Marcia S. Krieger, Chief United States District Judge.
Given the breadth of motions at issue here, the Court dispenses with a general factual or procedural summary, deferring factual development to the appropriate portion of the analysis. It is sufficient to note here that the Plaintiffs (collectively, "L-3") are engaged in the business of performing high-altitude electromagnetic pulse ("HEMP") testing of electronics, particularly for military applications, along with designing and manufacturing HEMP testing equipment. Most of the individual Defendants were employees of L-3 until approximately 2008, at which time they left L-3 and formed Defendant Jaxon Engineering and Maintenance, Inc. ("Jaxon"), a company that competes with L-3 in HEMP testing. Among its claims, L-3 alleges that the individual Defendants misappropriated L-3 trade secrets when they left L-3 employment and that Jaxon is infringing upon L-3's patents. The Defendants have filed counterclaims against L-3, although those counterclaims are not at issue here.
The substantive motions at issue here are motions for summary judgment. Rule 56 of the Federal Rules of Civil Procedure facilitates the entry of a judgment only if no trial is necessary. See White v. York Intern. Corp., 45 F.3d 357, 360 (10th Cir. 1995). Summary adjudication is authorized when there is no genuine dispute as to any material fact and a party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Substantive law governs what facts are material and what issues must be determined. It also specifies the elements that must be proved for a given claim or defense, sets the standard of proof and identifies the party with the burden of proof. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Kaiser-Francis Oil Co. v. Producer's Gas Co., 870 F.2d 563, 565
If the movant has the burden of proof on a claim or defense, the movant must establish every element of its claim or defense by sufficient, competent evidence. See Fed. R. Civ. P. 56(c)(1)(A). Once the moving party has met its burden, to avoid summary judgment the responding party must present sufficient, competent, contradictory evidence to establish a genuine factual dispute. See Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991); Perry v. Woodward, 199 F.3d 1126, 1131 (10th Cir.1999). If there is a genuine dispute as to a material fact, a trial is required. If there is no genuine dispute as to any material fact, no trial is required. The court then applies the law to the undisputed facts and enters judgment.
If the moving party does not have the burden of proof at trial, it must point to an absence of sufficient evidence to establish the claim or defense that the non-movant is obligated to prove. If the respondent comes forward with sufficient competent evidence to establish a prima facie claim or defense, a trial is required. If the respondent fails to produce sufficient competent evidence to establish its claim or defense, then the movant is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Here, both sides have filed motions seeking summary judgment in their favor. Most often such motions must be determined separately because whether there is a genuine dispute as to a material factual issue turns upon who has the burden of proof, the standard of proof and whether adequate evidence has been submitted to support a prima facie case or to establish a genuine dispute as to material fact. In re Ribozyme Pharmaceuticals, Inc., Securities Litig., 209 F.Supp.2d 1106, 1112 (D.Colo.2002); see also Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir.2000); Buell Cabinet Co. v. Sudduth, 608 F.2d 431, 433 (10th Cir.1979).
The Court pauses at this stage to emphasize that, given the sheer volume of briefing and exhibits submitted with regard to each of the parties' motions, the Court has scrupulously limited its analysis on a motion-by-motion basis, and within each motion, to the specific arguments and evidence identified by the parties in the pertinent portions of their respective briefs. In other words, when considering the Defendants' Motion For Summary Judgment, the Court limits its consideration to the evidence and arguments contained within that motion, L-3's response to it, and the Defendants' reply; the Court does not consider evidence or arguments contained within L-3's own summary judgment motion, even though it might be directed at the same claims. In considering the Defendants' motion directed at, for example, L-3's false advertising claim, the Court considers only the evidence and arguments specifically discussed by the parties under that heading (and any specific portion elsewhere in the brief incorporated by a precise reference), but will not consider evidence and arguments directed at, for example, the conversion or trade secrets claims.
In this motion, the Defendants seek summary judgment on: (i) Claim VII in L-3's Amended Complaint
The Court does not intend the address the Defendants' motion on the merits as it relates to the trade secrets claim, as the Defendants have previously filed an unsuccessful summary judgment motion directed at that claim, raising many of the same issues. In December 2012, the Defendants filed a Motion for Partial Summary Judgment on Plaintiffs' Trade Secret and Breach of Contract Claims
Included within a court's inherent discretion to control their own dockets is the discretion to consider (or to refuse to consider) successive motions for summary judgment raising the same arguments or directed at the same claims. See Hoffman v. Tonnemacher, 593 F.3d 908, 910-11 (9th Cir.2010) and cases cited therein; see also Wagner v. American Family Insurance, 968 F.Supp.2d 1100, 1102 n. 3 (D.Colo. 2013). Although courts sometimes accept successive motions where the latter motion presents a different factual record than the first motion did (as is the case here), this Court finds that, at least in the circumstances presented here, the presence of a different or broader factual record does not warrant a second round of motion practice. As explained more than 50 years ago in Allstate Finance Corp. v. Zimmerman, 296 F.2d 797, 799 (5th Cir. 1961), "we certainly do not approve in general of the piecemeal consideration of successive motions for summary judgment, since defendants might well normally be held to the requirement that the present their strongest case for summary judgment when the matter is first raised." This observation is consistent with this Court's belief that judicial resources are scarce
This Court might be more willing to entertain a successive summary judgment motion if circumstances beyond the movant's control compelled the filing of an initial motion that was less-comprehensive than the movant would otherwise have presented. For example, if the pendency of an imminent dispositive motion deadline prompted the filing of the initial motion before the parties had completed their discovery and subsequently-acquired evidence unexpectedly changed the factual picture, the Court might permit a second motion to be filed. Here, however, there was no urgency
Accordingly, the Court declines to entertain a successive summary judgment motion by the Defendants directed at the trade secrets claim.
L-3 asserts a series of breach of contract claims against each of the former employee Defendants. The record reflects that these Defendants each signed three separate contracts with L-3: the "Standard Contract," the "Confidentiality Contract," and the "Ethics Contract." Defendant Jerry Lubell signed a fourth contract with L-3, an "Exclusive Services Agreement." L-3 alleges that these Defendants breached each of these agreements, and the Defendants
Turning first to the Ethics Contract, the Court agrees with the Defendants that the document in question is merely an aspirational statement, not a formal contractual agreement with sufficiently definite terms. See e.g. Stice v. Peterson, 144 Colo. 219, 355 P.2d 948, 952 (1960) ("An offer must be so definite in its terms ... that the promises and performances to be rendered by each party are reasonably certain"). The Ethics Contract appears to take two different forms. One document (apparently distributed by L-3's predecessor entity called Titan) is a multi-page pamphlet entitled "Code of Ethics and Standards of Conduct" and a single-page document entitled "Statement of Affirmation." The employees signed the Statement of Affirmation below a paragraph reading "I have received and read the [pamphlet] and understand the requirements and obligations contained therein as it applies to me. I will abide by the Code of Ethics and Standards of Conduct." (Apparently, these affirmations were signed annually or thereabouts by employees, and the language varies slightly from year to year.) The pamphlet itself is divided into several sections. The pertinent one, entitled "Standards of Conduct," begins with an introductory paragraph stating "Titan's Standards of Conduct prescribe specific guidelines that all employees should understand and follow... This Code of Ethics booklet provides general guidance applicable to all Titan employees, managers, and supervisors." Several pages later is a subsection entitled "Proprietary information, Copyrights, and Inventions," which states:
A second version of the contract is a lengthy booklet, published by L-3, entitled "Guiding the Way: Code of Ethics and Business Conduct." (Notably, L-3's briefing does not direct the Court to any document by which the individual Defendants signed affirmations agreeing to comply with the provisions of this booklet.) The booklet's section entitled "Purpose" states "In this guide, you will find a summary of some of our most important policies and procedures which govern the day-to-day conduct of our business. More detailed guidance is found in our Corporate Policies." It further states that "Our Code is designed to serve as a broad outline of our company standards and legal obligations that we are required to abide by." Many pages later, under the subsection entitled "Safeguarding Confidential Information," the booklet states:
The Court finds that these documents are not enforceable contracts. Provisions contained in employee handbooks of this type can, in some circumstances, operate as binding contractual agreements, but to do so, it must be clear to both parties that the employer was making an offer to enter into a bargain on the terms contained in the handbook and that, by accepting or continuing employment, the employee was agreeing to be contractually bound by those terms. Vasey v. Martin Marietta Corp., 29 F.3d 1460, 1464 (10th Cir.1994). Normally, the determination of whether an employee handbook created an implied contract create factual questions for a jury, but if the alleged promises are only "vague assurances," the Court may determine the issue as a matter of law. Id.
Here, the pamphlet and booklet seem to disclaim any status as formal, binding agreements between the employees and L-3/Titan. They describe themselves as "guidelines" and "general guidance" and "summar[ies]." The vast bulk of the documents' contents are generalized platitudes, statements of aspirational intent, or non-binding advice as to what employees and others "should" do. The specific provisions that L-3 invokes appear to be express prohibitions, but they are presented in an indirect manner: rather than reflecting the crisp, unambiguous tenor of a formal contract provision, the prohibitions take on the elliptical form and passive voice of employees being "obligated" (by some unknown force) to "not disclose" confidential information. This is compounded by the fuzzy terms by which the Defendants manifest their assent to the documents as a whole: they state that they agree to "abide by" the documents. It is by no means clear whether this "abid[ing]" is intended to be a promise by the employee to adopt the documents' platitudes and exhortations, an agreement to use the employee's best efforts to follow the advice, a promise not to engage in the behaviors that the employee is prohibited from (or, more accurately, "obligated" to "not [do]"), some combination of those, or something else entirely. Taken as a whole, the Court finds that, as a matter of law, the documents are so vague and indirect as to preclude them from having any contractual effect. There is no clear meeting of the minds as to what the employees are obligated to do, and no apparent consideration for their promise to do so. Accordingly, the Defendants are entitled to summary judgment on L-3's claims of breach of contract relating to the so-called Ethics Contract.
The Court then turns to the claims invoking the "Standard Contract" and the "Confidentiality Contract." The "Standard Contract" is a document entitled "Standard Confidentiality Agreement and Assignment of Inventions." The Defendants signed these contracts at various dates between 1984 and June 2005, a time period in which L-3 was known as either Titan or Jaycor. Taking the form of a typical contract, it recites that it is an agreement between each named employee and the company, recites definitions for certain key terms, recites the consideration given for the agreement ("hiring or continued employment of the employee"), and states its purpose: "to protect the trade secrets and other proprietary ad confidential information of the company." It provides, in pertinent part, that "[t]he employee agrees to
At some point after June 2005, Titan/Jaycor became L-3, and the employees were apparently asked to sign a new contract addressing confidentiality. These new contracts, described in the Amended Complaint as the "Confidentiality Contract," were signed by the Defendants between August and October 2005. The formal title of this contract is "Employee Confidentiality and Innovation Agreement," and it provides, in pertinent part, that "I [the employee]... agree to hold all Proprietary Information and L-3 Materials in strict confidence," that "I will not take, use, copy, disclose, publish, or summarize any Proprietary Information or L-3 materials except to the extent necessary to carry out my duties and responsibilities as an employee of L-3," and that "upon termination of my employment for any reasons, or upon the request of L-3 if sooner, I will promptly deliver to L-3 all L-3 Materials in my possession, custody, or control and shall not retain any copies of the L-3 Materials in any form or medium whatsoever." This agreement, by its terms, is governed by New York law.
The Defendants argue that, under either California or New York law, the terms of the Confidentiality Contracts supersede the terms of the Standard Contracts, because they address the same subject matter. Thus, the Defendants argue, the Court should dismiss L-3's claims premised on the Standard Contract. The Court declines to address this issue, as the outcome would not materially affect the nature of the evidence to be produced at trial. Whether the jury is instructed on separate breach of contract claims addressing both the Standard and Confidentiality Contracts, or on a single claim involving only the Confidentiality Contract (arguably encompassing any breaches allegedly committed by the Defendants during the time frame of the Standard Contract as well) is largely an administrative, not substantive, issue.
The Defendants also make an abbreviated argument that L-3 cannot show that they breached the Standard Contract (or the Confidentiality Contract) because the
That leaves the Exclusive Services Agreement, which L-3 entered into only with Mr. Lubell. That agreement, reached between the parties in November 2009, provides for L-3 to retain Mr. Lubell's services as a consultant to "perform work and services for, supply reports to, and act as a consultant to L-3" in exchange for stated compensation. Among other provisions, the Exclusive Services Agreement: (i) provided that L-3 was retaining Mr. Lubell "on an exclusive basis with respect to" a defined scope of work, which an attachment defined as "all activity with the Defense Threat Reduction Agency (DTRA)"; and (ii) included an addendum, entitled "Mutual Non-Disclosure Agreement," that required that, upon termination of the Agreement, Mr. Lubell "return to [L-3] any proprietary information" that L-3 had expressly marked as "proprietary" or "confidential" before delivering it to Mr. Lubell. L-3 alleges that Mr. Lubell breached both provisions, the latter by improperly retaining, at least, a "proprietary"-marked L-3/Jaycor document entitled "Some Specifics (con't)," and the former by performing DTRA-related consulting work for Jaxon in January 2010, before the Exclusive Services Agreement with L-3 expired. In reply, Mr. Lubell submits his own affidavit denying that these acts constitute a breach of the Exclusive Services Agreement, but the Court finds that this affidavit merely creates a genuine dispute of fact when juxtaposed with L-3's evidence, such that a trial is required on L-3's claim against Mr. Lubell for breach of the Exclusive Services Agreement.
Accordingly, the Court grants summary judgment to the Defendants on Claim X, alleging breach of the Ethics Contract, but denies summary judgment on the remaining contract claims.
In Claim XV, L-3 alleges that each of the former employee Defendants breached a fiduciary duty they owed to L-3 by appropriating L-3's confidential data and other materials and using it to benefit Jaxon, L-3's competitor. The Defendants' argument on this claim is exceedingly brief. They contend merely that "with respect to L3's claim that the Former L3 Defendants misused L3 confidential data, L3 cannot show that a given Defendant misused any L3 data that was confidential" and refers the reader back to "Sections I and II above," a 40-page portion of the Defendants' motion. It makes a similarly-abbreviated argument that L-3 cannot show damages flowing from the Defendants' alleged breach of their fiduciary duties, again referring back to arguments raised with regard to other claims.
The Court declines to entertain such a generalized and unspecific argument on these terms. It is not clear whether the thrust of the Defendants' one-sentence argument that "no Defendant
The Court also declines to grant summary judgment to the Defendants on their argument that L-3 cannot adequately demonstrate an appropriate apportionment of damages among the Defendants and their alleged wrongs. The Defendants' brief appears to concede that, even if L-3 cannot demonstrate actual damages, it would still be entitled to an award of nominal damages in its favor, making the issue of damages one of proof at trial and instruction to the jury, not one that can be resolved on summary judgment.
Claims XII and XIX alleged that the Defendants engaged in civil theft and conversion by taking physical property belonging to L-3. The Defendants' summary judgment motion recites that by October 6, 2014 (the same date that the Defendants filed their summary judgment motion), L-3 had conceded in an e-mail that it no longer intended to pursue the civil theft claims in its entirety and that it would not be pursuing the conversion claim against the individual Defendants, but that it would apparently continue to press that claim as against Jaxon in some respect. With regard to the conversion claim against Jaxon, the Defendants again offered a highly-abbreviated argument to the effect that the October 6, 2014 e-mail conceded the conversion claim against Jaxon as to every item of property that L-3 had identified in its interrogatory responses as having been converted, and thus, L-3 could not base any remaining conversion claim against Jaxon on allegedly-converted items of property that L-3 had not disclosed during discovery. Shortly thereafter, L-3 filed a Motion to Dismiss the Civil Theft claim
Later, L-3 filed its response to the Defendants' summary judgment motion, arguing that the Defendants had failed to put forward a meaningful argument as to any deficiencies in L-3's conversion claim against Jaxon. It further argued that the conversion claim against Jaxon was based on Jaxon "convert[ing] a number of CSI capacitors for use in Jaxon's 1k and 5k pulsers."
Fed. R. Civ. P. 26(e)(1)(A) provides that, once a party responds to discovery requests, the party is under a continuing obligation to "supplement or correct its disclosure or response in a timely manner if the party learns that in some material respect the [initial] disclosure is incomplete or incorrect." However, that rule contains an exception: no supplementation is required "if the additional or corrective information has [] otherwise been made known to the other parties during the discovery process or in writing." Id. To satisfy the "made known" requirement, a party's
The Court finds that although L-3 did not formally supplement its interrogatory responses to identify the capacitors as allegedly converted property, other information produced during the discovery process was sufficient to put the Defendants on notice of that fact. Specifically, L-3 produced the report of Charles Crain, who discussed the capacitors at issue, posed the question "where did the [capacitors] come from?," and concluded that "the JAXON 1k pulser capacitor actually appears to belong to L-3." L-3 further points out that, when deposing Mr. Crain, the Defendants clearly understood that L-3 was asserting that Jaxon had obtained the capacitor in question from L-3, as counsel repeatedly inquired of Mr. Crain as to the possibility that Jaxon could have acquired the capacitor from some other source. Although the Defendants contend that Mr. Crain was identified only as a rebuttal expert, and thus, disclosure therein prevented the Defendants from obtaining a response from their own expert, that fact is irrelevant: the sole question being considered is whether L-3 somehow made clear to the Defendants that it was claiming the capacitor as converted property, and there can be little dispute that Mr. Crain's report did so. The Defendants were free to seek to reopen discovery or otherwise attempt to explore L-3's new conversion facts in more detail, but it cannot be said that they were uninformed of L-3's position on the matter.
However, the Court also notes that, although Mr. Crain expressed relative certainty that the capacitor in Jaxon's 1k pulser was taken from L-3, he acknowledged that "the same cannot be said conclusively about [other capacitors]." Thus, because L-3 did not unambiguously assert to the Defendants that it believed other capacitors were also converted, L-3's conversion claim against Jaxon is limited to a single instance of converting a single capacitor.
The Court finds that there is a genuine dispute of fact between the parties as to whether Jaxon converted the capacitor. L-3 has produced evidence, through Mr. Crain and otherwise, that the particular capacitor in question is one that was custom-manufactured for it in 2002 and that it never gave that capacitor to Jaxon. The Defendants have submitted evidence that the capacitor in question was obtained by Jaxon as part of a box of spare parts given to it by representatives of the Air Force. Although each side contends that the other side's explanation is unpersuasive in various respects, it is clear that there is a genuine dispute of fact as to the means by which Jaxon came into possession of the capacitor. Resolution of this dispute can only be had by trial.
Accordingly, the Court dismisses the civil theft claim in its entirety and the conversion claim against all individual Defendants, but the Court denies the Defendants' request for summary judgment on the conversion claim against Jaxon as it relates to the single capacitor used in Jaxon's 1k "prototype" pulser.
L-3 asserts a claim under the Lanham Act, sounding in false advertising, against Jaxon, Randall White, Joni White, and Susan Rettig. The crux of the claim is that Jaxon falsely advertised its ability to perform HEMP testing to potential customers
The Defendants first challenge this claim on the grounds that L-3 never identified any of the alleged false representations during discovery. The Defendants point to an interrogatory they served on L-3, requesting that it "identify each communication by a Defendant that.. was a false representation" for purposes of the Lanham Act claim (among others). It is undisputed that L-3's responses never identified any advertising-based communications. In response to the Defendants' instant motion, L-3 again argues that it was not required to identify the advertising misrepresentations via interrogatories because it identified those matters through the alternate "made known" provision of Rule 26(e)(1)(A). Careful parsing of L-3's summary judgment response is necessary, as that response makes many assertions regarding how it disclosed the allegedly misleading statements to the Defendants during discovery, but supports those assertions with only two actual citations to the record: (i) a reference to L-3 taking the deposition of Defendant Randall White, asking him "about various statements made in Jaxon's Initial Talking Papers dated January 2009 and whether those statements were false," and citing to a 15-page excerpt of Mr. White's deposition; and (ii) a reference to allegedly misleading statements in a March 2009 version of the Talking Papers, citing to a three-page excerpt from Mr. White's deposition.
Turning first to the 15-page excerpt, the Court finds that it does not suffice to discharge L-3's obligations under Rule 26(e)(1)(A) for numerous reasons. First, the Court notes that nowhere in the excerpt does L-3's counsel ever explicitly state to Mr. White or the Defendants' counsel that L-3 is purporting to identify the particular misrepresentations that underlie L-3's Lanham Act claim. It is only logical to require that a constructive disclosure of information under the "made known" provisions of Rule 26(e)(1)(A) be at least as specific and comprehensible as the express disclosure normally required by the rule would have been. Jama, 304 F.R.D. at 299. Thus, to the extent that L-3 relies upon questions posited to Mr. White at his deposition to put the Defendants on notice of the particular alleged misrepresentations that underlie the Lanham Act claim, this Court would expect that such questioning would either be expressly identified as such (e.g. preceded by "I'd like to turn to the Lanham Act claim now...") or, at the very least, would be questions that unambiguously relate solely to that claim. Nothing in the 15-page excerpt suggests to Mr. White or the Defendants that the questions being presented relate to the Lanham Act claim, as opposed to a different claim by L-3; indeed,
Second, Mr. White's deposition explains that the document in question was being submitted to "a bank." The excerpt does not reveal the purpose for which Jaxon was communicating with the bank, but it is implausible that Jaxon was addressing the bank as a potential customer of Jaxon's HEMP testing services; more likely, Jaxon was presenting the documents in the course of seeking a loan or financing from the bank. Because the cited examination of Mr. White did not involve misrepresentations allegedly made by Jaxon to potential
The 3-page excerpt of Mr. White's deposition cited by L-3 comes somewhat closer to supporting the contention that L-3 orally disclosed the factual basis of the Lanham Act claim to the Defendants. In that excerpt, Mr. White is being asked about a March 2009 version of the Talking Papers document. In a section entitled "Recent EHFASS HM/HS Work," the document states "In 2008-09, for MCSW/OSL, HM/HS test prep and HEMP testing has been accomplished on the following sites," and four sites are listed. In Mr. White's deposition, he acknowledged that Jaxon did not perform two of those tests and that L-3 did. (Mr. White stated "This is the contract I set up [at L-3] before I left," thus apparently taking personal credit for securing the HEMP testing contract, rather than performing the testing itself.) Asked whether he believed that representation was misleading, Mr. White responded that it was not because the people to whom the document was directed knew who had performed the testing.
Arguably, this line of questioning could be sufficient to put the Defendants on notice that L-3 was asserting that this particular portion of the March 2009 Talking Papers contained a misrepresentation that supported the Lanham Act claim. The questions posed to Mr. White at the deposition identified the particular text in question, established that the text was directed by Jaxon to what appears to be a potential purchaser of HEMP testing services ("the OSL office over at" a particular Air Force base), and inquired of Mr. White whether the text was "misleading." An argument could be made that this group of questions would only be germane to the Lanham Act claim, not to the trade secret-based claims
Even so, the Court finds that L-3 has failed to come forward with evidence that such a misrepresentation was likely to cause confusion to the putative purchaser of the services. Mr. White's deposition makes clear that Mr. White believed that the putative customer, the OSL Office at the Air Force Base, would not have been confused by the apparent false implication in the document — that Jaxon had performed the prior testing — because the staff at that office "knew" that L-3 had done so. In its response to the Defendants' summary judgment motion, L-3 does not acknowledge Mr. White's testimony or attempt to refute it. Indeed, L-3's response discusses the potential for customer confusion of other alleged misrepresentations by Jaxon, none of which L-3 has shown it identified in discovery. L-3 also makes an abbreviated argument that this Court should simply presume customer confusion on the grounds that Jaxon's misrepresentations were "literally false" or done "with the intent to deceive," citing NetQuote, Inc. v. Byrd, 2008 WL 5225880 (D.Colo. Dec. 15, 2008), but L-3 has not demonstrated either of those factual predicates. It has not offered any testimony that even addresses, much less refutes, Mr. White's own testimony that the recipients of the March 2009 Talking Papers documents understood that L-3, not Jaxon, had performed the prior HEMP testing, and thus, the Court will not presume confusion.
Because L-3 has not come forward with sufficient evidence to show a genuine issue of material fact with regard to the single alleged misrepresentation that it disclosed as supporting the Lanham Act claim, the Defendants are entitled to summary judgment on that claim.
L-3 asserts that the former employee Defendants engaged in fraud when they completed time sheets at L-3, reporting to L-3 that they had worked on L-3 business during those hours when, in fact, the Defendants had been working on business to benefit Jaxon during those hours. The Defendants contend that L-3 cannot show that any particular time sheet entry is false.
L-3's response is curious. It does not address any alleged fraud contained on the time sheets. Instead, it attempts to shift the focus of its fraud claim from the time sheet theory (as set forth in the Amended Complaint) to a new theory of fraud it developed during discovery — that the fraudulent statements by the Defendants were those made on documents called Termination Certifications, in which the Defendants (allegedly falsely) stated that they had returned all L-3 property and would abide by the Confidentiality Agreements they had signed. L-3 acknowledges that this theory of fraud is not the one pled in the Amended Complaint, but argues that the Defendants cannot be surprised
Treating L-3's response as a motion for leave to amend its complaint under Rule 15(a), the Court denies it. Although leave to amend a pleading is to be "freely granted," the Court may deny such leave when it is the result of undue delay by the movant. Cohen v. Longshore, 621 F.3d 1311, 1313 (10th Cir.2010). Here, L-3 has offered no adequate explanation for its delay in seeking to amend the pleading of its fraud claim in the Amended Complaint to focus on the Defendants' retention of L-3 property in violation of the Termination Certification, rather than on their submission of fraudulent time sheets. Indeed, by L-3's own acknowledgement, it was aware of all of the predicate facts of this new fraud theory at the time it filed its Amended Complaint: it knew that the various employee Defendants had signed Termination Certifications promising to return L-3 property, because it expressly referenced those Certifications; and it believed that the Defendants had improperly retained L-3 property, because it alleged as much in the conversion, civil theft claims, and trade secret misappropriation claims. Given the length of time that this case has been pending and the vigor with which L-3 has litigated it, no reasonable explanation can be proffered to explain why L-3's current fraud theory could not have been formally pled years ago.
Accordingly, because L-3 has not come forward with evidence to support the fraud claim as it is alleged in the Amended Complaint — that is, as it relates to allegedly fraudulent timesheets — all Defendants are entitled to summary judgment on L-3's common-law fraud claim.
L-3's tortious interference claim is asserted against Jaxon, Randall White, and Susan Rettig, and alleges that these Defendants secured 13 "Task Orders"
The parties disagree slightly on the precise elements that comprise this cause of action, but they generally agree that the pertinent elements require L-3 to show: (i) that it had a reasonable probability of entering into a future economic relation with Serco; (ii) that the Defendants against whom the claim is asserted resorted to improper means to prevent L-3 from securing that relation; and (iii) that L-3 suffered damages as a result. In their motion, the Defendants argue that L-3 cannot show that it had a reasonable probability of obtaining the Serco Task Orders that are the subject of the claim — either because Serco had designated them as available only to small businesses (which L-3 is not) or because bids that L-3 actually submitted were rejected as insufficient or non-compliant — and cannot quantify the damages that it would show arising from this claim.
The first seven Task Orders at issue were offered by Serco for bidding in or
It is not necessary to recite, in detail, the complex factual theory that supports L-3's contention; it is sufficient to observe that, taking all of the evidence in the light most favorable to L-3 and drawing reasonable inferences in its favor, L-3 has raised a genuine dispute as to the existence and applicability of the set-aside program to the key Task Order (number 9070) at issue here. Notably, L-3 points out that the bidding documents and information made no mention of any small business-related restrictions, that the internal Serco plan for directing contracts to small businesses was not put in place until several months after the key Task Order was granted to Jaxon, that Mr. Eich had given a different explanation to a subordinate for excluding L-3 from bidding (offering the patently false assertion that L-3 "didn't have the test capability" rather than because they were not a small business), and that Serco acted surprisingly hastily in awarding the key Task Order to Jaxon. Taken in the light most favorable to L-3, these facts could support the conclusion that Serco's "small business set-aside" explanation for why L-3 was excluded from bidding on these Task Orders is a pretext.
However, L-3 fails to supply additional evidence that would allow the factfinder to make the next necessary logical leap: that Serco either favored Jaxon or shunned L-3 because of some improper conduct by
This is significant. L-3's apparent theory is that Jaxon, Mr. White, and/or Ms. Rettig (or their agents) conspired with Mr. Eich to ensure that Serco's business was steered to Jaxon and away from L-3. To prove this theory, L-3 must come forward with some evidence that the Defendants actually induced Mr. Eich to steer the Task Orders to Jaxon instead of L-3. Put differently, if Mr. Eich elected to favor Jaxon over L-3 for reasons entirely of his own accord — say, because of a (hypothetical) personal dislike of an L-3 principal, because of a close friendship with a Jaxon principal, or even because of a general favoritism for new startup business — his decision to do so would not suffice to render the Defendants liable in tort for a decision they did nothing to influence. And, of course, a unilateral decision by Mr. Eich to freeze L-3 out of bidding on Task Orders prevents L-3 from showing that it had a reasonable probability of obtaining contracts that Mr. Eich was determined not to award to it in the first place. The absence of any evidence of involvement by the Defendant in Serco/Mr. Eich's decisions is fatal to the tortious interference claim premised on these Task Orders.
The Defendants seek summary judgment on L-3's unjust enrichment claim, but only to "to the extent that [it is] based on" the various other claims L-3 has asserted (which, the Defendants contend, each lack merit on their own). This is not so much an argument as a truism: unjust enrichment is an equitable remedy that is not available when a remedy at law lies to address the same conduct. Greenway Nutrients, Inc. v. Blackburn, 33 F.Supp.3d 1224, 1260-61 (D.Colo.2014). By definition, then, L-3's unjust enrichment claim cannot overlap any of its existing claims for relief.
However, Colorado law does recognize a limited situation in which a claim for unjust enrichment may piggyback on certain tort claims. As the court in Harris Group, Inc. v. Robinson, 209 P.3d 1188, 1205 (Colo.App.2009), explained, tort claims generally offer compensatory relief, entitling the plaintiff to damages that offset "the harm done to him". Unjust enrichment, by contrast, provides an equitable, restitution-based remedy that allows the plaintiff "to recover the gain acquired by the defendant through the wrongful act." Thus, unjust enrichment entitles the wronged plaintiff to recover not only compensation for his own injuries, but to also strip the tortfeasor defendant of the benefits of having perpetrated the wrongful act. Id. Harris is factually-identical to the instant case. In Harris, employees of an engineering firm defected to form their own competing business. The plaintiff firm brought suit against them, alleging the same types of claims asserted by L-3 here: misappropriation of trade secrets, breach of fiduciary duty, conversion, etc., along with a claim for unjust enrichment. A jury ultimately returned a verdict in favor of the plaintiff firm and against the employees, awarding nearly $ 2 million in actual damages and an additional $ 200,000 as an advisory verdict on the unjust enrichment claim. On appeal, the Court of Appeals vacated the unjust enrichment award, finding that "the company had an adequate remedy at law." Id. at 1207. But review of the court's reasoning indicates that it reached that conclusion only because the trial court's jury instructions on damages on the substantive tort claims allowed the jury to award "anything of value or profit the former employees and the new business received as a result of the breach" in addition to damages for other injuries. Id. Thus, the trial court had already allowed the jury to award the restitution-based damages normally available under an unjust enrichment theory as part of its award on the substantive tort claims. This made a separate unjust enrichment award unnecessary.
Finally, the Defendants seek summary judgment on L-3's claim of civil conspiracy. The Defendants' offer two primary arguments: (i) that the intra-corporate conspiracy doctrine precludes L-3 from basing a conspiracy claim against Jaxon on alleged agreements that it made with its own agents or employees, and vice versa — that the individual Defendants cannot be liable for conspiring with Jaxon itself, citing Vinton v. Adam Aircraft Indus., Inc., 232 F.R.D. 650, 655 (D.Colo.2005) and Pittman v. Larson Distrib. Co., 724 P.2d 1379, 1390 (Colo.App.1986); and (ii) that L-3 cannot show sufficient evidence of conspiratorial agreements among the Defendants. L-3 responds with a lengthy factual recitation.
The Court will not engage in a lengthy recapitulation of L-3's evidence, for it is sufficient to observe that L-3 has come forward with sufficient evidence to create a genuine issue of fact as to whether individual Defendants, while employed by L-3, conveyed L-3's physical and intellectual property to each other with the intention of aiding Jaxon, and that each individual Defendant either participated in those acts or knew of and acquiesced in the others' performance of them to the point where one could reasonably infer their tacit agreement to participate in the common plan. See generally Resolution Trust Corp. v. Heiserman, 898 P.2d 1049, 1056-57 (Colo.1995). Accordingly, the Court denies the Defendants' request for summary judgment on L-3's civil conspiracy claim.
Thus, the Defendants' Motion for Summary Judgment
Separately, the Defendants move for summary judgment on L-3's sole remaining patent infringement claim (Claim VI),
The Defendants first contend that L-3 lacks any ownership interest in the Patent because the Government acquired it in August
On August 19, 2011, Dawn Thompson, a Contracting Officer with the U.S. Army Corps of Engineers, wrote to SI International Telecom Corp., the primary contractor on the project at issue, stating as follows:
(Emphasis added.) The Defendants thus contend that the August 19, 2011 letter operated to vest title in the Patent in the U.S. Government, stripping L-3 of the right to assert patent infringement claims based on it.
L-3's response touches on a range of issues,
The Court begins with the recognition that the August 19, 2011 letter is, on its face, unambiguous: the letter informs L-3 of the "activation of the Government's right to appropriate title to the... patents." The letter is does not express that "activation" conditionally or provisionally, it does not invite L-3 to respond with its own position on the matter, nor does it in any way suggest that the Government's stated intent to appropriate the patents is in any way non-final. That the letter is a final statement of the Government's position is further demonstrated by Mr. Tomanelli's acknowledgement that L-3 "
The Contract Disputes Act clearly gave L-3 at least two ways of challenging the Government's decision. As Mr. Tomanelli seems to acknowledge, L-3 could have filed a claim under the Act with the U.S. Army Corps of Engineers, challenging the determination that the invention should have been disclosed or that such disclosure was untimely. 41 U.S.C. § 7103(a) (contractor may file a claim against the Government, in writing, to the appropriate contracting officer), or L-3 could have deemed the August 19, 2011 letter to be a final determination and appealed it directly to "an agency board" or directly to the U.S. Court of Federal Claims. 41 U.S.C. § 7104(a), (b). It did neither. Accordingly, the Court concludes that the Government appropriated L-3's rights in the Patent in 2011, that L-3 failed to timely challenge that appropriation, and thus, that L-3 no longer possesses standing to bring the patent infringement claim herein.
Although not specifically addressed by L-3, the Court pauses here to acknowledge Central Admixture Pharmacy Services, Inc. v. Advanced Cardiac Solutions, P.C., 482 F.3d 1347 (Fed.Cir.2007). There, a Dr. Buckberg invented a chemical solution to be used during heart surgery. The invention was achieved while Dr. Buckberg was performing research under a grant from the National Institutes of Health ("NIH"). Consistent with 35 U.S.C. § 201, Dr. Buckberg disclosed the invention to NIH and requested that NIH release any patent rights it might have in the invention so that he could pursue a patent in his own name. NIH agreed to do so, subject to Dr. Buckberg granting a license to NIH to use the invention. For reasons unknown, Dr. Buckberg never formally signed the licensing paperwork. The patent issued to Dr. Buckberg at some point thereafter, he assigned
The defendant moved to dismiss the patent infringement claims against it on standing grounds, noting that Dr. Buckberg had never executed the license demanded by NIH. Thus, it argued, NIH had never released its rights in the patent, preventing Dr. Buckberg or Central from having patent rights to assert. The trial court found the plaintiffs to have standing and, on appeal, the Federal Circuit affirmed. The Court of Appeals explained that a violation of 35 U.S.C. § 201 "grants the government discretionary authority to take title" in the patent. 482 F.3d at 1352 (emphasis in original). It explained that, in such circumstances:
482 F.3d at 1352-53. The quoted passage is similar to an argument that L-3 raises here -: that the Government was under some obligation, above and beyond sending the August 19, 2011 letter, to take some action to effectuate its appropriation of L-3's patent rights.
Such an argument is without merit here. The key fact in Central Admixture is that the NIH never expressed to Dr. Buckberg that it was intending to exercise its rights to appropriate the patent upon Dr. Buckberg's failure to issue the requested license. Until NIH affirmatively acted to claim those patent rights, Dr. Buckberg's rights in the patent were merely "voidable" upon demand by NIH, but not automatically "void." Here, however, the Army Corps of Engineers
The court pauses at this point to make an observation. L-3's Amended Complaint invokes this Court's subject matter jurisdiction pursuant to 28 U.S.C. § 1331, predicated on L-3 having asserted federal claims under the Lanham Act, the Patent Act, the RICO Act, and the Sherman Act. The court dismissed the latter two claims at the pleadings stage and, as discussed above, grants summary judgment to the Defendants on the former two claims. All that remain are claims under state law. In such circumstances, 28 U.S.C. § 1367(c)(3) grants discretion to the Court to decline to exercise further subject matter jurisdiction over the state law claims; indeed, the 10
It is not immediately apparent that any other basis exists for the exercise of federal subject matter jurisdiction over the state law claims. 28 U.S.C. § 1332 permits the Court to exercise subject matter jurisdiction founded on diversity of citizenship. Although Plaintiff L-3 Communications Corporation, as a Delaware corporation with its principal place of business in New York, is diverse in citizenship from Jaxon (a Colorado corporation with its principal place of business in Colorado) and the individual Defendants (who are identified as residents of Colorado and New Mexico), the same cannot necessarily be said of Plaintiff L-3 Services, Inc. The Amended Complaint indicates that Plaintiff L-3 Services, Inc. is incorporated in Delaware, but it gives no indication of that entity's principal place of business; it states only that L-3 Services, Inc. has "an office located [in] Colorado Springs, CO." If Colorado is L-3 Services, Inc.'s principal place of business, subject matter jurisdiction premised on diversity of citizenship would be unavailable.
Accordingly, within 14 days of the date of this Order, L-3 shall show cause why the remaining claims should not be dismissed for lack of federal subject matter jurisdiction. Notwithstanding the Court's concerns about a potential lack of subject-matter jurisdiction, it will proceed to briefly address the remaining motions.
L-3 moves for summary judgment in its own favor on its various claims. At this point, it is worthwhile to review the claims that remain: (i) Claim VII, misappropriation of trade secrets, against all Defendants; (ii) Claim VIII, breach of the Standard Contract, as against the former employee Defendants; (iii) Claim IX, breach of the Confidentiality Contract, as against the former employee Defendants; (iv) Claim XI, breach of the Exclusive Services Agreement, as against Mr. Lubell; (v) Claim XII, conversion, as against Jaxon only, relating to the single capacitor used in the 1k "prototype" pulser; (vi) Claim XV, breach of fiduciary duty, as against the former employee Defendants; (vii) Claim XVII, unjust enrichment against all Defendants; and (viii) Claim XVIII, civil conspiracy, as against all Defendants.
Although L-3 has plead a constellation of claims, many derive from the same common premise: that the former employee Defendants took L-3's trade secret information over to Jaxon when they left, "jump-starting" Jaxon's ability to compete for HEMP testing contracts. Accordingly, although the trade secret claim is addressed later in L-3's motion, it is appropriate to begin with it here.
To establish a claim of misappropriation of trade secrets under Colorado law, L-3 must show: (i) that it possessed a "trade secret," as that term is defined in C.R.S. § 7-74-102(4) — that is, scientific, technical, business, or financial information that has value and that L-3 has taken reasonable steps to prevent dissemination of; and (ii) that the Defendants "misappropriated" the secret, as that term is defined in C.R.S. § 7-74-102(2) — that is, acquired or disclosed the secret with actual or constructive knowledge that the acquisition or disclosure was by improper means. "Improper means" include theft, misrepresentation, or breach of a duty to maintain secrecy, among other acts. C.R.S. § 7-74-102(1); see generally Saturn Systems, Inc. v. Militare, 252 P.3d 516, 525 (Colo.App. 2011). Misappropriation can occur there without actual use or commercial implementation of the misappropriated trade; the act of misappropriation consists only of
The Court need not extensively walk through L-3's contentions regarding each Defendant and the alleged trade secrets they misappropriated. It is sufficient for purposes of addressing L-3's motion to observe that there are genuine disputes of material fact as to whether L-3 forfeited trade secret protection for most of its testing equipment, procedures, and software in the course of disclosing those matters to customers such as Boeing and the Government without reservations or requirements of confidentiality.
As previously discussed, the former employee Defendants entered into the Standard Contract with L-3's predecessor and the Confidentiality Contract with L-3.
As pertinent herein, the Standard Contract contained provisions designed to protect L-3's "Confidential Information." That term was defined to include "all information ... possessed by [L-3] ... which gives [L-3] an advantage over competitors who do not know or use it or is otherwise not generally known in the trade." The definition acknowledged that "Confidential Information" included, but was not limited to, "trade secrets, proprietary information, customer list and computer programs and software," and also included "information conceived, originated or developed" by the employee him- or herself. The Standard Contract required that the employee "maintain the confidentiality of" this information both during and after employment, that the employee "not ... directly or indirectly reveal or cause to be revealed" such information outside of L-3, that the employee "not ... use" the information "to the detriment of" L-3, and that the employee "not take or keep" any such information upon his or her separation from L-3.
In or about August 2005, each of the employee Defendants signed the Confidentiality Contract with L-3. That contract defined two separate classes of information that were affected by its terms: "L-3 Materials" and "Proprietary Information." "L-3 Materials" were defined as "all files, records, proposals, specifications or other documents, and all computer software,
L-3 has come forward with evidence demonstrating that each of the former employee Defendants obtained or retained certain specific L-3 materials following the end of their employment with L-3. (L-3 also makes broader assertions that, for example, Mr. Youngman retained "thousands of L-3 proprietary files" but does not generally elaborate on the particular documents involved.) For example, following his departure from L-3, Mr. Youngman obtained and distributed copies of L-3 software programs known as BADDAS and BUTTER. Mr. McClure retained a hard drive containing a backup of his L-3 laptop that included "test reports" and "test plans," and also distributed copies of the BADDAS software to an employee at Jaxon in October 2009. Randy White retained a document containing "funding information," "L-3 proposals for the AACE site," a test plan, and various other documents, as well as received L-3 documents from Scott White, then employed by L-3, after Randy White had ceased his employment there. There is evidence that Scott White, while employed by L-3, distributed various L-3 documents to persons employed at Jaxon.
The Defendants do not appear to significantly dispute that they obtained or retained L-3 software or documents after their employment with L-3 ended. Rather, they contend that the materials they retained are "generally known in the trade" or otherwise available to the public, and thus, not "Confidential Information" or "L-3 Materials" covered by the contracts. This argument is both mostly unsupported and somewhat irrelevant. It is unsupported in that each of the Defendants have produced their own affidavits that observe that L-3 did not generally mark the materials in question as being "proprietary," although that fact is mostly irrelevant — neither the Standard or Confidentiality Contracts require that material bear a particular marking in order to fall within the contractual definitions. The Defendants also cite extensively to Mr. Scott's affidavit, but that affidavit primarily addresses whether the physical components or design of L-3's pulsers are generally know; Mr. Scott says nothing about whether the design of L-3's BADDAS software or its test reports or pricing data are generally known in the industry.
Moreover, the argument that the materials the Defendants retained are not "proprietary" or "confidential" or trade secrets, etc. fails to recognize that the Confidentiality Contract is broader than that. It requires parties to not disseminate and to return "L-3 Materials." Those materials are defined as any document or information "relating to L-3's business"
Because it is apparently undisputed that each former employee Defendant disseminated records "relating to L-3's business" to persons outside the company or retained such records following their termination, it would seem that each Defendant has, at a minimum, breached the Confidentiality Contract. However, the Court declines to enter summary judgment on this claim to L-3 at this time; there remains the uncertain question of whether the Court has subject-matter jurisdiction over any of the breach of contract claims and, in any event, it remains necessary to submit this claim to a trial to conclusively ascertain
In November 2009, Mr. Lubell entered into an agreement with L-3 in which he agreed to "perform work and services for, supply reports to, and act as a consulted to L-3" in exchange for compensation. Section 1.1 of that contract proves that "L-3
L-3 appears to allege that Mr. Lubell breached the Exclusive Services Agreement in two ways: by simultaneously providing consulting services relating to DTRA matters to Jaxon, and by copying an L-3 proposal and sending it to himself via e-mail. For the reasons discussed above, the Court finds that Mr. Lubell's own affidavit on these points raises a genuine dispute of fact as to whether he breached the Exclusive Services Agreement. Accordingly, L-3's motion for summary judgment on the contract claims is denied.
L-3 alleges that each of the former employee Defendants breached a fiduciary duty of loyalty they owed to it. In Jet Courier Service, Inc. v. Mulei, 771 P.2d 486, 492-93 (Colo.1989), the Colorado Supreme Court grappled with two competing policies: that an employee has a duty of loyalty to act solely for the benefit of his or her employer concerning the subject matter of his employment, and that employees are privileged to "prepare or make arrangements to compete" with their employers. Resolving the tension between the two concepts, Jet Courier concluded that: (i) an employee may advise customers that he or she intends to leave his or her employment, but may not solicit those customers to defect to a competing business while the employee remains with the employer; and (ii) whether an employee, during his or her employment, may solicit co-workers to quit and join a competitor is subject to a fact-intensive inquiry examining the nature of the co-worker's employment relationship with the employer (at-will or under contract), the impact of the action on the employer's operations, and the extent of promises or inducements made to the co-worker, among others. Id. at 493-98. Courts have also recognized that it may be "a breach of duty for a number of the key officers or employees to agree to leave their employment simultaneously and without giving the employer an opportunity to hire and train replacements." In re Professional Home Health Care, Inc., 159 Fed.Appx. 32, 34 (10th Cir. 2005).
L-3 points to evidence that each of the former employee Defendants retained L-3 materials when they left their employment; that several were instrumental in soliciting co-workers to leave L-3 and join Jaxon; and that several participated in varying degrees in assisting Jaxon in obtaining work while still employed by L-3. Although some of this evidence is indeed powerful (particularly as to Randy White and Ms. Rettig), the Court declines to grant summary judgment to L-3 as to any Defendant at this time. As Jet Courier and others cases recognize, determining whether an employee has breached a duty of loyalty to his or her employer is often a fact-intensive inquiry and there is some
Although L-3 also seeks summary judgment on its remaining claims — for conversion of the prototype pulser capacitor, for unjust enrichment, for civil conspiracy — the Court denies L-3's request largely for reasons previously stated herein.
Accordingly, L-3's Motion for Summary Judgment is denied in its entirety.
The parties have filed dozens of motions seeking to restrict access to briefing and exhibits, mostly citing to concerns about disclosing trade secrets.
Having reviewed each of the motions in question, the Court finds common themes that reoccur in them and thus, the Court is able to rule on most of the motions in categorical terms. First, to the extent that parties provisionally filed documents under restriction, then later concluded that those restrictions can be lifted and the documents be publicly available in their entirety, the motion is granted. Because it is of some burden to the Clerk of the Court to attempt to lift restrictions on individual documents contained within an otherwise-restricted filing, the Court finds it appropriate to require the movant
Second, on many occasions, the parties have tendered proposed redacted versions, suitable for public review, of documents that would otherwise be subject to restricted access. Except as noted below, the Court generally finds that the parties have been diligent and circumspect in ensuring that no more material than necessary has been redacted, and thus, the Court grants the motions in those respects.
Third, as specified below, in a handful of situations, the Court agrees with the movant that a given document warrants a restriction on access in its entirety, and that effective redaction of the document is impossible. These situations typically arise with regard to discovery responses that extensively itemize alleged trade secrets and expert reports and affidavits that discuss those trade secrets at length. The Court grants these motions as set forth below.
That leaves a final category that requires further discussion. In several instances, a party seeks to restrict access to a given document in its entirety, claiming that effective redaction is impossible. Often times, the Court disagrees for several reasons. First, as noted above, both parties have often filed far more pages of documentation than their briefs cite. Any portion of an exhibit that is not specifically cited in a party's brief is, by definition, beyond the scope of the Court's review and thus irrelevant.
Moreover, for those portions of documents that remain, the sensitive information warranting restricted access is rarely the particular reason why the document is cited. In such circumstances, redaction of the sensitive material (or, really, everything in the document
Once again, the touchstone is the brief itself: a brief that cites to Exhibit A for a specific proposition constrains the relevance of Exhibit A to that limited portion of it that establishes the proposition. An exhibit that is tendered to establish that Person A sent Document B to Person C by e-mail on a given date might establish that fact in the header alone (if the header identifies Document B as being attached). In such circumstances, the body of the e-mail and its attachments, including Document B, is beyond the scope for which the document is cited and all of that content
Unless stated otherwise, the Court denies without prejudice all of the motions below to the extent they request that certain documents be retained under restricted access in their entirety, without a redacted version being tendered. Consonant with the observations above, the movants shall review each of the exhibits at issue, excise any pages of them that are not specifically cited in the briefs that the exhibits accompany, carefully correlate the remaining pages to the briefs in order to ascertain the precise fact(s) the exhibits are proffered to establish, and redact any sensitive material that is not necessary to establish the precise fact for which the exhibit is cited. In most instances, the Court anticipates that this process will produce a redacted exhibit that can be publicly-filed.
With these principles in mind, the Court briefly addresses the pending motions to restrict access. (All requested restrictions are at Level 1 access unless otherwise noted.)
The Court denies the motion for several reasons. The mere fact that any party — even a third-party like Serco — designated the document as sensitive for purposes of a protective order is not grounds for relief under D.C. Colo. L. Civ. R. 7.2(c)(2). Moreover, the Court finds that further review of the exhibit by the movant, as discussed above, is likely to yield an excised, redacted exhibit suitable for public filing.
The Court believes that further review by the movant of Docket # 898-20, Docket # 942-3 and 942-4, Docket # 942-3, and Docket # 942-8 is warranted under the terms discussed above.
Accordingly, he Defendants' Motion for Summary Judgment
Assuming there remains a predicate for federal subject matter jurisdiction, the Court observes that the dispositive motions deadline has now passed. Although there remain certain collateral matters to address, the Court directs that the parties begin preparation of a Proposed Pretrial Order pursuant to Docket # 44 and that they jointly contact chambers to schedule a Pretrial Conference.
Both parties reference an extremely detailed list of all of the trade secrets L-3 has identified as being allegedly misappropriated in this case. Docket # 1174. That list includes a list of the physical components of L-3's "SE test equipment" (id. at 6-7); a list of certain alternative methods that L-3 uses to construct the SE test equipment (id. at 7); a list of techniques that it employs when conducting SE testing (id. at 7-8); and a list of software programs that it employs when conducting SE testing (id. at 8-9). The list contains similar categories regarding PCI testing (including the components of five different types of pulsers) and CWI testing, along with a list of more general business records in which L-3 claims trade secret protection.
The Court would be inclined to find that, by delivering test equipment to Boeing and the Government with no restrictions on the clients' ability to use or disseminate the equipment, L-3 surrendered any trade secret protection it might have in the identity of the parts used in that test equipment. Although L-3 contends (on fairly thin evidence, the Court observes) that it would be extremely difficult for another person to reverse engineer the equipment in order to build duplicates, nothing in the record suggests that Boeing or anyone else in possession of that equipment could not, at the very least, readily disassemble the equipment in order to identify each and every part contained therein. However, there may be a triable issue of fact as to whether production of the test equipment itself necessarily disclosed L-3's secret methods used in constructing that equipment, the secret techniques it used in conducting tests, and the source code (c.f. the output) of the software it supplied to Boeing and the Government.
Such presentation is unhelpful to the Court because it is too voluminous, unwieldy and largely irrelevant. First, going by citations alone (without attempting to ascertain whether the same page is cited multiple times), L-3's motion cites to no more than 125 specific pages (of 1000) in Exhibit 53. This suggests that more than 850 pages of that exhibit are unnecessary. The Defendants' brief cites only twice to their Exhibit 11, offering no pinpoint cites to any of the more than 2,500 pages of supporting materials. Second, L-3 refers to individual pages within its voluminous exhibits by Bates numbers, without any indication of which subpart the specific page is pertinent. Third, buried within the thousands of pages, are a few pertinent documents that are critical and therefore should and could stand alone. For example, among its more than 1,000 pages, Exhibit 53 contains both the Standard and Confidentiality contracts signed by each of the former employee Defendants. There is no apparent reason why these contracts must be presented in situ as part of Exhibit 53, buried within a 1,000 page collection of documents.
Presenting each document as a separate exhibit may multiply the number of separate exhibits being filed, but it makes each individual exhibit far easier for the Court to locate and access. Moreover, requiring attorneys to carefully examine each and every exhibit they cite would help to reduce the number of exhibit pages that are filed unnecessarily.
