Candy Craft Creations, LLC v. Gartner et al

Filing 378

ORDER denying 372 Motion for Certificate of Appealability; and granting 374 Motion to Stay the present matter until July 31, 2015. On that day, Defendant is DIRECTED to notify the Court of the outcome of the July 30, 2015 settlement conference in Minnesota. The pretrial conference in the present case will be rescheduled for August. Signed by Chief Judge Lisa G. Wood on 5/19/2015. (csr)

n the Uniteb btatito flitrid Court
for the boutbern 3itritt of deorsia
36runowith Ammon
CANDY CRAFT CREATIONS, LLC,,
Plaintiff,
V

CV 212-091

.

GREG GARTNER, GARTNER STUDIOS,
INC.., and TYLINA FOOD PRODUCTS
CORPORATION,
Defendants.
ORDER

This Court's March 31, 2015 omnibus Order (Dkt. no. 371)
denied Defendants' dispositive motions as to most of the claims
Plaintiff asserted in its Complaint. In due course, Defendants
filed a Motion for Certification Permitting Interlocutory Appeal
and for Stay Pending Trial (Dkt. no. 372) on April 15, 2015.
Defendants subsequently filed a Motion to Stay the Matter (Dkt.
no. 374) pending a ruling in a related insurance coverage matter
out of the District of Minnesota. For the reasons stated below,
Defendants' Motion for Certification Permitting Interlocutory
Appeal (Dkt. no. 372) is DENIED, and Defendants' Motion to Stay
the Matter (Dkt. no. 374) is GRANTED.

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I. Defendants' Motion for Certification Permitting
Interlocutory appeal and for Stay Pending Trial (Dkt.
no. 372)

Defendants present three objections to legal conclusions
this Court makes in its March 31 Order which they would like to
bring before the Court of Appeals before this case proceeds to
trial pursuant to 28 U.S.C. § 1292(b).
a. Legal Standard

Under 28 U.S.C. § 1292(b), a district judge may issue an
order stating that a question of law discussed in a civil order
may be appropriate for an immediate appeal, even when the matter
is not otherwise appealable at that time. See 28 U.S.C.
§ 1292(b). At its discretion, the Court of Appeals may then
accept the immediate appeal of that question of law. See id.
To certify interlocutory appeal of an order, the district
court must find that three requirements are satisfied: (1) the
appeal would involve a "controlling question of law," (2) there
is a "substantial ground for difference of opinion" on this
controlling question, and (3) an immediate appeal on the order
"may materially advance the ultimate termination of litigation."
See id. Materially advancing the termination of the litigation
"means that a controlling legal question would serve to avoid a
trial or otherwise substantially shorten the litigation."
McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1259 (11th Cir.
2004)

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The burden of persuading the district court (and,
ultimately, the Court of Appeals) that interlocutory appeal is
appropriate rests on the petitioning party. See McFarlin, 381
F.3d at 1264. "Section 1292 is intended to be used sparingly and
only in exceptional cases where a speedy appeal would avoid
protracted litigation." United States ex rel Powell v. Mi.
InterContinental Univ., Inc., 756 F. Supp. 2d 1374, 1378 (N.D.
Ga. 2010).
b. Defendants' Three "Controlling Questions of Law"

Defendants have presented three questions of law which they
argue are appropriate for interlocutory appeal:
1. Whether, under the Georgia Trade Secrets Act, O.C.G.A.
§ 10-1-760, et seq. ("GTSA"), ownership of an alleged
trade secret is required to confer upon the plaintiff
standing to sue for misappropriation of that trade
secret or whether mere possession (including, but not
necessarily limited to, knowledge) of the alleged
trade secret is sufficient, an unsettled question
under Georgia Law.
2. Whether, under Georgia Law, a plaintiff asserting a
claim for misappropriation of a trade secret in the
face of a defense of legal reverse engineering
demonstrates an issue of material fact fit to be tried
where the plaintiff demonstrates "any
misappropriation," or if Georgia law requires that the
plaintiff must demonstrate that the defendant used a
substantial portion of the plaintiff's trade secret to
create an improvement or modification that is
"substantially derived" from the plaintiff's trade
secret.
3. Whether the GTSA's provision that it supersedes
"conflicting tort, restitutionary, and other laws of
this state providing civil remedies for
misappropriation of a trade secret" preempts
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Plaintiff's tort and restitutionary claims to the
extent that those claims are based upon Defendants'
alleged misappropriation of Plaintiff's trade secrets,
even where those portions of Plaintiff's tort and
restitutionary claims not based upon misappropriation
are not preempted.
Dkt. no. 372 (Def.'s Not. for Interlocutory Appeal), p. 2
(emphasis in original)
The Court notes, initially, that Defendants' third proposed
question of law is not appropriate for interlocutory appeal. In
the Order denying Defendants' motion for judgment on the
pleadings as to Plaintiff's state law claims, the Court
discussed the extent to which Plaintiff's GTSA claims preempt
its state law claims for fraud, breach of fiduciary duty, unjust
enrichment, promissory estoppel, and punitive damages. Dkt.
no. 371, pp. 31-35. The Court concluded that under Georgia law,
the GTSA only preempts non-GTSA claims whose operative facts are
"facts that would plainly and exclusively spell out only trade
secret misappropriation." Id. at 33-34 (quoting Diamond Power
Int'l, Inc. v. Davidson, 540 F. Supp. 2d 1322, 1345 (N.D. Ga.
2007)). The Court then examined Plaintiff's non-GTSA claims and
found that all of them pleaded operative facts that went beyond
those which would exclusively establish a claim for relief under
the GTSA. Id. at 34-35. For example, Plaintiff's claim for fraud
alleged not only that Defendants misappropriated its fondant
recipe, but also that Defendants stole "Plaintiff's customers or

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business opportunities." Id. at 34 (quoting Compi. ¶ 96) . While
the claim that Defendants misappropriated the fondant recipe
would be preempted by the GTSA when couched as a claim for fraud
(as opposed to one for misappropriation of trade secrets under
the GTSA), the claim that Defendants fraudulently stole
Plaintiff's business opportunities would not. Because each of
Plaintiff's non-GTSA claims alleged facts that would support the
claim independent of any allegations that would more
appropriately be pleaded under the GTSA, the Court denied
Defendants' motion for judgment on the pleadings as to all of
Plaintiff's non-GTSA claims which it did not willingly concede.
Id. at 35.
0

Defendants now argue that this holding was erroneous
because the Court failed to explicitly state that the non-GTSA
claims survive only to the extent that they allege wrongdoing
that cannot be corrected by the GTSA. According to Defendants,
Plaintiff now has a free pass to seek double redress for its
misappropriation claims under both non-GTSA and GTSA theories of
liability.
Defendants are wrong. The Court's Order does not permit
Plaintiff to seek recovery for its trade secret claims under
both GTSA and non-GTSA theories. But to the extent that any
ambiguity on this point remained despite the Court's Order, that

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ambiguity would more appropriately be clarified through jury
charges rather than an interlocutory appeal.
As to questions One and Two, Defendant has failed to show
that an interlocutory appeal on either of those questions would
materially advance the litigation. Even if this Court certified
those questions for appeal and the Court of Appeals accepted the
appeal and ruled in Defendants' favor, this Court and the
parties would still have to go through a trial on several
remaining issues, including the non-GTSA claims and Plaintiff's
claims for breach of the nondisclosure agreement, equitable
accounting, injunctive relief, and attorney's fees and expenses
of litigation.' Little time or effort would be saved by disposing
of these questions on interlocutory appeal, and it is for this
reason that "permitting piecemeal appeals is bad policy." See
McFarlin, 381 F.3d at 1259.
Thus, Defendants' Motion for Certification Permitting
Interlocutory Appeal (Dkt. no. 372) is DENIED.
II. Defendants' Motion to Stay the Matter Pending Resolution
of a Related Matter (Dkt. no. 374)

Defendants have also asked this Court to stay the present
matter until a related matter between Defendants and their
insurance carrier is resolved. See Dkt. no. 374.
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Indeed, the claims for breach of the nondisclosure agreement, equitable
accounting, injunctive relief, and attorney's fees would still have to be
tried even if all three questions were appealed. Thus, in addition to being
ill-suited for interlocutory appeal, Defendants' third proposed question
fails for this reason as well.
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The related matter, Gartner, et al. v. Northern Capital
Insurance Group, et al., is an insurance coverage matter
currently under consideration in the United States District
Court for the District of Minnesota. Defendants seek a
declaratory judgment that Federal Insurance Company d/b/a Chubb
is obligated to insure the cost of defending Plaintiff Candy
Craft's claims in the instant suit.
Defendants have filed a motion for partial summary judgment
in that suit. The District of Minnesota ordered that briefing on
dispositive motions be completed by June 10, 2015, and scheduled
a hearing on Defendants' motion for June 17, 2015 at 8:30 a.m.
CDT in Minneapolis, Minnesota. The District of Minnesota has
also ordered that Defendants and their insurers meet in person
to attempt to settle the coverage action on July 30, 2015.
The posture of the Minnesota coverage action compels a
response from this Court on two fronts. First, the hearing on
Defendant's motion for partial summary judgment in Minnesota is
scheduled for the day after the June 16 pretrial conference
scheduled for this case in Brunswick, Georgia. Because
Defendants' counsel is also representing them in the Minnesota
matter, maintaining the June 16 pretrial conference date would
impose a significant travel burden on Defendants. Second, as
Defendants point out, a favorable resolution for Defendants in

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the coverage matter would provide them with additional resources
in the present suit and could potentially avert trial.
In light of the Minnesota matter's pending hearings and
conferences, this Court finds that it is appropriate to GRANT
Defendants' motion and to STAY the present matter until July 31,
2015. On that day, Defendant is DIRECTED to notify the Court of
the outcome of the July 30, 2015 settlement conference in
Minnesota. The pretrial conference in the present case will be
rescheduled for August.

SO ORDERED, this 19TH day of May, 2015.

A

GODBEYD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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