Montana Camo v. Cabela's Incorporated et al

Filing 164

ORDER granting 75 Cabela's Motion for Partial Summary Judgment Dismissing Trade Secret Claims. Signed by Judge Richard F. Cebull on 6/11/2010. (EMA)

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF MONTANA B I L L I N G S DIVISION M O N T A N A CAMO, INC., C L A Y MATHEWS, P l a i n t if f s , vs. C A B E L A 'S , INC., CABELAS.COM, I N C ., and CABELA'S RETAIL, INC., Defendants. ) ) ) ) ) ) ) ) ) ) ) C a us e No.: CV-08-71-BLG-RFC

O R D E R GRANTING C A B E L A 'S MOTION FOR P A R T I A L SUMMARY J U D G M E N T DISMISSING T R A D E SECRETS CLAIM

I.

I NTRODUCTION Plaintiffs1 Montana Camo, Inc. ("MCI") and Clay Matthews allege Cabela's

us e d improper means to misappropriate its supply chain and business information to p ro d uc e its own line of camouflage clothing to compete with MCI and that this c o nd uc t harmed it in violation of Montana's Uniform Trade Secrets Act, Mont. C o d e Ann. § 30-14-401 et seq. Amended Complaint ¶ 60, Doc. 86.2 MCI further

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Throughout this Order, MCI or Montana Camo is used to refer to both Plaintiffs.

Montana Camo's Trade Secrets Act claims as pleaded in the initial Complaint (Doc. 1) are identical to those in the Amended Complaint (Doc. 86). 1

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alleges this misconduct was willful and malicious entitling it to punitive damages. Id. at ¶ 61. Presently before the Court is Cabela's Motion for Summary Judgment D is mis s ing Trade Secret Claim (Doc. 75). Cabela's argues it should be granted s umma ry judgment as to Montana Camo's misappropriation of trade secrets claims fo r three reasons: (1) the alleged trade secrets were generally known and readily a s c e rta ina b le ; (2) there is no admissible evidence to show that the alleged trade s e c re ts were misappropriated; and (3) the claims are barred by the statute of limita tio ns . Because the Court concludes the motion must be granted as to some tra d e secrets the first reasons and as to others for the second reason, there is no need to address the statute of limitations. II. A NALYSIS A. S UMMARY JUDGMENT STANDARD

S umma ry judgment is proper when "the pleadings, the discovery and d is c lo s ure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" only if there is a sufficient evidentiary b a s is on which a reasonable fact finder could find for the nonmoving party and a d is p ute is "material" only if it could affect the outcome of the suit under the
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governing law. Anderson, v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The p a rty moving for summary judgment has the initial burden of showing the absence o f a genuine issue of material fact. Anderson, 477 U.S. at 256-57. Once the mo ving party has done so, the burden shifts to the opposing party to set forth s p e c ific facts showing there is a genuine issue for trial. In re Barboza, 545 F.3d 7 0 2 , 707 (9th Cir. 2008). The nonmoving party "may not rely on denials in the p le a d ings but must produce specific evidence, through affidavits or admissible d is c o ve ry material, to show that the dispute exists." Id. O n summary judgment, the evidence must be viewed in the light most fa vo ra b le to the non-moving party. Id. The court should not weigh the evidence a nd determine the truth of the matter, but determine whether there is a genuine issue fo r trial. Anderson, 477 U.S. at 249. B. T HE TRADE SECRETS ACT

The Uniform Trade Secrets Act ("the Act") creates a cause of action for the mis a p p ro p ria tio n of trade secrets. Mont. Code. Ann. § 30-14-404. The Act defines " mis a p p ro p ria tio n" and "trade secret" as follows: (2 ) "Misappropriation" means: (a ) acquisition of a trade secret of another by a person who knows or ha s reason to know that the trade secret was acquired by improper me a ns ; or
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(b) disclosure or use of a trade secret of another without express or imp lie d consent by a person who: (i) used improper means to acquire knowledge of the trade s e c r e t; (ii) at the time of disclosure or use, knew or had reason to know tha t the person's knowledge of the trade secret was: (A ) derived from or through a person who had used imp ro p e r means to acquire it; (B ) acquired under circumstances giving rise to a duty to ma inta in its secrecy or limit its use; or (C ) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its us e ; or (iii) before a material change of the person's position, knew or ha d reason to know that it was a trade secret and that knowledge o f it had been acquired by accident or mistake.

(4 ) "Trade secret" means information or computer software, including a fo rmula , pattern, compilation, program, device, method, technique, or p ro c e s s , that: (a ) derives independent economic value, actual or potential, from not b e ing generally known to and not being readily ascertainable by proper me a ns by other persons who can obtain economic value from its d is c lo s ure or use; and (b ) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. M o nt. Code Ann. § 30-14-402(2) & (4).
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C.

C ABELA'S MUST BE GRANTED SUMMARY JUDGMENT BECAUSE M C I 'S ALLEGED TRADE SECRETS ARE EITHER GENERALLY KNOWN OR READILY ASCERTAINABLE, OR THERE IS NO ADMISSIBLE E VIDENCE OF MISAPPROPRIATION

As an initial matter, the Court notes that even the Amended Complaint, filed s o me 16 months after the initial complaint, is severely lacking in particularity, a lle ging only that MCI has a trade secrets in its "supply chain and other business info rma tio n." Doc. 86, ¶ 59. In any event, Cabela's claims it has discerned the fo llo w ing alleged trade secrets from Montana Camo's interrogatory answers, a d mis s io ns , an deposition testimony: 1 . Montana Camo's sources and suppliers for fabric and g a r m e nts : MCI alleges it owns a trade secret to use Jest Textiles, B rittne y Dye, Royal Carolina, Fine-Tex, RothTec and Haines to supply the ir fabric and garments and to convert and print camouflage patterns o n them; 2. Technical information concerning camo patterns and r e f ine m e nts to printing processes developed by Montana Camo: M C I alleges it owns a trade secret that consists of: using Adobe to create p a tte rns on print screens; making sure print screens do not overlap; fine -tuning the screen length and width; sizing and positioning final ima ge s ; selecting the type of screen and ink; and, selecting the proper ro lle r sequence and roller speed; 3. Montana Camo technical information in the possession of c onv e r te r s , print engravers, and print facilities (e.g. Jest Textiles, F ine Tex, Roth-Tech, and Royal Carolina) created for the purpose of making Montana Camo products: MCI alleges it owns a trade s e c re t that consists of giving the information described in alleged Trade S e c re t 2 to the printers and engravers identified in alleged Trade Secret
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1; 4. Montana Camo's customer and/or dealer information: MCI a lle ge s its customer and/or dealer list is a trade secret; 5. Montana Camo's cost, pricing, and related marketing inf or m a tion: MCI alleges it owns a trade secret on cost of camouflage go o d s , price of fabric, and profit margin as well as marketing strategies fo r selling camouflage products. 6 . Additional concepts: MCI alleges it has a trade secret in two d ime ns io na l camouflage patters; muted colors in the patterns; placement o f darker items in the foreground and lighter dissimilar items in the b a c k gro und of the patterns; and vertical representations in the patterns. M o nta na Camo does not dispute this characterization of its alleged trade secrets. They are addressed in turn. 1. T RADE SECRET 1: MONTANA CAMO'S SUPPLIERS OF FABRIC AND GARMENTS

Cabela's argues it is entitled to judgment as a matter of law that MCI's s up p lie rs were generally known or readily ascertainable. Under the plain language o f the Uniform Trade Secrets Act, MCI's alleged trade secrets must "derive[] ind e p e nd e nt economic value from not being generally known to and not being re a d ily ascertainable by proper means by other persons who can obtain economic va lue from its disclosure or use." Mont. Code Ann. § 30-14-402(4). While the identity of a supplier can be a trade secret, Yeti by Molly, Ltd. v. D e c k e r s Outdoor Corp., 259 F.3d 1101, 1108 (D.Mont. 2001), there can be no
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misappropriation action if the trade secret is readily ascertainable by people who s e e k them out. Billmayer v. City of Kalispell, 160 P.3d 869, 871 (Mont. 2007). Here, Cabela's cites Clay Matthews' deposition testimony stating that he found the s up p lie rs Jest Textiles, Brittney Dye, Royal Carolina, and Fine Tex at the library in the Thomas Registry, and that he found Haines through networking a trade show. Doc. 77, Cabela's Statement of Undisputed Facts ("SUF") ¶¶ 11-13. Accordingly, C a b e la ' s argues that since anyone could have discovered these suppliers using the s a me methods Matthews used, MCI's trade secret claim as to its suppliers fails at the outset because MCI cannot prove its suppliers are a trade secret. Montana Camo's only counter-argument is that because Cabela's sought a p ro te c tive order for its confidential business information, it is disingenuous for them to assert Montana Camo's alleged trade secrets cannot be protected as trade secrets. But just because a party claims something is confidential does not mean it is a trade s e c re t. Trade secrets have a statutory definition that excludes information that is ge ne ra lly known or readily ascertainable by proper means. Since the evidence is und is p ute d that these suppliers were readily ascertainable to people in the industry, M C I cannot seek trade status protection for them. In addition, even if these suppliers were trade secrets, Cabela's argues it still mus t be granted summary judgment because there is no evidence that it
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misappropriated MCI's trade secret in these suppliers. First, the undisputed e vid e nc e is that Cabela's has not done business with Brittney Dye, Fine-Tex, R o thT e c , or Haines. SUF, ¶ 25. Cabela's could not have misappropriated MCI's tra d e secret in the use of these businesses if they did not use them. With respect to Jest Textiles, Cabela's has been using it since the early 1 9 9 0 's , before MCI's existence. SUF, ¶ 24. As such, Cabela's could not have mis a p p ro p ria te d any trade secret MCI had in using Jest Textiles. That leaves Royal Carolina. Although Cabela's argues it also did not " d ire c tly" do business with Royal Carolina, Clay Matthews saw Open Country at R o ya l Carolina's factory, indicating that it at least indirectly did business with it. SGI, ¶¶ 83-91. Accordingly, even if MCI can claim trade secret protection for the us e of a supplier that it found in a publicly available document, Royal Carolina is the o nly supplier that Cabela's could have misappropriated. 2. T RADE SECRETS 2 & 3: "TECHNICAL INFORMATION
CONCERNING CAMO PATTERNS AND REFINEMENTS TO PRINTING PROCESSES DEVELOPED BY MONTANA CAMO"

M o nta na Camo's second alleged trade secret "is the use of Adobe to create p a tte rns on print screens; making sure print screens do not overlap; fine-tuning the s c re e n length and width; sizing and positioning the final images; selecting the type o f screen and ink; and selecting the proper roller sequence and roller speed." SUF,
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¶ 5. On account of Matthews' testimony that the technical information in alleged T ra d e Secret 2 is the same as that in alleged Trade Secret 3, except that it was p o s s e s s e d by Montana Camo's converters, print engravers, and printers, SUF ¶ 16, the y will be analyzed together. In support of its claim that Montana Camo's technical information cannot be tra d e secrets because they were generally known in the camouflage industry long b e fo re Montana Camo's existence, Cabela's cites a wealth of deposition testimony, d e c la ra tio ns , and patents. See SUF, ¶¶26 - 34. Montana Camo submits no contrary e vid e nc e , except that print screens, which the Court understands to be the end p ro d uc t of Montana Camo's "technical information", are confidential and p ro p rie ta ry. SGI, ¶ 146. Montana Camo, however, has not alleged that Cabela's mis a p p ro p ria te d its print screens or that Cabela's created camouflage patterns that w e re identical to MCI's. Further, Cabela's itself does not participate in the technical aspects of printing a nd engraving camouflage; it leaves that to its printers and engravers. SUF, ¶ 43. Accordingly, Cabela's could not have misappropriated Montana Camo's "technical info rma tio n concerning camo patterns and refinements to printing processes."

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3.

T RADE SECRET 4: MONTANA CAMO'S CUSTOMER AND D EALER INFORMATION

A s noted, a trade secret must "derive independent economic value, actual or p o te ntia l, from not being generally known to, and not being readily ascertainable by p ro p e r means by, other persons who can obtain economic value from its disclosure o r use." Mont. Code Ann. § 30-14-402(4)(a). A trade secret must also be "the s ub je c t of efforts that are reasonable under the circumstances to maintain its s e c re c y." Id.; Billmayer, 160 P.3d at 245. In this case, MCI's customer and dealer info rma tio n has been listed on its website since 2004. SUF, ¶ 37. Since MCI has ma d e no effort to maintain secrecy of its customer and dealer information, it is not a tra d e secret. 4. T RADE SECRET 5: MONTANA CAMO'S COST, PRICING, AND R ELATED MARKETING INFORMATION

C a b e la ' s claims MCI's discovery responses reveal that MCI claims to own a tra d e secret as to the cost of camouflage goods, price of fabric, and profit margin, as w e ll as marketing strategies for selling camouflage products. As noted, MCI has no t disputed this characterization, but neither has it provided further detail as to w ha t these trade secrets actually are. It is therefore doubtful that MCI has s uffic ie ntly identified a trade secret in the nebulous concepts of "cost, pricing, and re la te d marketing information." Imax Corp. v. Cinema Technologies, Inc., 152 F.3d
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1161, 1164 (9th Cir. 1998)(the proponent of a misappropriation claim must identify its trade secrets and prove that they exist). Nor has MCI rebutted Cabela's declaration that cost and pricing information is easily ascertainable in the camouflage industry by obtaining quotes from printers, e ngra ve rs , mills, and manufacturers. SUF, ¶ 38. With respect to its marketing info rma tio n and strategies, MCI has not stated which "marketing strategies" it has a tra d e secret in. In addition, MCI has submitted no summary judgment type evidence rebutting C a b e la ' s assertion that there is no evidence that it used or otherwise mis a p p ro p ria te d these trade secrets. MCI's response brief and accompanying s ta te me nt of genuine issues contain a lot of allegations, but the allegations are s up p o rte d only by narrative interrogatory responses. See SGI, ¶¶ 178-194. "When the moving party demonstrates the absence of a factual issue, the nonmoving party ma y not rely on denials in the pleadings but must produce specific evidence, through a ffid a vits or admissible discovery material, to show that the dispute exists." See In r e Barboza, 545 F.3d at 707. Even assuming MCI has a trade secret in its und e fine d cost, pricing and marketing information, self-serving interrogatory re s p o ns e s , unsupported by other evidence, cannot create a genuine issue of fact as to misappropriation.
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5.

T RADE SECRET 6: "ADDITIONAL CONCEPTS"

Finally, assuming MCI can go forward with alleged Trade Secret 6 when the A me nd e d Complaint only gives Cabela's notice that MCI had a trade secret in its "supply chain and other business information," Cabela's submits evidence that these c o nc e p ts were referenced in U.S. patents that existed prior to MCI's existence. SUF, ¶¶ 40, 41. As noted, trade secret protection is not available for concepts that a re readily attainable by proper means. Mont. Code. Ann. § 30-14-404(4)(a). Again, MCI does not respond to this argument and summary judgment in favor of C a b e la ' s is appropriate. III. O RDER Fo r those reasons, IT IS HEREBY ORDERED that Cabela's Motion for P a rtia l Summary Judgment Dismissing Trade Secret Claims (Doc. 75) is GRANTED. D a te d this 11th day of June 2010. /s / Richard F. Cebull_______ R ic ha rd F. Cebull U nite d States District Judge

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