Pro-Comp Management, Inc. v. R.K. Enterprises, LLC

237 S.W.3d 20, 366 Ark. 463
Supreme Court of Arkansas·Decided June 1, 2006·No. 05-459·Published·Cited by 22 cases

Opinions

Jim Hannah, Chief Justice.

Pro-Comp Management, Inc., d/b/a The Right Solutions, an Arkansas corporation, The D.L.J. Wright Industry, Inc., d/b/a The Right Solutions, an Oklahoma corporation, and Amedistaf, L.L.C., d/b/a The Right Solutions, a Delaware corporation, (TRS) appeal a decision of the Washington County Circuit Court entering upon remand a judgment in favor of R.K. Enterprises, L.L.C., d/b/a Nationwide Nurses, a Nevada corporation, Katherine Hefly, Mary Burks, Traca Lane, and Raymond Hefly. The appellees cross-appeal, alleging that this court lacked jurisdiction to remand the case for a determination of damages under the Trade Secrets Act.1 The decision on the prior appeal in this case is R.K. Enterprise, L.L.C. v. Pro-Comp Management, Inc., 356 Ark. 565, 158 S.W.3d 685 (2004) (R.K. I). Our jurisdiction is pursuant to Ark. Sup. Ct. R. l-2(a)(7) because this is the second appeal in this case.

Jurisdiction

Although the issue of jurisdiction is raised by appellees on cross-appeal, we address the issue of jurisdiction first because appellees allege that this court exceeded its jurisdiction in remanding the case for a determination of damages in R.K. I under the Trade Secrets Act. Appellees further allege that because this court lacked jurisdiction to issue the decision in R.K. I, it now lacks jurisdiction to hear any further appeal arising from that decision.

Appellees’ argument is that only Katherine Hefly, Mary Burks, and Traca Lane were found to have acquired and removed trade secrets from TRS; therefore, Nationwide and Raymond Hefly could not be liable under the Trade Secrets Act. However, the circuit court also found that Nationwide benefitted from the misappropriation, meaning that Nationwide used the illegally obtained trade secrets. Use of a misappropriated trade secret gives rise to liability under Ark. Code Ann. § 4-75-601 (2) (B) (Repl. 2001). Thus, there is a finding that Nationwide is liable. Raymond Hefly is likewise liable as he ran the business and was the person who used the trade secrets to further Nationwide’s business.

Appellee’s cross-appeal alleges that this court lacked jurisdiction to remand the case in R.K. I for a determination of damages under the Trade Secrets Act because TRS did not cross-appeal in R.K. I. They argue that by making the election of remedies at trial for those offered under conversion and conspiracy, there was a ruling by the circuit court that TRS failed to appeal in R.K. I, and that circuit court ruling now controls under the law of the case doctrine. This, appellees argue, means that this court lacked jurisdiction to reverse this case and remand it for relief benefitting TRS. The principle of the law of the case is that, “[w]hen there is no cross-appeal, the order from which cross-appeal is not taken becomes the law of the case.” Clemmons v. Office of Child Support Enforcement, 345 Ark. 330, 351, 47 S.W.3d 227, 241 (2001). However, what was at issue on appeal in R.K. I was whether the circuit court erred in deciding the case on conversion and conspiracy. This court held that appellees were correct, that the circuit court erred, and we reversed and remanded the case for a determination of damages under the Trade Secrets Act, the other remaining theory of liability argued at trial. Appellees rely on the election of remedies by TRS to serve as the reason law of the case must apply. However, the doctrine of election of remedies applies to remedies, not to causes of action, and bars more than one recovery on inconsistent remedies. Regions Bank v. Griffin, 364 Ark. 193, 217 S.W.3d 829 (2005). Here the remedy sought, recovery under conversion and conspiracy, was a remedy that was not available under this set of facts. Therefore, there could be no election between remedies and upon remand the circuit court was to consider the only available remedy, a determination of damages under the Trade Secrets Act.

Violation of the Mandate Rule

TRS argues that the circuit court violated the mandate rule as evidenced by reconsideration of the judgment entered in favor of TRS and entry of a judgment in favor of appellees. A lower court is bound by the judgment or decree of a higher court as law of the case and must carry the decision of the higher court into execution pursuant to the mandate issued by that court. Smith v. AJ&K Operating Co., 365 Ark. 229, 227 S.W.3d 899 (2006). The lower court may not vary the decision or judicially examine it for any purpose other than execution. Id. A lower court may not vary the relief granted in the mandate and may not intermeddle even where there is apparent error in the mandate. Id.

TRS argues that in entering judgment in favor of appellees, the circuit court altered its previous factual finding of liability against appellees. The record fails to support this conclusion. The order issued upon remand clearly indicates that what was at issue on remand was “a determination of damages under the statutory provisions of the Arkansas Trade Secrets Act. . . .” Further, the order upon remand reaffirms the earlier finding that appellees misappropriated and used trade secrets in violation of the Trade Secrets Act. Entry of judgment in favor of appellees merely reflected the circuit court’s conclusion that TRS failed to prove its damages.

Actual Loss and Unjust Enrichment

TRS argues that the circuit court erred in failing to award damages upon remand. In R.K. I, this court held that “the Trade Secrets Act prescribes an exclusive remedy for misappropriation of trade secrets. . . .” R.K. I, 356 Ark. at 568, 158 S.W.3d at 686. This court also held that “the statutory language of the Trade Secrets Act displaces or preempts the award of damages based upon tort claims for conversion of trade secrets, as well as other tort claims such as conspiracy, that may arise under a claim of misappropriation of trade secrets.” R.K. I, 356 Ark. at 574, 158 S.W.3d at 690. Section 4-75-606 (Repl. 2001) provides:

(a) In addition to or in lieu of injunctive relief, a complainant may recover damages for the actual loss caused by misappropriation.
(b) A complainant also may recover for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss.

In R.K. I, we stated that actual loss noted in the statute is calculated as “the plaintiffs lost profits or the defendant’s gain, ‘whichever affords the greater recovery.’ ” R.K. I, 356 Ark. at 575, 158 S.W.3d at 690 (quoting Saforo & Assocs., Inc. v. Porocel Corp., 337 Ark. 553, 566, 991 S.W.2d 117, 124 (1999)). We then noted that while the circuit court had determined that the market value of the trade secrets was $262,303, “[t]he abstract before us does not establish TRS’s lost profits or Nationwide’s gains resulting from the misappropriation of trade secrets.” R.K. I, 356 Ark. at 575, 158 S.W.3d at 691.

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Pro-Comp Management, Inc. v. R.K. Enterprises, LLC, 237 S.W.3d 20, 366 Ark. 463 (Ark. 2006).

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