Ultraclean Electropolish, Inc. v. Astro Pak Corporation

Filing 41

ORDER DENYING 27 MOTION for Summary Judgment - CONFIDENTIAL PORTIONS REDACTED, DENYING 28 Sealed MOTION, Terminating 35 Unopposed MOTION for Leave to File Excess Pages.(Signed by Judge Gray H. Miller) Parties notified.(rkonieczny, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ULTRA CLEAN ELECTROPOLISH , INC.,
Plaintiff,
v.
ASTRO PAK CORP .,
Defendant.

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CIVIL ACTION H-14-3635

ORDER
Pending before the court is defendant Astro Pak Corp.’s (“Astro Pak”) motion for summary
judgment. Dkts. 27, 28. After considering the motion, response, reply, record evidence, and
applicable law, the court is of the opinion that the motion should be DENIED.
I. BACKGROUND
In this action, plaintiff UltraClean Electropolish, Inc. (“UltraClean”) alleges that Astro Pak
breached a confidentiality agreement and misappropriated Ultraclean’s trade secrets. Dkt. 20 at 5-7.
Ultraclean is in the business of electropolishing. Dkt. 20 at 2. In 2006, Astro Pak considered
entering the electropolishing industry by purchasing UltraClean. Id. Astro Pak and Ultraclean began
negotiating a deal that both companies hoped would end in a purchase or merger. Id. During the
course of the negotiations, UltraClean and Astro Pak entered into a confidentiality agreement (the
“Confidentiality Agreement”) and a letter of intent (“LOI”) which would give Astro Pak access to
UltraClean’s records, personnel, and facilities during the due diligence phase. Id., Dkt. 28 at 6-7.
The terms of the confidentiality agreement prevented Astro Pak from disclosing or using confidential
information, including trade secrets, it learned from UltraClean during the merger negotiations. Dkt.
20 at 2-3.

By early 2007, the negotiations between Astro Pak and Ultraclean fell through. Id. at 3. In
July 2007, Ultraclean filed suit against Astro Pak alleging that Astro Pak violated various terms of
the LOI by hiring certain UltraClean employees (the “2007 Lawsuit”). Dkt. 28 at 4-5. The 2007
complaint also alleged that Astro Pak misappropriated trade secrets in violation of the
Confidentiality Agreement. Id. Astro Pak denied any wrongdoing, and the parties ultimately settled
the lawsuit. Id. at 5. The settlement agreement (“2009 Settlement Agreement”) released Astro Pak
from all claims:
arising out of or relating to any acts or omissions that took place prior to the date of
this AGREEMENT, including without limitation, any matters relating in any way to
the Letter of Intent or alleged breach of the Letter of Intent and/or any matters
relating to or contained in or which could have been contained in the ACTION and/or
any claims under other Federal or State statute, common law or regulation relating
to such.
Dkt. 28-1 at 2-3. The settlement agreement also states:
This AGREEMENT contains the entire agreement between the PARTIES hereto with
respect to all matters addressed herein, and fully supersedes all prior or
contemporaneous agreements, understandings or representations oral or written,
implied or express, pertaining to the subject matter hereof. This AGREEMENT may
only be subsequently modified by a writing signed by all PARTIES hereto.
Id. at 3-4.
UltraClean filed its first amended complaint in this action on February 3, 2015 alleging that
Astro Pak misappropriated trade secrets and breached the Confidentiality Agreement by using and
disseminating UltraClean’s trade secrets starting in 2013. Dkt. 20 at 4-6. Astro Pak now moves for
summary judgment arguing that 1) UltraClean’s claims arose in 2007, were released in 2009, and
cannot be brought again; 2) UltraClean’s claims are barred by res judicata; and (3) the 2009
Settlement Agreement supersedes the Confidentiality Agreement.

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II. LEGAL STANDARD
A court shall grant summary judgment when a “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.
Civ. P. 56(c). “[A] fact is genuinely in dispute only if a reasonable jury could return a verdict for
the non-moving party.” Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006). The
moving party bears the initial burden of demonstrating the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548 (1986). If the party meets its
burden, the burden shifts to the non-moving party to set forth specific facts showing a genuine issue
for trial. Fed. R. Civ. P. 56(e). The court must view the evidence in the light most favorable to the
non-movant and draw all justifiable inferences in favor of the non-movant. Envtl. Conservation Org.
v. City of Dallas, Tex., 529 F.3d 519, 524 (5th Cir. 2008).
III. ANALYSIS
A. Release of Claims by the 2009 Settlement Agreement
Astro Pak argues that UltraClean’s current trade secret misappropriation claim accrued in
2007 and was brought or could have been brought in the 2007 Lawsuit. Since any claims that could
been brought in the 2007 Lawsuit were releaed by the 2009 Settlement Agreement, Astro Pak argues
that the claims asserted here have already been released.

Under Texas law, a claim for

misappropriation of trade secrets accrues when the misappropriation is “discovered or by the exercise
of reasonable diligence should have been discovered.” Tex. Civ. Prac. & Re. Code § 16.010(a).
This is the case “whether the misappropriation is a single or continuing act.” Id. at § 16.010(b).
Astro Pak argues that UltraClean’s allegations of trade secret misappropriation in the 2007 Lawsuit
indicate that UltraClean discovered the continuing misappropriation they now allege prior to 2007,
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and the claim accrued at that time. If the current misappropriation claim accrued in 2007, then it was
released by the 2009 Settlement Agreement.

However, Astro Pak denied misappropriating

UltraClean’s trade secrets in 2007, and there was never a finding by a court or conclusive proof of
such misappropriation. A claim for misppropriation starting in 2013 could not have been brought
in the 2007 Lawsuit, and would not have been released by the 2009 Settlement Agreement. Since
there is a question of fact regarding the first date of misappropriation, Astro Pak is not entitled to
summary judgment on this basis.
B. Res Judicata
After the settlement of the 2007 Lawsuit, the court in that case entered an order of dismissal
with prejudice. Based on its argument that the current misappropriation claims accrued prior to
2007, Astro Pak argues that the order of dismissal has a preclusive effect and bars the current claims.
Dkt. 28 at 9. An order from a previous case bars future claims only where “the same claim or cause
of action was involved in both actions.” Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 571
(5th Cir. 2005). Based on reasoning similar to that outlined above, Astro Pak argues that the
currently asserted claims are actually the same claims that were dismissed with prejudice by the
previous court order. However, as noted above, Astro Pak has not shown that the claims are in fact
the same. There has never been a specific finding of misappropriation prior to 2007, and Astro Pak
continues to deny that it has ever misappropriated UltraClean’s trade secrets. Accordingly, the claim
asserted in this action does not necessarily relate back to the 2007 allegations and is not precluded
by the order of dismissal in the previous case. The current claims are based on allegations of
misappropriation that took place much later than the order of dismissal. Since Astro Pak denies
misappropriation at any time, it cannot show that UltraClean should have discovered any
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misappropriation prior to the order of dismissal. Accordingly, Astro Pak has not shown that the
previous order precludes Ultraclean’s claims here.
C. Confidentiality Agreement
Astro Pak argues that the 2009 Settlement Agreement supercedes the Confidentiality
Agreement, and there are no ongoing confidentiality obligations between the parties. As noted
above, the 2009 Settlement Agreement “fully supercedes all prior or contemporaneous agreements
. . . pertaining to the subject matter hereof.” Astro Pak opts for an extremely expansive reading of
the phrase “pertaining to the subject mater hereof” in arguing that the Confidentiality Agreement and
the 2009 Settlement Agreement pertain to the same subject matter. There is no language in the
contract that supports such a broad interpretation. The court finds that the subject matter of the 2009
Settlement Agreement is the settlement and release of the claims asserted in the 2007 Lawsuit.
Accordingly, the court finds that Astro Pak has not show that the Confidentiality Agreement has
been superceded by the 2009 Settlement Agreement.
IV. CONCLUSION
Because Astro Pak cannot show that UltraClean’s claims accrued prior to 2009, there are
remaining questions of fact, and Astro Pak is not entitled to summary judgment. Astro Pak’s motion
for summary judgment (Dkts. 27, 28) is DENIED.
Signed at Houston, Texas on May 20, 2015.

Gray H. Miller
United States District Judge

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