Ruehl et al v. AM General LLC
Filing
120
OPINION AND ORDER: DENYING 74 Supplemental MOTION for Summary Judgment (Partial) filed by AM General LLC. Signed by Chief Judge Theresa L Springmann on 3/25/2020. Modified on 3/26/2020 to remove cc (lhc).
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
PHILLIP C. RUEHL and PC RUEHL
ENGINEERING, INC.,
Plaintiffs,
v.
CAUSE NO.: 3:14-CV-317-TLS
AM GENERAL LLC,
Defendant.
OPINION AND ORDER
This matter is before the Court on Defendant AM General’s Supplemental Motion for
Partial Summary Judgment [ECF No. 74]. The motion is briefed and is ripe for ruling.
The case is a dispute over ownership rights to a patent related to vehicular frame rails. In his
Amended Complaint [ECF No. 22], Plaintiff Ruehl 1 raises claims against AM General LLC
(“AM General”) for patent infringement and breach of contract. AM General filed Defendant’s
Answer and Affirmative Defenses to Plaintiffs’ Amended Complaint and Counterclaim [ECF
No. 25], denying Ruehl’s allegations, raising affirmative defenses, raising counterclaims for
breach of warranty and breach of contract, and asking for a declaratory judgment that it either
owns the patent in question or has an irrevocable license to use it.
LEGAL STANDARD
“The court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
1
Unless noted otherwise, this Order will refer to Plaintiffs Phillip C. Ruehl and PC Ruehl Engineering, Inc.
collectively as “Ruehl.”
Civ. P. 56(a). “[T]he burden on the moving party may be discharged by ‘showing’—that is,
pointing out to the district court—that there is an absence of evidence to support the nonmoving
party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “If the moving party has
properly supported his motion, the burden shifts to the non-moving party to come forward with
specific facts showing that there is a genuine issue for trial.” Spierer v. Rossman, 798 F.3d 502,
507 (7th Cir. 2015). “To survive summary judgment, the nonmoving party must establish some
genuine issue for trial such that a reasonable jury could return a verdict in [his] favor.” Gordon v.
FedEx Freight, Inc., 674 F.3d 769, 772–73 (7th Cir. 2012).
Within this context, the Court must construe all facts and reasonable inferences from
those facts in the light most favorable to the nonmoving party. Frakes v. Peoria Sch. Dist. No.
150, 872 F.3d 545, 550 (7th Cir. 2017). However, the nonmoving party “is only entitled to the
benefit of inferences supported by admissible evidence, not those ‘supported by only speculation
or conjecture.’” Grant v. Trs. of Ind. Univ., 870 F.3d 562, 568 (7th Cir. 2017) (citing Nichols v.
Michigan City Plant Planning Dep’t, 755 F.3d 594, 599 (7th Cir. 2014)). Likewise, irrelevant or
unnecessary factual disputes do not preclude the entry of summary judgment. Carroll v. Lynch,
698 F.3d 561, 564 (7th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)).
STATEMENT OF MATERIAL FACTS
When considering this motion, the Court views the facts in the light most favorable to
Ruehl as the nonmoving party. The following statement of facts, including footnotes, is directly
quoted from the Court’s March 28, 2017 Opinion and Order [ECF No. 69] denying both parties’
Motions for Partial Summary Judgement [ECF Nos. 50, 54]:
1. Mother Necessity
2
The parties agree Ralf Pionke of AM General contacted his former co-worker Philip
Ruehl in late 2004 or early 2005 about consulting with AM General on a project to upgrade the
frame rails for its Humvee line of trucks.
Mr. Pionke sent Mr. Ruehl drawings of the then-current side rail design on February 17,
2015 (via email), and on February 23, 2005 (via UPS). AM General claims Mr. Ruehl admitted
that once he had its print drawings, which he did not receive until February 25, 2005, he looked
at them and wanted to modify the spacers. 2
2. February purchase order
Mr. Ruehl signed a purchase order on February 26, 2005. The front of this purchase order
says: “This purchase order is issued to cover cost to provide engineering support for HMMWV
frame rail feasibility study.” (Feb. Purchase Order, DE 51-13 at 2.) It also caps the cost at
$22,500. (Id.) It warns: “ACCEPTANCE OF THIS ORDER CONSTITUTES AN
ACCEPTANCE OF THE TERMS AND CONDITIONS ON FACE AND REVERSE
HEREOF.” (Id.)
The back of this purchase order says:
1. This order constitutes the entire agreement between the parties hereto and the
terms and conditions set forth herein cannot be modified or amended without the
written consent of the Purchaser. No officer, employee or other representative of
Purchaser is authorized to make any oral contract of commitment for the purchase
of materials or to modify or change the terms and conditions of this order unless
such modification or change is in writing approved by Vice President of the
Purchaser.
...
5. It is understood and agreed the Seller warrants that the sale or use of the
material covered by this order, either alone or in combination with other
materials, will not infringe or contribute to the infringement of any patents, either
in the U.S.A. or in foreign countries, and that the Seller covenants to defend every
2
AM General cites page 40, lines 9 through 17, of Mr. Ruehl’s deposition (Ruehl Dep., DE 51-11 at 8). But this
portion of the deposition does not definitively support AM General’s claim of admission.
3
suit which shall be brought against the Purchaser or any party selling or using any
of the Purchaser’s products for any alleged infringement of any patent by reason
of the sales or use of said materials, either alone, or in combination with other
materials, and to pay all expenses and fees of counsel which shall be incurred in
and about defending, and all cost, damages and profits recoverable in every such
suit.
...
9. Information, including but not limited to technical information, drawing and
data, submitted any time by Seller to Purchaser relating to goods or services
covered by this purchase order are deemed not to be submitted in confidence
unless otherwise specifically agreed to in writing. Any restrictive markings
affixed upon any such information furnished to Purchaser shall be of no force or
effect, may be modified, removed or ignored by Purchaser without any liability to
Seller and the information may be used by Purchaser in any way in the conduct of
its business. Seller’s sole rights with respect to use of such information by
Purchaser, it’s [sic] successors, subsidiaries, licenses, affiliates or parents shall be
determined only by valid pre-existing patent rights of Seller as related to the
manufacture, use or sale of goods or services covered by this order. Seller agrees
to promptly notify Purchaser of any pre-existing patents of any other form of
protection which Seller may hold or know of which relates to the goods or
services to be provided under this purchase order. In connection with the
development of any ideas, inventions, improvement or discoveries, including all
related information and know-how, related to the goods or services to be provided
under this purchase order and for which Purchaser has provided or is to provide
support to Seller in the form of funding, including but not limited to payments in
whole or part for prototype components or tooling, designing, testing or
consulting, Purchaser shall automatically be entitled to and Seller agrees to and
hereby assigns all rights, title and interest to such ideas, inventions, improvements
and discoveries (unless otherwise specifically agreed to in writing and such event
Purchaser shall be entitled to at least a nonexclusive paid up, irrevocable
worldwide right and license including the right to fully sublicense third parties
including the U.S. Government for all Governmental purposes to practice and
have practiced for its purpose such invention). Seller agrees to promptly notify
Purchaser in writing of any such idea, invention, improvement or discovery so
developed. The provisions of this clause shall survive termination of fulfillment of
this order and shall incur to the benefit of Purchaser’s successors, subsidiaries,
licensees, affiliates of parents.
(Feb. Purchase Order, DE 51-13 at 3.3 3) Mr. Ruehl acknowledges that his signature on this
document commits him to its terms.
3
Some apparent instances of the word “of” might actually be “or,” and vice versa. The document is difficult to read
in places.
4
3. Original concept sketch: March 5, 2005
On March 5, 2005, Mr. Ruehl sketched the big idea at the heart of this case. But the
parties disagree about the genesis of this idea.
Mr. Ruehl claims in his amended complaint he conceived the idea before signing the
purchase order on February 26, 2005. But he testified on November 19, 2015: “The iterative
process of inventing the concept was completed on March 5, 2005.” (Ruehl Dep., DE 51-11 at
15.) And on April 14, 2016, Mr. Ruehl signed his declaration stating: “None of my invoices to
AM General included charges for my work inventing my new frame rail concept, which was
completed no later than March 5, 2005 (and, to my best recollection, earlier than that.)” (Ruehl
Decl., DE 55-3 at 2.)
AM General argues there is no evidence Ruehl conceived the idea before signing the
February purchase order other than his say-so. AM General argues the evidence demonstrates
that the spacer concept was not completed until March 5, 2005, and that the idea continued to
develop after that date: “[T]he undisputed evidence demonstrates that Ruehl, after reviewing
AMG’s frame rail drawings and signing the February PO, came up with a spacer concept and
then spent three weeks further refining and developing this concept as part of the engineering
support he provided to AMG.” (AM General’s Br. Opp’n Pl.’s Mot. Partial Summ. J., DE 60 at
20.)
Not only do the parties disagree about the genesis of the idea, they also disagree about
what happened to the idea after Ruehl sketched it on March 5, 2005. Ruehl claims the idea never
changed or developed after that date, or perhaps even for some time before. Ruehl claims no one
refined, tested, supported, or funded the idea after that date, or perhaps even for some time
5
before. AM General, however, argues that the idea was subject to continued development,
refinement, and testing during the following months.
The parties refer to the idea in various ways. Ruehl refers to it as an invention “comprised
of a box-type frame rail assembly,” and as “a much improved means of assembling frame rails.”
(Am. Compl., DE 22 at 4, 6.) He says the patent, entitled “Boxed Frame Member and Method for
Manufacture,” covers the invention. (Id. at 7.)
AM General refers to the idea as a “spacer concept.” (AM General’s Br. Supp. Mot.
Partial Summ. J., DE 51 at 5.) AM General denies the amended complaint’s detailed definition
of the invention is accurate, but admits the patent relates to the new frame rail design. Mr. Ruehl
also refers to the idea as “my spacer concept” in correspondence. (Email, Dec. 1, 2005, DE 52-7
at 3.) For the sake of simplicity, the Court will use “idea” to reference the contested intellectual
property.
On March 5, 2005, Mr. Ruehl showed the sketch of the idea to Werner Kraenzler, a
prototype shop owner, who confirmed he believed he could make a prototype of the idea. Mr.
Ruehl did not identify the idea as confidential.
4. “Kick-off” meeting: March 7, 2005
On March 7, 2005, Ruehl met with representatives of Applied Technologies, Inc., and
Mr. Pionke at AM General’s facility in Livonia, Michigan. Ruehl claims he showed the ATI
representatives his sketch of the idea before Mr. Pionke even entered the room.
At that meeting, after disclosing his idea to the ATI representatives and to Mr. Pionke,
Ruehl signed a confidentiality agreement presented to him by AM General. R.J. Gula, a vice
president of AM General, signed it the next day.
5. Confidentiality agreement: March 7, 2005
6
The confidentiality agreement states:
1. “Confidential Information” shall mean any information that has value to the
Disclosing Party and is not generally known to its competitors, including but not
limited to all of the Disclosing Party’s trade secrets, designs, specifications, ideas,
concepts, plans, formulas, patterns, devices, software, drawings, machinery and
equipment, products, processes, procedures, methods, applications, technologies,
financial information, customer information (including identity, specific needs
and any of such customer’s information possessed by the Disclosing Party) or any
compilation or combination of the foregoing that is disclosed to Receiving Party
and marked as confidential or proprietary. Any information that is transmitted
orally shall be considered to be Confidential Information, provided such
information is identified as proprietary or confidential at the time of such oral
transmittal and notice is subsequently provided in writing of its confidential or
proprietary nature by Disclosing Party and transmitted to Receiving Party within
ten (10) days of such oral transmission. Any information that has value to the
Disclosing Party and is not generally known to its competitors, including but not
limited to Commercial/Military Vehicle Frame Feasibility Study
2. Information of the Disclosing Party shall not be considered “Confidential
Information” if it:
(a) Is publicly known to the Receiving party at the time of disclosure;
(b) Becomes public knowledge without breach of this Agreement by
Receiving Party;
(c) Is known to Receiving Party at the time of the disclosure and is not
subject to any restriction that would be violated by its disclosure;
(d) Is lawfully obtained, without restriction that would be violated by the
disclosure by Receiving Party, from a third party not affiliated with
Disclosing Party; or
(e) Is independently developed by Receiving Party by employees of
Receiving Party who have not had access to the Confidential Information
or by third parties unrelated to Disclosing Party.
...
11. Nothing contained in this Agreement shall be construed as granting or
conferring to Receiving Party any patent rights or licenses from Disclosing Party
either expressly or by implication.
...
15. This Agreement reflects the entire agreement of Company and AMG with
respect to the subject matter hereof and supersedes all prior oral and written
representations, warranties, covenants, commitments, guarantees, and other
agreements about the same subject matter hereof.
7
...
20. This Agreement shall be governed by and construed in accordance with the
laws of Indiana without reference to conflicts of law principles, and the parties
agree to be subject to the jurisdiction of the courts of Indiana. Any legal action to
enforce this Agreement shall be brought in St. Joseph County, Indiana.
(Mutual Confidentiality Agreement, DE 22-1 at 1–3.)
6. Frame rail feasibility study
After the meeting on March 7, 2005, Ruehl worked with AM General and ATI on the
frame rail feasibility study. The parties disagree about whether this work included work on the
idea itself.
On March 24, 2005, Ruehl completed a report summarizing his work. He identified the
spacer concept as a “key feature” of his proposed redesigned frame rails. He did not mark the
report, or anything included in the report, as confidential.
On March 28, 2005, he emailed Mr. Pionke drawings, including a drawing of the spacer
concept. Ruehl did not mark the drawing as confidential.
7. Invoices
Mr. Ruehl billed AM General for his work via two invoices dated March 29, 2005. The
first invoice itemizes travel expenses with precision, and totals $2,699.58. (Invoice # 120, DE
51-2 at 2.) The first three items on the list bill for travel on March 6, 2005.
The second invoice does not specify the dates it covers, nor does it itemize the work for
which Ruehl billed. The second invoice indicates he chose not to bill for 3.5 days of work, as a
“Professional Courtesy.” (Invoice # 121, DE 51-3 at 2.) In an email to Mr. Pionke dated March
30, 2005, Mr. Ruehl apparently explained that he reduced the bill to keep it under the budget of
$22,500: “I have adjusted billing to remain within budget; but we have exhausted the allocated
funds.” (Email, Mar. 30, 2005, DE 51-9 at 2.) In an attachment to another email, he apparently
8
sheds further light on the bill: “I pondered the problem for weeks with nothing to show. The
problem is as old as the industry. I could not consider billing for such ‘dreaming’, with high
probability of failure -- in 100 years the problem had not been solved.” (Email, Dec. 1, 2005, DE
52-7 at 4.) The second invoice seeks $19,800.
The combined total of these two invoices is $22,499.58. AM General paid this amount to
Ruehl. Ruehl claims the invoices did not include any time spent conceiving the invention. 4
8. April purchase order
On April 21, 2005, AM General sent Ruehl a second purchase order for
“ENGINEERING SUPPORT OF FRAME RAIL REVIEW.” (Apr. Purchase Order, DE 51-16 at
2.) The April purchase order and the February purchase order carry the same terms on their
backs. Ruehl signed the April purchase order on April 24, 2005.
Again, the parties dispute the nature of the work Ruehl performed under the April
purchase order. AM General claims Ruehl took an active role in evaluating the spacer concept
and was instrumental in arranging meetings between AM General and the prototype shop to
produce prototype rails incorporating the spacer concept. AM General claims his work included
development of the idea itself. Ruehl denies this, and instead claims that the idea itself did not
change or develop during this time period.
Pursuant to an invoice following the April purchase order, AM General paid Ruehl an
additional $15,027.93.
9. Patent
4
Invoice # 121, dated March 29, 2005, seems to bill for 20 days of work at $1,200 per day and seems to deduct 3.5
days for “Professional Courtesy.” (Invoice # 121, DE 51-3 at 2.) There are not many days between March 5, 2005,
when the idea might have been completed and March 29, 2005, the date of the invoice. March 29 minus 20 days is
about March 9. Did Ruehl work full days and almost all weekends during this period? Maybe. And what precise
work did Ruehl do under the heading “Professional Services”? These are the sorts of factual issues the Court cannot
resolve at this stage.
9
AM General claims that in the fall of 2005, after it had spent money in both phases to
have the spacer concept developed, defined, tested, and prototyped, AM General concluded that
the spacer concept Ruehl developed for it was patentable. Ruehl argues AM General did not fund
the spacer concept itself, but only funded its application to AM General’s needs.
On November 1, 2005, Ruehl filed a patent application. On November 7, 2005, Ruehl
requested for the first time that AM General pay him royalties for using the spacer concept.
On February 1, 2006, AM General filed its own patent application. AM General listed
Ruehl as the sole inventor and listed itself as the sole owner.
On July 16, 2013, the United States Patent and Trademark Office issued to Ruehl a patent
covering the idea. This patent, called “Boxed Frame Member and Method for Manufacture,”
embodies the spacer concept.
PRIOR SUMMARY JUDGMENT PROCEEDINGS
The parties previously traded motions for partial summary judgment. AM General sought
summary judgment in its favor on both of Ruehl’s claims and on its own declaratory judgment
and warranty counterclaims. AM General argued that Ruehl contractually assigned to it all rights
to the “idea” under the portion of paragraph nine of the February purchase order 5 stating that
Ruehl “assigns all rights, title, and interest” for which he was to provide support; that if neither
the assignment nor license are effective then Ruehl breached the warranty in the purchase orders;
and that the March 7, 2005 Mutual Confidentiality Agreement (“MCA”) (previously referred to
by the Court in the March 28, 2017 summary judgment ruling as the “confidentiality
agreement”) did not apply to the information Ruehl claimed was protected thereunder. Ruehl
also sought summary judgment on the issues of ownership and confidentiality. Ruehl argued that
5
The remainder of this Opinion and Order will refer to the February purchase order as the “purchase order.”
10
the purchase orders did not transfer any rights over the “idea” to AM General and that the MCA
protected Ruehl’s rights.
On March 28, 2017, the Court issued the Opinion and Order denying both parties’
motions. Opinion & Order, ECF No. 69. The Court rejected AM General’s interpretation of the
clause in paragraph nine of the purchase order, concluding that the assignment clause required
that AM General actually have supported the development of the “idea” to automatically assign
rights to AM General. Id. at 15. At the same time, the Court rejected Ruehl’s motion for
summary judgment on the grounds that there were genuine issues of material fact regarding
whether AM General actually had supported the development of the idea, as well as regarding
the “timing, process, and progress of the idea.” Id. at 16–18. The Court’s Opinion and Order did
not reach AM General’s counterclaim for breach of warranty. Id. at 22.
The Court’s Order also flagged for the parties that the first portion of paragraph nine of
the purchase order was potentially dispositive as it provided that information transmitted to AM
General could be “used by [AM General] in any way in the conduct of its business.” Id. at 18.
AM General accepted the Court’s invitation to brief the issue and brought the instant motion.
ANALYSIS
AM General now argues that under paragraph nine of the purchase order, information
disclosed to it by Ruehl could be “used by [AM General] in any way in the conduct of its
business.” Br. in Supp. Def. AM General’s Suppl. Mot. Partial Summ. J. at 5, ECF No. 75. AM
General argues that this applies to the “idea,” 6 which the parties agree was transmitted to AM
General by Ruehl both on March 7, 2005, and on March 28, 2005. Id. at 6. If this is correct, and
6
Like the Court’s previous Order [ECF No. 69], the Court will refer to the spacer concept embodied in the ‘930
patent as the “idea.”
11
AM General can use the “idea” which was the basis for the ‘930 patent “in any way,” then
Ruehl’s claims fail.
AM General argues that the claim for patent infringement would fail because AM
General cannot infringe on the ‘930 patent if it can make free use of the underlying idea. See 35
U.S.C. § 271(a) (“[W]hoever without authority makes, uses, offers to sell, or sells any patented
invention, within the United States or imports into the United States any patented invention
during the term of the patent therefor, infringes the patent.” (emphasis added)). Because
paragraph nine would give AM General the authority to use the “idea” in whatever way it
wanted, AM General could not infringe on the ‘930 patent by definition under this theory. Ruehl
does not appear to contest the argument that, if paragraph nine of the purchase order is effective
in assigning rights to the “idea” to AM General, his patent infringement claim fails.
AM General also argues that Ruehl’s breach of contract claim fails because the
documents transmitting the “idea” to AM General were never marked as the MCA requires,
meaning that the MCA did not provide Ruehl with any rights. ECF No. 75 at 12. If that were
correct, then the documents containing the “idea” would not be considered confidential and,
defaulting back to the purchase order, AM General would be free to us the “idea” however it
wanted.
However, Ruehl argues that the MCA superseded paragraph nine of the purchase order,
rendering it inoperative. Pls.’ Br. Opp’n Def.’s Suppl. Mot. Partial Summ. J. at 10, ECF No. 87.
Under this theory, his patent infringement claim would survive at a minimum because, even if
the MCA did not apply to the ‘930 patent, AM General would not have authorization to use the
“idea.” He also argues that the MCA applies to the ‘930 patent, meaning that, even if paragraph
nine of the purchase order were still operative, the designation of rights from the MCA would
12
control and the purchase order would not grant AM General any rights. Id. at 11. Ruehl raises
two main arguments as to why the MCA controls. First, he argues that his signature on the
March 5, 2005 document is sufficient to satisfy the “marking” requirement of the MCA. Id. at
12. Second, he argues in the alternative that AM General waived the marking requirement of the
MCA through conduct. Id. at 13. Ruehl also raises other arguments arising from AM General’s
counterclaim against him in this matter.
Thus, there are two main issues before the Court. First, does the MCA modify and
supersede paragraph nine of the purchase order? Second, did Ruehl maintain all rights to the
“idea” under the MCA?
A.
Purchase Order and Superseding Effect of the Mutual Confidentiality Agreement
Ruehl and AM General disagree about the effect of the MCA on the purchase order. AM
General argues that the purchase order, allowing it to use the “idea” “in any way,” controls the
parties’ rights and that the MCA is inapplicable and therefore cannot supersede the purchase
order. ECF No. 75 at 5. In contrast, Ruehl argues that the section of paragraph nine of the
purchase order allowing AM General use of the “idea” was “rendered a nullity” when the MCA
superseded that provision. Pls.’s Sur-Reply Opp’n Def.’s Supp. Mot. Partial Summ. J. at 10, ECF
No. 92-1. Whether the MCA supersedes paragraph nine of the purchase order is potentially
outcome determinative. If AM General is correct, Ruehl’s breach of contract claim fails because
the MCA is inapplicable and Ruehl’s patent infringement claim fails because paragraph nine of
the purchase order grants AM General the right to use the “idea” Ruehl submitted within the
March 5, 2005 drawing.
Because this case involves the contested assignment of rights to a patent, Indiana contract
law applies to the Court’s interpretation of the purchase orders. Euclid Chem. Co. v. Vector
13
Corrosion Techs., Inc., 561 F.3d 1340, 1343 (Fed. Cir. 2009) (“Construction of patent
assignment agreements is a matter of state contract law.” (quoting Mars, Inc. v. Coin Acceptors,
Inc., 527 F.3d 1359, 1370 (Fed. Cir. 2008))). Because this case involves the interpretation of the
MCA and the alleged breach of that agreement, which is a supplemental state law claim, Indiana
contract law also applies to the Court’s interpretation of the MCA. See United Mine Workers of
Am. v. Gibbs, 383 U.S. 715, 726 (1966).
Under Indiana law, the Court interprets contracts by examining the intent of the parties as
expressed within the four corners of the contract. McCae Mgmt. Corp. v. Mercs. Nat’l Bank &
Tr. Co. of Indianapolis, 553 N.E.2d 884, 887 (Ind. Ct. App. 1990). A court should give a
contract’s language its plain and ordinary meaning, unless the contract uses a particular term in a
manner intended to convey a specific technical concept. Citizens Action Coal. of Ind., Inc. v.
Duke Energy Ind., Inc., 44 N.E.3d 98, 108 (Ind. Ct. App. 2015). Within the four corners, the
Court “must accept an interpretation of the contract which harmonizes its provisions as opposed
to one which causes them to be conflicting.” McCae Mgmt. Corp., 553 N.E.2d at 887. “The
contract must be read as a whole when trying to ascertain the parties’ intent.” OEC-Diasonics,
Inc. v. Major, 674 N.E.2d 1312, 1315 (Ind. 1996). “The meaning of a contract is to be
determined from an examination of all of its provisions, not from a consideration of individual
words, phrases, or even paragraphs read alone.” Evan v. Poe & Assocs., Inc., 873 N.E.2d 92, 98
(Ind. Ct. App. 2007). “We read the contract as a whole and will attempt to construe the
contractual language so as not to render any words, phrases, or terms ineffective or
meaningless.” Whitaker v. Brunner, 814 N.E.2d 288, 294 (Ind. Ct. App. 2004). A court should
construe a contract “in a way that gives each term independent meaning, rather than rendering
one surplusage.” Pohl v. Pohl, 15 N.E.3d 1006, 1014 (Ind. 2014). “In most cases, construction of
14
a written contract is a question of law for the court, with summary judgment being particularly
appropriate.” McCae Mgmt. Corp., 553 N.E.2d at 887.
Here, whether the MCA had the potential to supersede paragraph nine of the purchase
order is dependent on if there are conflicting terms between the two contracts. See Morris v.
Trinkle, 170 N.E. 101, 104–05 (Ind. App. 1930); see also Acequia, Inc. v. Prudential Ins. Co. of
Am., 226 F.3d 798, 803 (7th Cir. 2000) (“[A] new contract with reference to the subject matter of
a former one does not supersede the former and destroy its obligations, except in so far as the
new one is inconsistent therewith, when it is evident from an inspection of the contracts and from
an examination of the circumstances that the parties did not intend the new contract to supersede
the old, but intended it as supplementary thereto.” (applying Idaho law) (quoting Silver
Syndicate, Inc. v. Sunshine Mining Co., 611 P.2d 1011, 1020 (Idaho 1979))); see also
Restatement (First) of Contracts § 408 (1932) (“A contract containing a term inconsistent with a
term of an earlier contract between the same parties is interpreted as including an agreement to
rescind the inconsistent term in the earlier contract.”). If the two agreements can apply
coextensively, then the question of whether the MCA superseded paragraph nine of the purchase
order is irrelevant. See Restatement (First) of Contracts § 408 (1932). So the Court begins its
analysis by answering the question of whether the documents conflict with each other.
And paragraph nine of the purchase order and MCA do not contradict each other. The
relevant language of the purchase order is as follows:
Information, including but not limited to technical information, drawing and data,
submitted any time by Seller to Purchaser relating to goods or services covered by
this purchase order are deemed not to be submitted in confidence unless otherwise
specifically agreed to in writing. Any restrictive markings affixed upon any such
information furnished to Purchaser shall be of no force or effect, may be
modified, removed or ignored by Purchaser without any liability to Seller and the
information may be used by Purchaser in any way in the conduct of its business.
15
Purch. Order at 3, ECF No. 51-13.
The relevant language of the MCA is as follows:
“Confidential Information” shall mean any information that has value to the
Disclosing Party and is not generally known to its competitors, including but not
limited to all of the Disclosing Party’s trade secrets, designs, specifications, ideas,
concepts, plans, formulas, patterns, devices, software, drawings, machinery and
equipment, products, processes, procedures, methods, applications, technologies,
financial information, customer information (including identity, specific needs
and any of such customer’s information possessed by the Disclosing Party) or any
compilation or combination of the foregoing that is disclosed to Receiving Party
and marked as confidential or proprietary.
Mutual Confidentiality Agreement at 1, ECF No. 22-1.
Ruehl argues that the language of the purchase order that “[a]ny restrictive markings
affixed upon any such information furnished to Purchaser shall be of no force or effect” and that
documents transmitted to AM General may be “may be used . . . in any way in the conduct of its
business” conflicts with the language of the MCA instructing that information “marked as
confidential or proprietary” will be considered “confidential information” and instructing that
each party maintains its rights to such information. But this interpretation requires that the Court
interpret the purchase order in a way that is not only nonsensical but is also internally
contradictory.
According to the plain language of paragraph nine of the purchase order, “Information . .
. submitted any time by Seller to Purchaser relating to goods or services covered by this purchase
order are deemed not to be submitted in confidence unless otherwise specifically agreed to in
writing.” ECF No. 51-13 at 3 (emphasis added). This makes it clear that the terms in paragraph
nine of the purchase order regarding transmittal of information from Ruehl to AM General are a
default procedure, but that the parties are free to override that default by way of a separate
writing. The MCA is such a writing.
16
To interpret the purchase order otherwise and read the second sentence in paragraph nine
regarding the ineffectiveness of restrictive markings as an absolute, as opposed to a default
statement allowing for the possibility of an alternate procedure by separate written agreement,
renders the purchase order internally contradictory. This is because the second sentence
regarding the ineffectiveness of restrictive markings has no modifiers, and interpreting that
provision as an absolute would dictate that it apply regardless of whether there was a separate
written agreement as allowed for in the first sentence. Compare ECF No. 51-13 at 3 (“Any
restrictive markings affixed upon any such information furnished to Purchaser shall be of no
force or effect, may be modified, removed or ignored by Purchaser without any liability to Seller
and the information may be used by Purchaser in any way in the conduct of its business.”), with
id. (“Information . . . submitted any time by Seller to Purchaser relating to goods or services
covered by this purchase order are deemed not to be submitted in confidence unless otherwise
specifically agreed to in writing.”).
Under such an interpretation, either the second sentence regarding the ineffectiveness of
restrictive markings could be enforceable, or the first sentence allowing for specific agreements
in writing to control could be enforceable, but not both. And basic law of contracts strongly
discourages an interpretation that causes contract language to be internally contradictory. See
OEC-Diasonics, Inc., 674 N.E.2d at 1315.
A much more reasonable interpretation of the contract is that the first two sentences of
paragraph nine of the purchase order set the default terms for the transmittal of information from
Ruehl to AM General, but also allow for those default terms to be overridden by specific
exceptions, as agreed to in writing. This interpretation renders the purchase order internally
17
consistent, as the Court is required to do if possible. Id. It also seems more likely to be the
parties’ actual intent at the time of execution based on the context of the entire purchase order.
The next question is whether the first two sentences of paragraph nine of the purchase
order conflict with the MCA. They do not. The purchase order sets the default terms for the
transmission of information from Ruehl to AM General but allows for exceptions that are
“otherwise specifically agreed to in writing.” ECF No. 51-13 at 3. When there is information
transmitted from Ruehl to AM General that fits within the terms of the MCA, then the MCA
controls the rights and obligations between the parties; this includes the markings having the
effect of rendering the transmitted information confidential and thereby creating rights for the
disclosing party. If the information transmitted does not fit within the terms of the MCA, then
paragraph nine of the purchase order and its default provision control.
For example, to step outside the confines of this case and specifically the “marking”
requirement of the MCA, imagine that Ruehl had submitted to AM General a document marked
“confidential” containing lyrics from a popular song. Applying the purchase order and the MCA,
the MCA might apply. The document is marked as “confidential,” so the requirement that the
document be “marked confidential or proprietary” is met. ECF No. 22-1. And the lyrics could
also hypothetically meet the requirement that the information “has value to the Disclosing
Party.” Id. But such a document would fail the requirement in the MCA that the information be
“not generally known.” Id. Therefore, the MCA would not be applicable, and the parties’ rights
would be determined by paragraph nine of the purchase order. Under paragraph nine, the fact
that the lyrics were marked as “confidential” would have no effect on the parties’ rights, and AM
General would be able to use the lyrics without regard to Ruehl’s rights to them, notwithstanding
applicable copyrights of course.
18
Similarly, if the MCA does not apply here regarding the “idea,” then paragraph nine of
the purchase order applies. If that is the case, then AM General is correct that it is entitled to
summary judgment on Ruehl’s breach of contract claim because the “idea” is not protected by
the MCA. It would also then be entitled to summary judgment on Ruehl’s patent infringement
claim because paragraph nine allows AM General to use the information Ruehl submitted to
them, i.e. the “idea,” “in any way in the conduct of its business.” ECF No. 51-13 at 3. This would
negate the “without authority” element of the patent infringement claim. See 35 U.S.C. § 271(a).
Ruehl contends that, because AM General does not explicitly argue in its opening brief
that the MCA does not supersede paragraph nine of the purchase order, his patent infringement
claims must survive this motion for summary judgment. ECF No. 92-1 at 9. He reasons that this
failure to raise the argument means that paragraph nine of the purchase order is inoperative
regardless of whether the MCA applies and protects the “idea.” Id. In contrast, AM General
responds that it does not matter whether or not the MCA supersedes the purchase order because
Ruehl did not mark as “confidential” or “proprietary” the March 5, 2005 drawing and, as a result,
the MCA is not applicable. Opp. Pls.’ Mot. Leave File Sur-Reply AM General’s Reply Brief
Supp. Suppl. Mot. Part. Summ. J. at 7, ECF No. 95. Both parties are incorrect.
When there exists either a modification to a contract that does not contradict prior terms,
or a new contract between the same parties containing consistent terms, those uncontradicted
prior terms stay in effect. Acequia, 226 F.3d at 803 (“[A] new contract with reference to the
subject matter of a former one does not supersede the former and destroy its obligations, except
in so far as the new one is inconsistent therewith.” (quoting Silver Syndicate, 611 P.2d at 1020)).
Ruehl’s argument fails because paragraph nine of the purchase order remains operative,
regardless of whether the MCA is a modification or a new agreement, to the extent that it does
19
not conflict with the MCA. AM General’s argument fails because, if the terms of paragraph nine
are actually inconsistent with the MCA, then the inconsistent terms within paragraph nine of the
purchase order would be superseded by the MCA and could not be operative, regardless of
whether the MCA provided protection for any particular document.
Therefore, because the MCA does not conflict with the first two sentences of paragraph
nine of the purchase order, the Court concludes that, if the MCA does not apply to the “idea”
(discussed in the next section), then paragraph nine of the purchase order grants AM General the
right to use the “idea” contained in the March 5, 2005 drawing “in any way.”
B.
Applicability of the MCA
The next question before the Court is therefore whether the MCA applies. If the MCA
applies, then paragraph nine of the purchase order does not and AM General does not have the
right to use the “idea” under that contract. AM General therefore argues that the MCA does not
apply because the documents containing the “idea” were never marked. Ruehl makes several
counter arguments. First, he argues that his signature on the March 5, 2005 drawing containing
the “idea” is sufficient to satisfy the marking requirement of the MCA. Second, he argues that,
even if his signature does not meet the marking requirement, it is irrelevant because AM General
waived the marking requirement of the MCA. Third, he raises arguments that are specific to AM
General’s supplemental interrogatory answers. Fourth, he argues that AM General’s
counterclaim is effectively a “judicial admission” that the MCA applies to his “idea.” And fifth,
Ruehl argues that equitable principles prevent AM General from arguing that the MCA does not
apply to the “idea” because a party is not allowed to disclaim an obligation created by an
agreement at the same time that s/he benefits from it.
1.
Marking Requirement
20
The next question that the Court will address is whether Ruehl fulfilled the “marking”
requirement of the MCA that is necessary for protection by that agreement.
Again, the relevant text of the MCA is as follows:
“Confidential Information” shall mean any information that has value to the
Disclosing Party and is not generally known to its competitors, including but not
limited to all of the Disclosing Party’s trade secrets, designs, specifications, ideas,
concepts, plans, formulas, patterns, devices, software, drawings, machinery and
equipment, products, processes, procedures, methods, applications, technologies,
financial information, customer information (including identity, specific needs
and any of such customer’s information possessed by the Disclosing Party) or any
compilation or combination of the foregoing that is disclosed to Receiving Party
and marked as confidential or proprietary.
ECF No. 22-1 (emphasis added).
The parties do not appear to dispute that the drawings and documents submitted to AM
General constituting the “idea” fulfill the first parts of this paragraph of the MCA, i.e. that it “has
value to Disclosing Party and is not generally known to its competitors.” The parties also do not
appear to dispute that the “idea” was “disclosed” to AM General within the meaning of the
MCA.
As an initial matter, in the Court’s previous order [ECF No. 69 at 22], the Court noted
that it was “inclined to conclude that the confidentiality agreement required Ruehl to mark his
information as confidential or proprietary in order to satisfy the definition of ‘Confidential
Information’ and be protected by the [MCA].” AM General argues that this amounts to a legal
conclusion that the “idea,” as contained within the March 5, 2005 drawing, “must have been
marked as confidential or proprietary” for Ruehl to maintain his rights to it. ECF No. 75 at 12.
Ruehl appears to challenge this by noting that the order only stated that this was an “inclination”
and that, “Whether that ‘inclination’ amounts to an actual legal finding . . . is, we submit,
unclear.” ECF No. 87 at 12. However, while Ruehl suggests that the Court’s previous statement
21
is not binding as a rule of law, he provides neither argument nor legal authority explaining why
or how the statement is not binding on the parties. Therefore, the Court will assume without
deciding, for the purposes of this motion, that the confidentiality agreement required Ruehl to
“mark his information as confidential or proprietary” to qualify for protection under the MCA.
As this matter is before the Court on AM General’s Motion for Partial Summary
Judgement, the question of whether the documents transmitted in fact meet the marking
requirement of the MCA is not before the Court. Instead, the Court is addressing the question:
When viewed in the light most favorable to Ruehl, does the evidence before the Court establish
that no reasonable fact finder could conclude that the documents transmitted to AM General
were “marked as confidential or proprietary” within the meaning of the MCA? And when the
question is framed in this way the answer is a conclusive “no.”
The parties agree, and the evidence supports, that the March 5, 2005 drawing was a
technical document that Ruehl signed and dated and that contained the “idea.” The Court’s
previous Order already determined that “Mr. Ruehl did not identify the idea as confidential.”
ECF No. 69 at 5. But the Order expressed no opinion on whether the signature and date could
constitute a mark designating the drawing as proprietary under the MCA.
The parties now contest this point. AM General argues that the only reasonable
interpretation of the language in the MCA is that “the information must contain the marking
‘Confidential’ or ‘Proprietary’ or, at the very least, a synonym to that effect.” Reply Brief in
Supp. Def. AM General’s Suppl. Mot. Partial Summ. J. at 4, ECF No. 90. Ruehl contends that
the MCA’s marking requirements are set forth in a “generalized and non-specific way,”
rendering the requirement ambiguous, which must then be construed against AM General as the
drafter. ECF No. 92-1 at 6.
22
The Court is faced with two possible meanings for the marking requirement. Under AM
General’s proposed interpretation, to fulfill the marking requirement of the MCA, any document
“must contain the marking ‘Confidential’ or ‘Proprietary’ or, at the very least, a synonym to that
effect.” ECF No. 90 at 4. Ruehl does not propose a specific interpretation, but does argue that
something less should apply, such that his signature would suffice to fulfill the requirement. ECF
No. 92-1 at 6.
“A basic principle of contract interpretation is that the court will apply definitions for
defined terms, but undefined terms will be given their plain, ordinary meaning.” Lafayette Life
Ins. Co. v. Arch Ins. Co., 784 F. Supp. 2d 1034, 1042 (N.D. Ind. 2011). A court should give a
contract’s language its plain and ordinary meaning, unless the contract uses a particular term in a
manner intended to convey a specific technical concept. Citizens Action Coal. of Ind., 44 N.E.3d
at 108. If the clause is ambiguous, then Ruehl is correct in that it must be construed against AM
General as the drafter. See Heartland Crossing Found., Inc. v. Dotlich, 976 N.E.2d 760, 763 n.3
(Ind. Ct. App. 2012). But while that is true in some cases, Indiana law mandates that this rule
applies “only if we cannot ascertain the parties’ intent from all the ordinary interpretative
guides.” George S. May Int’l Co. v. King, 629 N.E.2d 257, 260 (Ind. Ct. App. 1994).
As the clause “marked as confidential or proprietary” and the terms within the clause are
undefined within the MCA, the Court must go to the “plain, ordinary meaning” of the terms. 7 Id.
7
The Court notes that Ruehl, and to a certain extent AM General, focus on the meaning of the term “proprietary
mark.” But that is a term of art, referring to a concept that appears to be mainly relevant today as a historical basis
for the modern trademark. See Frank I. Schechter, The Rational Basis of Trademark Protection, 40 Harv. L. Rev.
813, 814 (1927) (“The modern trademark has two historical roots: (1) the proprietary mark, which was optionally
but usually affixed to goods by the owner, either for the benefit of illiterate clerks or in order that in case of
shipwreck or piracy the goods might be identified and reclaimed by the owner. This mark was essentially a
merchant’s rather than a craftsman’s mark and had nothing to do with the source of production of the goods in
question.”). Neither party has put forward any argument that the MCA used the term “proprietary mark” within that
contract “in a manner intended to convey a specific technical concept” such that the rule from Citizens Action should
apply. 44 N.E.3d at 108. And the Court is bound to apply ordinary definitions to undefined terms unless there is
some obvious intent for a technical term to apply. Id. Because the MCA does not even include the term “proprietary
23
Unfortunately, there does not appear to be such a plain meaning of the phrase that is dispositive.
The parties have not provided the Court with a widely accepted definition of how something may
be marked as proprietary, and the Court’s independent research has not revealed a “plain,
ordinary meaning” either. Breaking the phrase down to its individual parts does shed some light
on the matter.
Black’s legal dictionary defines “mark” as, “A symbol, impression, or feature on
something, usually to identify it or distinguish it from something else.” Mark, Black’s Law
Dictionary (11th ed. 2019). Based on this definition of “mark,” it is certainly possible that
Ruehl’s signature could apply. One example that Ruehl offers is a signature on a painting. It
does not appear that the parties truly contest this point.
The real dispute on this issue is the effect of the “mark” of Ruehl’s signature, i.e. whether
it can be considered as identifying the document as “proprietary.” Black’s legal dictionary
defines “proprietary” as: “1. Of, relating to, or involving a proprietor. 2. Of, relating to, or
holding as property. 3. (Of a product) sold under a tradename.” Proprietary, Black’s Law
Dictionary (11th ed. 2019). It defines “proprietor” as, “An owner, especially one who runs a
business.” Proprietor, Black’s Law Dictionary (11th ed. 2019). Inserting the definition of
“proprietor” into the first definition of “proprietary” yields the definition, “Of, relating to, or
involving an owner, esp. one who runs a business.” Id.
Putting these definitions together, it certainly appears that the phrase “marked as
confidential or proprietary” could reasonably be interpreted to mean that Ruehl’s signature
marked the document as proprietary. As noted, there is not a genuine dispute about the signature
mark,” the Court concludes that at this point there is no evidence of any manifestation of intent for the technical
meaning of the term of art “proprietary mark” to apply. Therefore, the parties’ analysis based on the term of art
“proprietary mark” is inapposite.
24
constituting a “mark,” only about what kind of “mark” is acceptable to qualify a document for
protection under the MCA. Because the signature is unique to Ruehl and was written by his
hand, it is “of, relating to, or involving” him. And he also fits the definition of “proprietor”
because he is the owner of PC Ruehl Engineering, Inc., and, in that capacity, he is engaged in
business as a consultant. Therefore, based on the plain and ordinary meaning of the phrases, it
certainly seems that Ruehl’s signature could qualify as marking the document as proprietary
under the MCA.
But the analysis does not end there; AM General has identified two cases that it claims
are particularly relevant to the disposition of this issue. While neither case is binding or
dispositive, both merit due consideration. In the first case, Corinthian Mortgage Corp. v.
ChoicePoint Precision Marketing., LLC, the court analyzed a clause in a confidentiality
agreement that required that confidential information be “clearly marked as proprietary,
confidential or with other confidentiality notices when disclosed, or . . . is identified as
proprietary, confidential or with other confidentiality notices on disclosure.” No. 1:07CV832
(JCC), 2008 WL 4276921, at *1 (E.D. Va. Sept. 11, 2008). As AM General points out, the court
did find that this clause was “facially unambiguous.” Id. at *5. But the issue before that court
was whether there was any marking requirement at all, not what was needed to fulfill that
requirement. Id. at *3 (“SouthBanc has not claimed that it marked as confidential any of the
underlying communications.”). Here, the parties’ dispute is not over whether a marking
requirement exists; the dispute is focused on what specifically is required to “mark” a document
within the meaning of the MCA. Thus, Corinthian Mortgage Corp. is not relevant to the instant
dispute.
25
The second case, Nilssen v. Motorola, Inc., is similarly unhelpful. 963 F. Supp. 664 (N.D.
Ill. 1997). The relevant portion involved a nondisclosure agreement that contained the following
two provisions:
* “Confidential Information” was defined as “any device, graphics, written
information or information in other tangible forms that is disclosed . . . and that is
marked at the time of disclosure as being ‘Confidential’ or ‘Proprietary.’”
* Information disclosed orally or visually and identified at the time of such
disclosure as “Confidential” was to be considered as “Confidential Information”
only if reduced to tangible form, marked “Confidential” and transmitted to
Motorola within 30 days of such oral or visual disclosure.
Id. at 668.
That court held that under these provisions “any disclosure that [the plaintiff] believed to
be proprietary—including previous disclosures that had not been so marked—had to be in
written form and stamped ‘confidential.’” Id. at 681. The court noted that the agreement
“specifically spelled out the only way in which [the plaintiff] could claim confidentiality as to
any communication.” Id. at 681 n.19.
Crucially, in that case the language of the agreement explicitly required that information
be marked “‘Confidential’ or ‘Proprietary.’” Id. at 668. The fact that the agreement in Nilssen
both capitalized and put in quotes the words “confidential” and “proprietary” clearly
demonstrated the intent of those parties to allow for only those two specific words to fulfill the
marking requirement. Id. 8
Here, in contrast, the exact language of the parties’ agreement required that information
be “marked as confidential or proprietary,” where no words are capitalized or in parentheses.
8
The Court has identified a third case that is potentially relevant to the instant dispute. The case Maxtech Consumer
Products, Ltd. v. Robert Bosch Tool Corp. involves in relevant part a dispute about trade secrets. 255 F. Supp. 3d
833, 861 (N.D. Ill. 2017). But exactly like Nilssen, the confidentiality agreement in Maxtech required the disclosing
party to clearly mark information “as ‘Confidential’ or ‘Proprietary’” for the contract to provide protections. Id. As
such, the case does not warrant a separate analysis.
26
ECF No. 22-1 at 1. This language at least potentially demonstrates an intent by the parties to
allow for the MCA to apply to information that is marked other than strictly with the specific
words “confidential” or “proprietary,” creating an ambiguity in the interpretation of the clause.
To supplement its argument, AM General contends that allowing a signature to constitute
a proprietary mark under the MCA would subvert the intention behind the marking requirement,
i.e. to allow the receiving party to know what information is covered. ECF No. 90 at 4. It
similarly argues that “under Ruehl’s interpretation, any document that Ruehl signed would
satisfy the marking requirement.” Id. But while AM General is technically correct about the
marking requirement, the MCA also contains other requirements in order for information to
constitute “Confidential Information” under the MCA. The information, in addition to being
marked, must also be “not generally known to [the disclosing party’s] competitors, including but
not limited to . . . trade secrets, designs, specifications, ideas, concepts, plans, formulas, . . .” and
so forth. ECF No. 22-1 at 1. Further, the information must have “value to the Disclosing Party.”
Id. So, while AM General is technically correct that Ruehl’s signature on any given document
could fulfill the marking requirement of the MCA, the other requirements within the MCA still
limit and provide notice to the receiving party of what information might be covered and
significantly narrow what information the MCA could apply to.
The marking requirement could therefore require the parties to mark documents with the
words “confidential” or “proprietary” in order to qualify for protection, or it could require
something less exacting. Because there is more than one reasonable interpretation of the marking
requirement, it is ambiguous. See Ecorp, Inc. v. Rooksby, 746 N.E.2d 128, 131 (Ind. Ct. App.
2001) (noting that a contract is ambiguous when reasonable people could come to differing
opinions about its meaning).
27
Because the Court has concluded that the marking requirement is ambiguous and could
have more than one potential meaning without reference to outside facts, the Court must
determine the meaning of the marking requirement. When a contract is ambiguous because of the
language within the four corners of the document, and not because of extrinsic evidence, the
meaning of the language is a pure question of law that is appropriate for summary judgment.
Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1133 (Ind. 1995) (“If a contract is ambiguous solely
because of the language used in the contract and not because of extrinsic facts, then its
construction is purely a question of law to be determined by the trial court.”).
Ruehl argues that the canon of construction of contra proferentem should apply to the
Court’s interpretation of the MCA. ECF No. 87 at 12–13. Under this canon of construction,
when other methods have failed to determine the intent of the parties, the Court is directed to
interpret ambiguous clauses against the drafter. See Heartland Crossing Found, Inc., 976 N.E.2d
at 763 n.3. AM General has not argued that other canons of construction should apply, but
simply argued that the contract is not ambiguous. ECF No. 90 at 4. Neither party has argued that
specific canons of construction other than contra proferentem should apply, and the Court’s
independent research has not uncovered any alternate interpretative guides.
Here, AM General is undisputedly the drafter, and so the Court is obliged to interpret the
marking requirement of the MCA against AM General and in Ruehl’s favor. See Heartland
Crossing Found, Inc., 976 N.E.2d at 763 n.3. Thus, construing the ambiguity against AM
General, the drafter, the Court concludes that the marking requirement does not require only that
information be explicitly marked with the specific words “confidential” or “proprietary” but
rather that something less exacting is permitted. See Ecorp, 746 N.E.2d at 131.
28
Because the MCA’s marking requirement can be fulfilled by something other than the
words “confidential” or “proprietary” and in light of the plain language defining the terms
“mark” and “proprietary,” the Court holds that a reasonable fact finder could conclude that
Ruehl’s signature was sufficient to fulfill the marking requirement of the MCA. If a fact finder
concluded that the signature on the March 5, 2005 document fulfilled the marking requirement of
the MCA, then the operative language in the MCA would control and paragraph nine of the
purchase order would not apply. Therefore, AM General’s motion for summary judgment on
both Ruehl’s patent infringement and breach of contract claims must be denied.
2.
Waiver
That does not end the Court’s analysis. The Court will next address the question of
whether, as Ruehl argues, AM General waived the marking requirement. While the Court’s
conclusion regarding what is necessary to fulfill the marking requirement is itself sufficient to
deny summary judgment, the Court will also address the issue of waiver. It does so: because the
parties have invested significant resources on the issue, including a separate discovery period
specifically on the issue; in the interest of creating a thorough record; and because what is
required to establish a waiver is a question of law for the Court. The questions before the Court
now are whether: 1) Ruehl has established waiver of the marking requirement as a matter of law;
2) AM General has established that it did not waive the marking requirement as a matter of law;
and 3) there is a genuine issue of material fact regarding waiver. See Gordon, 674 F.3d at 772–
73.
The Court concludes that neither party has established the presence or absence of waiver
as a matter of law. And further, there are genuine issues of material fact that stand in the way of
the Court granting summary judgment.
29
Contract provisions can be waived. See Integrity Ins. Co. v. Lindsey, 444 N.E.2d 345,
347–48 (Ind. Ct. App. 1983). “Waiver is an intentional relinquishment of a known right,
requiring both knowledge of the existence of the right and intention to relinquish it.” Pohle v.
Cheatham, 724 N.E.2d 655, 659 (Ind. Ct. App. 2000). The party alleging waiver of a right carries
the burden of proof on the matter. Union Fed. Sav. Bank v. INB Banking Co. Sw., 582 N.E.2d
426, 431 (Ind. Ct. App. 1991).
Waiver may be shown either expressly or impliedly, including by conduct. Pohle, 724
N.E.2d at 659. This determination turns on the conduct of the party alleged to have waived such
a right and, unlike an estoppel analysis, is not affected by the reaction or reliance of the nonwaiving party. 2444 Acquisitions, LLC v. Fish, 84 N.E.3d 1211, 1217 (Ind. Ct. App. 2017) (“A
person who is in a position to assert a right or insist upon an advantage may, by his own words or
conduct, and without reference to any act or conduct of the other party affected thereby, waive
such right.” (quoting Lafayette Car Wash, Inc. v. Boes, 282 N.E.2d 837, 839 (Ind. 1972))); see
also Tate v. Secura Ins., 587 N.E.2d 665, 671 (Ind. 1992) (“[T]here is a distinction between
‘waiver’ and ‘estoppel.’ A waiver is an intentional relinquishment of a known right and is a
voluntary act, while the elements of estoppel are the misleading of a party entitled to rely on the
acts or statements in question and a consequent change of position to his detriment.” (quoting
Travelers Ins. Co. v. Eviston, Adm’r, 37 N.E.2d 310, 314 (Ind. App. 1941))).
The existence of waiver may be implied from the acts, omissions, or conduct of one of
the parties to the contract. Am. Standard Ins. Co. of Wis. v. Rogers, 788 N.E.2d 873, 877 (Ind. Ct.
App. 2003). Waiver by conduct is not accomplished by inadvertent action but requires that the
waiving party’s conduct manifest an intent to waive the relevant provision. Hastetter v. Fetter
Properties, LLC, 873 N.E.2d 679, 684 (Ind. Ct. App. 2007) (“[S]ilence, inactivity, or
30
acquiescence is not waiver unless the party against whom waiver is claimed had a duty to act or
speak.”); see also J. H. Cohn & Co. v. Am. Appraisal Assocs., Inc., 628 F.2d 994, 1000 (7th Cir.
1980) (“Waiver, we pointed out, focuses on intent. If an individual intentionally relinquishes a
known right, either expressly or by conduct inconsistent with an intent to enforce that right, he
has waived it.”).
Provisions may be waived even when a contract has a “no waiver” clause. Am. Standard,
788 N.E.2d at 877 (“[W]e reject American Standard’s contention that the no-waiver clause in the
Policy immunizes it against application of the doctrines of waiver and estoppel.”). While AM
General argues that waiver of “no waiver” provisions in such contracts requires a higher standard
of proof of clear and convincing evidence, it has failed to cite to any Indiana law, the law
governing the interpretation of the MCA, requiring such a higher standard. See Def. AM General
LLC’s Suppl. Brief in Supp. Suppl. Mot. Part. Summ. J. at 5, ECF No. 112 (citing Wis. Elec.
Power Co. v. Union Pac. R.R. Co., 557 F.3d 504, 508–09 (7th Cir. 2009) (applying Wisconsin
law); Roboserve, Inc. v. Kato Kagaku Co., Ltd., 78 F.3d 266, 277 (7th Cir. 1996) (applying
Illinois law)). 9 Similarly, while AM General argues that the MCA’s clause restricting
modifications to writing precludes a finding of waiver, provisions may be waived by conduct
even when a contract dictates that it may only be modified in writing. Cf. Sees v. Bank One, Ind.,
N.A., 839 N.E.2d 154, 161 (Ind. 2005) (“Even a contract providing that any modification thereof
must be in writing, nevertheless may be modified orally.”). 10
9
However, because it does not affect the disposition of this motion, the Court will assume without deciding that
clear and convincing evidence is required to establish a waiver of a provision in a contract containing a “no waiver”
clause.
10
To conclude otherwise would require this Court to determine that “no waiver” provisions could themselves be
waived, but “no non-written modifications” provisions could not be. AM General has cited to no authority holding
as such.
31
Whether a contract provision was waived is typically a question of fact and is therefore
ordinarily not suitable for summary judgment. Phillips v. Green St. Corp., 237 N.E.2d 590, 595
(Ind. App. 1968). “[W]hile the existence of facts necessary to constitute waiver is ordinarily a
question of fact, the question of what facts are necessary to constitute waiver is a matter of law.”
Pohle, 724 N.E.2d at 658. Therefore, if the facts are not in dispute and the only question is
whether such facts constitute a waiver, then whether a party waived a specific right is a question
of law and is suitable for summary judgment. Jackson v. DeFabis, 553 N.E.2d 1212, 1217 (Ind.
Ct. App. 1990).
However, if the relevant facts are not in dispute but the intent that is inferred from those
facts is in dispute, then the allegedly waiving party’s intent is a question of fact that must be
resolved by the jury unless the conduct unequivocally establishes the intent. See Terry v. Int’l
Dairy Queen, Inc., 554 F. Supp. 1088, 1095 (N.D. Ind. 1983) (applying Indiana law). To expand:
It is essentially a matter of intention. Negligence, oversight, or thoughtlessness
does not create it. The intention to relinquish the right or advantage must be
proved. Occasionally it is proved by the express declaration of the party, or by his
undisputed acts or language so inconsistent with his purpose to stand upon his
rights as to leave no opportunity for a reasonable inference to the contrary. Then,
the waiver is established as a matter of law. Commonly it is sought to be proved
by various species of proofs and evidence, by declaration, by acts, and by
nonfeasance, permitting differing inferences, and which does not directly,
unmistakably, or [unequivocally] establish it. Then it is for the jury to determine
from the facts as proved or found by them whether or not the intention existed.
Id. (quoting Whipple v. Prudential Ins. Co. of Am., 118 N.E. 211, 213 (N.Y. 1917)).
The main questions that the Court must address at this point are whether, as a matter of
law, Ruehl has established that AM General waived the marking requirement by manifesting the
unequivocal intent to do so, or created a genuine issue of material fact regarding waiver? If the
answer to either of these questions is yes, then AM General’s summary judgment motion must
also be denied on this basis. Ruehl argues both of these points. Pls.’ Am. Suppl. Brief in Opp’n
32
Def.’s Second Mot. Part. Summ. J. at 4, ECF No. 110. AM General responds that Ruehl’s waiver
argument “fails at the threshold and summary judgment in favor of [AM General] is
appropriate.” ECF No. 112 at 9.
Ruehl focuses on conduct surrounding the transmission of documents, specifically of
technical documents which were not marked with either the words “confidential” or
“proprietary” that AM General shared with Ruehl during the development of the “idea.” ECF
No. 87 at 15–17. This conduct arguably could manifest an intent to waive the marking
requirement of the MCA if AM General shared documents with Ruehl that that were not marked
as confidential or proprietary but that AM General still considered to be covered by the MCA.
And that appears to be what happened between the parties.
The Federal Rules of Civil Procedure allow a party, during discovery, to serve a notice or
subpoena on a “public or private corporation, a partnership, an association, a governmental
agency, or other entity and must describe with reasonable particularity the matters for
examination.” Fed. R. Civ. P. 30(b)(6). The receiving organization “must then designate one or
more officers, directors, or managing agents, or designate other persons who consent to testify on
its behalf.” Id.; see also Sanyo Laser Prods. Inc. v. Arista Records, Inc., 214 F.R.D. 496, 502
(S.D. Ind. 2003) (“‘Since it is not literally possible to depose a corporation,’” Rule 30(b)(6)
authorizes litigants to name a business entity as a deponent.” (quoting Crous Cartage Co. v.
Nat’l Warehouse Inv. Co., No. IP02-071, 2003 WL 118001, *1 (S.D. Ind. Jan 13, 2003))).
Mr. Regis Luther, the representative AM General designated under this rule, testified
under oath by affirmation that AM General considered “all of its technical drawings to be
confidential” and that “if AM General shares its confidential information with a third party, it
expects that third party to keep it confidential.” Dep. Regis Luther 53:20–53:25, ECF No. 108-2
33
at 2. Therefore, if AM General transmitted documents to Ruehl that were not marked as
confidential or proprietary but that it still considered to be covered by the MCA, then AM
General could have waived the marking requirement of the MCA. 11
The next question before the Court then is whether AM General transmitted to Ruehl, or
shared with Ruehl, technical documents (which according to Mr. Luther it considered
confidential) which were not marked as confidential or proprietary. There are several categories
of relevant documents: “the large-scale” drawing; AMG 677–81; AMG 392 and 440; three sets
of technical documents which AM General emailed to Ruehl; two computer-generated drawings;
an unspecified number of documents which Ruehl had access to during the project within AM
General’s internal databases; and finally assorted technical documents that were not marked as
“confidential” or “proprietary” that were shared with third parties. Furthermore, there is also
deposition testimony about a conversation that allegedly took place between Ruehl and Pionke,
which Ruehl claims is relevant to his argument that AM General waived the marking
requirement of the MCA.
The Court will first lay out what the evidence shows about each of these categories, and
then analyze the legal implications of each. For each, the Court will analyze whether there are
genuine issues of material fact about each document or documents, and then will make a global
determination on what the parties have established about AM General’s intent as manifested
through conduct during the relevant period.
a.
Categories of Evidence
11
AM General attempts to avoid the effect of Mr. Luther’s deposition testimony by arguing that Mr. Luther testified
that the documents were considered “confidential” and not “confidential under the MCA.” ECF No. 112 at 15. But
while AM General’s counsel noted that distinction at the time of the deposition [ECF No. 112-2 at 4], Mr. Luther
never made that distinction in his testimony. And given that at this stage the Court must interpret the facts in the
light most favorable to the non-moving party, the Court concludes that it must interpret Mr. Luther’s testimony as a
statement that at least allows for the possibility that AM General considered the documents to be covered by a
relevant MCA. At trial this would of course be a contested issue of fact.
34
i.
Large-Scale Drawing
The first document at issue is referred to by the parties as the “large-scale drawing,”
hereinafter referred to as the “LSD.” The LSD is a copy of a “very large mechanical drawing of a
Humvee frame rail” that AM General sent to Ruehl in February of 2005. ECF No. 110 at 9.
Ruehl testified, and AM General does not directly dispute, that the original LSD sent to Ruehl
was lost. Def.’s Resp. Pls.’s First Set Post-Stay Disc. Reqs. at 3–4, ECF No. 92-3. It is therefore
unknown whether the original LSD sent to Ruehl had any sort of markings that could be
considered “confidential” or “proprietary,” and the parties dispute this question of fact. Id.
There is conflicting evidence on this point. First, John Smreker, another 30(b)(6)
representative for AM General, testified that: he did not know if the LSD was marked as
confidential; he did not know if AM General or a third party produced the copy; and if AM
General produced the copy “[s]omeone would have to physically stamp it” as confidential.
Smreker Dep. 169:1, ECF No. 87-3 at 4. To contrast, AM General, in an interrogatory answer,
submitted that “it was [AM General’s] practice at the time to mark such large scale documents
confidential or proprietary before they were sent to third parties.” ECF No. 92-3 at 4. The answer
continued by submitting that when AM General produced the new copy of the LSD that was
disclosed to Ruehl during discover in this case, it “reprinted the drawing directly from its system
in the same manner that the drawing would have been printed and sent to Ruehl in 2005. AM
General’s CAD system automatically prints the proprietary legend on that drawing, just as it
would have done in 2005.” Id.
Obviously it cannot be the case that AM General both did and did not print the original,
and that if AM General did print the original LSD then it both did and did not need to be
manually marked as confidential or proprietary before it was sent out. Further, even if the
35
original copy of the LSD had not been automatically marked and did need to be manually
stamped as confidential or proprietary, it still might have been.
In the course of discovery in this case, AM General did produce a new copy of the LSD,
and it is undisputed that the newly made copy is marked “confidential.” Pls.’ Notice Filing Am.
Suppl. Brief Opp’n Def.’s Second Mot. Part. Summ. J. Correct Inadvertent Error Re.
Identification Ex. at 1, ECF No. 109. This seems to have created an issue which confused the
parties during briefing on this matter. What happened is as follows. First, AM General disclosed
a new copy of the LSD to Ruehl, and Ruehl represented to the Court that this copy was not
marked as confidential or proprietary. Pls.’ Suppl. Brief in Opp’n Def.’s Second Mot. Part.
Summ. J. at 10, ECF No. 107. AM General’s counsel reached out to Ruehl’s counsel to discuss
the matter, and Ruehl filed a notice with the Court conceding that the copy of the LSD produced
during discovery actually was marked as confidential or proprietary. ECF No. 109 at 1. AM
General, in its final brief [ECF No. 112 at 14], misconstrues this concession. AM General
appears to argue that Ruehl’s concession was regarding the original copy of the LSD that he
received in 2005, and not the copy that he received during discovery in this matter. See ECF No.
112 at 14. And viewing both Ruehl’s notice of correction [ECF No. 109 at 1] and amended
memorandum reflecting the concession [ECF No. 110 at 9–10], it is clear that Ruehl was only
conceding that the newly produced copy, and not the original copy of the LSD, was marked as
proprietary.
ii.
AMG 677–81
The second category is a series of documents, labeled AMG 677–81, that was sent to
Ruehl by Pionke on February 17, 2005. AMG 677 is an email discussing payment and other
terms of the proposed agreement between the parties and is not marked “confidential” or
36
“proprietary;” and the remainder of the documents in the bates range were attachments to that
email. AMG 677–81, ECF No. 93-1 at 1–5. AMG 678–81 are technical drawings of AM
General’s rail designs. Id. at 2–5. Of these, only AMG 678 is marked with the words
“PROPRIETARY DATA.” Id. at 2. The other technical documents, AMG 679–81, are not
marked with the words “confidential” or “proprietary.” Id. at 3–5.
iii.
AMG 440 and 392
The next documents are labeled as AMG 440 and AMG 392. AMG 440 is a document
entitled “Design Verification Plan & Report,” sent to Ruehl July 7, 2005. Ex. B to Second Decl.
of Meghan Hodge, ECF No. 93-2. The parties agree that the phrase “AM General Confidential”
is electronically embedded in the document. Ex. C to Decl. Meghan Hodge at ¶ 5(b), ECF No.
87-8, ECF 110 at 8. They also agree that, in order to see this phrase, the document either has to
be printed or the user has to “turn on” the marking electronically. ECF 110 at 8. The parties
dispute whether the electronically embedded words are sufficient for the document to be
“marked” under the MCA.
AMG 392 is also titled “Design Verification Plan & Report,” and was sent from AM
General to Ruehl on July 7, 2005. Ex. C to Decl. of Meghan Hodge, ECF No. 87-11. It contains
some of the same information, including a table labeled “Test Description” that appears to be
identical on both documents. Id. AM General, in an answer to one of Ruehl’s interrogatories,
specifically identified the “Test Description” table in AMG440 as containing “Confidential
Information” pursuant to the MCA, even though the same identical table appeared in AMG 392,
a document that both parties agree was unmarked with either of the terms “confidential” or
“proprietary.” Def.’s Resp. Obj. Pls.’ First Set Interim Disc. Req. at 5, ECF No. 107-2.
iv.
Supplementary Documents
37
The next category of documents consists of three sets of technical drawings (together the
“Supplementary Documents”) that AM General emailed to Ruehl on February 17, April 20, and
May 9, all of 2005. ECF No. 108-3, 108-4, 108-5. The first set, sent to Ruehl on February 17,
2005, consists of an email message forwarding three technical drawings to assist Ruehl in his
consulting role. ECF No. 108-3. They were sent on the same day that AMG 677-81 were sent to
Ruehl. The second set was sent on April 20, 2005, and consists of an email message with a
meeting agenda and a technical drawing attached. ECF No. 108-4 The third and final set in this
category was sent on May 9, 2005, and consists of an email and 20 attached technical drawings.
It appears to be undisputed that none of these technical drawings was marked “confidential” or
“proprietary” until they were marked as such for discovery in this case. Compare ECF No. 110 at
10 (asserting the documents were not marked), with ECF No. 112 (not contesting this argument).
v.
Computer-Generated Drawings
The next category consists of two computer-generated technical drawings of a frame rail
(“CG Drawings”). ECF Nos. 108-45, 108-46. While Ruehl claims that these documents are not
labeled “confidential” or “proprietary” [ECF No. 110 at 11], the Court is unable to make out
sufficient detail on these drawings to determine whether or not they have such markings. At the
same time, AM General does not contest that these documents are not so marked. ECF No. 112.
Mr. Luther, another of AM General’s Rule 30(b)(6) witnesses, testified that it was
“likely” that these two drawings were created by AM General, but that he could not say for sure.
Dep. Regis Luther 125:22, ECF No. 108-2 at 3. Furthermore, it is important that there is no
evidence in the record at this point that these documents were transmitted to Ruehl before this
case commenced, much less during the relevant time period.
vi.
Documents Sent to Third Parties
38
Next, Ruehl has obtained through discovery a number of technical documents that were
not marked as “confidential” or “proprietary” that AM General transmitted to third parties.
Specifically, between March 7, 2005, and November 9, 2006, AM General sent Applied
Technologies, Inc. (“ATI”) five emails and one fax message, with numerous technical drawings
attached. ECF No. 108-6 to ECF No. 108-11. Also on March 7, 2005, ATI and AM General
signed a mutual confidentiality agreement. ECF No. 108-40. The provision in this agreement
titled “Confidential Information” is, to a word, identical to the provision titled “Confidential
Information” in the MCA entered into by Ruehl and AM General. Compare ECF 22-1 at 1, with
Mutual Confidentiality Agreement at 1, ECF No. 108-40.
AM General also sent attached unmarked technical documents to Assured Design, Inc.
(“ADI”) a total of twenty-eight times between May 20, 2005, and November 26, 2006 [ECF Nos.
108-13 to 108-39]. Just like with ATI, AM General had a mutual confidentiality agreement with
ADI [ECF No. 107-3], containing a provision titled “Confidential Information” that is
functionally identical to the provision titled “Confidential Information” in the MCA entered into
by Ruehl and AM General. 12
Finally, AM General also sent unmarked technical documents to other third parties on
five other occasions presented to the Court [ECF Nos. 108-39, 108-41 to ECF No. 108-44]. At
this point there is no evidence that AM General had any sort of confidentiality agreements with
the other parties that these documents were sent to.
12
The only difference between the “Confidential Information” sections in the MCA [ECF No. 22-1] and the mutual
confidentiality agreement signed by AM General and ADI is in the last sentences of the provisions. The last
sentence in the MCA reads, “Any information that has value to the Disclosing Party and is not generally known to
its competitors, including but not limited to Commercial/Military Vehicle Frame Feasibility Study.” ECF No. 22-1
at 1 (emphasis added). The last sentence in the “Confidential Information” provision in the mutual confidentially
agreement signed by AM General and ADI reads, “Any information that has value to the Disclosing Party and is not
generally known to its competitors, including but not limited to HMMWV and Commercial Vehicle Three-Piece
Frame Rails.” Mutual Confidentiality Agreement at 1, ECF No. 107-3 (emphasis added).
39
vii.
Documents on AM General’s Internal Databases
Next is an unknown number of technical documents that Ruehl had access to internally
within AM General that may or may not have been marked. ECF No. 92-3 at 3. AM General
declared in a response to an interrogatory asking it to identify “each particular item of [AM
General] Confidential Information” that “Ruehl had direct access to [AM General] Confidential
Information through various computer workstations and AM General’s CAD systems.” ECF No.
92-3 at 3. And further, that “[i]t is impossible at this time to identify each and every such
drawing Ruehl viewed or accessed during these meetings.” Id. This means that there is an
unknown number of technical documents that Ruehl viewed that may or may not have been
marked as “confidential” or “proprietary.”
viii.
Ruehl and Pionke Conversation
Finally, there is a relevant interaction that occurred between Ruehl and Pionke on March
7, 2005. Ruehl contends that, after he showed the March 5, 2005 drawing to Pionke, Ruehl noted
that his “idea” “may be original; I would like a patent search conducted.” Dep. Phillip Ruehl at
50, ECF No. 55-1. He testified that Pionke “said you’re going to sign a document that will
protect any ideas, and we can think about any patent search later.” Id. at 51. Pionke “then
produced the MCA” and he and Ruehl signed it. Id. Pionke, on the other hand, testified that he
did not know when he first discussed the potential of a patent with Ruehl, that it “probably”
happened sometime in March 2005, and that Ruehl “probably thought [getting a patent] would
be a good idea” but that Pionke couldn’t “remember what he said in specific.” Dep. Ralf Pionke
at 175–77, ECF No. 56-2.
b.
Analysis of Evidence Submitted on Waiver
40
As an initial matter, it is worth reiterating that whether unmarked technical documents
were transmitted from AM General to Ruehl is relevant because AM General considered “all of
its technical drawings to be confidential.” Dep. Regis Luther 53:20–53:25, ECF No. 108-2 at 2.
Therefore, if unmarked technical drawings were transmitted from AM General to Ruehl during
the relevant period, a jury could find that conduct manifested an intent to waive the marking
requirement of the MCA.
AM General argues that the transmission of unmarked technical documents is irrelevant
to the issue of waiver of the marking requirement of the MCA because “the Court has already
held that a document must be so marked to be covered” by the MCA. ECF No. 112 at 13. But
that is not what the Court held. The Court previously interpreted the language of the MCA and
held that within the four corners of the MCA, the language of that document required that
technical documents must be marked to qualify as “Confidential Information” and receive the
contemplated protections. ECF No. 69 at 21–22. Whether or not AM General waived the
marking requirement of the MCA through conduct manifesting an intent to waive that
requirement is not a question that the Court has previously addressed. See generally id.
i.
Large-Scale Drawing
Whether the original copy of the LSD sent to Ruehl was marked with the words
“confidential” or “proprietary” is a contested issue of fact. Ruehl’s position is that the LSD was
not marked “confidential” or “proprietary,” while AM General’s position is that it was. As
mentioned above, AM General claims that the original was absolutely marked as such, because
“AM General’s CAD system automatically prints the proprietary legend on that drawing, just as
it would have done in 2005.” ECF No. 92-3 at 4. But there has also been deposition testimony
submitted that in 2005 AM General’s system would not automatically print the “proprietary
41
legend” on technical documents it created, and that Smreker did not remember whether AM
General manually stamped the LSD or not. Smreker Dep. 167:21–167:25, ECF No. 87-3 at 4.
This is conflicting evidence, and it is not the role of the Court at summary judgment to weigh
evidence and resolve conflicting evidence. Anderson, 477 U.S. at 249.
Ruehl also submitted numerous technical documents to the Court, laid out above, that
AM General either sent to him or to a third party during the relevant time period that were not
marked with either the terms “confidential” or “proprietary.” This cuts strongly against AM
General’s claim that its system during the relevant period automatically added a footer to
technical documents labeling them “confidential” or “proprietary.” Specifically, AM General
stated in an interrogatory response that it had provided him with physical copies of AMG 677–
81, of which AMG 678–81 were technical documents. But, of that range of technical documents,
only AMG 678 was marked as “proprietary.” Further, the CG Drawings, Supplemental
Documents, AMG 392, and numerous documents sent to third parties all were unmarked with
either the term “confidential” or “proprietary.” If AM General’s system automatically marked
technical documents as “confidential” or “proprietary” then AMG 679–81, as well as the rest of
the unmarked technical documents specified above, should have been automatically marked too.
And whether or not the LSD was marked as “confidential” or “proprietary” is material
because, if it was not marked as such, then its transmission to Ruehl could be considered to have
been a manifestation of intent to waive the marking requirement entirely. This contested fact is
extremely important to determining the ultimate issue of fact on the issue of waiver, i.e. whether
or not AM General manifested intent to waive the marking requirement of the MCA. This is
especially so because AM General still takes the legal position that the LSD was covered by the
MCA. ECF No. 112 at 4.
42
ii.
AMG 677–81
A jury could also find that the transmission of AMG 679–81 manifested intent by AM
General to waive the marking requirement of the MCA. As noted, AMG 679–81 are unmarked
technical documents that AM General sent to Ruehl during the relevant time period. AM General
stated in an interrogatory answer that AMG 677–81 were “marked as proprietary or
confidential.” ECF No. 92-3 at 3. This is contradicted by AM General’s later brief in this matter
stating that the answer only was intended to refer to AMG 678 and that the range it listed was “to
show the transmission email to Ruehl and all of its attachments.” ECF No. 95 at 4 n.1. 13 But that
is not what AM General actually submitted in its interrogatory response. The response states that
AM General “provided Ruehl physical copies of drawings that were marked proprietary or
confidential. These documents have previously been produced as AMG677-681 and AMG440.”
ECF No. 92-3 at 3.
AM General argues that, of this cited range, it is only using AMG 678 as part of the basis
for its counterclaim and so the transmission of these other documents is not relevant. ECF No. 95
at 4 n.1. But the fact that AM General argues that AMG 679–81 are not part of the basis for their
counterclaim is what is actually irrelevant. AM General may be taking the legal position that
AMG 679–81 are not “marked” and thus not covered by the MCA, but Mr. Luther, one of AM
General’s Rule 30(b)(6) corporate witnesses, testified that all technical documents were
confidential. Dep. Regis Luther 53:20–53:25, ECF No. 108-2 at 2. AMG 679–81 are technical
documents and would therefore fall under that umbrella. Thus, the fact that AM General sent
13
It also does not appear that AM General is arguing that the mark on AMG 678 is sufficient to cover the other
attached technical documents.
43
these admittedly unmarked technical documents to Ruehl could be found by a jury to have
manifested intent by AM General to waive the marking requirement. 14
iii.
AMG 440 and 392
AMG 392 is also relevant, as an unmarked technical document sent to Ruehl, as to
whether AM General manifested an intent to waive the marking requirement. But the document
is also relevant for a different reason. It contains a table entitled “Test Description” which is
identical to the table entitled “Test Description” in AMG 440. Compare ECF No. 87-11, with
ECF No. 107-2 at 5.
AMG 440 also contains a “hidden” footer which contains the term “proprietary.” ECF
No. 107-2 at 5. This footer is only viewable electronically if the viewing party affirmatively
“turns on” the footer, which Ruhl alleges he never did and was never instructed to do. Allegedly
the footer also appears if the document is printed. The parties dispute whether AMG 440 was
“marked” within the meaning of the MCA because of the “hidden” footer and because the “Test
Description” table was in both AMG 392 and in AMG 440.
The parties misconstrue the relevance of these documents. What is relevant at this stage
is not whether AMG 440 was “marked” within the meaning of the MCA. 15 The relevant question
14
Curiously, neither party addresses the issue that both the LSD and AMG 677–81 were transmitted to Ruehl by
AM General in February of 2005, while the MCA was not signed by each party until March 7, 2005. And while the
Court is not reaching the issue because the parties did not raise it, the MCA appears to not apply to information or
documents exchanged before the agreement was signed. See ECF No. 22-1 at 1. If that is true, then whether any of
these documents is “marked” under the MCA would be irrelevant because waiver is the voluntary relinquishment of
a known right. Tate, 587 N.E.2d at 671. And a right cannot be “known” if it does not yet exist. However, while the
transmission of these documents could not claim any protection under the MCA under any interpretation of the
“marking” requirement due to the fact that they were disclosed before the parties signed the MCA, the parties both
argue that the LSD and AMG 678 are part of the grounds for the counterclaim and, therefore, are covered by the
MCA. And it is not this Court’s role to make arguments for the parties where they did not do so. Keller v. United
States, 58 F.3d 1194, 1198–99 (7th Cir. 1995) (“[I]t is not the responsibility of this court to make arguments for the
litigants.”).
15
That determination would, of course, be relevant to the disposition of AM General’s counterclaim.
44
surrounding AMG 440 is whether its transmission with the embedded “confidential” mark,
which Ruehl alleges he never viewed during the relevant time period and was never told that he
needed to “turn on,” manifested an intent to waive the marking requirement because it was
essentially hidden from the viewer. What intent was manifested from the transmission of AMG
440 is a contested issue of fact that the Court cannot resolve at the summary judgment stage. See
Anderson, 477 U.S. at 249. 16
iv.
Supplementary Documents
AM General argues that the Supplementary Documents are not relevant because it is not
arguing that these documents are part of the basis for the counterclaim. But like AMG 679–81,
these are technical documents that were transmitted to Ruehl during the relevant period.
Similarly, based on Luther’s testimony in his capacity as a Rule 30(b)(6) deposition witness for
AM General, a jury could find that the transmission of these technical drawings, which AM
General expected Ruehl to keep confidential but did not mark as such, could have manifested an
intent to waive the marking requirement of the MCA.
v.
Computer-Generated Drawings
The CG Drawings were not transmitted to Ruehl, and so cannot directly inform the
question of whether AM General manifested intent to waive. However, they are relevant. That
AM General did not automatically mark these documents with either of the terms “confidential”
or “proprietary,” during the relevant period is evidence of whether it was AM General’s practice
to automatically mark other, directly relevant documents that were created around the same time,
such as the LSD and the unknown internal documents which Ruehl accessed.
vi.
Documents Sent to Third Parties
16
The Court will therefore not reach the questions surrounding the transmission of the sensitive information that is
duplicated in both AMG 392 and AMG 440.
45
The technical documents sent to ADI and ATI were never sent to Ruehl during the
relevant period. This presents the question of whether conduct by one party to a contract can
manifest an intent to waive a contractual right when the other party to the contract has no
knowledge of that conduct? The parties have both done a poor job in arguing this point to the
Court, but the answer appears to be no.
“A person who is in a position to assert a right or insist upon an advantage may by his
own words or conduct . . . waive such right.” Lafayette Car Wash, Inc., 282 N.E.2d at 839.
Because waiver can only be accomplished by a “person who is in a position to assert a right”
common sense dictates that conduct allegedly manifesting an intent to waive a contractual
provision must be manifested to another party to the contract against whom the allegedly
waiving party had the ability to assert the right. See id. Therefore, the Court concludes that the
unmarked technical documents sent to ADI and ATI, as well as the other third parties [ECF Nos.
108-39, 108-41 to 108-44], during the relevant periods cannot manifest an intention to waive the
marking requirement of the MCA.
That is not the end of the story though. Like the CG Drawings, these technical documents
were transmitted and/or created around the relevant time period, and it is undisputed that they are
not marked with either of the words “confidential” or “proprietary.” Thus, while these
documents do not directly inform the Court’s analysis of AM General’s manifested intent, they
are relevant to the inquiry of whether other documents, such as the LSD and the unknown
documents that Ruehl accessed in AM General’s internal database, were automatically marked as
“confidential” or “proprietary.”
vii.
Documents on AM General’s Internal Databases
46
Finally, walking through the analysis step by step reveals that there is another issue of
fact regarding the internal documents that Ruehl had access to within AM General’s databases
when he was working on the project. In federal summary judgment proceedings, the party
moving for summary judgment does not have to offer evidence to disprove an element of the
nonmoving party’s case. Celotex Corp., 477 U.S. at 323. The moving party’s burden can be met
by showing the absence of evidence, by “informing the district court of the basis for its motion,
and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,’ which it believes demonstrates the
absence of a genuine issue of material fact.” Id. (emphasis added). The Supreme Court then held
that there is no requirement that the moving party “support its motion with . . . materials negating
the opponent’s claim.” Id.
Here, AM General has the burden to show that there is no genuine dispute that the
unknown internal documents were marked, Celotex Corp., 477 U.S. at 323, which it met by
submitting deposition testimony that its systems automatically marked technical documents as
either “confidential” or “proprietary.” ECF No. 92-3 at 4. The burden then shifts to Ruehl to
“come forward with specific facts showing that there is a genuine issue for trial.” Spierer, 798
F.3d at 507. Ruehl met this burden by producing all of the above-referenced unmarked technical
documents that AM General either created, transmitted to Ruehl, or transmitted to third parties.
However, while these unmarked technical documents are indirect evidence that these
internal documents may have not been marked as “proprietary” or “confidential,” that is not
sufficient to support Ruehl’s argument of waiver by conduct. For a finder of fact to credit Ruehl
accessing unmarked documents as evidence of waiver, there would have to be evidence of that
actually occurring. At this stage, while Ruehl has provided enough evidence to reject AM
47
General’s argument that it marked those documents “automatically,” 17 there is no evidence in the
record that Ruehl actually viewed unmarked documents in AM General’s databases. Therefore,
whether the documents that Ruehl viewed within AM General’s databases were marked or not is
an issue of fact going to the question of whether AM General’s conduct manifested an intent to
waive the marking requirement.
viii.
Ruehl and Pionke Conversation
Finally, as to the conversation that Ruehl had with Pionke, Ruehl argues that this
exchange is damning because, “there is no evidence in the record to suggest that Pionke insisted
that Ruehl add some marking to his documents to protect his interests.” ECF No. 87 at 14. This
argument is without legal support. Aside from the fact that the statement was contemporaneous
to the signing of the MCA, Ruehl has presented no authority even suggesting that Pionke was
under any sort of obligation to remind Ruehl of the marking requirement of the MCA. And in
fact, contrary authority exists in Indiana caselaw because “waiver is an affirmative act and mere
silence, acquiescence or inactivity does not constitute waiver unless there was a duty to speak or
act.” Pohle, 724 N.E.2d at 659.
Further, at this point it is unclear what actually took place during the discussions between
Ruehl and Pionke, because Pionke testified that he remembered very little of the interactions
Ruehl claimed took place. Therefore, there may also be issues of fact and credibility
determinations that a jury would need to resolve about the conversations. Therefore, there has
been insufficient evidence submitted to the Court at this stage to conclude that the conversations
support Ruehl’s argument of waiver.
c.
Intent Analysis
17
This is so at least at the summary judgment stage where the Court is obliged to construe all facts in the light most
favorable to Ruehl, as the nonmoving party.
48
This all boils down to the three questions laid out above: 1) has Ruehl established as a
matter of law that AM General waived the marking requirement of the MCA by conduct; 2) has
AM General established as a matter of law that it did not waive the marking requirement; 3) and
if the answer is no to both of those, is there a genuine issue of material fact regarding the issue of
waiver? Ruehl’s argument is that the unmarked technical documents that AM General sent him
undisputedly manifested an intent to waive the marking requirement of the MCA. ECF No. 110
at 4–11. AM General argues that Ruehl has not established that it intended to waive the marking
requirement of the MCA and that there is no genuine issue of material fact on the issue of
waiver. ECF No. 112 at 8.
First, did AM General’s conduct manifest an intent to waive the marking requirement as
a matter of law? 18 Ruehl argues that the answer is yes because of the unmarked technical
documents AM General transmitted to him. ECF No. 110 at 4. This is incorrect. For waiver by
conduct to be established as a manner of law, the conduct must be “so inconsistent with his
purpose to stand upon his rights as to leave no opportunity for a reasonable inference to the
contrary.” Terry, 554 F. Supp. at 1095. And here, while AM General did transmit technical
documents to Ruehl that arguably could have manifested an intent to waive the marking
requirement, it is also undisputed that AM General transmitted documents that were marked with
either of the words “confidential” or “proprietary.”
The transmission of the documents marked as such is conduct that is contrary to the
intent to waive the marking requirement. A jury could reasonably find that AM General’s
conduct in transmitting both marked and unmarked technical documents to Ruehl was not
evidence of intent to waive the marking requirement but was simply negligence on the part of
18
As the party asserting waiver of a right, Ruehl bears the burden of proof on the issue. Union Fed. Sav. Bank, 582
N.E.2d at 431.
49
AM General in protecting documents that it considered important. See Hastetter, 873 N.E.2d at
684 (“[S]ilence, inactivity, or acquiescence is not waiver unless the party against whom waiver is
claimed had a duty to act or speak.”). Therefore, the Court concludes that Ruehl has failed to
establish that AM General waived the marking requirement of the MCA as a matter of law.
AM General has also failed to establish that it did not waive the marking requirement by
its conduct as a matter of law. AM General argues that the deposition testimony by Luther as its
Rule 30(b)(6) witness regarding “confidential information” absolutely does not apply to MCA
and that this testimony referred to what AM General considered “confidential in the general
sense.” ECF No. 112 at 14. But Luther testified that AM General considers all of its technical
documents to be “confidential information,” which a jury could find meant that AM General
considered these documents to be covered by the various mutual confidentiality agreements that
it had with outside professionals that it engaged. 19 And there is no contrary evidence in the
record supporting an alternate source of authority that AM General could rely on to protect these
technical documents other than the mutual confidentiality agreements it had with various outside
parties, such as the one it had with Ruehl. Therefore, a reasonable fact finder could conclude that
Luther’s testimony did refer to MCA. Further, while AM General argues that the testimony did
not refer to MCA, it has not even alleged any other source of authority under which it could have
claimed legal protections for these valuable technical documents. 20 And while AM General does
19
The fact that AM General had at least three functionally identical mutual confidentiality agreements with Ruehl,
ADI, and ATI around the same time would support this contention.
20
Black’s legal dictionary defines “confidential” as, “1. (Of information) meant to be kept secret; imparted in
confidence . 2. (Of a relationship) based on or characterized by trust and a
willingness to impart secrets to the other .” Confidential,
Black’s Law Dictionary (11th ed. 2019). It is hard to imagine that a sophisticated corporation such as AM General
would genuinely intend that when it referred to “confidential information” that it would mean information that was
“confidential in the general sense (i.e., information it prefers not to publicize),” as AM General now claims, and not
information that AM General had some form of actual legal protection over.
50
not present it as such, AM General is essentially contesting whether its actions through its
employees manifested an intent to waive the marking requirement. ECF No. 112 at 8. Therefore,
AM General has failed to establish that it did not waive the marking requirement of the MCA as
a matter of law.
As to the third question, while AM General argues that it “did not, for the purposes of its
summary judgment motion, dispute any of the facts alleged by Ruehl,” this is simply not the
case. AM General argues emphatically that it never intended to waive the marking requirement,
and that its conduct through its agents and employees reflected that lack of intent. ECF No. 112
at 8. As mentioned above, Ruehl contests this fact and has supported this argument with
technical documents AM General transmitted to him that were not marked as “confidential” or
“proprietary,” but that AM General still considered to be confidential.
And the Court’s determination of waiver turns on whether or not AM General’s conduct
manifested intent to waive the marking requirement of the MCA, making this factual dispute
material. See Terry, 554 F. Supp. at 1095. There is evidence that could support a finding that AM
General’s conduct manifested an intent to waive, in the form of Luther’s deposition testimony
and the transmission of unmarked technical documents. There is also evidence to support the
opposite because there were both marked and unmarked documents transmitted, allowing for a
potential finding that the lack of any marking was inadvertent. Thus, AM General’s intent as
manifested through its conduct is a genuine issue of material fact. ECF Nos. 112 at 8, 110 at 6–
14.
A genuine issue of material fact precludes this Court from granting summary judgment.
Fed. R. Civ. P. 56; see also Anderson, 477 U.S. at 249 (“[A]t the summary judgment stage the
judge’s function is not . . . to weigh the evidence and determine the truth of the matter but to
51
determine whether there is a genuine issue for trial.”). Therefore, the genuine issue of material
fact regarding AM General’s intent as manifested through conduct requires the Court to deny
AM General’s Motion for Partial Summary Judgement on a ground that is entirely independent
of the Court’s above conclusion that Ruehl’s signature could fulfill the marking requirement of
the MCA.
3.
Supplemental Interrogatory
Ruehl makes two arguments regarding AM General’s answer to an interrogatory about
what AM General considered “Confidential Information.” ECF No. 92-1 at 2–5. Ruehl’s
argument as to the effect of the interrogatory and related answer is unclear, but he does claim
that “[t]he significance of this response cannot be overstated.” Id. at 2.
Ruehl explains that he “served an interrogatory asking AM General to specifically
identify and describe each particular item of alleged ‘Confidential Information’ underlying its
counterclaim.” Id. AM General responded that it “provided Ruehl physical copies of drawings
that were marked proprietary or confidential. These documents have previously been produced
as AMG677-681 and AMG440.” ECF No. 92-3 at 3–4. 21
21
The full text of the question and answer are as follows:
1.
Specifically identify and describe each particular item of AMG Confidential Information. If the particular
item of AMG Confidential Information was provided or transmitted to Plaintiffs in document form, also
identify the Bates number(s). If the particular item of AMG Confidential Information was orally provided
or transmitted to Plaintiffs, also identify the Bates number(s) of the written notice by which AM General
subsequently informed Plaintiffs of the information’s confidential or proprietary nature. If the particular
item of [AM General] Confidential Information was provided or transmitted to Plaintiffs in some other
manner, specifically identify and describe how the information was provided or transmitted to Plaintiffs.
RESPONSE: AM General objects to this Interrogatory as overly broad and unduly burdensome. Given the
nature of the relationship between Ruehl and AM General, it is not reasonably practical to identify each and
every piece of Confidential Information Ruehl was provided or had access to during his involvement with the
frame rail project. Indeed, Ruehl had direct access to [AM General] Confidential Information through various
computer workstations and AM General’s CAD systems. It is impossible at this time to identify each and every
such drawing Ruehl viewed or accessed during these meetings. Without waiving this Objection, and in addition
to providing Ruehl access to its CAD system which contained drawings marked proprietary or confidential, AM
General also provided Ruehl physical copies of drawings that were marked proprietary or confidential. These
documents have previously been produced as AMG677-681and AMG440. Moreover, in February 2005, AM
52
Ruehl first argues that the interrogatory answer is evidence of waiver. ECF No. 92-1 at 5.
To the extent that the interrogatory response is relevant to the waiver analysis, it has been
addressed above.
Ruehl also argues that AM General’s interrogatory response is an admission that it
considered AMG 677, 79–81 to be covered by the MCA even though they are not marked. ECF
No. 92-1 at 2. But that is not what the response actually says. The response states: “AM General
also provided Ruehl physical copies of drawings that were marked proprietary or confidential.
These documents have previously been produced as AMG677-681and AMG440.” ECF No. 92-3
at 3-4. While the response does identify AMG 677–81 as being “marked proprietary or
confidential,” it does not state that the MCA applies to these unmarked documents, and, in fact,
the MCA is not referenced at all. Id. If the answer to the interrogatory is not related to the
counterclaim (as it appears not to be) then it is on its face unrelated to the MCA, because both
the interrogatory and answer ask about “Confidential Information” but do not specifically refer
to the MCA. ECF No. 92-3 at 3–4. It is worth noting that both parties state in their briefs that the
interrogatory is related to the counterclaim, but that is not what the actual evidence submitted to
the Court shows. And arguments are not evidence. See Fed. R. Civ. P. 56 (c)(1)(A) (“A party
asserting that a fact cannot be or is genuinely disputed must support the assertion by . . . citing to
particular parts of materials in the record . . . .”).
General mailed a large-scale drawing to Ruehl for review. Although Ruehl testified that he no longer has the
original drawing, AMG’s representative testified that it was [AM General’s] practice at the time to mark such
large scale documents confidential or proprietary before they were sent to third parties. During discovery in this
case, AM General reprinted the drawing directly from its systemin the same manner that the drawing would
have been printed and sent to Ruehl in 2005. AM General’s CAD system automatically prints the proprietary
legend on that drawing, just as it would have done in 2005.
ECF No. 92-3 at 3–4.
53
Here, there is no evidence that the interrogatory and response relate to “Confidential
Information” that is the basis for AM General’s counterclaim, which would have implied that the
documents named would be confidential under the MCA. This is because neither the text of the
interrogatory or of the answer explicitly refer to either the counterclaim or the MCA. Instead
they both simply refer to “Confidential Information.” There may be a preamble to the
interrogatory that specifically defined “Confidential Information” as meaning confidential under
the MCA, but neither party has provided the Court with the original interrogatory served by
Ruehl. Therefore, it is unclear to the Court what legal effect either party expects this
interrogatory and response to have on the instant question before the Court. Additionally, neither
party has presented the Court with any legal authority clarifying what effect the interrogatory and
response could or should have on AM General’s motion.
Because neither party has presented a cogent argument explaining the effect of the
interrogatory and related response and there are other genuine issues of material fact requiring
the Court to deny AM General’s motion, the Court declines to reach a legal conclusion regarding
this issue.
4.
Counterclaim as Judicial Admission
Ruehl further argues that AM General’s counterclaim is effectively a judicial admission
that Ruehl’s invention is protected by the MCA. ECF No. 110 at 6. AM General argues that its
counterclaim cannot constitute a judicial admission because it is not a statement of fact but is
instead a legal argument. ECF No. 112 at 10–11.
The parties dispute the meaning of paragraph 36 of AM General’s counterclaim. This
section comes under the heading “Count II: Breach of Contract.” Def.’s Answer Aff. Defenses
Pls.’ Am. Compl. Countercl. at p. 22, ECF No. 25. Paragraph 36 of the counterclaim provides:
54
“[Ruehl] further breached the Confidentiality Agreement by filing a patent application
containing confidential information that belonged to AM General . . . .” Id.
Ruehl has a point. Within the context of Ruehl’s Amended Complaint, AM General is
defending on the basis that the MCA does not apply to the “idea,” such that paragraph nine of the
purchase order applies and Ruehl has no rights to the “idea.” AM General is also arguing that,
“the MCA by its very terms does not apply because Ruehl did not mark the information he
submitted to [AM General] as confidential or proprietary.” ECF No. 90 at 4.
But in its counterclaim, AM General alleges that Ruehl “breached the [MCA]” by filing
for a patent on his “idea” that is at the heart of this case. EFC Nos. 25 at 22, 67 at 7. For Ruehl to
have breached the MCA by using information about his invention, his invention must necessarily
have been covered by the MCA. 22 And in its interrogatory answer that AM General argues
provides the basis for its counterclaim, AM General only identified the documents mentioned
above. There is no evidence that, sometime after March 7, 2005, AMG transmitted to Ruehl
some technical document containing the “idea” that was marked “confidential” or “proprietary”
such that there would be some other basis for some document containing the “idea” being
“marked” such that the invention could be covered by the MCA.
But that does not mean that the counterclaim constitutes a judicial admission. “A judicial
admission is a statement, normally in a pleading, that negates a factual claim that the party
making the statement might have made or considered making.” Robinson v. McNeil Consumer
Healthcare, 615 F.3d 861, 872 (7th Cir. 2010). “That is why ‘in order to qualify as judicial
admissions, an attorney’s statements must be deliberate, clear and unambiguous.’” Id. (quoting
MacDonald v. Gen. Motors Corp., 110 F.3d 337, 340 (6th Cir. 1997)). “A party may state as
22
AM General tries to get around this point by arguing that the counterclaim only alleges a breach of the MCA “by
disclosing [AM General’s] undefined confidential information.” ECF No. 112 at 11 n.3.
55
many separate claims or defenses as it has, regardless of consistency.” Fed. R. Civ. P. 8(d)(3).
Judicial admissions “are not evidence at all but rather have the effect of withdrawing a fact from
contention.” Keller v. United States, 58 F.3d 1194, 1198 n.8 (7th Cir. 1995) (quoting Michael H.
Graham, Federal Practice and Procedure: Evidence § 6726 (Interim Edition)).
Here, the “fact” that Ruehl focuses on is whether the MCA applies to Ruehl’s “idea” that
is the basis for the protected intellectual property in the ‘930 patent. But whether a contract,
which does not require extrinsic evidence to interpret, applies to undisputed facts is a question of
law, not of fact. See N. Ind. Pub. Serv. Co. v. Dabagia, 721 N.E.2d 294, 299 (Ind. Ct. App.
1999). Therefore, the statement in AM General’s counterclaim cannot constitute a judicial
admission because it is not a fact but is a legal conclusion. See Robinson, 615 F.3d at 872. 23
5.
Equitable Effect of Counterclaim
Finally, Ruehl makes an equitable argument regarding AM General’s counterclaim. ECF
No. 110 at 11–13. He argues that AM General’s counterclaim, to be successful, necessarily
requires that documents which are not “marked” receive protection under the MCA. AM General
argues in response that it is not basing its counterclaim on any documents that are not expressly
marked either “confidential” or “proprietary.” ECF No. 112 at 11–13.
Under Indiana law, “[a]party may not claim benefits under a transaction or instrument
and, at the same time, repudiate its obligations.” Raymundo v. Hammond Clinic Ass’n, 449
N.E.2d 276, 283 (Ind. 1983) (citing Caito v. Indianapolis Produce Terminal, Inc., 320 N.E.2d
821, 825 (Ind. App. 1974)); see also Tutor Time Learning Ctrs., LLC v. Larzak, Inc., No. 305-
23
The Court declines to rule on the impact of the counterclaim on Ruehl’s waiver argument because the Court has
already held that there is a genuine issue of material fact preventing the Court from ruling on that issue. But even if
the Court were to rule definitively on the matter, it seems clear that, because “a party’s pre-litigation failure to assert
a legal right is not a judicial admission that the right does not exist,” it is also not an unequivocal manifestation of
intent to waive that same legal right, or else the result would effectively be the same. California N. R.R. Co. v.
Gunderson Rail Servs., LLC, 912 F. Supp. 2d 662, 669 (N.D. Ill. 2012).
56
CV-322 RM, 2007 WL 2025214, at *9 (N.D. Ind. July 6, 2007); Hickman v. State, 895 N.E.2d
353, 359 (Ind. Ct. App. 2008), decision clarified on reh’g, 900 N.E.2d 825 (Ind. Ct. App. 2009)
(“[A]n employee who receives paid vacation time under an employer’s policies is estopped from
arguing that forfeiture provisions of those same policies are unenforceable.”); Matter of Estate of
Palamara, 513 N.E.2d 1223, 1228 (Ind. Ct. App. 1987). While Ruehl frames this argument as
part of his waiver assertion, “The Unmarked Documents Underlying AM General’s
Counterclaim and Transmitted to Others Support a Finding of Waiver” [ECF No. 110 at 11], the
authority which he provides to support this argument does not classify the doctrine as one of
waiver but rather equitable estoppel. See Caito, 320 N.E.2d at 825 (“An equitable principle also
comes into play. Good faith imposed a duty on Caito Foods to speak up and inform Terminal of
the wrongful construction. By acquiescing in the violation and accepting the benefits therefrom,
there was affirmation of the wrongful construction. Thus, Caito Foods is equitably estopped to
assert disapproval and lack of authorization of the prohibited construction.”). Therefore, the
Court analyzes this argument separately.
Ruehl argues that AM General is attempting to gain the benefit of a narrowly applied
marking requirement as applied to the March 5, 2005 drawing (to prevent Ruehl from
maintaining rights to the “idea” under the MCA), while simultaneously disclaiming any marking
requirement when it comes to any information that it wants protected under the MCA (to be able
to sue Ruehl for breaching the MCA when he filed his patent application).
AM General has identified three documents on which its counterclaim is based: AMG
678, AMG440, and the LSD. ECF No. 112 at 12–13. It argues that all three documents are
“marked” under the MCA and, therefore, that Ruehl’s argument here fails. Id. In response, Ruehl
argues that all of AMG 677, 679–81 should be considered to be part of the counterclaim based
57
on AM General’s response to the interrogatory. 24 Ruehl also argues that neither the “large-scale
drawing” nor AMG440 is “marked” within the meaning of the MCA, and that Ruehl had access
over the course of the development of the “idea” to “unspecified CAD drawings.” ECF No. 110
at 7. The parties agree that AMG 678 is “marked,” but disagree about the other documents.
The most glaring problem with evaluating the parties’ arguments is that there exists a
genuine issue of fact regarding the LSD. As noted above, the original LSD was lost, and there is
a dispute about whether the lost version was marked with either of the words “confidential” or
“proprietary.” While AM General attempts to distort Ruehl’s concession about the reproduced
copy that AM General created for the purposes of this litigation being marked, Ruehl clearly still
argues that the original document, which is not in evidence, was not marked. ECF No. 110 at 9–
10.
But even assuming that neither the LSD nor AMG 440 was “marked,” the case law that
Ruehl cites does not provide him with any relief. All of the cited cases contemplate situations
where a party both attempted to gain the benefit of an agreement and escape its own obligations
under that agreement. See Raymundo, 449 N.E.2d at 283 (citing Caito, 320 N.E.2d at 825); see
also Tutor Time Learning Ctrs., LLC, 2007 WL 2025214, at *9; Hickman, 895 N.E.2d at 359.
For example, in Raymundo v. Hammond Clinic Ass’n, Raymundo had entered into a
contract with Hammond Clinic Association that: made him a partner in the clinic as an
orthopedic physician and surgeon for a period of five years; set forth his compensation schedule;
and, in the event of his withdrawal, bound him not to compete with the clinic within its service
area for two years. 449 N.E.2d at 277–78. The contract provided for liquidated damages in the
24
As noted above, in response to an interrogatory question asking AM General to designate “Confidential
Information,” AM General asserted that “AM General also provided Ruehl physical copies of drawings that were
marked proprietary or confidential. These documents have previously been produced as AMG677-681 and
AMG440.” ECF No. 92-3 at 3–4.
58
amount of $25,000 if he breached the non-compete agreement within the first year of leaving. Id.
After two and one-half years of being a partner, Raymundo left the partnership and immediately
began practicing within the clinic’s service area. Id. The clinic filed suit against Raymundo for
breach of the non-compete agreement. Id. Raymundo argued that the non-compete agreement
was unenforceable for several reasons, including that: he entered into the contract under duress;
the non-compete portion of the agreement violated Indiana law and was unenforceable; and there
were genuine issues of material fact regarding the service area. Id. at 279–84. The court rejected
all of these arguments and held that, even if Raymundo had entered into the contract under
duress, he accepted the benefits of it for two and one-half years. Id. at 283. The court concluded
this issue by stating that, “[a] party may not claim benefits under a transaction or instrument and,
at the same time, repudiate its obligations.” Id.
Similarly, in Hickman v. State, Hickman had been employed by the Indiana Department
for several years and had accumulated 212.5 hours in paid vacation hours. 895 N.E.2d at 354.
Hickman was placed on unpaid suspension and then involuntarily terminated. Id. at 354–55.
Under Indiana law, because she was dismissed from her job and did not leave in good standing,
Hickman forfeited all of her accumulated paid sick leave. Id. at 355. In relevant part, the court
held that “an employee who receives paid vacation time under an employer’s policies is estopped
from arguing that forfeiture provisions of those same policies are unenforceable.” Id. at 359. The
court further reiterated that in Indiana, “a party may not accept benefits under a transaction or
instrument and at the same time repudiate its obligations.” Id. (quoting In re Estate of Palamara,
513 N.E.2d at 1228).
The facts here are easily distinguishable from these cases. AM General is not disclaiming
an obligation under the MCA through its counterclaim while attempting to benefit from a
59
different provision in its defense against Ruehl’s claims. AM General is advocating for a
particular interpretation of the MCA, i.e. that the marking requirement strictly requires
documents to be marked “confidential” or “proprietary” to be protected by the MCA. If the Court
accepts that interpretation and applies it to the March 5, 2005 technical drawing that Ruehl sent
to AM General, then that interpretation will apply with equal force to documents that AM
General sent to Ruehl. While AM General’s counterclaim based on Ruehl violating the MCA
when he filed his patent application might also fail based on this Court accepting AM General’s
interpretation of the marking requirement of the MCA, that still does not create a situation
analogous to those that Ruehl has cited to in these cases. Therefore, the Court concludes that,
even if Ruehl is correct and neither AMG 440 nor the LSD were marked under the MCA,
Ruehl’s argument regarding the equitable effect of the counterclaim fails.
CONCLUSION
For the reasons stated above, Defendant AM General’s Supplemental Motion for Partial
Summary Judgment [ECF No. 74] is DENIED.
SO ORDERED on March 25, 2020.
s/ Theresa L. Springmann
CHIEF JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT
60
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