as well as state-law claims for unfair

or deceptive trade practices, see N.H. Rev. Stat. § 358-A,

tortious interference with contractual relations, and tortious

interference with prospective advantage. Wheelabrator moved to

dismiss the complaint, see Fed. R. Civ. P. 12(b)(6), arguing that

Forrester could not state a claim for recovery under federal law

because, among other things, the alleged patent infringement and

Lanham Act violation occurred in a foreign country. But before

the court (DiClerico, D.J.) could rule on that motion, Forrester

voluntarily dismissed the case without prejudice. See Fed. R.

Civ. P. 41(a)(1)(A)(I).

Forrester and FESI commenced the present action against

Wheelabrator in New Hampshire Superior Court on February 2 3 ,

2010. In their new action, they asserted the same three state-

20 law claims (unfair and deceptive practices, tortious interference

with contract, and tortious interference with prospective

advantage), but replaced the patent infringement claims with a

state common-law claim for “misappropriation of proprietary

method.” Wheelabrator removed the case to this court, see 28

U.S.C. § 1441, and moved to dismiss the common-law

misappropriation count, see Fed. R. Civ. P. 12(b)(6), arguing

that it was preempted by federal patent law and New Hampshire’s

version of the Uniform Trade Secrets Act, N.H. Rev. Stat. Ann.

§ 350-B. The court later granted plaintiffs leave to amend their

complaint to replace their common-law misappropriation claim with

a claim under the Trade Secrets Act and denied Wheelabrator’s

motion to dismiss as moot. See document n o . 3 7 . The current

version of the complaint asserts claims for unfair and deceptive

practices in violation of N.H. Rev. Stat. Ann. § 358-A, tortious

interference with contractual relations, and misappropriation of

trade secrets in violation of N.H. Rev. Stat. Ann. § 350-B.

In responding to both the original and amended complaints in

this action, Wheelabrator asserted an amorphous counterclaim

against Forrester and FESI. Wheelabrator alleges that Forrester

had breached his contractual obligation to assign it the rights

to any methods or technologies developed during his employment at

Wheelabrator or the ensuing five-year period; failed to disclose

21 critical information to the United States Patent & Trademark

Office when applying for patents; and used Wheelabrator’s

confidential business information, methods, technologies, and

other intellectual property for his own benefit. The

counterclaim seeks a declaratory judgment that Wheelabrator

actually owns the methods, technologies and other intellectual

property that plaintiffs claim to own; an accounting; and

injunctive relief.

The parties subsequently filed a flurry of summary judgment

briefs, both before and after the close of discovery.

Wheelabrator seeks summary judgment in its favor on all of

plaintiffs’ claims, while Forrester and FESI have moved for

partial summary judgment as to liability on Counts I-III of their

complaint and for summary judgment in their favor on

Wheelabrator’s counterclaim.

III. Analysis

A. The parties’ cross-motions for summary judgment on Counts 1-3 of the complaint

The parties’ cross-motions for summary judgment on Counts 1-

3 of the complaint are denied. Wheelabrator’s motion is based

primarily on the theory that any injury to plaintiffs occurred no

later than fall 2006, when Kobin stopped purchasing DCPDHP from

22 FESI, and that their claims are therefore barred under the

applicable statute of limitations because plaintiffs did not

bring suit until February 2010. See N.H. Rev. Stat. Ann. §

508:4, I.10

Under the statute, the limitations period on the plaintiffs’

claims began running when they “[d]iscovered, or in the exercise

of reasonable diligence should have discovered, the injury and

its causal relationship to the act or omission complained of.”

10 Wheelabrator has also relied upon N.H. Rev. Stat. Ann. § 358-A:3, IV-a, asserting that the statute “requires a claim to be brought within three years from the date a plaintiff knows or should have known of conduct that allegedly violates the statute.” Document n o . 36-1 at 1 9 . While plaintiffs do not dispute this interpretation of section 358-A:3, IV-a, and it finds some support in the legislative history, it is contrary to the plain language of the statute. C f . Ruiz v . Bally Total Fitness Holding Corp., 496 F.3d 1 , 8 (1st Cir. 2007) (“Court are not free to disregard the plain language of a statute and, instead, conjure up legislative purposes and intent out of thin air.”). Rather than requiring plaintiffs to bring suit within three years of the date they learn of the violation, section 358- A : 3 , IV-a exempts “[t]ransactions entered into more than 3 years prior to the time the plaintiff knew, or reasonably should have known, of the conduct alleged to be in violation of this chapter” from the Consumer Protection Act. It does not govern the time period within which a plaintiff must bring suit. But see King v . Philip Morris, Inc., N o . 99-C-856, 2000 WL 34016358, *12-13 (N.H. Sup. C t . Nov. 2 , 2000) (relying on legislative history to reach the opposite conclusion). Because the Consumer Protection Act contains no limitations provision applicable to this action, the court will apply section 508:4,I ’s general statute of limitations to plaintiffs’ Consumer Protection Act claim. See N.H. Rev. Stat. Ann. § 508:4, I (section 508:4's limitations period applies “[e]xcept as otherwise provided by law”).

23 N.H. Rev. Stat. Ann. § 508:4. Plaintiffs certainly knew of the

injury in the fall of 2006, when Kobin stopped its regular

monthly purchases of DCPDHP from FESI. And there is a good deal

of evidence that plaintiffs either knew or should have known of

Wheelabrator’s alleged misstatements to Kobin before February

2007. As early as May 2005, Forrester accused Wheelabrator of

“provid[ing] misinformation relating to FESI-BOND technology to

its licensee in Taiwan, and disparag[ing] FESI and myself.” In

April 2006, he wrote to Kobin to state his belief that

Wheelabrator had committed “intellectual property fraud” against

it. And in January 2007, he wrote to Kobin again to express his

concern that Kobin might be resuming its use of WES-PHix, and

reminded Kobin that Wheelabrator had previously overstated the

scope of its patent rights.

These letters, taken together, suggest that Forrester and

FESI had reason to believe that Wheelabrator had been untruthful

with Kobin regarding the scope of Wheelabrator’s intellectual

property rights. From this evidence, a trier of fact could

reasonably conclude that as soon as plaintiffs knew that Kobin

had ceased business with FESI and was considering resuming

business with Wheelabrator--which, the evidence suggests, might

be as early as September or October 2006--they should have

immediately suspected that this resulted from Wheelabrator again

24 overstating its rights. Under this view of the evidence,

plaintiffs knew or should have known of Wheelabrator’s misconduct

and its connection to their injury more than three years before

they brought this suit in February 2010. For this reason alone,

plaintiffs’ motion for summary judgment on Counts 1-3 is denied.11

But that is not the only reasonable conclusion that could be

drawn from the evidence. First, none of the letters accuses

Wheelabrator of falsely claiming to own the U.S. patent rights at

issue in this case. Rather, the “intellectual property fraud”

referred to in the April 2006 letter (and referenced again in the

January 2007 letter) dealt with the scope of Wheelabrator’s

Taiwan patent rights. Second, the January 2007 letter does not

definitively indicate whether Forrester knew at that time that

Kobin had decided to resume business with Wheelabrator, or

whether he had merely surmised as much from Kobin’s abrupt

cessation of DCPDHP purchases.

Third, and most importantly, there is also evidence that

plaintiffs did exercise reasonable care in trying to discover the

11 That motion must also be denied because genuine disputes exist as to a number of material facts, not least of which are whether Wheelabrator actually misrepresented the scope of its intellectual property rights or whether such misrepresentation caused plaintiffs any legally-cognizable damages.

25 reason that Kobin stopped purchasing DCPDHP from them in 2006.

In addition to the January 2007 letter, plaintiffs and their

agents reached out to Kobin on several occasions to try to

confirm that it had decided to stop doing business with them.

Kobin did not respond. Forrester testified that he was not able

to confirm Kobin’s position, or the reason for i t , until the June

2 7 , 2007 meeting in Taipei. This evidence is sufficient to

create a genuine issue of material fact as to whether the

plaintiffs knew or should have known that Wheelabrator’s alleged

misstatements had caused their injury more than three years prior

to the filing of this action. Thus, to the extent Wheelabrator’s

motion is premised on the statute of limitations, it must be

denied.

Wheelabrator’s motion is also denied insofar as it is based

on the merits of plaintiffs’ claims. A reasonable finder of fact

could conclude, based upon the evidence of record, that

Wheelabrator repeatedly and intentionally misrepresented that it

owned intellectual property actually belonging to FESI, a

competitor, with the purpose and effect of causing their mutual

customer to terminate its contractual relationship with FESI.

This is sufficient to make out a claim for intentional

interference with contract or prospective advantage under New

Hampshire law. Those claims require a plaintiff to establish

26 that “(1) the plaintiff had an economic relationship [or

contract] with a third party; (2) the defendant knew of this

relationship [or contract]; (3) the defendant intentionally and

improperly interfered with this relationship [or contract]; and

(4) the plaintiff was damaged by such interference.” Singer

Asset Fin. Co., LLC v . Wyner, 156 N.H. 4 6 8 , 478 (2007) (reciting

elements of intentional interference with contract); see M&D

Cycles, Inc. v . Amer. Honda Motor Co., Inc., 208 F. Supp. 2d 115,

119 (D.N.H. 2002) (reciting elements of intentional interference

with prospective advantage). While it is not the only rational

view of the evidence, a factfinder could conclude that each of

those elements is present.

Wheelabrator offers no clear reason why the same conduct

does not also make out a claim for unfair and deceptive practices

under the Consumer Protection Act.12 Contrary to Wheelabrator’s

one-line argument, the Consumer Protection Act may in fact be

applied to “business transactions” concerning “sophisticated

entities.” See document n o . 36-1 at 2 2 . Our court of appeals

has expressly noted that “[t]he unfair and deceptive practices

12 Whether Wheelabrator’s alleged conduct constitutes one of the fourteen types of enumerated conduct the Act prohibits, o r , if not, whether it meets the “rascality” test, see Fin-Brand Positioning, LLC v . Take 2 Dough Productions, Inc., 2011 DNH 2 0 0 , 2 4 , are issues not addressed in depth by the parties’ memoranda, so the court will ignore them at this point as well.

27 prohibited by the CPA appear to include transactions between

business competitors as well as those involving ultimate

consumers” and that “[t]here are no provisions which limit the

Act’s protection to ultimate ‘consumers’ alone.” E . Mountain

Platform Tennis, Inc. v . Sherwin-Williams Co., Inc., 40 F.3d 4 9 2 ,

497 (1st Cir. 1994); see also Pacamor Bearings, Inc. v . Minebea

Co., Ltd., 918 F. Supp. 4 9 1 , 499 (D.N.H. 1996) (“[P]laintiffs’

‘competitor’ status does not foreclose resort to the Consumer

Protection Act for redress of their asserted injuries.”).

Moreover, the fact that some of Wheelabrator’s alleged wrongful

conduct may have taken place at the June 1 4 , 2007 meeting between

Kobin and Wheelabrator in New Hampshire--albeit a very small part

of the overall picture--may subject Wheelabrator to liability

under the Consumer Protection Act for the conduct of “trade or

commerce within this state.” See Pacamor, 918 F. Supp. at 504

(holding that Consumer Protection Act applies to “offending

conduct” that takes place within New Hampshire). Whether

plaintiffs can ultimately prove conduct within New Hampshire

sufficient to give rise to liability under the Act is a question

for trial.

28 B. Wheelabrator’s motion for summary judgment on Count IV (trade secret misappropriation)

Count 4 of plaintiffs’ complaint makes a claim under New

Hampshire's version of the Uniform Trade Secrets Act, N.H. Rev.

Stat. Ann. § 350-B. The Act provides for injunctive and monetary

relief for trade secret misappropriation. N.H. Rev. Stat. Ann. §

350–B:2. Wheelabrator argues that plaintiffs’ claim under the

Act fails for three reasons: (1) it is barred by the statute of

limitations, (2) plaintiffs cannot prove the existence of a trade

secret because the alleged secret was generally known and

publicly disclosed, and (3) plaintiffs cannot prove

misappropriation. While the court has doubts about the first two

arguments, the third is correct.

UTSA defines “misappropriation” a s :

(a) Acquisition 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

(b) Disclosure or use of a trade secret of another without express or implied consent by a person who:

(1) Used improper means to acquire knowledge of the trade secret; or

(2) At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire i t ; or acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or

29 (3) 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.

Id. § 350–B:1, I I . A successful claim for misappropriation of

trade secrets, therefore, requires the defendant’s acquisition,

use, or disclosure of the secret. See, e.g., 4 Roger M . Milgrim

& Eric E . Bensen, Milgrim on Trade Secrets § 15.01[1][d], at 15-

116 n.85.3 (2010).

Plaintiffs have explained their theory of misappropriation

as follows:

[Wheelabrator’s] claim to Kobin of ownership of the patent for all solid phosphate stabilizers of ash, and acceptance of their subsequent license by EMMA and them Kobin, allowed [Wheelabrator] site access and the ability to license a FESI-developed, turn-key [lead] stabilization system and chemistry at Kobin which [it] did not own, engineer, invent, patent, or retain by license. By falsely purporting to license as its own property the FESI-BOND DRY system facility operations under false pretences, [Wheelabrator] misappropriated [FESI’s] Trade Secrets . . . .

Document n o . 104 at 1 0 ; see also document n o . 116 at 18-19. In

other words, plaintiffs claim that Wheelabrator misappropriated

their trade secrets by telling Kobin that it owned the rights to

the use of any solid form of phosphate to stabilize lead in

incinerator ash, and including in its licenses with EMMA and

Kobin an overly broad definition of WES-PHix that included the

special method of FESI-BOND DRY that Forrester had developed for

Kobin. According to plaintiffs, this conduct constitutes either

30 a use or disclosure of their special method under N.H. Rev. Stat.

Ann. § 350–B:1, II(b), see document n o . 116 at 1 8 ; they do not

argue that Wheelabrator “acquired” their method as that term is

used in § 350–B:1, II(a).

This theory suffers from several shortcomings. Among them,

in responding to Wheelabrator’s motion for summary judgment,

plaintiffs have pointed to no evidence that Wheelabrator ever

actually obtained knowledge of the alleged trade secret. There

i s , for example, no testimony from any employee of Wheelabrator

or Kobin that could establish that Kobin ever demonstrated or

disclosed plaintiffs’ special FESI-BOND DRY method to

Wheelabrator. In fact, Wheelabrator’s Rule 30(b)(6) deponent

testified that he did not learn that Kobin was using DCPDHP, a

key component of plaintiffs’ alleged secret, until after this

lawsuit had been filed. Even assuming that plaintiffs are

correct in asserting that Wheelabrator had the right to “site

access” at Kobin’s facility, they have produced no evidence that

Wheelabrator ever used or even attempted to use its site access

to observe plaintiffs’ method in action; again, Wheelabrator’s

30(b)(6) deponent testified to the contrary, stating that he had

never observed Kobin using plaintiffs’ method. And while direct

evidence of a defendant’s knowledge of the secret can sometimes

be difficult to come by, plaintiffs also have not provided any

31 indirect evidence, such as Wheelabrator’s use of plaintiffs’

method, or a method derived from i t , at Kobin’s facility or any

other facility. There is no evidence before the court that

Wheelabrator could replicate FESI’s special method for treating

ash if it so desired, or that it could explain to a third party

how to replicate that method.

The absence of such evidence is fatal to plaintiffs’ claim

that Wheelabrator “disclosed” or “used” their alleged trade

secret within the meaning of N.H. Rev. Stat. Ann. § 350–B:1,

II(b). Under the Act, the defendant’s knowledge of the secret is

an integral element of both a disclosure and a use claim. See

id. §§ 350–B:1, II(b)(1) (requiring that defendant “used improper

means to acquire knowledge of the trade secret”); II(b)(2)

(requiring that defendant “knew or had reason to know that his

knowledge of the trade secret” was acquired under certain

conditions); II(b)(3) (requiring that defendant “had reason to

know that it was a trade secret and that knowledge of it had been

acquired by accident or mistake”) (emphasis added). As the

United States District Court for the District of Connecticut,

interpreting that state’s version of the Act, has explained, to

be held liable for use or disclosure, a defendant “must itself

have knowledge of and used or disclosed the Trade Secrets.”

Control Module, Inc. v . Data Mgmt., Inc., N o . 07-cv-475-AWT, 2007

32 WL 4333814, *4 (D. Conn. Dec. 1 0 , 2007); see also Silvaco Data

Sys. v . Intel Corp., 184 Cal. App. 4th 2 1 0 , 225, 109 Cal. Rptr.

3d 2 7 , 42 (2010) (holding that in order for plaintiff to prevail

against defendant on UTSA claim, plaintiff “was obligated to

establish that [defendant] had ‘knowledge of the trade secret’”),

overruled on other grounds by Kwikset Corp. v . Sup. Ct., 120 Cal.

Rptr. 3d 7 4 1 , 246 P.3d 877 (Cal. 2011). 13

Even more fundamentally, Wheelabrator’s alleged conduct does

not constitute either “disclosure” or “use.” There is no

evidence that Wheelabrator ever disclosed plaintiffs’ secret to

13Becausethe general purpose of the Uniform Trade Secrets Act is to promote uniformity with respect to trade secret law, “the construction that other courts have given to the same provision” is instructive when construing a provision of the Act. Mortg. Specialists, Inc. v . Davey, 153 N.H. 7 6 4 , 775 (2006).

It is useful to caution here that

[n]othing said here should be taken to suggest that a defendant cannot be liable for misappropriation unless he personally possessed knowledge of the trade secret. He can of course acquire such knowledge, and indeed can conduct the entire misappropriation, vicariously, e.g., through an agent. Further, constructive knowledge of the secret may well be sufficient, at least in some circumstances. Thus one who knowingly possesses information constituting a trade secret cannot escape liability merely because he lacks the technical expertise to understand i t , or does not speak the language in which it was written.

Silvaco, 184 Cal. App. 4th at 225 n.7, 109 Cal. Rptr. 3d at 42 n.76 (emphasis in original). Neither situation is presented here.

33 any other person or entity. Kobin, the only other party that

knew of the secret (at least as far as the record evidence

shows), learned of it from plaintiffs themselves, not from

Wheelabrator. And while “‘use’ is a very broad concept,” given

its most expansive definition by courts that hold that “any

exploitation of the trade secret that is likely to result in

injury to the trade secret owner or enrichment to the defendant”

constitutes “use,” Cognis Corp. v . CHEMCENTRAL Corp., 430 F.

Supp. 2d 806, 812 (N.D. Ill. 2006) (quoting Restatement (Third)

of Unfair Competition § 40 cmt. c (1995)), it is not broad enough

to encompass Wheelabrator’s alleged conduct. What Wheelabrator

is alleged to have done is markedly different from the type of

acts usually constituting such “exploitation”: “marketing goods

that embody the trade secret, employing the trade secret in

manufacturing or production, relying on the trade secret to

assist or accelerate research or development, or soliciting

customers through the use of information that is a trade secret.”

Id. Wheelabrator, rather than actively exploiting its knowledge

or possession of the secret to its own advantage--the common

thread in each of these examples--simply claimed ownership of the

secret that it did not have.

This court’s conclusion that this conduct does not

constitute either “disclosure” or “use” finds further support in

34 Tao of Systems Integration, Inc. v . Analytical Services &

Materials, Inc., 299 F. Supp. 2d 565 (E.D. V a . 2004), a case

remarkably similar to this one. There, as here, the plaintiff

alleged that the defendant misrepresented to a common client that

the defendant owned trade secrets that actually belonged to the

plaintiff, inducing the client to sign a valuable services

contract with the defendant. Id. at 568. The mere act of making

false statements about the ownership of the plaintiff’s trade

secrets, the court concluded, was not “misappropriation” within

the meaning of the Uniform Trade Secrets Act because “[t]o

falsely claim to have certain information does not constitute the

acquisition, disclosure, or use of that information.” Id. at

576. This court agrees. Wheelabrator is entitled to summary

judgment on Count 4 .

C. Plaintiffs’ motion for summary judgment on Wheelabrator’s counterclaim

Forrester and FESI have also moved for summary judgment on

Wheelabrator’s counterclaim. As the sole basis for their motion,

they argue that Wheelabrator discovered its alleged injury more

than three years before asserting the counterclaim, such that the

counterclaim is barred by the statute of limitations. Forrester

and FESI did not, however, assert a statute of limitations

35 defense in their reply to the counterclaim. In their reply, they

asserted only two “affirmative defenses”: first, that the

counterclaim “fails to state a claim upon which relief may be

granted,” and second, that the counterclaim “is barred by the

doctrine of laches.” Document n o . 88 at 2 . They have not sought

leave of court to amend their reply to add a statute of

limitations defense.

Federal Rule of Civil Procedure 8(c)(1) provides that “[i]n

responding to a pleading, a party must affirmatively state any

avoidance or affirmative defense, including . . . statute of

limitations.” The rule does not distinguish between defenses to

claims set forth in a complaint and those set forth in a

counterclaim, and therefore requires a plaintiff responding to a

counterclaim to state its affirmative defenses against the

counterclaim. See 5 Arthur R. Miller & Mary Kay Kane, Federal

Practice & Procedure § 1278, at 690 (2004) (“If the original

answer contains a counterclaim . . . the plaintiff is obliged to

reply to it and that pleading which, in effect, is an answer to

that counterclaim, must contain any affirmative defenses the

plaintiff may wish to assert against the counterclaim.”).

Affirmative defenses not pleaded in an answer are waived. See,

e.g., Jewelers Mut. Ins. C o . v . N . Barquet, Inc., 410 F.3d 2 , 11

(1st Cir. 2005); see also 5 Miller & Kane, supra, § 1278, at 644-

36 45 (“It is a frequently stated proposition of virtually universal

acceptance by the federal courts that a failure to plead an

affirmative defense as required by Federal Rule 8(c) results in

the waiver of that defense and its exclusion from the case.”).

The purpose of the Rule 8(c) pleading requirement is “to

give the opposing party notice of the defense and a chance to

develop evidence and offer arguments to controvert the defense,”

Wolf v . Reliance Standard Life Ins. Co., 71 F.3d 4 4 4 , 449 (1st

Cir. 1995), such as “facts and legal arguments that require the

tolling of the statute, whether by action of law, by agreement of

the parties, or by equitable means,” Harris v . Sec’y, U.S. Dep’t

of Veterans Affairs, 126 F.3d 339, (D.C. Cir. 1997).

Accordingly, a court may excuse a party’s failure to plead an

affirmative defense if the opposing party has ample notice of it

and time to conduct discovery so that no prejudice results.

Knapp Shoes, Inc. v . Sylvania Shoe Mfg. Corp., 15 F.3d 1222, 1226

(1st Cir. 1994); see also Conjugal P’Ship of Jones v . Conjugal

P’ship of Pineda, 22 F.3d 3 9 1 , 400 (1st Cir. 1994) (“[W]hen there

is no prejudice and when fairness dictates, the strictures of the

raise or waive rule may be relaxed.”).14 On the present record,

14 This standard is more forgiving than that applied in some circuits, which hold that once a party has waived an affirmative defense under Rule 8 ( c ) , it “cannot revive the defense in a memorandum in support of a motion for summary judgment.” Lebouef

37 however, the court cannot excuse plaintiffs’ failure to plead

their statute of limitations defense.

Plaintiffs’ motion, which was filed on August 3 0 , 2011--long

after the close of non-expert discovery in this case, and even

longer after the deadline for amending pleadings--appears to be

the first filing that squarely raises their statute of

limitations defense. It is clear that plaintiffs anticipated

asserting, and had the opportunity to conduct discovery o n , their

statute of limitations defense--their motion is premised almost

entirely on Wheelabrator’s responses to their requests for

admission. But there is no indication in any of the documents

before the court that Wheelabrator likewise had a full and fair

opportunity to conduct discovery on i t . Though Wheelabrator has

gamely responded to the plaintiffs’ motion on the merits, its

response relies primarily upon legal arguments and matters of

public record, rather than evidence revealed during discovery.

Cf. Conjugal P’Ship, 22 F.3d at 401 (implied consent to trial of

a new issue, and corresponding lack of prejudice by the

v. Island Operating Co., Inc., 342 Fed. Appx. 983, 984 (5th Cir. 2009 ) ; see also Harris, 126 F.3d at 339 (observing that permitting parties to raise affirmative defenses for the first time in dispositive motions undermines the structure dictated by Rules 8 and 15 and holding that “a party must first raise its affirmative defenses in a responsive pleading before it can raise them in a dispositive motion”).

38 introduction of that issue into the case, can be found “where the

opposing party actually produced evidence on the new issue”).

The court thus cannot say that Wheelabrator has not been

prejudiced by plaintiffs’ late introduction of a statute of

The fact that plaintiffs have failed to plead their statute

of limitations defense in their answer (or even to seek leave to

amend to add it) is striking given that plaintiffs themselves

repeatedly castigate Wheelabrator for raising affirmative

defenses or theories of recovery that, they contend, were omitted

from its answer and counterclaim. See document 1 2 8 , passim.

With what measure ye mete, it shall be measured to you:

Forrester and FESI may not rely upon a statute of limitations

defense to Wheelabrator’s counterclaim unless and until they are

able to demonstrate grounds for amending their answer in

accordance with Rule 1 5 . Their motion for summary judgment on

Wheelabrator’s counterclaim is therefore denied.

39 IV. Conclusion

For the reasons set forth above, the parties’ respective

motions for summary judgment on Counts 1-315 are DENIED,

Wheelabrator’s motion for summary judgment on Count 4 16 is

GRANTED, and plaintiffs’ motion for summary judgment on

Wheelabrator’s counterclaim17 is DENIED. Plaintiffs’ motion to

file a supplemental declaration in objection to Wheelabrator’s

motion for summary judgment18 is therefore DENIED as moot.

Because the court grants summary judgment for Wheelabrator on

plaintiffs’ trade secret claim, Wheelabrator’s motion in limine

to preclude evidence of alleged disclosure of trade secrets19 is

As also described above, Wheelabrator’s motions to strike

certain evidence20 are DENIED and plaintiffs’ motion to have

statements of Jen Wu deemed admissions21 is DENIED.

15 Document nos. 36 & 9 6 . 16 Document n o . 101. 17 Document n o . 9 9 . 18 Document n o . 7 6 . 19 Document n o . 181. 20 Document nos. 6 0 , 1 1 1 , & 117. 21 Document n o . 8 9 .

40 SO ORDERED.

Joseph N . Laplante T ^iited States District Judge

Dated: December 1 6 , 2011

cc: Erik Graham Moskowitz, Esq. Michael J. Markoff, Esq. Sibley P. Reppert, Esq. Steven E . Grill, Esq. Jonathan M . Shirley, Esq.