American Furukawa, Inc. v. HOSSAIN

Filing 138

OPINION AND ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT 119 AND GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT 117 . Signed by District Judge Gershwin A. Drain. (DPar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

AMERICAN FURUKAWA, INC.,
Plaintiff,

Case No. 14-cv-13633

v.

UNITED STATES DISTRICT COURT JUDGE
GERSHWIN A. DRAIN

ISTHIHAR HOSSAIN,
HT WIRE & CABLE AMERICAS, LLC

UNITED STATES MAGISTRATE JUDGE
STEPHANIE DAWKINS DAVIS

Defendants.
/
OPINION AND ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
[119] AND GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION
FOR SUMMARY JUDGMENT [117]
I. INTRODUCTION
On September 19, 2014, American Furukawa, Inc. (“Furukawa” or
“Plaintiff”), filed the instant action against former employee, Isthihar Hossain
(“Defendant Hossain” or “Hossain”). See Dkt. No. 1. In the Complaint, Furukawa
alleges eight Counts: (I) violation of the Computer Fraud and Abuse Act
(“CFAA”), 18 U.S.C. § 1030; (II) Fraud; (III) Breach of Contract; (IV) Breach of
Fiduciary Duty; (V) Misappropriation of Trade Secrets under MICH. COMP. LAWS §
445.1902; (VI) Conversion; (VII) Tortious Interference; and (VIII) Civil
Conspiracy. Id.

-1-

On September 16, 2015, Furukawa amended the Complaint to add another
Defendant, HT Wire & Cable America, LLC (“HT Wire”). See Dkt. No. 65. On
October 5, 2015, the Hossain and HT Wire (collectively, “Defendants”) moved to
dismiss the action and defer to arbitration. See Dkt. No. 79. That Motion was
denied on November 19, 2015. See Dkt. No. 97.
Presently before the Court are Plaintiff’s and Defendants’ Motions for
Summary Judgment. See Dkt. No. 117 & 119. Both Motions have been fully
briefed. A hearing was held on June 13, 2016 at 2:30 p.m. For the reasons
discussed below, the Defendants’ Motion [117] is GRANTED IN PART, and
Plaintiff’s Motion [119] is DENIED.
II. BACKGROUND
Furukawa is a supplier of advanced automotive technology, electronics and
specialty products to several high technology industries. Isthihar Hossain accepted
employment with Furukawa in September, 2011 as a Power Systems Electrical
Engineer.
When Hossain began his employment with Furukawa, Furukawa asserts that
Hossain agreed to abide by several of Furukawa’s Policies, including Furukawa’s
policy on “Removable Media Use.” Furukawa also asserts that Hossain entered
into an Invention Assignment & Secrecy Agreement (“Secrecy Agreement”) with
Furukawa, which dictated that Hossain “will regard and preserve as confidential all
-2-

trade secrets pertaining to the Company’s business that have been or may be
obtained by me by reason of my employment.” The Secrecy Agreement also
dictated that Hossain would not “without prior authority from the company to do
so, use for [his] own benefit or purposes, nor disclose to others, either during [his]
employment or thereafter” any trade secrets pertaining to Furukawa’s business.
By 2014, Hossain had become a Senior Production Manager with access to
Furukawa’s know-how, intellectual property and other confidential information.
On March 11, 2014, while he was still employed by Furukawa, Furukawa asserts
that Hossain entered into an “Employment Agreement” with Heibei Huatong
Wires & Cables Group Co., Ltd. (“Huatong”)—a competitor and supplier to
Furukawa.
On March 17, 2014, Hossain informed Furukawa he was unable to work due
to a basketball injury. Notably, pursuant to his alleged Agreement with Huatong,
Hossain was scheduled to begin his employment with Huatong on March 17, 2014.
As a result of his reported injury, Hossain was granted a leave of absence,
commencing March 18, 2014. As a condition for granting leave, Furukawa asserts
that it instructed Hossain that he could not do any work for Furukawa while he was
away. Despite the instructions to the contrary, Furukawa asserts that Hossain
accessed information on his company laptop, copied Furukawa files, and sent them

-3-

from his company email to his personal “gmail” account during his leave of
absence.
On March 20, 2014, Huatong announced that it would no longer sell
Electrical Submersible Pump (“ESP”) cables and photovoltaic (“PV”) cables
(collectively, the “Cables”) to the United States market, through Furukawa.
On April 24, 2014, Hossain sent an email to Furukawa’s Manager of Human
Resources stating that his doctor had cleared him to return to work. On Monday,
April 28, 2014, Hossain announced that he was resigning his employment,
effective May 2, 2014. Furukawa accepted Hossain’s resignation, effective April
29, 2014, and paid him through May 2, 2014.
Despite his alleged Agreement with Huatong, when he resigned his
employment, Hossain allegedly indicated he did not “have another job lined up or
anything,” but his “previous employer” had been contacting him, and he was
“pretty sure” that he could get a job with them. Upon his departure from Furukawa,
Hossain was asked to sign an “Employee Certification & Agreement on
Termination,” certifying that he had returned all property belonging to the
Company, had complied with the Secrecy Agreement and would continue to abide
by that Agreement. Hossain allegedly refused to sign.
On or about May 12, 2014, Furukawa learned that Huatong had approached
WTEC—one of Furukawa’s customers—about buying cable from Huatong. On

-4-

May 16, 2014, Furukawa received an email from WTEC regarding WTEC's
“compound” requirements and “payment terms.” The email from WTEC was
addressed to Hossain at his former Furukawa email address. On May 30, 2014,
WTEC confirmed that Hossain was acting as Huatong’s agent with respect to the
sales negotiations between WTEC and Huatong. On June 5, 2014, Furukawa
received another email from WTEC, addressed to Hossain’s Furukawa email
address, purportedly asking Hossain to quote the price for several sets of cables.
Furukawa sent a letter to Hossain on June 9, 2014, reminding him of his
obligations under the Secrecy Agreement. In the letter, Furukawa demanded that
Hossain immediately cease and desist from any further solicitation of cable
business from WTEC or any other customer of Furukawa. Furukawa also sought
assurances that Hossain would abide by his trade secret obligations, and would not
use or disclose any trade secret information that he acquired during his
employment with Furukawa. Hossain purportedly refused to comply with this
request. Furukawa attempted to negotiate with Hossain to resolve the dispute.
Throughout the negotiations, Hossain purportedly maintained that he had returned
all property belonging to Furukawa and fully complied with the Secrecy
Agreement. After looking into the actions of Hossain, Furukawa brought the
instant action pursuant to the CFAA and Michigan law.

-5-

III. LEGAL STANDARD
Federal Rule of Civil Procedure 56(c) “directs that summary judgment shall
be granted if there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Cehrs v. Ne. Ohio Alzheimer’s
Research Ctr., 155 F.3d 775, 779 (6th Cir. 1998) (quotations omitted). The court
must view the facts, and draw reasonable inferences from those facts, in the light
most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986). No genuine dispute of material fact exists where the record “taken
as a whole could not lead a rational trier of fact to find for the non-moving party.”
Matsushita Elec. Indus., Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Ultimately, the court evaluates “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.” Anderson, 477 U.S. at 251–52.
IV. DISCUSSION
A. Defendants’ Motion for Summary Judgment
Defendants attack on Plaintiff’s claims is essentially three-fold. Defendants
first attack Plaintiff’s claim under the Michigan Uniform Trade Secrets Act
(“MUTSA”), arguing that the information downloaded by Hossain did not contain
any trade secrets. Defendants next attack Plaintiff’s claim overall, arguing that

-6-

Plaintiff has not made a proper request for damages. Finally, Defendants argue that
Plaintiff’s state-law tort claims are pre-empted by MUTSA.
a. Plaintiff’s MUTSA Claim
Defendants first move for summary judgment on Plaintiff’s claim under the
MUTSA. Defendants argue that Plaintiff has failed to establish that the alleged
data breach involved trade secrets as defined by the statute.
In order to establish a violation of MUTSA, the plaintiff must show that (1)
it has protectable trade secrets, and (2) defendant has improperly acquired,
disclosed or used those trade secrets. Compuware Corp. v. International Business
Machines Corp., No. 02–70906, 2003 WL 23212863, *6 (E.D. Mich. December
19, 2003); MICH. COMP. LAWS § 445.1902. The statute defines a “trade secret” as
“information, including a formula, pattern, compilation, program, device, method,
or process,” that (1) “[d]erives independent economic value, actual or potential,
from not being generally known” and (2) “is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.” MICH. COMP. LAWS §
445.1902(d); Delphi Automotive PLC v. Absmeier, No. 15-cv-13966, 2016 WL
787137, *10 (E.D. Mich. March 1, 2016). “Information may be ‘generally known’
if it has been disclosed to, is known to, or is ascertainable by persons in the
relevant industry of field.” Compuware, 2003 WL 23212863 at *6. “A party

-7-

alleging trade secret misappropriation must particularize and identify the
purportedly misappropriated trade secrets with specificity.” Id.
Defendants argue that the product information alleged to have been
misappropriated was in fact “within the knowledge and control of” Huatong—
parent company to Defendant HT Wire—before Defendant Hossain ever
downloaded any files. Dkt. No. 117 at 15–18 (Pg. ID No. 2315–18). According to
Defendants, Huatong gained access to this information via the creation of a Joint
Venture Agreement with Plaintiff’s parent company. Dkt. No. 117 at 25 (Pg. ID
No. 2325). Therefore, Defendants argue, the information was generally known, and
thus cannot be considered trade secrets. The argument is flawed on two levels.
First, this line of argument has already been rejected by the Supreme Court
of Michigan. Hayes-Albion v. Kuberski, 421 Mich. 170, 185 (1984) (“First,
information may qualify as a trade secret although others possess it.”). Therefore,
without more, Defendants’ argument is insufficient to rule that the allegedly
misappropriated files were not trade secrets. Id. at 181–182.
Second, as Plaintiff notes, Defendants have not identified, nor evidenced,
what information was possessed by Huatong, and if it indeed encompasses all of
the alleged trade secrets that have been purportedly stolen. Defendants’ argument
implies that the only trade secrets at issue relate to the technology or
manufacturing of specific products. Dkt. No. 117 at 18 (Pg. ID No. 2318) (“Here,

-8-

Defendant’s parent company either developed the products at issue (ESP Cables,
PV Cables, and Low Voltage Cables) or jointly developed them, and through
shared technology (MV URD Cables).”). Their argument discounts the fact that
“customer and supplier contact information, customer requirements, pricing
information, factory costs and factory capacity”—which may also be trade
secrets—are also alleged to have been misappropriated. Dkt. No. 125 at 10 (Pg. ID
No. 3158); Giasson Aerospace Science, Inc. v. RCO Engineering, Inc., 680 F.
Supp. 2d 830, 844 (E.D. Mich. 2010) (finding that a jury could conclude that
“vendor product and pricing information” constituted a trade secret.). Therefore,
there is a dispute of fact as to whether all of the information was even possessed by
Defendants. Accordingly, Plaintiff’s MUTSA claim survives the Motion.
b. Plaintiff’s Claim for Damages
Defendants argue that Plaintiff cannot claim damages for materials it has
never manufactured, and further, that Plaintiff cannot articulate the method by
which he calculated damages, and thus they are too vague. These arguments
however are without merit.
i. Damages for Items Yet to be Manufactured
Plaintiff has alleged damages for: (1) sales and marketing expenses incurred,
but not recovered due to the loss of business; (2) lost sales; (3) value of the
information that was misappropriated; and (4) out-of-pocket expenses, including
-9-

lost time and professional fees. Dkt. No. 125 at 11 (Pg. ID No. 3159). Defendants’
Motion, although cryptic, appears to argue that the first two categories, loss of
business and lost sales, cannot be granted because Plaintiff in fact did not have any
sales to begin with, nor the capacity to generate sales. Dkt. No. 117 at 19 (Pg. ID
No. 2319).
As an initial matter, the latter two categories of damages are not only
appropriate, but they are also unchallenged by the Defendant. See e.g., MICH.
COMP. LAWS § 445.1904 (“Damages can include both the actual loss caused by
misappropriation and the unjust enrichment caused by misappropriation that is not
taken into account in computing actual loss.”). Accordingly, the Motion for
Summary Judgment cannot be granted on this argument alone. The question then
becomes whether or not Plaintiff’s claim for damages should be limited on this
basis. In other words, may Plaintiff recover for the lost profits of an item it did not
have immediate plans to produce?
“Courts have used a wide variety of methods to measure damages in trade
secret cases, including lost profits, unjust enrichment and reasonable royalty.”
Pioneer Hi-Bred Intern. v. Holden Foundation Seeds, Inc., 35 F.3d 1226, 1243 (8th
Cir. 1994). “In order to recover prospective profits, a plaintiff must establish proof
of lost profits with a reasonable degree of certainty.” Joerger v. Gordon Food
Service, Inc., 224 Mich. App. 167, 175 (1997).

-10-

There have been very few, if any, cases involving Michigan trade secret law
regarding the availability of lost profits as a remedy when the plaintiff has failed to
establish that it sold certain items. However, other courts have granted summary
judgment to defendants (and have chosen an alternate means to measure damages)
when plaintiffs have failed to dispute similar allegations, particularly in patent
cases. See Kowalski v. Mommy Gina Tuna Resources, 574 F. Supp. 2d 1160, 1163
(D. Hawai’i 2008); see also Herbert v. Lisle Corp., 99 F.3d 1109, 1119 (Fed. Cir.
1996) (“When the patentee does not seek to make and sell the invention, lost
profits are not an appropriate measure of damages.”); Trell v. Marlee Electronics
Corp., 912 F.2d 1443 (Fed. Cir. 1990) (holding that lost profits were unavailable
where the patentee did not himself manufacture and sell the device).
Here, Plaintiff has neither sold, nor has immediate plans to sell ESP cables.
Dkt. No. 117 (Exhibit D, pp. 46–49). However, contrary to Defendants’ assertions,
Plaintiff has sold the other materials at issue—PV cables, low voltage cables, and
MV URD cables. See e.g., id. (Exhibit C, p. 47). Because Plaintiff has engaged in
the sale of these other products, lost sales/lost profits will not be foreclosed as a
measure of damages.
ii. Lack of Methodology for Damages
Next, Defendants argue that Plaintiff has failed to provide a methodology for
its measure of damages. In support, Defendants primarily point to the deposition of

-11-

Plaintiff’s witness, Shuichi Takagi. Dkt. No. 117 at 21 (Pg. ID No. 2321).
Defendants argue that Takagi was “solely responsible creating [sic] the
calculations and determining the value of the allegedly misappropriated items.” Id.
Defendants’ entire argument appears to assume that Takagi is acting as
Plaintiff’s damages expert, and is required to provide Defendants with Plaintiff’s
damage model. This assumption is misguided.
Plaintiff intends to present their damages model in the form of expert
testimony from a separate witness. Dkt. No. 125 at 12 (Pg. ID No. 3160). But at a
more fundamental level, Defendants’ objection stems from Takagi’s inability to
recall specific details in his estimates on command. Dkt. No. 117 at 21 (Pg. ID No.
2321); id. (Exhibit G, pp. 180–90). Critically, at the deposition, Takagi was unable
to consult his materials when asked questions regarding the reasoning behind his
valuations. Id. For this reason, Defendants argue that Takagi’s estimates amount to
nothing more than “speculation.”
Defendants do not provide any authority supporting the position that a nonexpert witness be required to recite, from memory, every detail of a damages
estimate. As Plaintiff points out, this objection merely goes to the weight of
Takagi’s lay-witness valuation of the claims. Dkt. No. 125 at 13 (Pg. ID No. 3161).
Moreover, the witness himself states in his deposition that his valuations are based
on his prior experiences evaluating intellectual property. Dkt. No. 125 (Exhibit 8,

-12-

p. 64). Therefore, they are not based on “speculation” or “conjecture.”
Accordingly, Defendants are not entitled to summary judgment on this theory
either.
c. Tort Claims
Defendants next argue that Plaintiff’s tort claims are displaced by its
MUTSA claim. Dkt. No. 117 at 26 (Pg. ID No. 2326). Under Michigan Law, a
claim under MUTSA preempts tort claims when the allegations center exclusively
on the defendant’s misappropriation and unauthorized use of trade secrets. See
Dura Global Technologies, Inc. v. Magna Donnelly Corp., No. 07–10945, 2009
WL 3032594, *3 (E.D. Mich. Sept. 18, 2009) (quoting Bliss Clearing Niagara,
Inc. v. Midwest Brake Bond Co., 270 F. Supp. 2d 943 (W.D. Mich. 2003)).
“However, MUTSA does not displace . . . ‘[o]ther civil remedies that are not based
on misappropriation of a trade secret.’ ” Bliss Clearing Niagara, Inc., 270 F. Supp.
2d at 946.
Defendants raised this issue in their Motion for Judgment on the Pleadings.
See Dkt. No. 30. In its May 6, 2015 Opinion and Order, this Court held that
Plaintiff “[alleged] facts, independent of the MUTSA claim, supporting causes of
action for Fraud, Breach of Fiduciary Duty, and Conversion.” American
Furukawa, Inc. v. Hossain, 103 F. Supp. 3d 864, 884 (E.D. Mich. 2015). Here, in
response to Defendants’ present Motion, Plaintiff points solely to the Court’s prior
-13-

Opinion. However, that Opinion was issued at the pleadings stage when all
allegations in the Complaint were taken as true. At the summary judgment stage,
Furukawa must point to evidence in the record supporting its claims. Furthermore,
even though there are issues of fact regarding whether the downloaded information
actually contained trade secrets, prior case law indicates that “the disputed status of
information as a trade secret does not preclude a court from determining whether a
claim or claims are displaced by the MUTSA.” Bliss Clearing Niagara, Inc., 270
F. Supp. 2d at 948–949; see also Easton Sports, Inc. v. Warrior LaCross, Inc., No.
05–cv–72031, 2005 WL 2234559, *1–3 (E.D. Mich. September 14, 2005).
MUTSA displaces all common law claims that “are arguably cognizable
under” MUTSA. Bliss Clearing Niagara, Inc., 250 F. Supp. 2d at 948. Therefore,
the Court shall look to the record as submitted by both parties to determine
whether there is evidence of wrongful conduct “independent of the
misappropriation of trade secrets” that would amount to causes of action for
Furukawa’s tort claims. Id. at 950 (emphasis added).
i. Fraud
Furukawa’s fraud claim rests not on Hossain’s misappropriation of
information, but instead on several representations and omissions made by
Hossain. See Dkt. No. 119 at 12–17 (Pg. ID No. 2581–86). For example, Furukawa
alleges Hossain fraudulently represented that he suffered a basketball injury and

-14-

needed time off on March 17, 2014. Id. at 12 (Pg. ID No. 2581). Furukawa also
alleges that Hossain’s non-disclosure of his dual employment constitutes fraud.
This conduct is separate and removed from the misappropriation of confidential
information. Therefore, this claim will not be displaced.
ii. Breach of Fiduciary Duty
Under Michigan law, “if an agent acquires any pecuniary advantage to
himself from third parties by means of his fiduciary character, he is accountable to
his employer for the profit made.” Central Cartage Co. v. Fewless, 591 N.W.2d
422, 426 (Mich. App. Ct. 1998). In order to survive MUTSA displacement, a
plaintiff must show that the breach of fiduciary duty claims rest on “wrongful acts”
other than the misappropriation of trade secrets. Easton Sports, 2005 WL 2234559
at *3.
Plaintiff’s breach of fiduciary duty claim is based not only on the “using and
disclosing of confidential information,” but also on “entering into an Employment
Agreement with Huatong while still employed by Furukawa,” and actively
“diverting business away from Furukawa.” See Dkt. No. 65 at 23 (Pg. ID No.
1167).
Hossain does not dispute that he signed an employment agreement with
Huatong while still under the employ of Furukawa. Moreover, Furukawa has
brought testimonial evidence that Hossain himself “[pursued] business with

-15-

American Furukawa customers, both current customers as well as customers that
he helped to get business with.” Dkt. No. 119 (Exhibit 19, p. 113). Even without
the alleged misappropriation of confidential information, a reasonable juror could
find that these facts constitute a breach of Hossain’s duty of loyalty. Therefore, this
is conduct that is independent of Plaintiff’s alleged trade secret claims.
Accordingly, this claim will not be displaced.
iii. Tortious Interference
Similar to breach of fiduciary duty, in order to survive MUTSA preemption,
a plaintiff must evidence “wrongful acts” other than the misappropriation of trade
secrets. Easton Sports, 2005 WL 2234559 at *2. As stated above, Furukawa has
evidenced that Hossain committed a wrongful act by directly interfering with
Furukawa’s current customers. Accordingly, this claim will not be preempted.
iv. Civil Conspiracy
Furukawa’s civil conspiracy claim is also premised on conduct other than
the misappropriation of trade secrets, including making misrepresentations, and
directly interfering with Furukawa’s business relationships. Accordingly, this
claim will not be preempted.
v. Conversion
Plaintiff’s conversion claim rests solely on Hossain taking possession of
“various computer files and confidential information.” Dkt. No. 65 at 27 (Pg. ID

-16-

No. 1172). In this Court’s prior Opinion and Order Denying Defendant’s Motion
for Judgment on the Pleadings, the Court emphasized that it was alleged that other
confidential information in addition to the trade secrets had been misappropriated,
thus allowing the conversion claim to move forward. American Furukawa, Inc.,
103 F. Supp. 3d at 885 n.11. Had Furukawa evidenced the taking of a non-trade
secret, this conversion claim could move forward. However, Furukawa has failed
to point to any copied information that is not arguably a trade secret. In fact, at oral
argument, counsel for Furukawa argued that all of the information taken by
Hossain may constitute a trade secret. This claim therefore rests solely on the
misappropriation of potential trade secrets and is pre-empted by MUTSA. Easton
Sports, 2005 WL 2234559 at *2.
B. Plaintiff’s Motion for Summary Judgment
Furukawa has moved for summary judgment on all of its asserted claims.
The Court shall analyze each claim in turn.
a. Computer Fraud and Abuse
The Amended Complaint alleges violations of 18 U.S.C. §§ 1030(a)(2) and
(a)(4), of the CFAA. To prevail on a claim under § 1030(a)(2), Furukawa must
prove that Hossain: (1) intentionally accessed a computer, (2) without
authorization or exceeding authorized access, and that he (3) thereby obtained
information (4) from any protected computer (if the conduct involved an interstate
-17-

or foreign communication), and that (5) there was loss to one or more persons
during any one-year period aggregating at least $5,000 in value. See LVRC
Holdings LLC v. Brekka, 581 F.3d 1127, 1132 (9th Cir. 2009).
To successfully bring an action for a violation of § 1030(a)(4), Furukawa
must show that Hossain: (1) accessed a protected computer, (2) without
authorization or exceeding such authorization that was granted, (3) knowingly and
with intent to defraud, and thereby (4) “further[ed] the intended fraud and
obtain[ed] anything of value,” causing (5) a loss to one or more persons during any
one-year period aggregating at least $5,000 in value. See id. (citing P.C. Yonkers,
Inc. v. Celebrations the Party and Seasonal Superstore, LLC, 428 F.3d 504, 508
(3d. Cir. 2005)). Defendants contest both claims, arguing that “Plaintiff has not
established any damage or loss as defined by the [CFAA].” Dkt. No. 124 at 25 (Pg.
ID No. 2884).
Defendants argue that “copying information without more does not state a
cognizable claim for ‘damage’ under the CFAA, even in situations where a former
employee is accused of taking information from his former employer and giving it
to a ‘competitor.’ ” Dkt. No. 124 at 26–27 (Pg. ID No. 2885–86). Furukawa argues
that it did not suffer “damage,” but instead suffered a “loss” because Furukawa had
to take remedial measures (in the form of a computer forensic investigation, and

-18-

attorney fees) in response to Hossain’s copying. Dkt. No. 131 at 7–8 (Pg. ID No.
3355–56).
First, under the CFAA, “[a]ny person who suffers damage or loss by reason
of a violation” may maintain a civil action. 18 U.S.C. § 1030(g) (emphasis added).
The CFAA defines a “loss” as “any reasonable cost to any victim, including the
cost of responding to an offense, conducting a damage assessment, and restoring
the data, program, system, or information to its condition prior to the offense, and
any revenue lost, cost incurred, or other consequential damages incurred because
of interruption of service.” 18 U.S.C. § 1030(e)(11). This is separate from the term
“damage,” which the Act defines as “any impairment to the integrity or availability
of data, a program, a system, or information.” 18 U.S.C. § 1030(d)(8). Therefore,
Furukawa’s claim may survive although it appears they do not claim to have
suffered any “damage” as defined under the Act.
“Courts have consistently interpreted ‘loss’ . . . to mean a cost of
investigating or remedying damage to a computer, or a cost incurred because the
computer’s service was interrupted.” Lasco Foods, Inc. v. Hall and Shaw Sales,
Marketing & Consulting, LLC, 600 F. Supp. 2d 1045, 1052 (E.D. Mo. 2009)
(quoting Frees, Inc. v. McMillian, No. 05–1979, 2007 WL 2264457, *3 (W.D. La.
Aug. 6, 2007)). While some courts find that any response to an offense qualifies as
a loss, Global Policy Partners, LLC v. Yessin, 686 F. Supp. 2d 642, 651 (E.D. Va.

-19-

2010), other courts require that any “loss” stem from an “interruption of service.”
Lasco Foods Inc., 686 F. Supp. 2d at 1052.
The Sixth Circuit has found that investigations into an offense and the
conduction of a damage assessment constitute a “loss” as defined by the CFAA;
interruption of service is not necessary. Yoder & Frey Auctioneers, Inc. v.
EquipmentFacts, LLC, 774 F.3d 1065, 1074 (6th Cir. 2014) (“Thus . . . it was not
necessary that Plaintiffs establish that an ‘interruption in service’ occurred.”); Dice
Corp. v. Bold Technologies, No. 11–13578, 2012 WL 263031, *2 (E.D. Mich.
January 30, 2012). In this case, upon learning that there was a data breach,
Furukawa took remedial action to investigate the matter. However, Furukawa has
not provided the Court with the documents detailing its expenses. Therefore, as of
now, there is no way to determine whether the response to the offense resulted in
over $5,000 in expenses. Accordingly, Furukawa has failed to prove a necessary
element of their claim, and thus summary judgment cannot be granted.
b. Furukawa’s Fraud Claim
“As a general rule, actionable fraud consists of the following elements: (1)
the defendant made a material representation; (2) the representation was false; (3)
when the defendant made the representation, the defendant knew that it was false,
or made it recklessly, without knowledge of its truth as a positive assertion; (4) the
defendant made the representation with the intention that the plaintiff would act
-20-

upon it; (5) the plaintiff acted in reliance upon it; and (6) the plaintiff suffered
damage.” M&D, Inc. v. W.B. McConkey, 231 Mich. App. 22, 27 (1998). In the
current action, Furukawa alleges that Hossain made actionable misrepresentations,
and also actionable non-disclosures.
i. Fraudulent Misrepresentations
Furukawa’s Motion points to three representations made by Hossain. First,
Furukawa alleges that Hossain “misrepresented his relationship with Huatong, and
his activities on behalf of Huatong.” Dkt. No. 119 at 24 (Pg. ID No. 2593). This
“misrepresentation” allegedly occurred when, on March 17, 2014, Hossain told
Furukawa that he was unable to work due to a basketball injury. Id. at 12 (Pg. ID
No. 2581). Next, Furukawa alleges that Hossain misrepresented his relationship to
Huatong again when he resigned. Id. at 24 (Pg. ID No. 2593). This apparently
occurred twice. Once, in late April or early May of 2014, when Hossain, upon
resigning, informed Furukawa that “he did not ‘have another job lined up or
anything . . . . ’ ” Id. at 14 (Pg. ID No. 2583). Then a second time, in June 2014,
when Hossain allegedly told Furukawa that “he had returned all property
belonging to [Furukawa], and had fully complied with his Secrecy Agreement.”
Id. at 17 (Pg. ID No. 2586).
Hossain does not dispute that he told Furukawa that he suffered a basketball
injury and needed time off on March 17, 2014. Id. (Exhibit 18, p. 56). However,

-21-

Hossain testifies that he did indeed need time off because he needed surgery on his
Achilles tendon. Id.; see Dkt. No. 124 (Exhibit A, ¶ 7). Therefore, there is a
dispute of fact as to the falsity of this statement.
Furthermore, Furukawa has failed to demonstrate how it relied on Hossain’s
next two statements. Furukawa claims that it relied on Hossain’s representations
by “continuing his employment, continuing his salary and benefits, allowing him
to have access to confidential information and allowing him to have access to
customers.” Id. at 24–25 (Pg. ID No. 2593–94). However, the latter two
statements were only made upon or after Hossain’s resignation. Therefore, it’s not
clear how Hossain’s employment, benefits, or access to confidential information
would have been continued, as he was no longer an employee in Furukawa.
ii. Silent Fraud
Furukawa also argues that Hossain’s failure to disclose his relationship to
Huatong at the time he signed the Employment Agreement constituted fraud. Dkt.
No. 131 at 11 (Pg. ID No. 3359). However, this argument was raised in the
Plaintiff’s reply brief, and was not included in the Plaintiff’s original Motion for
Summary Judgment. Therefore, this argument will not be considered on summary
judgment as Defendants have not had appropriate notice to respond. Scottsdale Ins.
Co. v. Flowers, 513 F.3d 546, 553 (6th Cir. 2008).

-22-

Moreover, even if the Court were to consider this argument, Furukawa’s
claim still fails. The doctrine of “silent fraud” has long been recognized in
Michigan. See Tompkins v. Hollister, 60 Mich. 470 (1886). However, in order for a
silent fraud action to exist, the plaintiff must prove that the defendant breached a
legal or equitable duty of disclose. U.S. Fidelity and Guaranty Co. v. Black, 412
Mich. 99, 125 (1981); Williston v. Garrow-Loftis Realtors, No. 257647, 2006 WL
335830, *1 (Mich. Ct. App. February 14, 2006) (“A claim of silent fraud requires
circumstances that establish a legal duty to make disclosure; mere nondisclosure of
information is insufficient.”). Furukawa presents no authority for the position that
such a duty to disclose existed in the present case.
c. Breach of Contract
To prevail on a claim for breach of contract, the plaintiff must establish (1)
the existence of a contract and its terms, (2) performance by the plaintiff, (3)
breach of the contract by defendant, and (4) damages. Green Leaf Nursery, Inc. v.
Kmart Corp., 485 F. Supp. 2d 815, 818 (E.D. Mich. 2007).
Furukawa alleges that Hossain breached Furukawa’s Secrecy Agreement by
“using and disclosing confidential information,” “taking such information with him
when he [resigned],” and using it for his own purposes. Dkt. No. 119 at 26 (Pg. ID
No. 2595). Furukawa also alleges that Hossain violated Furukawa’s policies

-23-

concerning “Conflicts of Interest,” and “Outside Employment” and “Removable
Media Use.” Id.
This Court has already held that “Furukawa’s Breach of Contract claim is
only premised on the ‘Invention Assignment & Secrecy Agreement . . . and
impliedly, Furukawa’s Removable Media Policy.” American Furukawa, Inc., 103
F. Supp. 3d at 885. Therefore, the Court’s analysis of this claim will be limited to
these two documents.
i. The Secrecy Agreement
There is no dispute that the Secrecy Agreement is a valid and enforceable
contract. Defendants argue that the Secrecy Agreement is not applicable to nontrade secrets, and Plaintiff’s failure to prove the existence of trade-secrets
precludes summary judgment. Dkt. No. 124 at 28 (Pg. ID No. 2887).
The relevant provision of the Secrecy Agreement reads:
I will regard and preserve as confidential all trade secrets pertaining to
the Company’s business that have been or may be obtained by me by
reason of my employment. I will not without prior written authority
from the Company to do so, use for my own benefit or purposes, nor
disclose to others, either during my employment or thereafter, except
as required in the course of my employment with the Company and I
will not take, retain or copy any of the Company’s specifications,
drawings, blueprints, reproductions, or other documents or items. This
provision shall not apply after the Company information has been
voluntarily disclosed by others, or otherwise enters the public domain
through lawful means.

-24-

Dkt. No. 119 (Exhibit 6, ¶ 6). Furthermore, the term “trade secrets” is defined in
the Secrecy Agreement as including, but not limited to:
all Company information encompassed in all drawings, designs, plans,
proposals, marketing & sales plans, financial information, costs,
pricing information, and all concepts or ideas in or reasonably related
to the business of the Company that have not previously been publicly
released by duly authorized representatives of the Company.
Id.(Exhibit 6, ¶ 1). Therefore, the definition of “trade secrets” in the Secrecy
Agreement is broader than the term’s definition under Michigan law. In the
contract, the term “trade secret” is merely a proxy for all company information
“reasonably related to the business of” Furukawa that has not been previously
released to the public. Id. The Court is bound to enforce the Agreement’s
unambiguous language. Quality Products and Concepts Co. v. Nagel Precision,
Inc., 469 Mich. 362, 375 (2003).
There is no dispute that Hossain downloaded many of Furukawa’s files onto
his personal laptop. The act of copying or downloading the files is in violation of
the Secrecy Agreement’s prohibition of retaining or copying company items. See
Dkt. No. 119 (Exhibit 6, ¶ 6). However, Plaintiff has not proven that it was
damaged by this violation. Accordingly, the Court will deny Plaintiff summary
judgment.

-25-

ii. The Removable Media Use Policy
The parties dispute whether or not the Removable Media Use Policy can be
enforced as a contract at law. “Not all policy statements will constitute a ‘promise .
. . .’ ” Lytle v. Malady, 458 Mich. 153, 165 (1998). “[A] ‘policy’ is commonly
understood to be a flexible framework for operational guidance, not a perpetually
binding contractual obligation.” Id. at 165 n.11. However, under Michigan law,
“where an employer chooses to establish such policies and practices and makes
them known to its employees, the employment relationship is presumably
enhanced.” Toussaint v. Blue Cross & Blue Shield of Michigan, 208 Mich. 579,
613 (1980). “The employer has then created a situation ‘instinct with an
obligation.’ ” Id. And accordingly, “employer statements of policy . . . can give
rise to contractual rights.” Id. at 614. However, despite the apparent enforceability
of the policy at contract, summary judgment is still not warranted.
A plain reading of the policy indicates that employees, authorized to use
removable media devices such as flash drives or memory sticks, must first gain
approval from their manager, upper management and the IT department before
they are allowed to use said devices. Dkt. No. 119 (Exhibit 3). Hossain’s
deposition testimony indicates that there is uncertainty over whether he in fact
attached a portable device to his laptop. Id. (Exhibit 18, p. 98). Accordingly, there

-26-

is a dispute of fact over whether the policy was breached, and Plaintiff is not
entitled to Summary Judgment.
d. Breach of Fiduciary Duty
“Under principles of agency, an agent owes his principal a duty of good
faith, loyalty, and fair dealing.” H.J. Tucker & Assoc., Inc. v. Allied Chucker &
Eng’g Co., 234 Mich. App. 550, 595 (1999). These duties prevent an agent from
acting for himself at the principal’s expense. Nedschroef Detroit Corp. v. Bemas
Enterprises LLC, 106 F. Supp. 3d 874, 882 (E.D. Mich. 2015) (citing Central
Cartage Co., 591 N.W.2d at 426). As stated above, under Michigan law, “if an
agent acquires any pecuniary advantage to himself from third parties by means of
his fiduciary character, he is accountable to his employer for the profit made.”
Central Cartage Co., 591 N.W.2d at 426.
Furukawa argues that Hossain is liable on this count because he entered into
an employment agreement with Huatong while still working for Furukawa, and
diverted business away from Furukawa. Dkt. No. 119 at 28 (Pg. ID No. 2597).
However, Hossain’s testimony disputes that he ever interfered with any Furukawa
customers. Id. (Exhibit 18, p. 59). Moreover, according to Hossain, he was merely
making plans to leave Furukawa when he signed his Employment Agreement. Id.
Merely entering an employment agreement with another company is not enough by
itself to constitute a breach of a fiduciary duty. Meyers v. Roger J. Sullivan Co.,

-27-

166 Mich. 193, 196 (1911); see also In re Sullivan, 305 B.R. 809, 819 (Bankr.
W.D. Mich. 2004). Accordingly, Plaintiff is not entitled to summary judgment on
this claim.
e. MUTSA
To prevail under MUTSA, the plaintiff must prove (1) it has protectable
trade secrets, and (2) the defendant has improperly acquired, disclosed or used
those trade secrets. Compuware Corp., 2003 WL 23212863 at *6; MICH. COMP.
LAWS § 445.1902.

As described above, a trade secret is defined as any

“information, including a formula, pattern, compilation, program, device, method,
or process,” that (1) “[d]erives independent economic value, actual or potential,
from not being generally known” and (2) “is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.” MICH. COMP. LAWS §
445.1902(d).
Defendants argue that Furukawa has failed to specifically identify their trade
secrets, and provide evidence that the content of the allegedly misappropriated
documents derive any economic value from not being generally known. Dkt. No.
124 at 18 (Pg. ID No. 2877). The Court agrees.
Michigan courts have held that an alleged trade secret must be identified
“clearly, unambiguously, and with specificity.” Utilase, Inc. v. Williamson, No.
98–1233, 98–1320, 1999 WL 717969, *6 (6th Cir. September 10, 1999). The
-28-

identification of alleged trade secrets is important because “the general knowledge
of an employee does not constitute a trade secret,” Lowry Holding Co., Inc. v.
Geroco Tech Holding Corp., No. 303694, 2012 WL 1890231, *3 (Mich. Ct. App.
2012), and the concept of misappropriation of trade secrets “must not compromise
the right of employees to change jobs.” Degussa Admixtures, Inc. v. Burnett, 277
F. App’x 530, 535 (6th Cir. 2008). Accordingly, a plaintiff claiming
misappropriation of trade secrets must “particularize and identify the material that
it claims qualifies for trade secret protection” and “establish the independent
economic value of the material.” PrimePay, LLC v. Barnes, No. 14–11838, 2015
WL 2405702, *24 (E.D. Mich. May 20, 2015).
In PrimePay, the court found that a plaintiff’s MUTSA claim was unlikely
to succeed on the merits, in part because the plaintiff did not describe in detail why
their purported trade secrets were valuable. In that case, financial information was
allegedly misappropriated from a payroll services company. A witness for the
plaintiff testified that the information would be of “significant competitive value”
because it provided a blueprint to competitors. The PrimePay court found this
unpersuasive. The court reasoned that the “evidence still [fell] short of explaining
with any degree of clarity how this information, given this particular industry, has
competitive value from not being generally known to every other payroll services

-29-

company or how this type of information could be used by a competitor to steal
customers.” Id.
Here, Furukawa has offered very little evidence demonstrating with any
degree of clarity how the information at issue has competitive value in the
advanced technology and electronics industry. Furukawa argues that the copied
information derives economic value by virtue of the fact that Hossain copied them,
and the information would give him a “competitive advantage.” Dkt. No. 131 at 4–
7 (Pg. ID No. 3352–55). This argument—it is valuable because he took it—is
circular. Furukawa has not explained the nature of the information’s value, nor
how it would give a third party a competitive advantage. Using the analysis
described in PrimePay, the Court finds that Plaintiff is not entitled to summary
judgment on this claim.
f. Conversion
As explained above, Plaintiff’s Conversion claim has been displaced by
Plaintiff’s MUTSA claim. Accordingly, Plaintiff is not entitled to summary
judgment on its conversion claim.
g. Tortious Interference
To prevail on a claim for tortious interference with a business expectancy,
the plaintiff must establish: (1) the existence of a valid business relationship or
expectancy that is not necessarily predicated on an enforceable contract; (2)
-30-

knowledge of the relationship or expectancy on the part of the defendant interferer;
(3) an intentional interference by the defendant inducing or causing a breach or
termination of the relationship or expectancy, and (4) resulting damage to the
plaintiff whose relationship or expectancy was disrupted. Health Call of Detroit v.
Atrium Home & Health Care Services, Inc., 268 Mich. App. 83, 90 (2005).
As stated above, whether Hossain actually interfered with any of Furukawa’s
customers (directly or indirectly) is in dispute. Accordingly, summary judgment
will not be granted on this claim.
h. Civil Conspiracy
“A civil conspiracy is a combination of two or more persons, by some
concerted action, to accomplish a criminal or unlawful purpose, or to accomplish a
lawful purpose by unlawful means.” Admiral Ins. Co. v. Columbia Cas. Ins. Co.,
194 Mich. App. 300, 313 (1992). Plaintiff has brought no evidence that either
Huatong or HT Wire engaged in any unlawful conspiracy. Accordingly,
Furukawa’s motion on this claim is denied.
V. CONCLUSION
For the reasons discussed above,
IT IS HEREBY ORDERED, that Defendants’ Motion [117] is
GRANTED IN PART with respect to Plaintiff’s Conversion Claim (Count VI).

-31-

IT IS FURTHER ORDERED that the Defendants’ Motion [117] is
DENIED IN PART with respect to Counts I, II, III, IV, V, VII, and VIII.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Summary
Judgment [119] is DENIED on all Counts.
IT IS SO ORDERED.

Dated: June 23, 2016
Detroit, Michigan

s/Gershwin A. Drain
GERSHWIN A. DRAIN
United States District Judge

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon
counsel of record and any unrepresented parties via the Court's ECF System to
their respective email or First Class U.S. mail addresses disclosed on the Notice of
Electronic Filing on June 23, 2016.
s/Tanya R. Bankston
TANYA R.BANKSTON
Case Manager & Deputy Clerk

-32-