Phoenix Renovation Corp. v. Rodriguez

258 F. App'x 526
CourtCourt of Appeals for the Fourth Circuit
DecidedDecember 17, 2007
Docket06-2260
StatusUnpublished
Cited by1 cases

This text of 258 F. App'x 526 (Phoenix Renovation Corp. v. Rodriguez) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Phoenix Renovation Corp. v. Rodriguez, 258 F. App'x 526 (4th Cir. 2007).

Opinion

PER CURIAM:

Phoenix Renovation Corp. (“Phoenix”) appeals the district court’s order finding Peter Rodriguez, Radek Koci, and Atlantic Re-Plumbing, LLC (“Atlantic”) (collectively “Appellees”) not liable for damages for copyright infringement and entering judgment in favor of Appellees on Phoenix’s tort and contract claims under Virginia law. Phoenix argues that the district court erroneously failed to shift the burden of proof on its copyright claim to Appellees pursuant to 17 U.S.C.A. § 504(b) (West 2000 & Supp. 2006), resulting in the mistaken conclusion that none of Atlantic’s revenue was attributable to the copyright infringement. Phoenix further contends that the district court erred in finding that Rodriguez and Koci did not breach their Independent Contractor Agreements with Phoenix by using their memories of the locations at which they had performed work for Phoenix in marketing their competing business and did not violate Virginia’s Business Conspiracy Statute, Va. Code Ann. § 18.2-499 (2004 & Supp. 2007) by infringing the copyrighted contract. For the following reasons, we affirm.

I.

The parties do not dispute the relevant facts, which are as follows:

A. Phoenix’s Business

Phoenix specializes in providing polybutylene (“PB”) replacement services. PB replacement represents a niche business within the plumbing industry that arose after it was discovered that PB pipes are defective and can leak. The market for PB replacement services is finite because once a house’s PB pipes have been replaced, there will never be further need for such services in that house.

Phoenix developed and continues to maintain records of the names and addresses of its former customers in a proprietary database. Phoenix considers the addresses contained in the database to be valuable confidential information, because there are no public records identifying buildings that contain PB pipes. Houses with PB pipes, however, are often found on the same street or in the same neighborhoods as other houses with PB. As a result, a company that learns of the existence of PB pipes in one house can often accurately predict that nearby houses also contain PB. Phoenix has therefore developed a system of targeted direct mailing that uses the homes of former customers as “center points” given to direct mail vendors, who then send solicitations to all addresses within defined radii. (J.A. at 340.)

B. Appellees’ Employment/Contracts with Phoenix

Phoenix hired both Rodriguez and Koci as employees in 1995. Rodriguez performed drywall work, and Koci was a licensed master plumber. During the course of their employment with Phoenix, both Rodriguez and Koci asked to be treated as independent contractors rather than employees, and Phoenix agreed. Koci entered into a written Subcontractor Agreement with Phoenix on February 25, 2000, and Rodriguez signed a nearly identical Subcontractor Agreement on Marcli 23, 2000.

The Subcontractor Agreements contained a provision entitled “Disclosure of Trade Secrets and Confidential and Proprietary Information,” which provides as follows:

The Subcontractor shall not, during or at any time after termination of the *529 subcontract, without prior written authorization of the Company, disclose to, or make use of, any trade secret or confidential or proprietary information of the Company or its affiliates. Trade Secrets and confidential or proprietary information include, but are not limited to: customer lists, price lists, insurance and other third party contracts, marketing and sales plans and concepts, identity of key customer or client personnel and their phone numbers, the identity and requirements of customers and clients, bidding and pricing information, personnel policies and procedures, compensation and fringe benefit programs and offer sales, business plans and methods, computer programs and copyrightable work (models, processes, designs, drawings, plans, prototypes, inventions, devices, parts, improvements and other physical and intellectual property), that were disclosed to the Subcontractor or known by the Subcontractor as a consequence of the subcontract and/or used by the Subcontractor to carry out its duties under this Agreement. ...

(J.A. at 25.) 1

While still working for Phoenix, Rodriguez and his then-roommate, Kenneth Cocolin began to discuss forming a new PB replacement business to compete with Phoenix. 2 They recruited Koci to join their venture. In early June 2003, prior to terminating their subcontractor relationship with Phoenix, Rodriguez and Koci performed several PB replacement jobs in neighborhoods in which they had previously done PB replacement work for Phoenix. Also in June 2003, they took steps to organize their business, which they named “Atlantic Re-Plumbing.” (JA. at 346.) On or about June 18, 2003, Rodriguez and Koci terminated their subcontractor agreements with Phoenix.

C. Appellees’ Use of Information Gained from Their Employment with Phoenix

Rodriguez and Koci initially marketed Atlantic’s services primarily through the distribution of fliers on the same streets and neighborhoods in which they had performed PB replacement work for Phoenix. In determining which areas to target, Rodriguez and Koci relied on them own memories; neither ever had access to Phoenix’s database of customer information. 3

Rodriguez and Koci eventually began to market Atlantic’s services through targeted direct mailing. They compiled mailing lists based on “center points,” which were generally locations at which they had performed PB replacement work for Phoenix.

In addition to using their prior knowledge of PB replacement sites to market their services in competition with Phoenix, Rodriguez and Koci also used them knowledge of Phoenix’s pricing structure to gain a competitive advantage. Rodriguez had learned of Phoenix’s pricing structure for PB replacement services during his em *530 ployment and subcontractor relationship with Phoenix. He used this knowledge in an attempt to offer Atlantic’s services at a lower rate than Phoenix’s. Rodriguez and Koci also relied on their memories of what Phoenix had paid them as subcontractors in determining what to pay Atlantic’s subcontractors and employees. Although Koci did come across a Phoenix “pay sheet” while moving Atlantic into a new office, neither he nor Rodriguez used or purposefully retained a Phoenix “pay sheet” for use in competition with Phoenix.

D. Appellee’s Use of Phoenix’s 2002 Interior Re-Pipe Agreement

In its PB replacement business, Phoenix uses a consumer contract known as the “2002 Interior Re-Pipe Agreement.” While Rodriguez and Koci worked with Phoenix, the 2002 Interior Re-Pipe Agreement was neither marked as copyrighted nor kept hidden from independent contractors, and Rodriguez and Koci were not advised that it was confidential or protected by copyright.

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Bluebook (online)
258 F. App'x 526, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phoenix-renovation-corp-v-rodriguez-ca4-2007.