The Stonebridge Collection, Inc. v. Carmichael et al

Filing 75

MEMORANDUM OPINION AND ORDER granting in part and denying in part 35 Motion for Partial Summary Judgment and granting in part and denying in part 41 , 44 & 49 Motions for Summary Judgment. See order for specifics. Signed by Honorable Robert T. Dawson on July 22, 2013. (tg) Modified on 7/23/2013 to add text(tg). Modified on 7/23/2013 to change document type (jn).

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
HOT SPRINGS DIVISION
THE STONEBRIDGE COLLECTION, INC.
v.

PLAINTIFF

Case No. 6:12-CV-6084

KEITH CARMICHAEL, GLENNA CARMICHAEL,
CUTTING-EDGE USA, LLC, JOHN MARK TAYLOR,
TAYLORMADE UNLIMITED, LLC and STEVEN MASSEY

DEFENDANTS

MEMORANDUM OPINION AND ORDER
Before the Court are Plaintiff The Stonebridge Collection
Inc.’s (hereinafter “Stonebridge”) Motion for Partial Summary
Judgment and supporting materials (Docs. 35-39), Defendants John
Mark

Taylor

(“Taylor”)

,

TaylorMade

Unlimited,

LLC

(“TaylorMade”) , Keith Carmichael, Glenna Carmichael, CuttingEdge

USA,

LLC,

and

Steven

Massey’s

supporting materials (Docs. 52-54);

combined

Response

and

Stonebridge’s Reply (Doc.

65); Separate Defendants Keith Carmichael, Glenna Carmichael and
Cutting-Edge

USA,

LLC’s

Motion

for

Summary

Judgment

and

supporting materials (Docs. 44-46), Stonebridge’s Response and
supporting materials

(Docs. 56-57), Separate Defendants

Keith

Carmichael, Glenna Carmichael and Cutting-Edge USA, LLC’s Reply
and supporting brief (Docs. 68-69); Separate Defendants Taylor
and

TaylorMade’s

Motion

for

Summary

Judgment

and

supporting

materials (Docs. 41-43), Stonebridge’s Response and supporting
materials (Docs. 58-59), Separate Defendants John Mark Taylor,
TaylorMade Unlimited, LLC’s Reply (Doc. 66); Separate Defendant
Page 1 of 20

Steven

Massey’s

(“Massey”)

Motion

for

Summary

Judgment

and

supporting materials (Docs. 48-50), Stonebridge’s Response and
supporting materials (Docs. 60-62); Stonebridge’s Response Brief
in Opposition to Defendants’ Motions for Summary Judgment1 (Doc.
63);

Separate

Defendant

Massey’s

Reply

(Doc.

67),

and

Motion

for

Stonebridge’s Sealed Exhibit 13-A.
For

the

reasons

set

out

below

Stonebridge’s

Partial Summary Judgment (Doc. 35) is GRANTED in part and DENIED
in part, Separate Defendants Taylor and TaylorMade’s Motion for
Summary Judgment (Doc. 41) is GRANTED in part and DENIED in
part,

Separate Defendants Keith Carmichael, Glenna Carmichael

and Cutting-Edge USA, LLC’s Motion for Summary Judgment (Doc.
44)

is

GRANTED

in

part

and

DENIED

in

part,

and

Separate

Defendant Steven Massey’s Motion for Summary Judgment (Doc. 49)
is GRANTED in part and DENIED in part.
I.

Procedural Background
On June 26, 2012, Stonebridge filed its Original Complaint

(Doc.

1).

Carmichael,

Separate

Defendants

Cutting-Edge

responsive pleadings.

USA,

Keith

LLC,

Carmichael,

Taylor,

TaylorMade

Glenna
filed

Separate Defendant Steven Massey did not

1

Stonebridge’s Response Brief in Opposition to Defendants’ Motions for
Summary Judgment (Doc. 63) was submitted as a combined response to Separate
Defendants Taylor and TaylorMade’s Motion for Summary Judgment (Doc. 41),
Separate Defendants Keith Carmichael, Glenna Carmichael and Cutting-Edge USA,
LLC’s Motion for Summary Judgment (Doc. 44) and Separate Defendant Massey’s
Motion for Summary Judgment (Doc. 49).

Page 2 of 20

file a responsive pleading to the Original Complaint2.
On April 9, 2013, Stonebridge filed its Amended Complaint
(Doc. 25) and alleged that Defendants expropriated certain files
from its computers, including artwork and customer lists, and
used

them

Stonebridge

in

a

alleged

scheme

to

defraud

ten

causes

of

and

action:

unfairly
fraud,

compete.

conversion,

breach of fiduciary duties, violations of 18 U.S.C. §§ 1961 and
1964

(civil

RICO),

violation

of

Ark.

Code.

Ann.

§

4-88-188

(state deceptive trade practices act violations), violations of
15 U.S.C. § 1125 (federal deceptive trade practices violations),
violations of Ark. Code. Ann. § 4-75-601 (state misappropriation
of trade secrets), common law tortious interference with known
business expectancy, violation of 15 U.S.C. § 1125 (Lanham Act
Violations), and common law negligent supervision.

All named

defendants timely filed responsive pleadings denying wrongdoing.
(Docs. 27-29).
On May 25, 2013, Stonebridge filed its Motion for Partial
Summary Judgment (Doc. 35) and sought relief on the last eight
of the stated ten causes of action.

On May 31, 2013, Separate

Defendants John Mark Taylor (“Taylor”) and TaylorMade Unlimited,
2

On July 17, 2012, and July 23, 2012, Separate Defendant Steven Massey filed
Notices of Filing Bankruptcy.
(Docs. 4-5).
On July 23, 2013, the Court
entered an order staying this matter as to Separate Defendant Steven Massey
pending the outcome of the bankruptcy proceeding (Doc. 6).
On November 13,
2012, the Honorable Richard D. Taylor, U.S. Bankruptcy Court Judge, Western
District of Arkansas, entered an Order, on consent of the parties, granted
Stonebridge relief from the automatic stay so as to pursue its claims against
Separate Defendant Massey. (See Doc. 13 Exh. 1).

Page 3 of 20

LLC (“TaylorMade”) filed their Motion for Summary Judgment (Doc.
41).

On June 5, 2013, Separate Defendants Keith Carmichael,

Glenna Carmichael and Cutting-Edge USA, LLC filed their Motion
for Summary Judgment (Doc. 44) and Separate Defendant Massey
filed his Motion for Summary Judgment (Doc. 49).

All parties

filed responses and replies to opposing parties’ motions.
II.

Standard of Review
In determining whether summary judgment is appropriate, the

burden

is

placed

on

the

moving

party

to

establish

both

the

absence of a genuine issue of material fact and that it is
entitled to judgment as a matter of law.

See Fed. R. Civ. P.

56(c); Celotex Corp. v. Catrett, 479 U.S.317, 322 (1986).

The

Court must review the facts in a light most favorable to the
party opposing a motion for summary judgment and give that party
the benefit of any inferences that logically can be drawn from
those facts.

Canada v. Union Elec. Co., 135 F.3d 1211, 1212-13

(8th Cir. 1998) (citing Buller v. Buechler, 706 F.2d 844, 846
(8th Cir. 1983)).
Once the moving party demonstrates that the record does not
disclose a genuine dispute on a material fact, the non-moving
party may not rest upon the mere allegations or denials of his
pleadings,

but

his

response,

by

affidavits

or

as

otherwise

provided in Rule 56, must set forth specific facts showing that
there is a genuine issue for trial.
Page 4 of 20

Ghane v. West, 148 F.3d

979, 981 (8th Cir. 1998) (citing Burst v. Adolph Coors Co., 650
F.2d 930, 932 (8th Cir. 1981)).
genuine

issue

of

material

fact,

In order for there to be a
the

non-moving

party

must

produce evidence “such that a reasonable jury could return a
verdict for the nonmoving party.”

Allison v. Flexway Trucking,

Inc.,

1994)

28

F.3d

64,

66

(8th

Cir.

(quoting

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

Anderson

v.

Furthermore,

“[w]here the unresolved issues are primarily legal rather than
factual, summary judgment is particularly appropriate.”

Aucutt

v. Six Flags Over Mid-America, Inc., 85 F.3d 1311, 1315 (8th
Cir. 1996) (quoting Crain v. Bd. of Police Comm’rs, 920 F.2d
1402, 1405-06 (8th Cir. 1990)).
III. Uncontroverted Facts
The

following

facts,

unless

noted

otherwise,

are

deemed

uncontroverted and are viewed in a light most favorable to the
non-moving party.
1.
2.
3.
4.
5.
6.
7.

Stonebridge is in the business of engraving and selling
personalized etched knives.
Stonebridge sells knives to
both end use customers and distributors.
Glenna Carmichael, Keith Carmichael (the Carmichaels) and
Cutting-Edge USA, LLC (Cutting-Edge) are in the business of
selling personalized engraved knives.
Taylor and TaylorMade are in the business of engraving
personalized knives.
From 2007 through on or about July 23, 2009, Taylor worked
for Stonebridge as its general manager.
From 2007 through on or about September 14, 2009, Massey
worked for Stonebridge as its graphic artist.
As a graphic artist Massey was responsible for the creation
and setup of artwork for lasers to engrave on knives.
No parties involved ever executed a non-compete agreement,
Page 5 of 20

8.
9.

10.

11.
12.
13.
14.

15.

16.

17.
18.
19.

confidentiality
agreement,
non-disclosure
agreement,
agreement regarding creation or ownership of artwork, or
any agreement of such kind. (Doc. 38 at 5).
Sometime in 2004 Keith Carmichael and Ken Harrelson, a
salesperson for Stonebridge, discussed Cutting-Edge selling
pocket knives engraved by Stonebridge.
Stonebridge asserts that a loose business understanding was
reached between it and Cutting-Edge which amounted to a
“requirement
contract”
relationship
and/or independent
distributorship agreement. (Doc. 39 at 9, Doc. 44 at 2).
Cutting-Edge asserts that there was neither a contractual
relationship nor any other relationship that bound the
parties.
Cutting-Edge asserts it was free to use the
services of any etcher, and did so. (Doc. 42 at 7).
From late 2004 through late 2010, Cutting-Edge sold and
distributed knives to customers that were engraved by
Stonebridge.
From late 2004 through late 2010, Stonebridge provided at
Stonebridge’s expense samples of engraved knives to the
Carmichaels and Cutting-Edge.
Stonebridge asserts that between 2004 and 2011, in over 650
shipments, it delivered over 131,000 sample knives to the
Carmichaels and Cutting-Edge.
Customers who ordered knives through a distributor such as
Cutting-Edge were referred to Stonebridge as “outside”
customers
and
customers
who
ordered
directly
from
Stonebridge were referred to as “inside” customers.
Stonebridge asserts as part of its business model and the
parties’ course of dealing, once an order was placed
directly, or once it was represented by a distributor such
as
Cutting-Edge
that
an
order
had
been
received,
Stonebridge began the set up process to create a proof for
the laser engraving machine.
Stonebridge asserts that as part of the setup process it
provided customers with free mock-ups on approval by the
customer of their specific logos generally presented in two
to four different layouts, setups or combinations (the
“Proofs” contained on “Proof Selection Forms”) and sent
them for approval using e-mail and telefax communications.
The Proofs are computer generated drawings of prospective
designs to be placed on the knives, the “Art”.
The Proof Selection Forms and Final Proof Pages contained
the Art and were used to assist with the ordering and
selection process of the orders.
Once completed, both the Proof Selection Forms and the
Final Proof Pages generally contained an order number and
also customer contact information, and when applicable a
Page 6 of 20

20.
21.

22.

23.
24.
25.
26.
27.

28.

IV.

notation indicating the order to be a reorder of a prior
order. (Doc. 38 at 17).
The Proof Selection Forms and Final Proof Pages would be
sent either directly to “inside” customers or to the
distributor to be delivered to “outside” customers.
Defendants assert in most instances Proof Selection Forms
and Final Proof Pages were sent in a computer format
commonly known as “PDF”, but in some instances in a format
commonly as “CDR”.
Stonebridge asserts that the Art would be created or
assembled, manipulated and stored in the native CDR file
format at Stonebridge, and in PDF file format when sent out
for customer reviews. (Doc. 45 at 2).
On or about July 23, 2009, Taylor self-terminated his
position with Stonebridge.
On July 28, 2009, Taylor formed TaylorMade, in which he is
the sole member and manager.
On or about September 14, 2009, Massey self-terminated his
employ at Stonebridge. By September 18, 2009, he commenced
working in the employ of Taylor and/or TaylorMade.
In about mid-2009, the Carmichaels and Cutting-Edge started
using the engraving services of TaylorMade to fulfill their
engraved knives orders.
When
Massey
left
Stonebridge
he
took
a
flashdrive
containing artwork and other documents which he downloaded
from Stonebridge computers (before he self-terminated).
Massey loaded the flashdrive’s contents onto his home
computer, his work computer at TaylorMade, and transmitted
some of the contents to Keith Carmichael and Cutting-Edge.
(Doc. 42 at 6, Doc. 49 at 3).
Taylor
and
TaylorMade
have
utilized
files
sent
by
Stonebridge to Cutting-Edge
and files obtained from
Massey’s flashdrive.
Discussion
Stonebridge’s motion sought relief on the last eight of the

stated ten causes of action and Defendants filed three virtually
identical motions on all causes of action.
Court

will

discuss

the

parties’

motions

For brevity, the

jointly,

considering

each cause of action in turn and under the appropriate standard
of review.
Page 7 of 20

i.

Breach of Fiduciary Duties

The

parties’

cause

of

action

motions
is

on

the

breach

GRANTED

in

part

of

and

fiduciary
DENIED

in

duties
part.

Stonebridge’s Complaint alleged Defendants owed it a duty of
loyalty as bailees of knife samples and its “outside” customer
list.
or

Stonebridge also alleged Defendants, either as employees

parties

in

a

joint

venture,

had

access

to

Art,

mock-up

templates, and “inside” customer lists and therefore owed it
fiduciary duties not to compete.
The facts indicate that there was no bailment relationship
between Stonebridge and any defendant and therefore no duty of
loyalty.

Stonebridge’s motion is DENIED and Defendants’ motions

are GRANTED as to the breach of fiduciary duties cause of action
on bailment grounds.
Stonebridge cites in its motion that the “common law duty
of loyalty to an employer applies to at-will employees, even
those without a continuing non-compete agreement and absent a
written employment contract, up to the day they leave.”

(Doc.

39 at 22, citing Vigoro Industries, Inc. v. Crisp, 82 F.3d 785
(8th Cir. 1996)).
and

Cutting-Edge

The argument fails because the Carmichaels
were

never

employed

by

Stonebridge.

The

argument also fails as to former employees Massey and Taylor
because

the

alleged

wrong

took

place

after

their

self-

termination and therefore there was no violation of employment
Page 8 of 20

fiduciaries duties.
shared

and

occurred
working

used

after
for

Specifically, the allegations that Massey

(as

his

opposed

to

downloading)

self-termination

Taylor

and

TaylorMade.

and

certain

after

he

files

commenced

Stonebridge’s

motion

is

DENIED and Defendants’ motion is GRANTED as to the breach of
fiduciary duties cause of action on employment grounds.
As to the latter ground of the allegation, the Carmichaels
and

Cutting-Edge

have

always

been

in

competition

with

Stonebridge and many of the items complained of were provided by
Stonebridge

to

assist

the

Carmichaels

servicing their customers’ orders.

and

Cutting-Edge

(Doc. 45 at 9).

in

The items

used in this manner do not represent any breach of fiduciary
duties; nonetheless, there are disputes as to the subsequent use
of

these

“outside”

items

and

reorders

the
and

roles

they

“inside”

played

orders

in

and

Stonebridge’s
the

resulting

competition that constitute the alleged breach. The parties have
raised issues of material fact to survive summary judgment and
therefore their motions are DENIED as to the breach of fiduciary
duties cause of action on access grounds.
Accordingly,

the

parties’

motions

on

the

breach

of

fiduciary duties cause of action is GRANTED in part and DENIED
in part.
ii.

State Deceptive Trade Practices Act

The parties’ motions on the State Deceptive Trade Practice
Page 9 of 20

Act cause of action are DENIED.
provides

a

civil

appropriate

action

reasonable

to

Ark. Code. Ann. § 4-88-113(f)

recover

attorney’s

actual

fees

by

damages

“any

and

person”

if
who

suffers actual damage or injury as a result of an offense or
violation

of

Article

4,

Chapter

883.

Definitional

statutes

setting out offenses under Chapter 88 include subchapter 107
(illustrative acts) and subchapter 108 (deception or concealment
with intent others rely).
and 4-88-108.
to

Defendants’

See A.C.A. §§ 4-88-107(a)(3), (a)(5)

Stonebridge’s allegations are made in connection
website,

photographs,

postcard

mailings,

etc.

that contained certain phrases, including but not limited to
“The Original” and “Our Number One Seller for Nearly 10 Years”
which implied affiliation, source, and quality.

(Doc. 38 at 44,

Doc. 41 at 11, Doc. 44 at 20).
Defendants argued that only the Carmichaels and CuttingEdge may have made any kind of representation to the public
concerning the goods and services of Stonebridge and therefore
this

cause

of

action

Massey and TaylorMade.

is

meritless

as

to

Defendants

Taylor,

Further, although the Carmichaels and

Cutting-Edge admit to instances the complained of language was
used

in

their

advertisements,

etc.,

3

they

argued

that

any

Stonebridge states “that Under Ark. Code. Ann. § 4-88-104 violation may not
be addressed by aggrieved persons via injunction but rather only by the
Attorney General; as such, no injunctive relief is requested specifically
with respect to this cause of action.”

Page 10 of 20

statements made were true.

(Doc. 42 at 9).

Specifically, the

Carmichaels and Cutting-Edge assert that knives they sold in
connection

with

those

previously

sold,

i.e.,

advertisements
they

were

purchased

knives

the

same

from

the

ones
same

supplier4 as Stonebridge and engraved the knives in the same
manner and therefore there was no deception, fraud or false
pretense.

(Doc. 65 at 37).

Stonebridge disputes Defendants’ assertion that the knives
are the same and cite to the deposition of B&F System’s owner
John Meyer.

(Id., Doc. 42 at 13, Doc. 44 at 22).

In addition,

Stonebridge cites testimony that it stamped knives it etched
with identifying markers to discern their products apart from
others.

(Id. at 40, Doc. 44 at 8).

Accordingly,

and

notwithstanding

Defendants’

admissions,

issues of material fact exist to preclude summary judgment on
the state deceptive

trade practices

act cause of action and

therefore the parties’ motions are DENIED.
iii. Misappropriation of Trade Secrets
The

parties’

motions

on

the

misappropriation

of

trade

secrets cause of action is GRANTED in part and DENIED in part.
Whether

information

constitutes

a

trade

secret

under

the

Arkansas Trade Secrets Act is governed by six factors: 1) the

4

B&F Systems was and remains to be Stonebridge’s and Cutting-Edge’s knife
supplier.

Page 11 of 20

extent to which the information is known outside the business;
2) the extent to which the information is known by employees and
others in the business; 3) the extent of measures taken to guard
the secrecy of the information; 4) the value of the information
to the party and competitors; 5) the amount of money or effort
expended by the party in developing the information; and 6) the
ease or difficulty with which the information could be properly
acquired by others.
Ark. 651 (2002).
their

trade

Wal-Mart Stores v. P.O. Mkt., Inc., 347

Stonebridge seeks relief for appropriation of

secrets,

i.e.,

their

customer

lists

and

Art.

Defendants argue that “there can be no question there has been
no appropriation of a “trade secret” with respect to customers
initially generated by the sale efforts of Cutting-Edge.

Thus,

this cause of action must be limited to only those customers who
had never done business with Cutting-Edge before it terminated
its

relationship

simple

–

with

Stonebridge.

Cutting-Edge

is

the

The

one

reason

who

for

provided

this
all

is
the

information to Stonebridge in the first place so it already had
the so-called “trade secrets” in its possession and rightfully
so.”

(Doc.

Stonebridge’s

53

at

17)

(original

“outside”

customer

internal
list

quotation

(of

marks).

customers

who

purchased through/from Cutting-Edge) does not constitute a trade
secret because that list is in essence Cutting-Edge’s list of
customers (who had their orders fulfilled using Stonebridge’s
Page 12 of 20

engraving services).

Accordingly, as to Stonebridge’s “outside”

customer list of Cutting-Edge customers, Stonebridge’s motion is
DENIED and Defendants’ motions are GRANTED.
As

to

Stonebridge’s

list

of

“inside”

customers

and

“outside” customers who purchased from other distributors5, the
parties dispute facts which are material to the definitional
elements of a trade secret.

For example, the parties disagree

on the level of effort taken to create the lists, guard its
secrecy, and ease of acquiring the information.
Doc.

42

at

11).

Likewise,

the

parties

(Doc. 41 at 9,

disagree

surrounding whether the Art was a trade secret.

on

facts

For example,

the parties raise multiple arguments surrounding the formats of
the Art files, i.e., Stonebridge argues that files that were
kept

secret

were

only

shared

with

others

in

PDF

format

to

protect against unauthorized use whereas Defendants argue that
both PDF and CDR formats were shared (but in any event either
format would allow for ease of use and manipulation by others).
(Doc. 65 at 9, 18).
with

Stonebridge’s

customers

not

Issues of material fact exist in connection
list

of

serviced

by

“inside”

customers

Cutting-Edge,

and

and
the

“outside”
Art

and

therefore the parties’ motions on the misappropriation of trade
secrets cause of action on this ground are DENIED.
iv.
5

Tortious Interference with Known Business Expectancy

See Doc. 38 at 34-35.

Page 13 of 20

The
known

parties’

business

motions

on

expectancy

the

tortious

cause

of

interference

action

are

with

DENIED.

Stonebridge argues that there is a business expectancy that both
their “inside” and “outside” customers would reorder from it.
Defendants

argue

there

was

neither

a

valid

contractual

relationship nor a business expectancy and therefore there could
be

no

tortious

Stonebridge’s

interference.

claim

that

it

The
had

a

Court

finds

business

problematic

expectancy

with

“outside” customers as the facts suggest that the majority of
customers

were

unaware

which

etcher

performed

the

engraving

Stonebridge

“outside”

service on their knives.
Most

if

not

all

communications

to

customers came from or was made to appear to have come from the
distributor/seller.

(Doc.

46

at

4).

The

majority

of

communications that Stonebridge had with “outside” customers who
purchased
through

through

Cutting-Edge

Cutting-Edge.

In

were

the

indirect

instances

as
that

they

flowed

Stonebridge

directly dealt with “outside” customers efforts were made to
disguise its identity, i.e., drop shipments made by Stonebridge
had

return

addresses

for

identifying labels removed.

Cutting-Edge

and

all

Stonebridge

(Doc. 46 at 20).

Notwithstanding the Court’s observations, the parties have
raised issues of material fact to survive summary judgment and
therefore the parties’ motions on the tortious interference with
Page 14 of 20

known business expectancy cause of action are DENIED.
v.

15 U.S.C. § 1125: Lanham Act Violations & Deceptive
Trade Practices Act (federal)

Stonebridge brought this cause of action under the Lanham
Act deception of origin claim (“palming off”) under subsection
(A)

and

the

Lanham

(“misrepresentation”)

Act

under

false

subsection

advertising
(B).

The

motions are GRANTED in part and DENIED in part.
violation

under

the

Lanham

Act

deception

of

claim
parties’

To establish a
origin

claim

(“palming off”) under subsection (A) a plaintiff must prove that
the materials used by the defendant created a likelihood of
confusion, deception or mistake on the part of the consuming
public.

15 U.S.C. § 1125(a)(1)(A).

To establish a Lanham Act

false advertising claim under subsection (B), a plaintiff must
prove “(1) a false statement of fact by the defendant in a
commercial advertisement about its own or another’s product; (2)
the statement actually deceived or has the tendency to deceive a
substantial
material,

in

segment
that

of
it

its
is

audience;

likely

to

(3)

the

influence

deception
the

is

purchasing

decision; (4) the defendant caused its false statement to enter
interstate commerce; and (5) the plaintiff has been or is likely
to be injured as a result of the false statement, either by
direct diversion of sales from itself to defendant or by a loss
of goodwill associated with its products”.

Page 15 of 20

Buetow v. A.L.S.

Enterprises, Inc., 650 F.3d 1178 (8th Cir. 2011), citing United
Indus. Corp. v. Clorox. Co., 140 F.3d 1175 (8th Cir. 1998); 15
U.S.C. § 1125(a)(1)(B).
The parties raise similar arguments in support of their
positions to the “palming off” and “misrepresentation” claims as
they

did

for

the

discussed above.

state

deceptive

trade

practices

act

claim

The complained of materials and the relating

allegations are common between the claims and therefore raise
the

same

issues

of

material

facts.

“palming

off”

example,

under

the

whether

there

is

advertising

materials,

Stonebridge’s
different

deception

than

is

those

that

that

claim

sales

the

TaylorMade

45

the

resulting

telephonic

position

(Doc.

at

parties

from

it

engraved

For

dispute

Defendants’

pitches,

knives

4).

et

cetera.

engraved
and

are

therefore

Cutting-Edge’s claim to customers that they are receiving the
same knives is deceptive and in violation of subsection (A).
to

subsection

(B)

Stonebridge’s

position

is

that

As

Defendants’

statements (as opposed to their materials) form the basis of
Defendants’ violation.

Issues of material fact preclude summary

judgment and therefore the parties’ motions on the Lanham Act
Violations and Federal Deceptive Trade Practices Act causes of
action are DENIED.
vi.

Negligent Supervision

Stonebridge’s motion on its Negligent Supervision cause of
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action

was

not

specifically

therefore it is DENIED.

argued

in

the

moving

brief

and

(See doc. 65 at 48-49, Section 7).

Defendants’ motions are DENIED as there are issues of material
fact relating to the alleged conduct involving the flashdrive
and shared files.

(Doc. 46 at 10, Doc. 35 Exh. 2, Doc. 46 at

32).
vii. Civil Rico
The parties’ motions are DENIED as premature.
seeks

a

finding

of

liability

under

Stonebridge

Racketeering

Influenced

Corrupt Organizations law (18 U.S.C. 1961 et seq.) (“RICO”) in
the

alternative

to

the

injunction

requested

as

part

of

the

federal and state unfair competition and state trade secrets
claim if that injunction is denied.

In view of the Court’s

rulings as to the federal and state unfair competition and state
trade secrets claims, the merits of the Civil Rico Claim is not
reached and therefore the parties’ motions as to its Civil Rico
cause of action are DENIED as premature.
viii.

Fraud

Defendants’ motions as to the fraud causes of action are
DENIED.

There are issues of material fact that preclude summary

judgment.

For

example,

the

instances

that

customer

orders

Stonebridge

following

the

parties

setup

were

dispute

the

“diverted”

process.

(Doc.

number
away
65

at

of

from
51).

Defendants admit there were instances that Stonebridge “outside”
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customers placed reorders with Defendants, but had their orders
fulfilled with knives that were not engraved by Stonebridge.
(Id.)

Defendants however deny any instances, or any wrongdoing,

where

Stonebridge

“outside”

customers’

initial

orders

were

“diverted” from Stonebridge after the initial setup process was
completed, i.e., that Defendants would fraudulently communicate
to Stonebridge that customer orders were canceled when they were
in actuality sent instead to TaylorMade for engraving services.
(Doc.

45

discussed

at

7).

above

These

issues

preclude

of

summary

material

fact

judgment

and

and

those

therefore

Defendants’ motions on the fraud cause of action are DENIED.
ix.

Conversion

Defendants’ motions as to the conversion causes of action
are

DENIED.

Issues

of

fact

relating

to

whether

the

files

Stonebridge sent out allowed for easy manipulation and use of
the

art

weigh

Stonebridge’s

on

the

position

is

property
that

it

interest
has

determination.

never

delivered

to

Cutting-Edge or any customers any vector-based CDR files that
could be redistributed to and readily used by another etcher,
but rather, only sent files in PDF format which could not be
used by another etcher.
that

the

files

shared

Defendants assert otherwise and argue
are

evidence

that

Stonebridge

property interest in any of the files shared.

has

no

The discrepancy

in the parties’ positions presents issues of material fact that
Page 18 of 20

preclude summary judgment and therefore Defendants’ motions are
DENIED.
V.

Conclusion
For the foregoing reasons Stonebridge’s Motion for Partial

Summary Judgment (Doc. 35) is GRANTED in part and DENIED in
part,

Separate

Unlimited,

Defendants

LLC’s

Motion

John

for

Mark

Taylor

Summary

and

Judgment

TaylorMade

(Doc.

41)

is

GRANTED in part and DENIED in part, Separate Defendants Keith
Carmichael, Glenna Carmichael and Cutting-Edge USA, LLC’s Motion
for Summary Judgment (Doc. 44) is GRANTED in part and DENIED in
part, and Separate Defendant Steven Massey’s Motion for Summary
Judgment (Doc. 49) is GRANTED in part and DENIED in part.
This matter remains set for a bench trial on the following:
breach of fiduciary duties on access grounds, state deceptive
trade practices act, misappropriation of trade secrets as to
Stonebridge’s list of “inside” customers and “outside” customers
who

purchased

from

a

distributor

other

than

Cutting-Edge,

tortious interference with known business expectancy, Lanham Act
Violations,

federal

supervision,

civil

deceptive
rico,

trade

practices

and

conversion.

fraud

act,

negligent

Trial

shall

begin on Monday, September 30, 2013 at 9:00am in Hot Springs,
Arkansas.
Counsel
prior

to

are

trial.

directed

to

Exhibits

mark
are

and

to

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be

exchange
listed

all
in

exhibits
numerical

sequence, with notations as to which exhibits, if any, will be
admitted by stipulation of the parties.

The AO187 – Exhibit and

Witness List may be found on the Court’s website.

The parties

are instructed to provide the Court with this list by 9:00 a.m.
on Friday, September 27, 2013.
IT IS SO ORDERED this 2nd day of July, 2012.
/s/ Robert T. Dawson
Honorable Robert T. Dawson
United States District Judge

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