Niemi v. NHK Spring Co., Ltd.

543 F.3d 294, 88 U.S.P.Q. 2d (BNA) 1321, 2008 U.S. App. LEXIS 20241, 2008 WL 4273123
Court of Appeals for the Sixth Circuit·Decided September 19, 2008·No. 07-3536·Published·Cited by 75 cases

Opinion

McKEAGUE, Circuit Judge.

Plaintiff Richard K. Niemi devised a new method of manufacturing stabilizer bars for automobiles in 1990, a “trade secret.” He alleges he disclosed this method to defendant New Mather Metals, Inc., only after entering into an oral confidentiality agreement. Pursuant to this agreement, New Mather was allowed to use the manufacturing process in exchange for its promise to maintain its secrecy and to grant plaintiff the exclusive right to perform all design work for New Mather. In 1998, Niemi learned that New Mather had breached the agreement by entering into design contracts with other parties. Niemi brought suit for misappropriation of trade secret, breach of contract, and promissory estoppel. The district court dismissed the claims against New Mather’s parent corporation, NHK Spring Co., Ltd., for lack of personal jurisdiction and awarded summary judgment to New Mather on all of Niemi’s claims. Niemi has timely appealed these rulings.

On careful consideration of the record, we uphold the district court’s dismissal of the claims against NHK Spring Co., but conclude there is sufficient evidence to create genuine issues of material fact on the trade secret and promissory estoppel claims. For the reasons that follow, the summary judgment rulings on these two claims are vacated and the matter remanded for further proceedings.

I. FACTUAL BACKGROUND

Despite having little more than a high school education, plaintiff Richard K. Niemi has, since the 1960s, made a living in the engineering design business in the metropolitan Detroit area. Although his employment situation has been subject to numerous changes over the years, his involvement in the “bender business,” i.e., creating machines and tools to manufacture stabilizer bars for automobiles, has been a constant, as he has serviced customers like New Mather Metals, Inc. of Toledo, Ohio (defendant herein), General Motors Corporation, and Chrysler Corporation. Niemi performed engineering design work for New Mather from 1967 to 1998. During this period, Niemi conducted his business operations informally; apart from quotations, purchase orders and invoices, written documentation was rarely used. During the early 1990s, when the transactions giving rise to this action took place, Niemi operated under the name “Richard K. Niemi Design and Engineering,” as a sole proprietorship. Since 1997, Niemi has conducted business, as “50/50 partners” with his son Mark, under the name “RKN Technology, LLC.” RKN Technology operates out of Mark’s home in South Lyon, Oakland County, Michigan.

In 1990, Niemi approached Denzil Sheckler, of New Mather, to discuss a new method of manufacturing stabilizer bars for automobiles. New Mather was interested in the new method and, in September 1990, issued the first purchase order requesting Niemi to incorporate the new method design into the manufacturing tooling. Although the purchase order was *297 accompanied by a statement of standard terms and conditions providing that “no other or different terms or conditions shall apply to this order unless specifically agreed to in writing by the authorized officer of Purchaser,” Niemi contends he obtained New Mather’s assurance that the new method “would remain confidential” even before he disclosed it. Niemi aff. ¶ 3, JA 37. He did not reduce this “confidentiality agreement” to writing in the form of a license because he trusted New Mather as “honorable people of integrity I’ve dealt with for thirty years.” Niemi dep. at 238-39, JA 98.

Thereafter, in 1993 or '94, Niemi remembers that Albert Blackwood, New Mather’s Engineering Manager, approached him with a request that he sign a reciprocal “exclusivity agreement.” Black-wood explained that New Mather, cognizant of the competitive advantage it had gained by using the new bar-forming method, wanted to ensure that its use remained exclusive and that Niemi would not disclose the method to other manufacturers. In exchange for this restriction, Niemi sought assurance that he would continue to receive all of New Mather’s design work, as he had for the previous 25 or 30 years, as well as the opportunity to bid on design needs of New Mather’s parent corporation, NHK Spring Co., Ltd. After receiving the requested assurance from Blackwood, Niemi signed the exclusivity agreement, but was not given a copy. 1 Although New Mather’s reciprocal assurance was not reduced to writing, Niemi believed that he and Blackwood both understood that New Mather was obligated to continue using Niemi for its design needs perpetually as long as Niemi maintained the confidentiality of the design. No further writing was needed, in Niemi’s estimation, because New Mather’s obligation represented a continuation of an arrangement that had been in place for 25 or 30 years, an arrangement with people who Niemi had come to believe were honest and trustworthy. 2

In 1998, Niemi learned of reason to believe New Mather had disclosed his trade secret to, and ordered design work from, other designers, actions which he believed were in violation of the parties’ reciprocal exclusivity agreement. Niemi confronted Blackwood and New Mather’s President, Ron Malcolm. He learned that Raul Cor-nieles was the new Engineering Manager. When he confronted Cornieles, Cornieles said he was unaware of any agreement, but would look into it. In his next conversation with Mark Niemi, Cornieles asked whether RKN Technology wanted to be New Mather’s design source. Mark Niemi responded affirmatively and “assumed” that Cornieles was thereby ratifying and reaffirming the preexisting mutual exclusivity agreement. Yet, apparently, New Mather did not live up to Niemi’s understanding of the exclusivity agreement and Niemi commenced this action.

II. PROCEDURAL HISTORY

Niemi filed suit in the Eastern District of Michigan on February 28, 2002, invoking federal jurisdiction based on the parties’ diversity of citizenship. Named plaintiffs include Niemi, d/b/a Richard K. Niemi Design and Engineering Services, and *298 RKN Technology, LLC (referred to collectively as “Niemi”). Named defendants include New Mather, its parent corporation NHK Spring Co., Ltd. (a Japan corporation), and another subsidiary of NHK Spring, NHK International Ltd. (a Delaware corporation). The original complaint included two counts, asserting claims for misappropriation of trade secret and breach of contract. On August 8, 2003, the district court, Honorable John Feikens, ruled on NHK Spring’s motion to dismiss for lack of personal jurisdiction. The court concluded that personal jurisdiction over NHK Spring was lacking. Rather than dismissing the claims against NHK Spring, however, the district court transferred the case to the Northern District of Ohio, where the actions giving rise to Niemi’s claims took place.

On transfer of the case to the Northern District of Ohio, NHK Spring again moved to dismiss for lack of personal jurisdiction on November 21, 2003. The district court, Honorable James G. Carr, Chief Judge, granted the motion on April 12, 2006. 3

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Niemi v. NHK Spring Co., Ltd., 543 F.3d 294, 88 U.S.P.Q. 2d (BNA) 1321, 2008 U.S. App. LEXIS 20241, 2008 WL 4273123 (6th Cir. 2008).

543 F.3d 294 (Niemi v. NHK Spring Co., Ltd.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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