Food Services of America Incorporated v. Carrington et al

Filing 154

ORDER denying 147 Motion for Reconsideration. (See attached order for full details). Signed by Judge G Murray Snow on 10/17/2013.(KFZ)

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WO

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Food Services of America Incorporated, a
Delaware corporation,

ORDER

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No. CV-12-00175-PHX-GMS

Plaintiff,
vs.
Paul Carrington; Elba Rubio, et al.,
Defendants.

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Pending before the Court is Defendants’ Motion for Reconsideration. (Doc. 147.)
For the reasons discussed below, Defendants’ Motion is denied.
BACKGROUND

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Plaintiff Food Services of America, Inc. (“FSA”) alleges that Defendants Paul

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Carrington and Elba Rubio misappropriated confidential information during their tenure

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at FSA and now work in positions where they could use that information to their new

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employers’ competitive advantage. (Doc. 1.) FSA filed this action on January 25, 2012,

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alleging the following six claims: (1) violation of the Computer Fraud and Abuse Act

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(“CFAA”); (2) violation of the Arizona Uniform Trade Secrets Act (“AUTSA”); (3)

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violation of the Arizona Anti-Racketeering Statute; (4) breach of fiduciary duty; (5)

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conversion; and (6) unjust enrichment.

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On April 9, 2013, FSA filed a Motion for Partial Summary Judgment on Liability

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and Available Remedies. (Doc. 105.) On May 3, 2013, Defendants filed a Motion for

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Summary Judgment on Plaintiff’s Cause of Action under the AUTSA. (Doc. 109.) On

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August 23, 2013, the Court issued an order denying in part and granting in part Plaintiff’s

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Motion for Partial Summary Judgment and denying Defendants’ Motion for Summary

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Judgment. (Doc. 144, “August 23 Order.”) Defendants move for reconsideration of the

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Court’s Order.
DISCUSSION

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I.

Legal Standard

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Under Rule 59(e), a motion for reconsideration may be granted only on one of

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four grounds: “1) the motion is necessary to correct manifest errors of law or fact upon

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which the judgment is based; 2) the moving party presents newly discovered or

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previously unavailable evidence; 3) the motion is necessary to prevent manifest injustice

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or 4) there is an intervening change in controlling law.” Turner v. Burlington N. Santa Fe

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R.R. Co., 338 F.3d 1058, 1063 (9th Cir. 2003) (internal quotations and emphasis

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omitted). Motions for reconsideration are disfavored and are not the place for parties to

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make new arguments not raised in their original briefs. See Nw. Acceptance Corp. v.

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Lynnwood Equip., Inc., 841 F.2d 918, 925–26 (9th Cir. 1988). Nor should such motions

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ask the Court to “rethink what the court has already thought through—rightly or

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wrongly.” See United States v. Rezzonico, 32 F. Supp. 2d 1112, 1116 (D. Ariz. 1998)

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(quoting Above the Belt, Inc. v. Mel Bohannon Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va.

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1983)).

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II.

Analysis

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A.

Existence of Trade Secrets

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Defendants first request that the Court reconsider its holding that the information

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obtained by Defendants includes protectable trade secrets. (Doc. 147 at 2–3.) The

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AUTSA defines a “trade secret” as information that “(a) [d]erives independent economic

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value, actual or potential, from not being generally known to, and not being readily

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ascertainable by proper means by other persons who can obtain economic value from its

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disclosure or use” and “(b) [i]s the subject of efforts that are reasonable under the
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circumstances to maintain its secrecy.” A.R.S. § 44-401.

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Defendants particularly request that the Court reconsider its holding that the

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information obtained by Defendants had independent economic value and that FSA took

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sufficient measures to safeguard the information. (Id. at 2–7.)

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Defendants argue that the Court erred in relying on disputed February e-mails in

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determining that the information obtained by Defendants had independent economic

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value. As noted in the August 23 Order, Defendants do not dispute that they transmitted

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FSA information in e-mails they sent in March 2011. (Doc. 144 at 6–7.) They also do not

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dispute that this information included manufacturer and UPC codes, brand names,

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product specifications, product formulae, pricing strategies, rebates, customer contact

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information, volumes, pricing, and vendor contact information and data. (Id.) The Court

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noted that this information contains elements of common knowledge but, in combination,

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are not known to other distributors in the industry and thus provide a competitive

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advantage to FSA. Accordingly, the Court found that the compilation of data provides

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economic value to FSA. (Id. at 7–9.)

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The Court has not yet determined an amount of damages sustained by FSA in this

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matter. Thus, the Court did not rely on any disputed e-mails to calculate such a damages

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award. Instead, the Court merely determined that some of the information obtained by

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Defendants constituted trade secrets, and thus that FSA had sustained some damages in

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the form of remediation efforts. (Id.)

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number of disputed February e-mails as undisputed March e-mails. (Id. at 7–8.) However,

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even without these disputed e-mails, the undisputed information regarding the actual

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March e-mails (Id. at 6–7) provided sufficient facts on which to grant summary judgment

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as to liability for trade secret misappropriation in these circumstances.

In addition, the Court inadvertently referred to a

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Defendants next argue that the Court failed to consider FSA’s failure to save or

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preserve the hard-drive on Defendant Carrington’s work computer in determining

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whether FSA exercised reasonable measures to protect its trade secret information.

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However, the possibility that FSA failed to follow its computer preservation policy in that
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instance is but one fact in the inquiry of whether FSA took reasonable measures to

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protect their trade secret information. As described in August 23 Order, it is undisputed

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that FSA took several measures to protect the secrecy of its information. (Doc. 144 at 11–

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17.) These measures were both reasonable and sufficient.

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B.

Proof of Actual Damages

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Defendants next assert that the Court erred in denying Defendants’ Motion for

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Summary Judgment because the Court concluded that FSA provided some evidence of

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damages. (Doc. 147 at 7–9.) As noted in the August 23 Order, FSA substantiated its

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claim that FSA employees spent over 75 employee hours reviewing the documents that

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were misappropriated by Defendants, and argues that this expenditure of company

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resources was directly caused by the misappropriation. (Doc. 144 at 22–23.) While this

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may not indicate significant damages, FSA at least established that the existence of

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expenses is a genuine issue of material fact. Thus, the Court did not err in its denial of

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summary judgment to Defendants.
CONCLUSION

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The Court does not find error in its August 23 Order in finding that the

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information obtained by Defendants had independent economic value and that FSA took

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sufficient measures to protect that information. Further, the Court does not find error in

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its finding that FSA sufficiently established the existence of damages to survive summary

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judgment on that issue.

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IT IS THEREFORE ORDERED that Defendants’ Motion for Reconsideration
(Doc. 147) is DENIED.
Dated this 17th day of October, 2013.

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