Filed: Apr. 15, 2010
Latest Update: Feb. 21, 2020
Summary: dumpsters to its customers.to Home Depot on all counts.1, The detailed provisions of the business plan were not, disclosed by the relatively short teaser statement, but this is, irrelevant for two independent reasons.of novel concepts.breach of the Agreement and misappropriation of trade secrets.
Not for Publication in West’s Federal Reporter
United States Court of Appeals
For the First Circuit
No. 09-1336
TAKE IT AWAY, INC.,
Plaintiff, Appellant,
v.
THE HOME DEPOT, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Lipez, Circuit Judge,
Souter, Associate Justice,* and Howard, Circuit Judge.
Philip Y. Brown, with whom Timothy P. Frawley, Brian R.
Birke, Adler Pollock & Sheehan P.C., and John M. Greabe were on
brief, for appellant.
David B. Chaffin, with whom Sarianna T. Honkola and White
and Williams LLP were on brief, for appellee.
April 15, 2010
*
The Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
SOUTER, Associate Justice. Three principals organized
the appellant, Take It Away, Inc., to act as a broker in a
contemplated business of supplying dumpsters that do-it-yourselfers
could rent from the appellee, The Home Depot, Inc., and like
retailers. In a document called a “teaser,” mailed to a Home Depot
official in 1997, Take It Away hopefully described itself as a
“Nationwide Association” of waste haulers and others, with a
“Retail Distribution Channel for renting Construction & Demolition
Debris Removal Containers” (i.e., dumpsters), which was prepared to
form “Strategic Partnerships” with building material supplies
dealers like Home Depot. Take it Away would “provid[e] all the
tools,” apparently dumpsters, “for [Home Depot] to capture [its]
share of this immense untapped market,” presumably by renting the
dumpsters to its customers. The statement described itself as
confidential, and when the recipient at Home Depot agreed to have
discussions he signed a “non-disclosure agreement” prepared by Take
It Away, pledging that Home Depot would “utilize the Confidential
Proprietary Information” to be disclosed “for the sole purpose of
evaluating the business of [Take It Away] and [would] make no other
use” of it without permission.
The information actually disclosed was a proposal that
the association, Take It Away, would supply dumpsters (obtained,
one supposes, from its associated trash haulers) that Home Depot
would rent directly to its customers, pocketing ten percent of the
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charge and remitting the balance to Take It Away. Home Depot was
not interested in becoming a dumpster lessor, and remained of that
mind despite at least four more of Take It Away’s pitches to other
company officers and employees over the next five years. Beginning
in 2003, however, Home Depot signed agreements allowing four
suppliers in the United States and Canada to use space in Home
Depot stores to offer dumpster rentals directly as lessors to Home
Depot customers.
Take It Away brought this suit in a Massachusetts state
court. Count 1 accused Home Depot of violating the non-disclosure
agreement; count 2 charged appropriation of trade secrets contrary
to Massachusetts General Laws Chapter 93, § 42; count 3 alleged
common law conversion of trade secrets; and count 4 claimed
violation of Chapter 93A, § 11 of the Massachusetts statutes,
forbidding unfair trade practices. Home Depot removed the case to
federal court, where the district judge granted summary judgement
to Home Depot on all counts. On appeal for de novo review, Klaucke
v. Daly, 595 F.3d 20, 24 (1st Cir. 2010), we affirm.
The principal difficulty in this case is understanding
what the confidentiality agreement was supposed to protect.
“Confidential Proprietary Information” is undefined, and the
district court not unnaturally took it at a fairly general level to
cover “the concept of renting dumpsters from national home
improvement retail centers.” At first, some of us also thought
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that was what the fight was about, but a careful rereading of Take
It Away’s reply brief shows that its claim is a degree more
particular, focused on brokerage. It says that its “dumpster-
brokerage concept and business plan” were the intended subjects of
protection; “the essence of its concept is national retail
distribution dumpster brokerage” combined with a “separate business
plan for putting its concept into practice” (emphasis in original).
The stress in the reply brief is repeatedly on its “dumpster-
brokerage concept” or “container-brokerage concept,” which is more
specific than “rental of dumpsters.”
The clarification at least saves Take It Away from the
obvious response that all it disclosed was that Home Depot, like
ever so many others, could rent out dumpsters. But even as
clarified, the claim seems to boil down to this: the agreement was
intended to protect a “brokerage” concept to the effect that Take
It Away would deal with third parties to obtain dumpsters that Home
Depot could rent to customers. The concept is not merely, “you can
do it, too,” but no more than “you can do it, too, and we will
broker your supplies.”
With the subject of the claimed protection so understood,
we think the summary judgement order was correct on all counts.
Although much of the briefing and argument addresses the potential
breadth of “Confidential Proprietary Information” along with its
relation to the notion of a trade secret and the criteria for
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concluding that information amounts to a trade secret, the anterior
issue is whether the concept actually meant to be protected here
can reasonably be seen as having enough value, beyond what was
commonly known or obvious, to amount to consideration for Home
Depot’s promise to limit its use of that concept as Take It Away
subsequently disclosed it. The first reason for answering no is
simply that before the Home Depot official signed the agreement he
had already seen the teaser, which is fairly read as disclosing the
concept of a network of businesses organized by Take It Away to
supply dumpsters to be rented out by retail suppliers to their
customers. That is, the teaser described an association in the
role of a broker of rental goods. While the details of the
business plan were not set out there, the basic business structure
was apparent: Home Depot would “capture” the market, while Take It
Away would work behind the scene of the retailer’s direct
transaction with the customer. The concept was out in the open
before Home Depot agreed to talk.1
But even if the claimed secret had not already been
revealed before the agreement was signed, one searches in vain for
anything of value not readily imaginable that might be protected.
1
The detailed provisions of the business plan were not
disclosed by the relatively short teaser statement, but this is
irrelevant for two independent reasons. First, it does not appear
that the plan adds anything to the concept that was not obvious
from the concept as described by the teaser. And, second, Home
Depot did not implement the details of Take It Away’s plan; its
four contractors deal directly with the customers.
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It is undisputed that Home Depot rented tools and even trucks to
its customers, that dumpsters were commonly rented out, and that
retailers need manufacturers or suppliers. While it might have
been information of some commercial (though not necessarily
protectable) value that a previously unknown broker network was
ready for business and could give Home Depot an immediate entree to
the dumpster supply market, that could not have been protectable
information here, if for no other reason than the undisputed fact
that Take it Away’s “Nationwide Association” did not actually
exist; the references to an association were expressions of hope,
nothing more. In sum, it is hard to see what concept or plan Home
Depot gained from the disclosure that it could not have thought up
readily for itself if it had found any reason to expand its rental
activity: a dumpster is a big tool for removing debris, and renting
tools and establishing reliable supply networks are not the stuff
of novel concepts. This is not to say, of course, that a proposal
like Take It Away’s could not have led to lucrative business if
accepted, but any such value would have come from efficient
execution, not conceptual inventiveness, and disclosing the concept
did not provide the value necessary for consideration supporting a
contractual claim.
This view of the nature and worth of Take It Away’s
disclosure answers its argument that “Confidential Proprietary
Information” may be the subject of a confidentiality agreement
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covering more than trade secrets and may be protected by contract
under Massachusetts law. We will assume this to be so, for it
makes no difference. Whatever the state law of contract may
protect, there must be a contract to protect it, and without
valuable consideration on one side there is none.
As might be expected, the state doctrine of protectable
trade secrets, the subject of counts 2 and 3, fails to improve Take
It Away’s position. Under Massachusetts common law, a trade secret
is “‘any formula, pattern, device or compilation of information
. . . used in one’s business . . . which gives him an opportunity
to obtain an advantage over competitors who do not know or use it,”
J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., 357 Mass.
728, 736,
260 N.E.2d 723, 729 (1970) (quoting Restatement of Torts
§ 757 cmt. b (1939)).2 The definition is spacious to be sure, but
a protectable secret must still be described aptly as a secret
after considering six criteria, see Jet Spray Cooler, Inc. v.
Crampton,
361 Mass. 835, 840,
282 N.E.2d 921, 925 (1972), which are
not much help to Take It Away.
2
While Take It Away brought claims under both Massachusetts
common law and statutory law, it does not distinguish between them
on appeal because it views them as “doctrinally equivalent.” This
may well be true. See Incase Inc. v. Timex Corp., 488 F.3d 46, 52
n.10 (1st Cir. 2007); Burten v. Milton Bradley Co.,
763 F.2d 461,
462 (1st Cir. 1985) (“Mass. Gen. Laws Ann. ch. 93, § 42 . . .
essentially codifies the common law.”). Regardless, because Take
It Away makes no argument that its statutory claim calls for a
separate analysis, we analyze counts 2 and 3 together.
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The first and last criteria look to the extent that
information was known outside Take It Away and the ease with which
it could be acquired independently. As noted, the teaser revealed
what a true teaser would have left for later, and for that matter
anyone interested in domestic building construction could readily
have thought of supplying dumpsters for rent by a lumber dealer; in
fact, the idea struck one of Take It Away’s principals in a flash
as he was driving by a Home Depot store. While it should not count
against a small corporation that everyone working for it knows the
supposed secret (under the second criterion), it does count against
Take It Away (under the third) that the move it made to protect
itself (getting a non-disclosure agreement) was outflanked by the
teaser and was insisted upon in dealing with only one of at least
seven Home Depot officers or employees to whom Take It Away
revealed the concept. The others variously refused, declined, or
were never asked to sign the non-disclosure form. See Healy, 357
Mass. at 738, 260 N.E.2d at 731 (he who wishes to preserve a trade
secret “must exercise eternal vigilance”).
The amount of effort and money devoted to developing the
supposed secret (criterion five) does not enhance Take It Away’s
case appreciably, for the 1700 hours of work claimed, and the
thousands said to have been spent, include the extended and wholly
unsuccessful marketing efforts. Finally, with respect to the
fourth criterion (the value of the idea), while Take It Away’s
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expert envisioned millions in profits, nothing in his report
suggests that a trade secret was the reason; he simply estimates
the value of the business opportunity assuming vigorous marketing
by Home Depot. Cf. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1011
n.15 (1984) (“[T]he value of a trade secret lies in the competitive
advantage it gives its owner over competitors.”).
It is not apparent that consideration of these six
factors could support a conclusion of protectable trade secret. So
summary judgement on counts 2 and 3 was proper. See Rodi v. S. New
Eng. Sch. of Law, 532 F.3d 11, 15 (1st Cir. 2008) (explaining that
summary judgement is appropriate if no reasonable jury could find
for the non-movant, even on an issue that is “ordinarily a question
of fact for the jury” under state law).
Take It Away’s final claim alleges violation of
Massachusetts General Laws Chapter 93-A. As Take It Away
succinctly put it in the reply brief, this claim “is premised on a
number of unfair and deceptive acts . . . namely, Home Depot’s
breach of the Agreement and misappropriation of trade secrets.”
Absent an enforceable agreement and, specifically, a trade secret,
count 4 fails as well.
Affirmed.
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