John Bean Technologies v. B GSE Group et al
Filing
184
MEMORANDUM DECISION AND ORDER: 1) JBT's Motion for Partial Summary Judgment on its affirmative claims 129 is GRANTED IN PART and DENIED IN PART; 2) Defendants' Motion for Summary Judgment 126 is GRANTED IN PART and DEN IED IN PART; 3) JBT's Motion for Summary Judgment on Defendants' counterclaims 134 is GRANTED IN PART; 4) Defendants' Motion to Exclude JBT's expert is denied without prejudice to refile it in connection with pre-trial proceedings 128 . Signed by Judge Robert J. Shelby on 8/13/20. (dla)
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
JOHN BEAN TECHNOLOGIES
CORPORATION,
Plaintiff,
MEMORANDUM DECISION AND
ORDER
Case No. 1:17-cv-142-RJS-DAO
v.
Chief District Judge Robert J. Shelby
B GSE GROUP, LLC and BRYAN
BULLERDICK,
Magistrate Judge Daphne A. Oberg
Defendants.
Plaintiff John Bean Technologies (JBT) is a major player in the aviation industry for
ground support equipment. Ground support equipment refers to the array of equipment required
to maintain commercial and military aircraft, ranging from cables and hoses to power converters
and axle jacks. Relevant here are preconditioned air (PC Air) units that cool aircraft and ground
power units (GPUs) that power this equipment.
In 2011, JBT sought to enter the niche market to supply ground support equipment—
primarily PC Air units and GPUs—for the United States military’s latest fighter aircraft, the
F-35. Because F-35s utilize modern, advanced technology, they usually required construction of
new hangars supplied with specialized PC Air Units and GPUs. The military worked through
general and sub-contractors to source this equipment from manufacturers like JBT. To help it
through the bidding process and to win these government contracts, JBT hired Defendant Bryan
Bullerdick. Bullerdick left JBT after about three years, however, to become the head and
majority shareholder of Defendant B GSE Group, LLC (BGSE). BGSE initially acted as JBT’s
designated distributor of ground support equipment for F-35 hangars. After the parties’ one-year
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distributorship agreement ended, BGSE continued informally to source JBT’s equipment for
several years as a reseller.
Unbeknownst to JBT, while BGSE’s and JBT’s informal relationship was ongoing,
Bullerdick began representing to industry contacts, primarily contractors and sub-contractors,
that BGSE was the designer of several of JBT’s products and that JBT was merely the
manufacturer of BGSE’s designs. During the same period, Bullerdick transmitted some of JBT’s
proprietary information to one of its competitors, Twist, Inc. (Twist), to help Twist develop a
competing PC Air unit. BGSE later began competing directly with JBT to win F-35 projects by
supplying products manufactured by Twist and others.
After learning of Bullerdick’s conduct, JBT brought this action for, among other things,
misappropriation of trade secrets, unfair competition and trademark violations under the Lanham
Act, and breach of contract.1 Defendants assert several counterclaims, including tortious
interference, negligent misrepresentation, and defamation.2 Defendants’ claims stem primarily
from JBT’s efforts to inform industry contacts of its lawsuit against BGSE and Bullerdick.
Before the court are the parties’ cross-motions for summary judgment on JBT’s affirmative
claims3 and JBT’s Motion for Partial Summary Judgment on Defendants’ Counterclaims.4 For
the reasons given below, the court grants in part and denies in part JBT’s First Motion, grants in
1
See generally Dkt. 99.
2
Dkt. 108.
3
Dkt. 126; Dkt. 129.
4
Dkt. 134.
2
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part and denies in part Defendants’ Motion, and grants in part and denies in part JBT’s Second
Motion.5
BACKGROUND6
I.
Factual Background
A. The Parties and the Ground Support Equipment Industry
Both JBT and Defendants operate in the specialized ground support equipment industry.7
Ground support equipment refers to the products and equipment needed to service and maintain
commercial and military aircraft.8 Two essential components of ground support equipment are
PC Air units and GPU systems.9 Since at least 2003, JBT has manufactured and sold PC Air
units under its Jetaire brand and GPU systems under its Jetpower brand.10 JBT sells these
products for commercial and military aircraft, both domestically and internationally.11
Among the products JBT sells is the Jetaire HPCF 3000 (the HPCF 3000), a fixed, highpressure PC Air unit that JBT designed and manufactures.12 JBT also sells the Jetpower III
270VDC GPU (the 270VDC).13
Defendants also move to exclude the testimony of JBT’s expert, David Duski. Dkt. 128. However, Duski’s
testimony relates only to the amount of damages JBT will ultimately seek. Those damages amounts are not at issue
in the parties’ current motions. Accordingly, in view of the court’s ruling here, the court denies Defendants’ Motion
to Exclude without prejudice to refile it in connection with future pre-trial proceedings.
5
Because the parties filed cross-motions for summary judgment, the court “provides a neutral summary of the facts,
which it will view ‘in the light most favorable to the nonmoving party’ and ‘draw reasonable inferences therefrom’
while evaluating the motions in turn.” Stella v. Davis Cty., No. 1:18-CV-002, 2019 WL 4601611, at *1 n.1 (D. Utah
Sept. 23, 2019) (quoting Doe v. City of Albuquerque, 667 F.3d 1111, 1122 (10th Cir. 2012)). Except where otherwise
noted, the facts that follow are not disputed.
6
7
Dkt. 126 ¶¶ 1–2, 4, 14–20.
8
Dkt. 99 ¶ 2. All citations to the Amended Complaint are for context only.
9
See id.
10
Id. ¶¶ 2–3.
11
Id. ¶ 2.
12
Dkt. 129 ¶ 15.
13
Id. ¶ 13(c)–(g).
3
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In 2011, JBT began bidding on projects to supply ground support equipment for the
United States Department of Defense’s next generation strike aircraft deployed by the Navy, Air
Force, and Marines.14 In most instances, this aircraft, the F-35, has required construction of new,
specially designed maintenance hangars at military bases in the United States and abroad.15
These F-35 hangars require specialized PC Air units and GPU systems.16 JBT won several
government contracts to supply ground support equipment for these hangars.17
In 2011, JBT hired Bullerdick as a sales manager to assist JBT in its efforts to win
government contracts for F-35 hangar projects.18 Prior to joining JBT, Bullerdick had worked
for two companies that sold ground support equipment,19 and in 2010, Bullerdick formed his
own company, Bullerdick GSE, LLC.20 JBT hoped Bullerdick could expand JBT’s market share
in the PC Air unit and GPU systems space.21 Bullerdick’s primary responsibilities at JBT related
to its efforts to sell equipment for F-35 hangars on United States and foreign military
installations.22
As a condition of his employment, Bullerdick signed JBT’s Confidential Information and
Inventions Agreement (the 2011 Confidentiality Agreement).23 The 2011 Confidentiality
14
Dkt. 99 ¶ 4.
15
Id. ¶ 5.
16
Id.
17
Id. ¶ 4.
18
Dkt. 126 ¶¶ 6, 8.
19
Id. ¶ 4.
Defs.’ Ex. 1 (“Bullerdick Aff.”) ¶ 8. When Bullerdick joined JBT, he was the sole director, president, and
shareholder of Bullerdick GSE, a separate entity from BGSE. See Pl.’s Ex. 119 at 1 (sealed). Prior to April 1, 2014,
Bullerdick had no ownership interest in BGSE. Id. After Bullerdick resigned from JBT, Bullerdick GSE and BGSE
eventually merged. Dkt. 154 at 2 (citing Pl.’s Ex. 119) (sealed).
20
21
Dkt. 126 ¶ 6.
22
Dkt. 99 ¶¶ 28–29.
23
Dkt. 129 ¶ 2; Pl.’s Ex. 109.
4
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Agreement required that Bullerdick “agree to maintain in confidence all information pertaining
to [JBT’s] business” to which he had access, including “information related to [JBT’s] products,
inventions, trade secrets, know-how, systems, formulae, [and] processes.”24 The Confidentiality
Agreement further required that Bullerdick “agree not to use, communicate or disclose . . . such
information orally, in writing or by publication either during [his] employment or thereafter.”25
Bullerdick resigned from JBT in April 2014.26 Following his resignation, Bullerdick
began running BGSE full-time.27
B. JBT and BGSE’s Formal and Informal Business Relationship
Around the time it hired Bullerdick, JBT formed a business relationship with BGSE, a
distributor focused on ground support equipment for military projects.28 On November 11, 2011,
the two companies signed a Mutual Non-Disclosure Agreement (the NDA).29 The NDA required
the party receiving “Confidential Information” to keep the information “in confidence.”30
Additionally, the party receiving Confidential Information “agree[d] to refrain from the use of
the Confidential Information for any purpose other than in furtherance of the Disclosure
Purpose.”31 The confidentiality provisions remained in force for five years from the time the
receiving party obtained the Confidential Information.32
24
Pl.’s Ex. 109 ¶ 5.
25
Id.
Dkt. 126 ¶ 12. The parties dispute why Bullerdick resigned. JBT alleges Bullerdick was given the choice to
resign or be terminated for cause. Dkt. 99 ¶ 26. Bullerdick maintains he resigned only after Brian DeRoche
“promised that if [Bullerdick] were to resign and focus [his] efforts on BGSE, JBT would enter into a new
distributorship agreement with BGSE.” Bullerdick Aff. ¶ 14.
26
27
See Pl.’s Ex. 119 at 1 (sealed) (showing Bullerdick obtained sixty percent ownership in BGSE “after April 2014”).
28
See Dkt. 126 ¶ 10.
29
Dkt. 129 ¶ 6.
30
Pl.’s Ex. 110 ¶ 2.
31
Id.
32
Id.
5
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On January 18, 2012, JBT and BGSE entered into a one-year Distributorship Agreement
(the 2012 Distributorship Agreement).33 This agreement gave BGSE exclusive rights to
distribute JBT products to United States military air bases for projects that had small business set
aside requirements.34 Under the 2012 Distributorship Agreement, BGSE was required to “retain
[JBT confidential information] in confidence and not to use it, or disclose it, except as expressly
agreed . . . .”35 The 2012 Distributorship Agreement further required that “within thirty (30)
days after the effective date of termination of [the] Agreement”—i.e., on or around February 18,
2013—BGSE was required “to remove all reference” to JBT from its “letterhead, business
forms, advertising literature and place of business,” and to refrain from using “any name or
trademark suggesting” BGSE “has any relationship” with JBT.36
JBT and BGSE attempted to negotiate an extension of the 2012 Distributorship
Agreement in late 2012 before it expired, again in 2014 shortly after Bullerdick resigned, and yet
again in 2015, but the companies could not reach an agreement.37 Specifically, JBT refused to
accept BGSE’s primary demands—exclusivity beyond projects with small business set-aside
requirements and a term for more than one year.38 The 2012 Distributorship Agreement expired
on January 18, 2013.39
33
Pl.’s Ex. 111 at 9.
34
Id. ¶ 2.
35
Id. ¶ 6(B).
36
Id. ¶ 12.
37
Dkt. 134 ¶¶ 7–18; Dkt. 99 ¶¶ 45–46; Dkt. 108 at 22 ¶ 22.
38
Dkt. 134 ¶ 8; Dkt. 99 ¶¶ 45–46; Dkt. 108 at 22 ¶ 22.
39
Dkt. 108 at 22 ¶ 21.
6
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After the contract expired, the parties continued to work together under the same terms.40
JBT continued to sell its products to BGSE for resale as late as March 2017.41 Over the course
of the parties’ approximately five-year relationship, BGSE purchased around $7.7 million worth
of equipment from JBT.42
C. The Bidding Process and BGSE’s Submittals Incorporating JBT Documents
To obtain contracts to supply equipment for U.S. military projects, manufacturers and
distributors generally submit quotes to contractors or sub-contractors, who in turn submit bids to
the government.43 Once a project is awarded, the prevailing manufacturer or distributor is
required to provide a “submittal.”44 Project submittals—often referred to as “post-award
submittals”—are the “final technical documents to get approval from the government to proceed
to make [the proposed] product.”45
At times, JBT—sometimes acting on its own and sometimes working through BGSE—
responded directly to military project solicitations.46 For instance, in September 2013, the U.S.
Navy solicited proposals for equipment for its Shipboard Mobile Electric Power Plant
(SMEPP).47 BGSE and JBT initially worked together to submit a qualifying proposal from
See Dkt. 126 ¶ 11 (“The 2012 distributorship agreement expired after one year, though the parties continued to
operate under it while they worked to create a new one.”) (citing Bullerdick Aff. ¶ 13). JBT does not deny BGSE’s
characterization of the parties’ informal relationship, insisting only that it is “irrelevant to JBT’s claims or BGSE’s
defenses whether or not there was an understanding that these products would continue to be sold under the terms of
the expired 2012 distributorship agreement.” Dkt. 154 at 2.
40
41
Dkt. 126 ¶ 36.
42
Id. ¶ 35.
See, e.g., Dkt. 129 ¶¶ 19–22 (noting BGSE provided submittal packages for F-35 hangar projects to various subcontractors, including Able Mechanical, Carothers Construction, and Prime Projects International).
43
Pl.’s Ex. 20 at 103:17–25. Sometimes, however, submittals must be provided before a contract is won. See Pl.’s
Ex. 12 at 127:17–19 (“Sometimes [BGSE had] to produce submittals before an award. Sometimes it’s after the
purchase order or contract has been signed.”).
44
45
Pl.’s Ex. 20 at 103:23–25.
46
See Dkt. 134 ¶¶ 19–48 (documenting JBT’s successful efforts to win a government contract with the U.S. Navy).
47
Id. ¶ 19.
7
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BGSE, but the Navy ultimately rejected BGSE’s SMEPP submittal in February 2014.48 The
Navy cancelled the solicitation “due to the fact that no acceptable small business proposals were
received.”49
After the Navy reissued the SMEPP solicitation in March 2014, JBT submitted an
independent proposal and also joined BGSE’s proposal.50 In February 2015, the Navy awarded
the SMEPP contract to JBT.51
From 2015 to 2017, BGSE independently submitted several bids to sub-contractors to
supply PC Air units or GPU systems (or both) for F-35 maintenance hangars.52 In many of those
submittals, BGSE included JBT documents and pictures of JBT products but with JBT identifiers
removed and replaced with BGSE identifiers.53
For example, the following two images are of the same JBT PC Air Unit.54 In the second
image—incorporated into one of BGSE’s submittals—BGSE superimposed its logo over JBT’s
logo:
48
Id. ¶¶ 25–28, 40.
Pl.’s Countercl. Ex. 36 at 2 (sealed). The parties dispute why the Navy rejected the proposal. See Dkt. 134 ¶ 40;
Dkt. 151 at 2.
49
50
Dkt. 134 ¶¶ 43–44.
51
Id. ¶ 46.
52
See Dkt. 129 ¶¶ 19–23.
53
Id. ¶ 19–28 (citing Pl.’s Exs. 2–12, 16, 21, 23, 25, 27, 62, 112, & 113).
54
Compare Pl.’s Ex. 18 at 1 (sealed) with Pl.’s Ex. 8 at 30 (sealed).
8
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The following chart catalogues BGSE’s submittals that incorporated JBT documents
stripped of JBT’s identifying information and replaced with BGSE’s logo:
9
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F-35 Hangar
Products
Project
Submittal
Marine Corps Air PC Air Units
Station Lemoore
(Lemoore P328)55
Revised Lemoore
P-32858
Kadena Air Base
(Kadena P-803)59
PC Air Units
PC Air Units
GPU Systems
Sub-contractor
Recipient
Able Mechanical
Able Mechanical
Prime Projects
International
Date
September 8,
2015
December 1,
2015
February 12,
2016
Modified JBT
Documents
Excerpt of
HPCF 3000
Operation &
Maintenance
Manual56
One page of
Technical
Specification for
HPCF 300057
Excerpt of
HPCF O&M
Manual
HPCF Tech.
Sheet
Excerpt of
HPCF O&M
Manual
HPCF Tech.
Sheet
Excerpt of
270VDC
Operation &
Maintenance
Manual60
One page of
Technical
Specification for
270VDC61
55
Pl.’s Ex. 2 at 36–48 (sealed).
56
Pl.’s Ex. 13 at 12–18 (sealed) (HPCF O&M Manual).
57
Pl.’s Ex. 16 (HPCF Tech. Sheet).
58
Pl.’s Ex. 112 at 30–46 (sealed).
59
Pl.’s Ex. 6 at 93–105 (sealed).
60
Pl.’s Ex. 21 (sealed) (270VDC O&M Manual).
61
Pl.’s Ex. 23 (270VDC Tech. Sheet).
10
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Marine Corps Air
Station Beaufort
(Beaufort P465)62
Lemoore
P-378(A)63
Lemoore
P-378(B)64
Carothers
Construction
PC Air Units
GPU Systems
Certified Air
Conditioning Inc.
Berg Electric
February 23,
2016
September 23,
2016
February 13,
2017
Excerpt of
HPCF O&M
Manual
HPCF Tech.
Sheet
Excerpt of
HPCF O&M
Manual
HPCF Tech.
Sheet
270VDC
Functional
Checklist65
270VDC
Special Factory
Test66
“Certificate of
Test,” originally
performed for
JBT on a JBT
product,67
altered to appear
as if performed
for BGSE on a
BGSE product68
Counterfeit
“Authorization
to Mark”
certificate69
62
Pl.’s Ex. 4 at 14–26 (sealed).
63
Pl.’s Ex. 8 at 37–49 (sealed).
64
Pl.’s Ex. 10 at 32–40 (sealed).
65
Pl.’s Ex. 25 (sealed).
66
Pl.’s Ex. 27 at 1–3 (sealed).
67
Id. at 4 (sealed).
68
Pl.’s Ex. 10 at 42 (sealed).
69
Id. at 44 (sealed); Pl.’s Ex. 113.
11
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D. Defendants’ Communications with Third Parties Concerning JBT’s Products and
Technology
1. Bullerdick’s Transmission of JBT’s Proprietary Information to Twist
While preparing one submittal in August 2015, Bullerdick sent an email to
representatives at one of JBT’s competitors—Twist, Inc.—with “Lemoore” in the subject line.70
The body of the email stated, “We have a lot of ground to make up. Attached is a library of
confidential info to reference.”71 A few days later, Bullerdick sent Twist another email in which
the body of the email stated, “Confidential,” and Bullerdick attached an electronic copy of JBT’s
HPCF O&M Manual.72
2. Bullerdick’s Representations to Contractors About BGSE’s Products
From November 2015 to August 2016, Bullerdick represented to several contractors that,
although JBT manufactured BGSE’s PC Air unit and GPU products, BGSE was the creator and
owner of the designs.73 For example, on March 9, 2016, Bullerdick told Bob Diez of Harris
Mechanical Southwest:
[BGSE] initially brought our designs for JBT AeroTech to build. They built the
power and air for us up until last summer. . . . We began to shar[e] BGSE designs
with Twist last summer in confidence. For 8 months now we have worked with
Twist engineers quietly . . . The product made for BGSE with BGSE technology is
call[ed] “Cool Jet.” It is not available anywhere else.”74
Two days later, Bullerdick emailed Wayne Thomas of Carothers Construction and
represented:
70
Dkt. 129 ¶ 41.
71
Id. (citing Pl.’s Ex. 54).
72
Id. ¶ 42 (citing Pl.’s Exs. 13, 94).
Dkt. 129 ¶¶ 50–52. Defendants do not dispute that Bullerdick sent these emails to several contractors. Rather,
Defendants argue the statements were not false or were at least condoned by JBT. See Dkt. 145 at 6–9.
73
74
Pl.’s Ex. 39 at 2 (sealed).
12
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JBT AeroTech builds 270VDC and CAS as a licensee of BGSE Group design
specifications. The agreement has expired and JBT is not making the design
supplied previously under BGSE licensee agreement at this time. . . . Solution . . .
Replace JBT with BGSE Group since BGSE Group is the designer and owner of
the technology.75
Finally, Bullerdick emailed Neal Barton of Okland Construction in August 2016, telling
him that “JBT has been our ‘manufacturer’ of a BGSE design for 2 generations of CAS units
now. . . . This is the BGSE Group design and not to be confused with who we contract to make
the units.”76
E. BGSE Marketing Materials Incorporating JBT Information
In August 2014, BGSE created a brochure (the F-35 Brochure)77 that contained excerpts
of several original JBT documents, with JBT identifying information removed and replaced with
BGSE identifiers. These excerpts were taken from the 270VDC General Specifications,78 the
HPCF O&M Manual,79 the 30-Ton HPCF Justifications,80 and the 30-Ton HPCF Calculations.81
Between September 2014 and March 2017, BGSE emailed the F-35 Brochure to seventeen
industry contacts.82
In March 2016, Bullerdick created another brochure (the Lemoore Brochure)83 that
contained a letter addressed to “bidders and designers.”84 The Lemoore Brochure includes a list
75
Pl.’s Ex. 40 at 2 (sealed) (emphasis altered).
76
Pl.’s Ex. 41 at 2 (sealed).
77
Pl.’s Ex. 30 (sealed).
78
Pl.’s Ex. 31 (sealed).
79
Pl.’s Ex. 13 at 12–37 (sealed).
80
Pl.’s Ex. 33 (sealed).
81
Pl.’s Ex. 35 (sealed).
See Dkt. 129 ¶ 44(a)–(r) (citing Pl.’s Exs. 69–70, 72–87). Though the F-35 brochure reached some military
personnel, most of the recipients were contractors or sub-contractors. See id.
82
83
Pl.’s Ex. 38 (sealed).
84
Id. at 3.
13
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of thirteen F-35 hangar projects and states, “[t]he following F 35 specific projects all have BGSE
Group equipment. All projects completed on this list have installed, commissioned and working
100% BGSE Group designs.”85 The Lemoore Brochure also contains a technical specification
substantially copied from the JBT HPCF Tech. Sheet and two pictures of JBT HPCF 3000 PC
Air units with BGSE logos superimposed on them.86 In March 2016, BGSE emailed the
Lemoore Brochure to four industry contacts.87
In November 2016, Bullerdick created a document to answer questions posed by a
contractor who was working on a project at Eielson Air Force Base (the Eielson F-35 Letter).88
The Eielson F-35 Letter contains the rhetorical question, “Who manufactured the BGSE Group
Air Design?” along with the stated answer, “These are BGSE Group designs. We produce the
bill of material and design and pay for the certifications.”89 BGSE emailed the Eielson F-35
Letter to T. Karre of Burns & McDonald in November 201690 and two other industry contacts in
April and June 2017.91
Finally, in March 2017 Bullerdick created a document titled “F-35 Equipment History.”92
That document represents that “BGSE Group with the help of JBT made the first combination
270VDC/400HZ power supplies.”93 It also states that “BGSE Group worked 2 years on a
second-generation [PC Air] unit. . . . to [achieve] a better F 35 air unit than what was installed in
85
Id.
86
Id. at 7–9.
87
Dkt. 129 ¶ 45.
88
Id. ¶ 36; Pl.’s Ex. 53 (sealed).
89
Pl.’s Ex. 53 at 2 (sealed).
90
Dkt. 129 ¶ 46.
91
Id. ¶ 48.
92
Id. ¶ 39; Pl.’s Ex. 58 (sealed).
93
Pl.’s Ex. 58 at 1 (sealed).
14
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2008.”94 BGSE emailed the F-35 Equipment History to two industry contacts in March and June
2017.95
F. JBT Informs Industry Contacts of Its Lawsuit Against Bullerdick and BGSE
Shortly after JBT initiated this action, JBT sent the Complaint and a cover letter to some
of the parties’ mutual industry contacts.96 The cover letter reaffirmed that all JBT equipment
sold through BGSE was designed and developed solely by JBT.97 The cover letter also
contained the following representations:
•
“During the time period beginning on January 10, 2012 through January 9,
2013, B GSE served as a distributor for the Jetway Systems business unit
of JBT Corporation. . . . That distribution agreement was terminated on
January 9, 2013, and only in-process sales at the time of the termination of
the distribution agreement are being supported by JBT.”98
•
“In its support of its products, JBT does not require its customers to solve
issues with JBT’s suppliers, but instead serves as the sole point of contact
for support.”99
These statements, among other things, form the basis of many of Defendants’ counterclaims.
II.
Procedural History
On September 1, 2017, JBT filed its Complaint100 and simultaneously moved for a
preliminary injunction, asking the court to enjoin Defendants from engaging in any conduct that
94
Id. at 2.
95
Dkt. 129 ¶ 47.
96
Dkt. 108 at 27 ¶¶ 54–55.
97
Dkt. 49, Ex. D.
98
Id.
99
Id.
100
Dkt. 2.
15
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gave rise to the claims described in JBT’s Complaint.101 The parties thereafter stipulated to the
entry of a preliminary injunction.102
Defendants filed an Answer to JBT’s Complaint103 and an amended Answer that added
six counterclaims.104 JBT filed an Answer to Defendants’ counterclaims and moved to dismiss
two of the claims.105 Before the court resolved JBT’s Motion to Dismiss, JBT filed an Amended
Complaint.106 Defendants filed a new Answer, reasserting the same counterclaims.107 As before,
JBT answered the counterclaims and moved to dismiss two of the claims.108 After holding a
hearing, the court granted JBT’s Motion to Dismiss one of the counterclaims and concluded the
other counterclaim was moot.109
On April 18, 2019, the parties filed cross-motions for summary judgment on JBT’s
affirmative claims.110 Defendants also moved to exclude JBT’s damages expert.111 The next day
JBT also moved for summary judgment on Defendants’ counterclaims.112 On November 26,
2019, the court held a hearing on the parties’ respective Motions for Summary Judgment.113 The
Motions are now fully briefed and ripe for review.
101
See Dkt. 3 at 1.
102
See Dkt. 31; Dkt. 32.
103
Dkt. 34.
104
Dkt. 49.
105
Dkt. 61; Dkt. 62.
106
Dkt. 99.
107
Dkt. 108.
108
Dkt. 110; Dkt. 111.
109
Dkt. 121.
110
Dkt. 126; Dkt. 129.
111
Dkt. 128.
112
Dkt. 134.
113
Dkt. 181.
16
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LEGAL STANDARD
Summary judgment is appropriate when “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.”114 A dispute is genuine “if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”115 A fact
is material if, under the governing substantive law, it could “affect the outcome of the suit.”116
When applying this standard, the court is to “view the evidence and make all reasonable
inferences in the light most favorable to the nonmoving party.”117
“Cross-motions for summary judgment are to be treated separately; the denial of one does
not require the grant of another.” 118 If the moving party does not have the ultimate burden of
persuasion at trial—here, BGSE on JBT’s affirmative claims and JBT on BGSE’s
counterclaims—that party “has both the initial burden of production . . . and the burden of
establishing that summary judgment is appropriate as a matter of law.”119 The moving party can
meet its burden “either by producing affirmative evidence negating an essential element of the
non-moving party’s claim, or by showing that the nonmoving party does not have enough
evidence to carry its burden of persuasion at trial.”120
“[A] more stringent summary judgment standard applies,” however, when the moving
party has the burden of proof at trial.121 In that instance, the moving party “cannot force the
114
Fed. R. Civ. P. 56(a).
115
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Id.; see also United States v. Simons, 129 F.3d 1386, 1388 (10th Cir. 1997) (“The substantive law of the case
determines which facts are material.”).
116
117
N. Natural Gas Co. v. Nash Oil & Gas, Inc., 526 F.3d 626, 629 (10th Cir. 2008) (citation omitted).
118
Buell Cabinet Co., Inc. v. Sudduth, 608 F.2d 431, 433 (10th Cir. 1979) (citations omitted).
119
Pelt v. Utah, 539 F.3d 1271, 1280 (10th Cir. 2008) (citation omitted).
120
Id. (internal quotation marks and citation omitted).
121
Id.
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nonmoving party to come forward with specific facts showing there is a genuine issue for trial
merely by pointing to parts of the record that it believes illustrate the absence of a genuine issue
of material fact.”122 Rather, “the moving party must establish, as a matter of law, all essential
elements of the issue before the nonmoving party can be obligated to bring forward any specific
facts alleged to rebut the movant’s case.”123
ANALYSIS
The court first considers the parties’ Cross-Motions for Summary Judgment on JBT’s
affirmative claims and then turns to JBT’s Motion for Partial Summary Judgment on
Defendants’ Counterclaims.124
I.
JBT’s Affirmative Claims
JBT brings ten causes of action against Defendants: misappropriation of trade secrets
under the Utah Uniform Trade Secrets Act and federal Defend Trade Secrets Act; three
violations of the Lanham Act for False Designation of Origin, False Advertising, and Trademark
Infringement; three breach of contract claims; defamation; and tortious interference.125 JBT and
Defendants both move for summary judgment on each of JBT’s claims. The court addresses
each claim in turn.
122
Id.
123
Id. (internal quotation marks and citations omitted).
Several of JBT’s claims and Defendants’ counterclaims arise under state law. A federal court exercising
jurisdiction over state law claims “applies the substantive law, including choice of law rules, of the forum state.”
BancOklahoma Mortg. Corp. v. Capital Title Co., Inc., 194 F.3d 1089, 1103 (10th Cir. 1999) (internal quotation
marks and citations omitted). Here, the parties agree Utah substantive law applies to JBT’s claims for
misappropriation under the Utah Uniform Trade Secrets Act, breach of contract, and defamation, and to Defendants’
counterclaim for tortious interference. The parties further agree North Carolina substantive law applies to
Defendants’ counterclaims for negligent misrepresentation, defamation, and unfair or deceptive trade practices.
Federal law applies to the remainder of JBT’s claims.
124
125
Dkt. 99 ¶¶ 146–212.
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A. Misappropriation of Trade Secrets (Counts One & Two)
JBT brings two causes of action against Defendants for misappropriation of its trade
secrets—specifically, its HPCF O&M Manual (HPCF Manual or Manual) containing the
schematics for its HPCF 3000 PC Air unit. JBT argues Defendants violated the Utah Uniform
Trade Secrets Act (UTSA)126 and the federal Defend Trade Secrets Act (DTSA)127 by emailing
the Manual to JBT’s competitor, Twist, Inc.128 Defendants dispute that the HPCF Manual
qualifies as a trade secret and argue JBT’s DTSA claim fails because the alleged cause of action
accrued before the statute took effect.
1. Utah Uniform Trade Secrets Act
To establish a misappropriation claim under the UTSA, JBT must show “two essential
elements: [1] existence of a protectable ‘trade secret’ of a plaintiff and [2] demonstration of
‘misappropriation’ by a defendant.”129 Defendants challenge only JBT’s showing on the first
prong, i.e., that the HPCF Manual qualifies as a trade secret.130
The UTSA defines “trade secret” as:
126
Utah Code Ann. § 13-24-1 et seq.
127
18 U.S.C. § 1832 et seq.
128
Dkt. 129 at 46–48.
129
InnoSys, Inc. v. Mercer, 2015 UT 80, ¶ 24, 364 P.3d 1013 (citing Utah Code Ann. § 13-24-2).
Dkt. 126 at 14–17; Dkt. 145 at 24–25. There is no genuine dispute of material fact on the misappropriation
prong. It is undisputed that Bullerdick sent an electronic copy of the HPCF Manual to Twist. Dkt. 129 ¶ 42.
Because Bullerdick was obligated to maintain the confidentiality of the Manual, providing the Manual to Twist, one
of JBT’s competitors, constitutes misappropriation under the UTSA. See Mercer, 2015 UT 80, ¶ 27 (“The definition
of ‘misappropriation’ under [the UTSA] encompasses ‘disclosure . . . of a trade secret of another without express or
implied consent by a person who . . . knew or had reason to know that his knowledge of the trade secret was . . .
acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use.’”) (quoting Utah Code
Ann. § 13–24–2(2)(b)) (ellipses in original).
130
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information, including a formula, pattern, compilation, program, device, method,
technique, or process, that:
(a) derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by, other
persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to maintain
its secrecy.131
Defendants assert the HPCF Manual was not subject to reasonable efforts to maintain its secrecy
and lacks independent economic value.
a. Reasonable Efforts to Maintain Secrecy
JBT points to a host of steps it takes to maintain the secrecy of the HPCF Manual.
Nevertheless, Defendants maintain JBT’s efforts are insufficient to sustain its UTSA claim. The
court ultimately concludes Defendants failed to present evidence sufficient to create a genuine
dispute concerning whether JBT’s efforts to maintain the secrecy of the HPCF Manual were
reasonable.
Under the UTSA, efforts to maintain the secrecy of a trade secret need only be
“reasonable under the circumstances.”132 The court’s review of the applicable caselaw reveals
that Utah courts have yet to define what it means for a party’s efforts to be reasonable under the
circumstances. However, other courts interpreting nearly identical state trade secrets laws
generally agree that reasonable efforts does not mean “all conceivable efforts,”133 nor are
131
USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶ 45, 372 P.3d 629 (quoting Utah Code Ann. § 13-24-2(4)).
132
Utah Code Ann. § 13-24-2(4)(b).
All W. Pet Supply Co. v. Hill’s Pet Prods. Div., 840 F. Supp. 1433, 1438 (D. Kan. 1993) (discussing Uniform
Trade Secrets Act and collecting cases).
133
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“[h]eroic measures” required.134 Thus, a plaintiff can meet this requirement even though a
defendant “manage[s] to point out aspects of plaintiff’s procedures that could have been
stronger.”135
JBT takes several measures to maintain the secrecy of the HPCF Manual. Brian
DeRoche, JBT’s Rule 30(b)(6) representative, testified JBT requires confidentiality agreements
with distributors and agents, trains its project managers to limit to whom the Manuals are sent,
and employs proprietary wording and clauses on its documents.136 JBT also requires its
employees to sign confidentiality agreements and abide by a code of ethics.137
Aside from these measures, JBT’s sales of the HPCF 3000 are subject to JBT’s
Conditions of Sale. This includes the following confidentiality provision:
CONFIDENTIALITY: Buyer acknowledges that during the execution of this
Agreement that Seller will provide confidential information to Buyer regarding the
Equipment design. Buyer agrees that such information is and will remain the
property of Seller and that Buyer will use the information only for the operation
and maintenance of the Equipment and protect the confidential information from
disclosure to other person, and entities.138
And the Manual itself contains both a confidentiality disclaimer and a proprietary notice:
Data Gen. Corp. v. Grumman Sys. Support Corp., 825 F. Supp. 340, 359 (D. Mass. 1993) (applying similar
Massachusetts trade secrets law); see also Catalyst & Chem. Servs., Inc. v. Global Ground Support, 350 F. Supp. 2d
1, 10 (D.D.C. 2004) (interpreting District of Columbia’s nearly identical trade secrets law and concluding “[a]n
owner is not required to maintain absolute secrecy to retain trade secret protection”); MicroStrategy Inc. v. Bus.
Objects, S.A., 331 F. Supp. 2d 396, 416 (E.D. Va. 2004) (interpreting identical language in Virginia’s trade secrets
act and finding that because “only reasonable efforts must be taken to maintain secrecy,” “[r]estricting access to
information, implementing confidentiality agreements, and providing physical barriers to access are all reasonable
efforts”); Comput. Assocs. Int’l v. Quest Software, Inc., 333 F. Supp. 2d 688, 696 (N.D. Ill. 2004) (“[T]he [Illinois
Trade Secrets Act] requires only reasonable measures, not perfection.”).
134
Quest Software, Inc., 333 F. Supp. 2d at 696 (granting plaintiff preliminary injunction related to trade secrets
claim).
135
136
Pl.’s Ex. 98 at 12:4–13:5.
137
Id. at 20:3–21:25.
138
Pl.’s Ex. 121 at 9 (emphasis added).
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PROPRIETARY NOTICE
This manual and any associated information, drawings, or amendments are
proprietary and confidential to JBT AeroTech, Jetway Systems®. Acceptance of
this manual constitutes agreement not to reproduce it in whole or in part and not to
disclose it to any other party and not use it for any purpose beyond the limited
license granted herein without prior written consent of JBT AeroTech, Jetway
Systems®.139
Despite these considerable efforts, Defendants maintain they are insufficient because (1)
JBT’s confidentiality requirements did not apply to the end users of its product—the U.S.
government,140 (2) “JBT is aware that its end users periodically lose track of the hard copies of
its manuals,”141 and (3) “end users can further disperse the Manual to other third-party
maintenance providers in the marketplace.”142 None of Defendants’ arguments has merit.
First, Defendants contend the confidentiality provisions in JBT’s Conditions of Sale do
not bind the government because JBT always sold its products through BGSE.143 Because
BGSE was the purchaser, Defendants argue the Conditions of Sale would not obligate the
government to protect JBT’s trade secrets.144 But JBT submitted evidence that, beginning in
2012, BGSE included the same Conditions of Sale clause “in all of [BGSE’s] quotes.”145 Thus,
the government was bound to guard JBT’s confidential information. And Defendants do not
contest that a party asserting trade secret protection “may make partial or limited disclosure of
the information without defeating its trade secret status[,]” including communicating the
139
Pl.’s Ex. 13 at 3, 5.
140
Dkt. 159 at 10.
141
Dkt. 126 at 16.
142
Id.
143
Dkt. 159 at 10.
144
See id.
145
Pl.’s Ex. 144 at 2, 7.
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information to third parties who are “pledged to secrecy.”146 Because BGSE and the government
were under a confidentiality requirement not to disclose the HPCF Manual’s contents, JBT’s
transmission of the Manual to those parties does not defeat the Manual’s trade secret status.
Second, Defendants challenge the reasonableness of JBT’s efforts because “it is
apparently common for these manuals to go missing or not end up in the end user’s hands.”147
But Defendants’ representation is not supported by the evidence they cite. Defendants point to a
single email exchange between a JBT representative and a BGSE employee concerning a
customer who could not locate an operating manual.148 The JBT representative stated that the
manuals were located inside the units and that “[o]ft times we’ve found that whomever unpacks
the units take the manuals out before passing them on to the users.”149 But nowhere does the
exchange evidence that manuals commonly go missing or fall into the hands of someone who
would not be under the confidentiality obligations discussed above.
Third, Defendants maintain JBT’s efforts are not reasonable because it acknowledges that
end-users of the HPCF 3000 are permitted to hire third parties to perform maintenance on the
units and to share the Manual with those maintenance providers.150 Defendants assert this shows
USA Power, 2016 UT 20, ¶ 57 (internal quotation marks and citation omitted). Other courts interpreting similar
trade secret laws reach the same conclusion. See SyncSort Inc. v. Innovative Routines, Int’l, Inc., No. 04-3623
(WHW), 2011 WL 3651331, at *15 (D.N.J. Aug. 18, 2011) (citing Fabkom, Inc. v. R.W. Smith & Assocs., Inc., Civ.
No. 95–4552, 1996 WL 531873, at *7 (S.D.N.Y. Sept. 19, 1996)) (“That a trade secret owner distributes secret
materials outside of his business, but only does so through agreements that require confidentiality, does not destroy
the secrecy of those materials, but rather reinforces it.”); Allied Erecting & Dismantling Co. v. Genesis Equip. &
Mfg., 649 F. Supp. 2d 702, 715 (N.D. Ohio 2009) (holding that an owner’s manual containing confidentiality
disclaimers did not destroy trade secret despite being sent to customers).
146
147
Dkt. 126 at 16.
148
Defs.’ Ex. 20.
149
Id.
150
Dkt. 126 at 15.
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“JBT freely and willingly circulated its alleged[] trade secret documents to countless individuals
who were under no obligation to protect them.”151
Defendants’ contention is flawed for several reasons. As an initial matter, this argument
requires the court to assume the government does not require maintenance providers to agree to
maintain the confidentiality of any materials they receive through their work, a fact about which
neither party has submitted evidence. But even assuming the government shares the HPCF
Manual without restriction, Defendants’ argument still fails. First, Defendants ignore that, in
addition to the proprietary and confidentiality notices on pages three and five, the Manual also
includes a disclaimer on every page that it is JBT’s confidential and proprietary
documentation.152 These notices would put maintenance providers on notice that they were
prohibited from using the Manual for any purpose other than repairing an HPCF 3000. Second,
requiring end-users to enter into specific confidentiality agreements with maintenance providers
would be superfluous. As noted, end-users were already obligated to protect the proprietary
information in the Manual. If the end-users were careless, JBT could assert a claim against them
based on the Conditions of Sale.153
At bottom, Defendants’ arguments amount to claiming that JBT could have implemented
stronger measures to protect the Manual’s trade secrets. But if a plaintiff were required to prove
it could do nothing more to protect its trade secrets to establish it took reasonable efforts to
maintain their secrecy, plaintiffs would rarely, if ever, prevail on a UTSA claim. Here, the
151
Dkt. 159 at 11.
152
See Pl.’s Ex. 13.
Nor is Bullerdick’s deposition testimony that user manuals are not considered confidential in the industry enough
to create a genuine dispute of material fact. Dkt. 126 at 15 (citing Defs.’ Ex. 7 at 157:5–23). “Vague, conclusory
statements do not suffice to create a genuine issue of material fact.” Gen. Steel Domestic Sales, LLC v. Chumley, 627
F. App’x 682, 689 n.2 (10th Cir. 2015) (quoting Adler v. Wal–Mart Stores, Inc., 144 F.3d 664, 674 (10th Cir. 1998)).
Besides, Bullerdick’s testimony that the manuals are not considered confidential is contradicted by his own email to
Twist providing the HPCF Manual and describing it as “confidential.” Pl.’s Ex. 94 (sealed).
153
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undisputed evidence establishes that JBT took numerous, practical measures to maintain the
secrecy of its trade secrets. Indeed, because no rational jury could conclude JBT’s efforts were
not reasonable under the circumstances, the court finds JBT has satisfied this element of its
UTSA claim.154
b. Independent Economic Value
JBT argues in its Motion that the Manual’s trade secrets derive independent economic
value from not being generally known or readily ascertainable by proper means.155 Defendants
maintain that (1) JBT fails to provide evidence from which a fact finder could determine its trade
secrets have independent economic value156 and (2) the Manual was readily ascertainable to
them.157 Defendants’ arguments are unavailing, and the court finds that no reasonable jury could
conclude JBT’s trade secrets lack independent economic value.
“[T]o be a trade secret, information must ‘derive[] independent economic value, actual or
potential, from not being generally known’ or ‘readily ascertainable’ to the defendant.”158
Information is not generally known if it is “secret from at least some interested parties” and has
not been fully disclosed without limitations.159 A trade secret is “readily” ascertainable “when it
can be determined without much difficulty through proper means.”160
It appears Utah courts have yet to opine about whether a jury should ordinarily decide this issue. But even
assuming for the sake of argument that this question is usually one for a jury, Defendants have failed to submit
evidence from which a reasonable trier of fact could find in their favor. Accordingly, judgment as a matter of law is
warranted. Cf., e.g., CDC Restoration & Const., LC v. Tradesmen Contractors, LLC, 2012 UT App 60, ¶ 27, 274
P.3d 317 (affirming trial court’s ruling that, as a matter of law, information was not entitled to trade secret
protection).
154
155
Dkt. 129 at 46.
156
Dkt. 145 at 24–25.
157
Dkt. 126 at 17.
158
USA Power, 2016 UT 20, ¶ 68 (quoting Utah Code Ann. § 13-24-2(4)(a)) (brackets in original).
159
Id. ¶ 57 (internal quotation marks and citation omitted).
160
Id. ¶ 67 (internal quotation marks omitted).
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JBT directs the court to two pieces of evidence to establish the HPCF Manual derives
independent economic value from not being generally known or readily ascertainable by proper
means. First, Scott Gwilliam, one of JBT’s engineers, submitted a declaration stating as
much.161 Second, JBT argues the Manual’s economic value from being unknown to its
competitors is evident from Bullerdick’s transmission of the Manual to Twist.162 It is undisputed
that in August and September of 2015, Bullerdick attempted to further Twist’s efforts to design a
PC Air unit that BGSE could source on F-35 hangar projects.163 Bullerdick included in one of
the emails an electronic version of the Manual.164 JBT contends this shows the Manual derived
economic value by not being generally known or readily ascertainable to others. That is,
Bullerdick would not have sent Twist the Manual—which contained internal schematics for
JBT’s HPCF 3000—unless he believed it would expedite Twist’s ability to design and produce a
competing PC Air unit.165
Defendants do not meaningfully refute this evidence. Rather, they assert with little
explanation that “JBT presents no evidence from which any finder of fact could conclude that
[the Manual] derive[s] independent commercial value from not being generally known . . . .”166
But this simply ignores the evidence chronicled above. Defendants do not address JBT’s
argument that Bullerdick’s transmission of the Manual to Twist evinces its commercial value.
161
Dkt. 129 at 46 (citing Pl.’s Ex. A ¶¶ 9–10).
162
See id.
Pl.’s Ex. 54 (sealed) (August 27, 2015 email from Bullerdick to Twist representatives Don Maynard and Scott
Schrinner, explaining they “have a lot of ground to make up” and attaching “a library of confidential info to
reference”); Pl.’s Ex. 94 (sealed) (August 31, 2015 email from Bullerdick to Twist attaching an electronic copy of
the HPCF O&M Manual); Pl.’s Ex. 97 (sealed) (September 3, 2015 email to Twist telling Schrinner “[w]hat is
designed will not meet spec[ifications]” and attaching a file named “CAS Master Controller.pdf”).
163
164
Pl.’s Ex. 94 (sealed).
165
See Dkt. 129 at 46.
166
Dkt. 145 at 24–25.
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Nor do they substantially oppose Scott Gwilliam’s declaration. Although not designated as an
expert, Gwilliam is a mechanical engineer with more than thirty years of experience designing
and manufacturing ground air conditioning equipment for aircraft.167 Gwilliam stated that
having the schematics of the HPCF 3000 would make it easier for a competitor to “achiev[e] the
specific required humidity . . . of air at the required airflow, pressure and temperature required by
the F-35 aircraft . . . .”168 Indeed, “[w]ithout the information included in the schematics,”
Gwilliam testified “it is likely that a competitor would have taken a less efficient and more costly
approach to achieving the performance requirements.”169
Defendants do not challenge Gwilliam’s credibility or expertise, nor did they submit
competing testimony—expert or otherwise—demonstrating that the information in the Manual is
generally known or readily ascertainable.170 Instead, Defendants assert only that Gwilliam’s
testimony is merely “someone’s subjective belief” that must be “discount[ed].”171 But affidavits
like Gwilliam’s are exactly the kind of evidence Rule 56 identifies as a proper means to prove a
factual assertion.172 Because Defendants advance no credible opposition to Gwilliam’s affidavit,
his testimony is undisputed and provides factual support to establish the HPCF Manual derives
economic value from not being generally known or readily ascertainable.
167
Dkt. 154 at 16.
168
Pl.’s Ex. A ¶ 8.
Id. Additionally, Defendants contend the Manual lacks economic value because it is merely “an operational
guide for the end user,” and JBT has not introduced evidence that the Manual actually has value to assist a
competitor develop a competing product. Dkt. 126 at 15, 17. These arguments are unavailing in light of Gwilliam’s
testimony.
169
Defendants appear to suggest JBT cannot prevail on its trade secret claim without expert testimony. Dkt. 145 at
25. The Utah Supreme Court expressly rejected that assertion. USA Power, 2016 UT 20, ¶ 67 (“[W]e conclude that
[Plaintiff] was not required to present expert testimony that this information was not readily ascertainable.”).
170
171
Dkt. 159 at 9.
Fed. R. Civ. P. 56(c)(1)(A) (listing affidavits or declarations as materials in the record upon which a party may
rely to support a factual assertion that no genuine dispute of material fact exists).
172
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Nevertheless, the court addresses Defendants’ contention that the HPCF Manual was
readily ascertainable to them through proper means.173 BGSE regularly pursued maintenance
contracts to service equipment on F-35 hangars.174 Because Bullerdick knew JBT’s products
well, BGSE was often awarded maintenance contracts at F-35 hangars where BGSE installed
JBT equipment.175 Through that maintenance work, Defendants argue they could have received
a copy of the HPCF Manual.176
Defendants’ argument proves too much. In the context of the UTSA’s statutory
framework, a trade secret is “readily ascertainable” if the defendant can easily obtain the relevant
information to use it for the defendant’s own purposes and benefit without restriction. Thus, a
trade secret is not “readily ascertainable” simply because a party could purchase the trade secret,
for example, through a licensing agreement that places conditions on the scope of the buyer’s use
of the secret. Under such an agreement, although the buyer gains access to the trade secret, the
buyer is restricted in its use of the secret, and therefore it cannot be said that the secret was
readily ascertainable. That is the case here. Although Defendants may have been able to obtain
the Manual through a maintenance contract, their use of the Manual would have been restricted
to servicing the equipment owner’s air units. Because Defendants would not have been free to
use the information contained in the Manual however they saw fit, the trade secrets were not
“readily ascertainable.”
But in any event, Defendants have submitted no evidence—nor argued—that they in fact
obtained an HPCF Manual through a maintenance contract for JBT equipment. Their argument
173
Dkt. 126 at 17.
174
Id.
175
Id. (citing Bullerdick Aff. ¶ 30).
176
Id.
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is purely hypothetical. “To defeat a motion for summary judgment, evidence . . . must be based
on more than mere speculation, conjecture, or surmise. Unsubstantiated allegations carry no
probative weight in summary judgment proceedings.”177 Defendants’ argument fails.
The undisputed evidence shows the Manual derives independent economic value from
not being generally known or readily ascertainable. Defendants fail to meaningfully refute JBT’s
evidence. Accordingly, no reasonable jury could conclude JBT’s trade secrets were readily
ascertainable.178
In sum, the HPCF Manual is information that derives independent economic value from
not being generally known or readily ascertainable and is the subject of reasonable efforts to
maintain its secrecy. It qualifies as a trade secret. And Defendants do not challenge JBT’s
evidence on the UTSA’s second prong, i.e., that Bullerdick misappropriated JBT’s trade secrets
when he emailed the Manual to Twist. Having proved both elements of its UTSA claim, JBT is
entitled to summary judgment.
2. Defend Trade Secrets Act
No controlling decision in this Circuit identifies the specific elements of a federal DTSA
claim.179 However, several district courts in the Circuit have held that a plaintiff must show: “(1)
the existence of a trade secret; (2) the acquisition, use, or disclosure of the trade secret without
consent; and (3) that the individual acquiring, using, or disclosing the trade secret knew or
177
Self v. Crum, 439 F.3d 1227, 1230 (10th Cir. 2006) (internal quotation marks and citations omitted).
Ordinarily, “[w]hether information is readily ascertainable is an issue for the jury . . . .” USA Power, 2016 UT
20, ¶ 67. But the court does not read USA Power to mean courts may never decide this issue as a matter of law.
Otherwise, the nonmoving party could avoid summary judgment merely by presenting nominal objections to the
moving party’s evidence. Instead, the court reads USA Power as cautioning courts that granting summary judgment
on this issue should be reserved for those cases, like here, where the undisputed evidence clearly establishes whether
the plaintiff’s trade secrets are readily ascertainable.
178
API Ams. Inc. v. Miller, 380 F. Supp. 3d 1141, 1148 n.5 (D. Kan. 2019) (“[T]here does not appear to be any
controlling decision regarding the elements required to establish a misappropriation claim under the recently-enacted
DTSA.”).
179
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should have known the trade secret was acquired by improper means.”180 A DTSA “trade secret
includes all forms and types of information that [1] derives value from being secret and [2] that
the owner took reasonable measures to keep secret.”181
Defendants acknowledge the DTSA’s definition of a trade secret mirrors the UTSA’s
definition, and they fail to advance any separate arguments about why JBT’s Manual is not a
trade secret under the DTSA.182 For the same reasons given above, the court concludes the
HPCF Manual qualifies as a trade secret under the DTSA.
Defendants raise only one argument unique to the DTSA. They contend JBT’s DTSA
claim must fail because the misappropriation allegations predate the DTSA’s enactment on May
11, 2016.183 Because JBT alleges Defendants misappropriated JBT’s trade secrets by sending
the HPCF Manual to Twist in August and September of 2015, Defendants argue the DTSA does
not cover their alleged misappropriation.184 But JBT also provides evidence Defendants used the
HPCF Manual to create other documents they disclosed to multiple third parties as late as March
3, 2017.185 For example, Bullerdick incorporated into the F-35 brochure portions of the HPCF
Manual that he sent to numerous industry contacts.186
Id. at 1148 (citing Video Gaming Techs., Inc. v. Castle Hill Studios LLC, No. 17-CV-454-GKF-JFJ, 2018 WL
3437083, at *4 (N.D. Okla. July 17, 2018)); Arctic Energy Servs., LLC v. Neal, No. 18-cv-00108-PAB-KLM, 2018
WL 1010939, at *2 (D. Colo. Feb. 22, 2018)).
180
Ultradent Prods., Inc. v. Spectrum Sols. LLC, No. 2:17-cv-890, 2018 WL 324868, at *2 (D. Utah Jan. 8, 2018)
(internal quotation marks and citations omitted).
181
182
See Dkt. 126 at 13.
Id. at 17–18 (citing Camick v. Holladay, 758 F. App’x 640, 644 (10th Cir. 2018) (noting the DTSA applies to
misappropriations that occurred “on or after the date of the enactment of the Act on May 11, 2016”) (internal
quotation marks and citations omitted)).
183
184
Dkt. 126 at 18.
185
Dkt. 154 at 16 (citing Pl.’s Exs. 78, 87).
186
See supra notes 77–82 and accompanying text.
30
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Defendants argue those subsequent disclosures cannot support a claim for
misappropriation because the earlier disclosure to Twist defeated the Manual’s trade secret
status.187 Defendants rely on Avago Technologies U.S. Inc. v. Nanoprecision Products, Inc. for
the proposition that “[o]nce the information is in the public domain and the element of secrecy is
gone, the trade secret is extinguished and the patentee’s only protection is that afforded under the
patent law.”188 But Avago involved a case in which the plaintiff’s trade secrets were published in
patents, which are publicly available.189 In contrast, Defendants’ disclosure to a single Twist
representative in 2015 did not render the Manual publicly available. Accordingly, Defendants’
subsequent disclosures to additional third parties of information contained in the Manual
constitute distinct misappropriations of JBT’s trade secrets. The court grants JBT summary
judgment on this claim.
B. Unfair Competition under the Lanham Act (Counts Three & Four)
JBT argues Defendants violated Section 43 of the Lanham Act by repeatedly
misrepresenting Defendants’ relationship to JBT’s products in order to mislead buyers of F-35
hangar equipment. Section 43(a) provides in relevant part,
Any person who, on or in connection with any goods or services . . . uses . . . any false
designation of origin, false or misleading description of fact, or false or misleading
representation of fact, which—
187
Dkt. 126 at 18.
No. 16-cv-03737-JCS, 2017 WL 412524, at *9 (N.D. Cal. Jan. 31, 2017) (quoting Ultimax Cement Mfg. Corp. v.
CTS Cement Mfg. Corp., 587 F.3d 1339, 1355 (Fed. Cir. 2009)).
188
189
Id. at *2.
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(A) is likely to cause confusion . . . as to the origin . . . of his or her goods, services, or
commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristic,
qualities, or geographic origin of his or her or another person’s goods, services, or
commercial activities,
shall be liable in a civil action by any person who believes that he or she is likely to be
damaged by such act.190
The Lanham Act “principally provides for two distinct causes of action: [1] false
designation of origin or source . . . and [2] false description or representation, known as false
advertising.”191 JBT argues Defendants are liable for both.
1. False Designation of Origin
JBT contends Defendants falsely designated the origin of the goods they were supplying
for F-35 hangar projects by incorporating doctored JBT documents throughout their bid
proposals.192 False designation of origin claims fall into two categories: “passing off,” where a
party represents his or her own goods or services as someone else’s or “reverse passing off,”
where a party misrepresents someone else’s goods or services as his or her own.193 To illustrate,
passing off could include Reebok removing its distinctive “vector” logo from its own shoes and
replacing it with Nike’s “swoosh.” Reverse passing off, on the other hand, would entail Reebok
acquiring Nike’s shoes, replacing the swoosh with Reebok’s vector logo, and selling the shoes as
190
15 U.S.C. § 1125(a)(1).
Cottrell, Ltd. v. Biotrol Int’l, Inc., 191 F.3d 1248, 1252 n.3 (10th Cir. 1999) (internal quotation marks and
citations omitted).
191
Dkt. 129 at 32 (“Defendants’ own documents overwhelmingly establish BGSE: (a) falsely claimed responsibility
for the JBT products installed on numerous projects, (b) improperly used images of JBT equipment, passing them
off as if they were BGSE’s, (c) stripped JBT’s name and identifying marks from JBT’s brochures, manuals, test
reports and specification documents in order to pass off JBT’s goods and services as its own, and (d) created the
false impression that its new products—manufactured by unproven third parties—were simply new versions of the
JBT products that BGSE previously distributed.”).
192
See Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 27 n.1 (2003); Gaedeke Holdings VII LTD v.
Baker, 683 F. App’x 677, 679 n.2 (10th Cir. 2017); Larkin Grp, Inc. v. Aquatic Design Consultants, Inc., 323 F.
Supp. 2d 1121, 1124 (D. Kan. 2004) (describing reverse passing off).
193
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if Reebok produced them. Here, JBT asserts a reverse passing off claim. JBT contends
Defendants sold the products they were promoting—here, Twist’s PC Air units—by creating a
false link with JBT’s products.194
Because the Tenth Circuit has yet to rule substantively on a reverse passing off claim, it
has not established what elements a plaintiff need demonstrate to succeed on this kind of
Lanham Act violation.195 JBT directs the court to the test adopted by the Second, Fourth, and
Federal Circuits, and Defendants do not contest that framework.196 To prevail on a reverse
passing off claim under that test, a plaintiff must prove four elements: “(1) that the work at issue
originated with the plaintiff; (2) that origin of the work was falsely designated by the defendant;
(3) that the false designation of origin was likely to cause consumer confusion; and (4) that the
plaintiff was harmed by the defendant’s false designation of origin.”197 Following the parties’
lead and finding the proposed test helpful, the court assesses JBT’s claim under this framework.
Before turning to the elements of the claim, however, the court addresses the threshold
issue of what goods Defendants allegedly reverse passed off: the post-award submittals
themselves or the PC Air units and GPUs contained therein. Defendants argue several courts
have concluded that a bid proposal is not a good or service and that, even if it were, a reverse
194
Dkt. 129 at 32, 35.
In Gaedeke Holdings VII LTD v. Baker, the Tenth Circuit defined reverse passing off, but the merits of the claim
were not at issue. 683 F. App’x at 679 n.2.
195
196
Dkt. 129 at 31–32.
Universal Furniture Int’l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 438 (4th Cir. 2010) (quoting
Syngenta Seeds, Inc. v. Delta Cotton Coop., Inc., 457 F.3d 1269, 1277 (Fed. Cir. 2006)); Lipton v. Nature Co., 71
F.3d 464, 473 (2d Cir. 1995) (establishing the same four elements).
197
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passing off claim does not lie where the defendant created the bid as BGSE did here.198 The
court agrees with Defendants that if JBT’s false designation of origin claim were based on
Defendants’ plagiarized submittals, the claim likely would fail.199 But JBT clarified that the
submittal documents “are not the goods at issue here.”200 Rather, JBT asserts the relevant goods
are the equipment BGSE was promoting within the submittals, i.e., the PC Air units and
GPUs.201 That is, “by obscuring that JBT was the originator of the material used in BGSE’s
post-bid submittals,” JBT argues “Defendants misrepresented the origin of the equipment they
proposed to supply by creating a connection to the JBT products that BGSE previously sold.”202
Having concluded the tangible goods at issue are the equipment represented in BGSE’s
submittals, the court turns to the elements JBT must prove to prevail on its claim.
a. The Work at Issue Originated with JBT and Defendants
Falsely Designated Its Origin
Defendants stake their opposition to JBT’s Motion on a single legal argument—that the
Supreme Court’s decision in Dastar Corporation v. Twentieth Century Fox Film Corporation
See Larkin, 323 F. Supp. 2d at 1126–27 (“[T]he court is unpersuaded . . . that the proposals defendants submitted
. . . constitute tangible goods [or services] that are offered for sale. Even if those proposals are, however, considered
goods or services offered for sale within the meaning of Dastar, in this case plaintiff does not allege that plaintiff
actually produced those proposals. Instead, plaintiff alleges that defendants took plaintiff’s materials and
incorporated them into defendants’ proposals without attributing any credit to plaintiff. Thus, the ‘origin’ of the
proposals was actually defendants, not plaintiff. Even if plaintiff authored some of the ideas and concepts embodied
in those proposals, the Lanham Act does not provide protection for such plagiarism.”) (internal citation and
quotation marks omitted); Tao of Sys. Integration, Inc. v. Analytical Servs. & Materials, Inc., 299 F. Supp. 2d 565,
572 (E.D. Va. 2004) (same).
198
199
See supra note 198.
200
Dkt. 164 at 4.
Id. For this reason, Defendants’ reliance on Larkin is misplaced. There, the plaintiff’s false designation of origin
claim was based on bid documents themselves and not, as here, the goods or services being offered. See Larkin, 323
F. Supp. 2d at 1126 (“Plaintiff is essentially claiming that defendants took plaintiff’s uncopyrighted and unpatented
ideas and concepts, edited and repackaged them, and passed them off as their own without attributing any credit to
plaintiff.”).
201
202
Dkt. 164 at 5.
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forecloses JBT’s theory.203 In Dastar, the Court considered whether Section 43 of the Lanham
Act “prevents the unaccredited copying of a work.”204 There, the plaintiff acquired the rights to
a 1949 TV series called “Crusade in Europe.”205 The plaintiff did not renew the copyright on the
series, and it entered the public domain in 1977.206 At issue was the defendant’s creation and
sale of a video set entitled World War II Campaigns in Europe.207 To make Campaigns, the
defendant bought tapes of the original Crusade television series, made various edits, and then
repackaged and sold the tapes as a new product.208 The plaintiff argued the defendant’s sale of
Campaigns without proper credit to the Crusade television series constituted reverse passing
off.209
The Supreme Court disagreed:
[R]eading the phrase “origin of goods” in the Lanham Act in accordance with the
Act’s common-law foundations (which were not designed to protect originality or
creativity), and in light of the copyright and patent laws (which were), we conclude
that the phrase refers to the producer of the tangible goods that are offered for sale,
and not to the author of any idea, concept, or communication embodied in those
goods.210
Recognizing that the defendant was the producer of the tangible goods it offered for sale—the
Campaign tapes—the Court concluded the defendant could not be liable for reverse passing off
even though it had copied the plaintiff’s idea.211
Dkt. 145 at 17–21. In their own Motion for Summary Judgment, Defendants argue JBT fails to provide evidence
any consumers were confused by Defendants’ conduct. Dkt. 126 at 19–21. The court takes up this argument below.
203
204
593 U.S. at 25.
205
Id. at 26.
206
Id.
207
Id.
208
Id. at 26–27.
209
Id. at 27.
210
Id. at 37 (emphasis altered).
211
Id. at 38.
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Defendants rely on Dastar and district court cases interpreting that decision to argue
JBT’s claim must fail because they never actually sold any of JBT’s products repackaged as
Defendants’ or Twist’s product.212 In other words, because Twist—not JBT—manufactured the
PC Air units Defendants ultimately supplied for the relevant F-35 hangars, Defendants assert
BGSE, or Twist, is the origin of the goods at issue. As such, Defendants contend they did not
reverse pass off JBT’s products.
It is true that in the typical case, the focus of the inquiry in a reverse passing off claim is
on the defendant’s goods.213 If the defendant supplies a product it manufactured, even if copied
from a competitor, a reverse passing off claim generally will not attach.214 For example, in Tao
of Systems Integration, Inc. v. Analytical Services & Materials, Inc., the district court dismissed
plaintiff’s reverse passing off claim where plaintiff argued defendant was able to win a contract
with NASA only by misrepresenting plaintiff’s work as defendant’s.215 The court held that “[t]o
state a claim for reverse passing off, [Plaintiff] must allege that the actual goods provided to
NASA by [Defendant] were in fact produced by [Plaintiff.]”216 Because the defendant there
produced the goods supplied to NASA, the court concluded the plaintiff’s claim must fail.217
Dkt. 145 at 20 (“JBT has failed to show that BGSE has made any false designation of origin as to any actual air
or power unit supplied and sold by BGSE.”) (emphasis added).
212
See, e.g., Kehoe Component Sales Inc. v. Best Lighting Prods., Inc., 796 F.3d 576, 587 (6th Cir. 2015) (“In this
case, it is undisputed that [the defendant] manufactured the tangible cloned objects that it represented as having
manufactured. The undisputed facts thus show that [the defendant] never made a false designation of the products’
‘origin’ within the meaning of § 43(a). [The defendant] represented that the cloned products originated with [the
defendant]; and even though the ideas and initial design may well have originated with [the plaintiff], the tangible
products themselves did not.”); Tao of Sys. Integration, 299 F. Supp. 2d at 572 (“The goods or services which are
examined for a false designation of origin under a reverse-passing-off claim are those of the defendant.”) (citation
omitted).
213
214
See supra note 213.
215
299 F. Supp. 2d at 569.
216
Id. at 572.
217
Id.
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But the Tao court’s holding is called into question by a subsequent decision from the
Fourth Circuit declining to impose such a brightline rule. In Universal Furniture International,
Inc. v. Collezione Europa USA, Inc., the Fourth Circuit upheld a district court’s finding of
liability on plaintiff’s false designation of origin claim even though the defendant never sold any
of the plaintiff’s products as if they were produced by the defendant.218 In that case, the
defendant intentionally mimicked several of the plaintiff’s furniture designs and sold cheaper
versions of two of the plaintiff’s most popular furniture lines.219 At one point, the defendant
displayed in its showroom some of the plaintiff’s actual pieces.220 The court concluded that
“[b]ecause [the defendant] displayed actual pieces from [the plaintiff’s furniture line] and
marketed them as belonging to [the defendant’s] 20200 collection, [the defendant] falsely
designated the origin of such furniture.”221 In short, there are at least some instances in which a
defendant may be liable for reverse passing off even where the product the defendant sells was
not manufactured by the plaintiff.
In this court’s judgment, this case presents one such scenario. As noted above, the Court
in Dastar held that the phrase “origin of goods” as used in § 1125(a)(1)(A) “refers to the
producer of tangible goods that are offered for sale, and not to the author of any idea, concept or
communication embodied in those goods.”222 Here, JBT was the producer of the tangible goods
Defendants were offering for sale in the post-submittal documents. In the project submittals for
Lemoore P-328, Beaufort P-465, Kadena P-803, and Lemoore P-378(A), BGSE included a
218
618 F.3d at 438–39.
219
Id. at 425–26.
220
Id. at 438.
221
Id.
222
539 U.S. at 37 (emphasis added).
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lengthy excerpt copied from the JBT HPCF O&M Manual.223 BGSE removed all references to
JBT and superimposed BGSE’s logo over JBT’s.224 Further, the submittals contained JBT’s
HPCF 3000 Tech. Sheet, stripped of its JBT identifiers and replaced with BGSE’s.225 The twopage technical specification purported to provide engineering details for a BGSE PC Air unit,
even though no such unit existed.226 Thus, although BGSE represented that it was offering for
sale a BGSE product to be manufactured by Twist, the substance of the submittal revealed the
product being offered for sale was actually produced by JBT.
In sum, the court concludes the equipment represented in BGSE’s project submittals
originated with JBT and that BGSE falsely designated the origin of the work.
b. The False Designation of Origin Was Likely to Cause
Consumer Confusion
To determine whether a false designation of origin is likely to cause confusion, the Tenth
Circuit typically applies a six-factor test.227 “As a general matter, however, courts have
concluded that a party’s attempt to pass off another party’s product as its own satisfies the
confusion requirement of the Lanham Act for an obvious reason—it represents a direct attempt
to confuse a consumer about the origin of a product.”228 This is because “when a ‘defendant has
taken the plaintiff’s product and has represented it to be his own work,’ it is ‘difficult to imagine
how a designation of origin of a product could be more false, or could be more likely to cause
Dkt. 129 at 22–23 (citing Pl.’s Ex. 13 at 10–24; Pl.’s Ex. 2 at 37–49; Pl.’s Ex. 4 at 13–25; Pl.’s Ex. 6 at 92–104;
Pl.’s Ex. 8 at 37–49).
223
224
Id. at 23.
225
Id.
Id.; see also Pl.’s Ex. 96 at 2 (sealed) (containing Bullerdick’s explanation in a May 2015 email that JBT’s HPCF
3000 was “the only [PC Air unit] to currently meet the specification” for an F-35 hangar project).
226
227
See Sally Beauty Co., Inc. v. Beautyco, Inc., 304 F.3d 964, 972–76 (10th Cir. 2002).
Laura Laaman & Assocs., LLC v. Davis, No. 3:16-CV-00594 (MPS), 2017 WL 5711393, at *6 (D. Conn. Nov.
27, 2017) (collecting cases).
228
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confusion or mistake as to the actual origin of the product.’”229 Accordingly, courts that would
otherwise apply multi-factor tests in considering this element generally eschew that mode of
analysis when assessing reverse passing off claims.230
Instead, for the reasons expressed above, where a court concludes a defendant has falsely
designated the origin of its product, likelihood of confusion may be presumed. Because
Defendants failed to rebut the presumption that their false designation of origin likely caused
substantial consumer confusion, the court concludes JBT satisfied this element.
c. The Plaintiff Was Harmed by Defendants’ False
Designation of Origin
Although Defendants assert BGSE’s conduct did not actually confuse any contractors,
Defendants never directly refute JBT’s arguments on the harm element. JBT contends “BGSE’s
deception allowed BGSE to create the false impression that it was the most experienced designer
and supplier of PC-Air units and GPUs for F-35 hangar project” and allowed BGSE “to sell other
suppliers’ products at a time when even Bullerdick conceded that only JBT made compliant
products.”231 The court concludes JBT has met its burden of establishing this final element.
One of the Lanham Act’s purposes is to “assure a producer that it (and not an imitating
competitor) will reap the financial, reputation-related rewards associated with a desirable
product.”232 BGSE’s deception prevented JBT from reaping both the financial and reputational
rewards associated with its products. The harm JBT suffered is the same harm identified by the
court in Universal Furniture. There, the court expressly rejected the defendant’s contention the
229
Universal Furniture, 618 F.3d at 438–39 (quoting Johnson v. Jones, 149 F.3d 494, 503 (6th Cir. 1998)).
See, e.g., Suntree Techs., Inc. v. Ecosense, Int’l, Inc., 693 F.3d 1338, 1348 (11th Cir. 2012) (noting “the first five
factors of the likelihood of confusion test are irrelevant”) (citing Johnson, 149 F.3d at 503).
230
231
Dkt. 129 at 39.
232
Dastar, 539 U.S. at 34 (internal citation and quotation marks omitted).
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plaintiff was not harmed because the defendant “did not actually sell” the plaintiff’s furniture.233
Rather, the court held that “[b]y displaying [Plaintiff’s] furniture as its own for a lower price,
[Defendant] appears to have retained customers that would have otherwise purchased from
[Plaintiff], even if it did not actually sell the [furniture] pieces in question.”234
The same is true here. Defendants often were able to fulfill the requirements of the bids
they won only by representing a product JBT produced. Just a few days before BGSE submitted
its bid for the Lemoore P-328 hangar, Bullerdick sent an email to Twist’s Scott Schrinner
explaining they had “a lot of work to do” because “[w]hat is designed will not meet the
spec[ifications].”235 Lacking a compliant PC Air unit designed by Twist, BGSE chose to include
the technical specifications of a product that would fulfill the project requirements: JBT’s HPCF
3000. If BGSE declined to represent JBT’s PC Air unit as its own, it likely would have lost the
project or been forced to source JBT’s product rather than Twist’s. Indeed, in May 2015
Bullerdick told another industry contact that “the jetAire JBT product” was “the only one to
currently meet the specification” for the Luke Air Force Base F-35 hangar.236 Like the plaintiff
in Universal Furniture, even though Defendants never sold JBT equipment under BGSE’s brand,
JBT nevertheless lost contracts on which it would have otherwise been the supplier. BGSE’s
false designation harmed JBT.
At bottom, “Section 43(a) of the Lanham Act prohibits actions like trademark
infringement that deceive consumers and impair a producer’s goodwill.”237 BGSE’s actions did
233
Universal Furniture, 618 F.3d at 439.
234
Id.
235
Pl.’s Ex. 97 at 2 (sealed).
236
Pl.’s Ex. 96 at 2 (sealed).
237
Dastar, 539 U.S. at 32.
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both of those things. Despite ultimately supplying a PC Air unit Twist manufactured, JBT was
materially harmed by BGSE’s false designation of origin in the post-submittal documents. In
those submittals, the tangible product BGSE was offering for sale was manufactured by JBT, but
BGSE represented it was a BGSE design that would be manufactured by Twist. Absent BGSE’s
deception, BGSE likely would have been forced to source JBT PC Air units. JBT is entitled to
summary judgment on its false designation of origin claim.
2. False Advertising
JBT’s false advertising claim principally relies on four promotional documents
Bullerdick created and disseminated from August 2014 to March 2017: the F-35 Brochure, the
Lemoore Brochure, the Eielson F-35 Letter, and the F-35 Equipment History document.238 JBT
argues these marketing materials contained literally false representations that hindered JBT’s
ability to sell its PC Air and GPU products.239 To succeed on a false advertising claim, a
plaintiff must demonstrate:
(1) that defendant made material false or misleading representations of fact in
connection with the commercial advertising or promotion of its product; (2) in
commerce; (3) that are either likely to cause confusion or mistake as to (a) the
origin, association or approval of the product with or by another, or (b) the
characteristics of the goods or services; and (4) injure the plaintiff.240
Dkt. 129 at 41. Although the central thrust of JBT’s arguments revolves around these four documents, JBT also
cites “the materials described above [in connection with JBT’s false designation of origin claim] which contain false
representations.” Id. JBT appears to be referring to (1) BGSE’s submittals containing JBT’s information and (2)
allegedly false statements Bullerdick communicated to various contractors over the years. See id. at 22–30
(cataloguing Bullerdick and BGSE’s allegedly false representations). Besides this passing reference, however, JBT
never explains how those documents and statements satisfy the elements required to prove a false advertising claim.
Accordingly, the court does not consider them in assessing this claim. And even if the court evaluated these
additional materials, JBT’s claim would fail for the same reasons discussed below.
238
239
Id. at 40–44.
240
Sally Beauty Co., Inc., 304 F.3d at 980 (quoting Cottrell, Ltd., 191 F.3d at 1252).
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Defendants argue JBT cannot meet its burden on the first prong. Specifically,
Defendants argue JBT cannot establish the statements it complains about are false241 and that,
even if they are, they were not sufficiently disseminated to constitute advertising or promotion
under the Lanham Act.242 The court takes up each argument in turn.
a. Some of Defendants’ Statements Are Literally False
To satisfy the first prong of a false advertising claim, JBT must establish that Defendants’
statements were “either (1) literally false or (2) literally true or ambiguous but implicitly false,
misleading in context, or likely to deceive.”243 JBT points to four statements in particular as
evidence of Defendants’ false representations: (1) the F-35 Brochure’s inclusion of excerpts of
two JBT product manuals and two engineering documents that have been stripped of JBT
identifiers and replaced with BGSE’s logo; (2) the Lemoore Brochure’s statement that “[t]he
following F 35 specific projects all have BGSE Group Equipment. All projects completed on
this list have installed, commissioned and working 100% BGSE Group Designs”; (3) a similar
statement in the Eielson F-35 Letter that “These are BGSE Group Designs. We produce the bill
of material and design and pay for the certifications”; and (4) the statement in the F-35
Equipment History document claiming BGSE brought its designs and expertise to JBT to make
“second generation” PC Air units.244
241
Dkt. 145 at 21–22.
Dkt. 126 at 22–23. Defendants also advance in passing an argument that JBT cannot establish the likelihood-ofconfusion element. See id. at 21 (“Claims for false advertising . . . must meet the same likelihood of confusion
requirements discussed [in opposing JBT’s false designation of origin claim]. . . . JBT is unable to meet this
requirement, and summary judgment is appropriate.”). But likelihood of confusion is presumed when the offending
statements are literally false. See Zoller Labs., LLC v. NBTY, Inc., 111 F. App’x 978, 982 (10th Cir. 2004) (citation
omitted) (“Where the advertisement is literally false, a violation may be established without evidence of consumer
deception.”); Nunes v. Rushton, 299 F. Supp. 3d 1216, 1239 (D. Utah 2018) (same). Thus, because the court
concludes some of Defendants’ statements were literally false, JBT satisfies the likelihood of confusion element.
242
Chumley, 627 F. App’x at 684 (citing Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 820 (7th Cir. 1999) and
Cottrell, Ltd., 191 F.3d at 1252).
243
244
Dkt. 129 at 41.
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Defendants never address the statements individually, instead declaring that “the
evidence suggests that the representations are indeed true or, at the very least, that they were
encouraged and condoned by JBT.”245 Defendants develop only the second half of their
argument—that BGSE should not be liable for the statements because JBT endorsed them. They
cite to their Exhibit 59, a PowerPoint presentation with a slide stating, “Together JBT and BGSE
have developed, marketed, and tested power conversion, PC Air, and Aircraft Air Start products
for the 21st century warfighters’ needs.”246 Defendants argue this shows “BGSE did indeed have
some role in the development of JBT products.”247 The court is not persuaded.
Defendants overstate the significance of this isolated slide. The slide merely expresses
general sentiments about working together—it does not represent an official endorsement by JBT
of BGSE’s role in developing any specific products. Even Bullerdick acknowledged in
deposition testimony that BGSE lacks any ownership in JBT’s products.248
Moreover, Defendants did not dispute JBT’s Statement of Fact 15, which asserts the
“Jetaire® HPCF 3000 was designed and is manufactured by JBT and is not a BGSE design.”249
So, whatever BGSE may have contributed to the development of some of JBT’s products, it is
undisputed that JBT designed and builds the HPCF 3000. By including portions of the HPCF
O&M Manual affixed with the BGSE logo in the F-35 Brochure, Defendants unambiguously
represented that the HPCF 3000 is a BGSE product. That is literally false. So is Defendants’
representation in the Eielson F-35 Letter that the JBT PC Air units incorporated into several F-35
245
Dkt. 145 at 21.
246
Id.
247
Id.
248
Pl.’s Ex. 12 at 191:22–192:1 (sealed).
249
Dkt. 129 at 8.
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hangars “are BGSE Group designs.”250 BGSE’s assertion that JBT was merely a manufacturer
of BGSE’s PC Air unit designs finds no support in the record and is contradicted by JBT’s
evidence.251
The challenged statements in the Lemoore Brochure and the F-35 Equipment History
document are more vague. But while perhaps not literally false, these statements are at least
“ambiguous but implicitly false, misleading in context, or likely to deceive.”252 They obscure
JBT’s role as the designer of the PC Air units supplied to some of the F-35 hangars and overstate
BGSE’s involvement. Thus, JBT has met its burden of showing many of Defendants’ statements
were either literally false or likely to deceive.
b. JBT Fails to Establish Defendants Sufficiently
Disseminated the Materials to Constitute Advertising or
Promotion
Notwithstanding JBT has proved the falsity of Defendants’ statements, its claim
nonetheless fails because JBT cannot establish Defendants’ promotional materials were
sufficiently disseminated to support a false advertising claim. For representations to constitute
“commercial advertising or promotion,” they must be “(1) commercial speech; (2) by a
defendant who is in commercial competition with plaintiff; (3) for the purpose of influencing
consumers to buy defendant’s goods or services . . . [and] (4) must be disseminated sufficiently
to the relevant purchasing public to constitute advertising or promotion within that industry.”253
250
Pl.’s Ex. 53 at 2 (sealed).
See, e.g., Pl.’s Ex. 48 (sealed) (JBT R&D cost spreadsheet for HPCF 3000); Pl.’s Exs. 49–51 (sealed) (JBT
project charters for HPCF 3000).
251
252
Chumley, 627 F. App’x at 684.
Proctor & Gamble Co. v. Haugen, 222 F.3d 1262, 1273–74 (10th Cir. 2000) (citations and internal quotation
marks omitted).
253
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Defendants argue JBT cannot satisfy the final element because none of the materials on
which JBT bases its claim were sufficiently disseminated to the relevant purchasing public. To
determine whether marketing materials have been sufficiently disseminated, courts typically
“compar[e] the number of instances [of dissemination] to the market size as a whole.”254 “[T]he
extent of distribution necessary to constitute commercial advertising or promotion in a particular
case may be an elastic factor, so that a relatively modest amount of activity may be sufficient in
the context of a particular case.” 255 For instance, in Sports Unlimited, Inc. v. Lankford
Enterprises, Inc., the Tenth Circuit upheld the district court’s conclusion that sending a
document containing allegedly false statements to two industry contacts was insufficient to
constitute advertising where the plaintiff submitted at least 150 bids per year.256 Similarly, in
Vivint, Inc. v. NorthStar Alarm Servs., LLC, the court decided the dissemination question by
comparing how many times the false statements were communicated in relation to the market as
a whole.257 In that case, the plaintiff alleged 216 customers had been subjected to false or
misleading statements by the defendant’s sales force.258 After first identifying the relevant
Vivint, Inc. v. NorthStar Alarm Servs., LLC, No. 2:16-cv-00106-JNP-EJF, 2019 WL 1098986, at *8 (D. Utah Mar.
8, 2019) (discussing Vitamins Online, Inc. v. HeartWise, Inc., 207 F. Supp. 3d 1233, 1242 (D. Utah 2016)).
254
255
Sports Unlimited, Inc. v. Lankford Enters., Inc., 275 F.3d 996, 1005 (10th Cir. 2002) (citation omitted).
256
Id. at 1003–04.
257
2019 WL 1098986, at *8–9.
258
Id. at *8.
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market as the plaintiff’s one million clients, the court concluded that “216 incidents do not rise to
the level of widespread dissemination of false statements.”259
Here, the court is unable to compare the amount of dissemination against the market as a
whole because neither party has submitted any evidence from which the court can determine the
size of the relevant market. Defendants maintain JBT’s failure to present such evidence is fatal
to its claim. JBT responds that the relevant purchasing public is exceptionally narrow, limited to
the design firms, the contractors working with the military, and the military itself. 260 Given the
niche industry, JBT argues it has presented ample evidence for the court to infer the small size of
the market.261
JBT has submitted evidence, unrefuted by Defendants and accepted by the court, that the
relevant market is small. Bullerdick has acknowledged that the market for PC Air units and
GPU systems installed on military bases in F-35 hangars is a “very small industry.”262 But it
remains unclear to the court how small is small. By JBT’s own assessment, the market consists
of military designers, contractors (including sub-contractors), and military personnel. But JBT
has introduced no evidence concerning the actual size of that cohort. The court lacks any basis
to assess how many designers, contractors, and sub-contractors the military hires to construct an
F-35 hangar, or whether that number varies depending on the individual project. Nor can the
Id. at *9. Defendants suggest JBT was required to submit expert testimony to prove Defendants’ advertising was
sufficiently widespread. Dkt. 126 at 23 (“JBT has not presented, and cannot present, given the passing of the expert
disclosure deadline, any statistical analysis of the alleged incidents in comparison to the relevant market.”). The
court disagrees. Defendants’ argument relies on a misreading of Vivint. There, the court stated that “there must be
some statistical analysis of the number of alleged incidents in comparison to the relevant market.” Vivint, Inc., 2019
WL 1098986, at *9. But the court was referring only to an analysis akin to the Tenth Circuit’s comparison in Sports
Unlimited of the two incidents of dissemination against the market of 150 bids. No expert testimony is needed to
conduct such a simple comparison.
259
260
Dkt. 154 at 26.
261
See id.
Pl.’s Ex. 126 (sealed); see also Pl.’s Ex. 127 (sealed) (describing the industry as being “too small . . . like being a
resident of a small hometown where everyone knows everyone and everyone knows everyone’s business”).
262
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court determine how many military contacts between the Navy, Air Force, and Marines should
be included in the relevant market. In other words, the court cannot on its own come up with the
appropriate denominator to evaluate the extent of Defendants’ dissemination.
JBT advances two arguments to make up for this deficiency. First, JBT cites Larkin
Group, Inc. v. Aquatic Design Consultants, Inc.,263 for the proposition that a court may infer that
the size of the relevant purchasing public is “limited to only several customers.”264 In Larkin, the
plaintiff alleged the defendant sent false advertising to three members of the relevant purchasing
public.265 Although the court acknowledged the complaint failed to “provide enough
information for the court to ascertain the extent and nature of the relevant purchasing public for
the aquatic design services industry,” it denied the defendant’s motion to dismiss because it
could “reasonably infer that the customer base for aquatic design services may very well be
limited to only several customers . . . .”266 Larkin, however, concerned a motion to dismiss.
JBT’s allegations in its Complaint about the extent of Defendants’ dissemination and the size of
the market would be enough to survive a motion to dismiss. But facing Defendants’ Motion for
Summary Judgment, JBT needed to submit evidence about the size of the market. JBT failed to
do so and asking the court to draw inferences in its favor is insufficient to create a genuine
dispute of material fact.267
263
323 F. Supp. 2d 1121 (D. Kan. 2004).
264
Dkt. 154 at 25–26.
265
323 F. Supp. 2d at 1128.
266
Id.
See Chumley, 627 F. App’x at 688 (“The Supreme Court long ago established that a defendant may support its
motion for summary judgment on an issue on which the plaintiff bears the burden of proof by arguing that the record
lacks any evidence in the plaintiff's favor. See Celotex Corp. v. Catrett, 477 U.S. 317, 322–25 (1986). Rule 56
doesn’t require that ‘the moving party support its motion with affidavits or other similar materials negating the
opponent’s claim’—so long as it explains why the record doesn’t support the opponent’s position. Id. at 323.”).
267
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Second, JBT points to evidence that BGSE sent a promotional email to 38 individuals
involved with F-35 maintenance hangars at military bases.268 JBT suggests the court should use
that number as a reference point to conclude Defendants’ dissemination was sufficiently
widespread.269 But the court doubts the underlying assumption in JBT’s argument. That on one
occasion Bullerdick sent a promotional email to 38 individuals does not establish that those
recipients comprise the entirety—or even a rough approximation—of the relevant market.
Defendants may have chosen to limit that email’s recipients to those with which Defendants had
an existing relationship. Conversely, the email may have targeted those contacts with which
Defendants had never worked with before but hoped to do so in the future. There are numerous
plausible explanations for the number of recipients. Ultimately, the record provides the court no
meaningful way to extrapolate the relevant market from the email.
The market for ground support equipment for F-35 hangars is undoubtedly small. But
JBT was required to do more to allow the court to gauge how widely Defendants disseminated
the challenged statements. Because JBT failed to submit adequate evidence of the size of the
market, the court grants Defendants summary judgment on JBT’s false advertising claim.
C. Trademark Infringement under the Lanham Act (Count Five)
JBT argues Defendants violated the Lanham Act both by displaying its trademarks on
BGSE’s website and incorporating them into the website’s metatags.270 Because its trademarks
are federally registered, JBT brings its trademark infringement claim under Section 32 of the
268
Dkt. 154 at 26 (citing Pl.’s Ex. 125).
269
See id.
Dkt. 154 at 27; Dkt. 129 at 49. “A metatag is a part of a Web site that is not seen by the public, but is read by
search engine web browsers and later used by the browsers to classify the Web site. Metatags are used to increase
the probability that a Web site will be seen by a customer who has typed a particular search query into his or her
search engine.” Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1233 n.3 (10th Cir. 2006) (citing Deborah F.
Buckman, Annotation, Initial Interest Confusion Doctrine under Lanham Trademark Act, 183 A.L.R. Fed. 553).
270
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Lanham Act, 15 U.S.C. § 1114.271 To establish its claim for trademark infringement, JBT must
show: “(1) that the plaintiff has a protectable interest in the mark; (2) that the defendant has used
an identical or similar mark in commerce; and (3) that the defendant’s use is likely to confuse
consumers.”272
Defendants contest only the third element—whether their use of JBT’s trademarks was
likely to confuse consumers. But the court’s ability to determine whether either party is entitled
to summary judgment is impeded by the parties’ minimal briefing and failure to identify and
apply the applicable standard. The Tenth Circuit has repeatedly identified six factors that should
be considered when assessing whether a likelihood of confusion exists:
(a) the degree of similarity between the marks;
(b) the intent of the alleged infringer in adopting its mark;
(c) evidence of actual confusion;
(d) the relation in use and the manner of marketing between the goods or services marketed
by the competing parties;
(e) the degree of care likely to be exercised by purchasers; and
(f) the strength or weakness of the marks.273
“Likelihood of confusion is ordinarily a question of fact for the jury, but summary judgment is
appropriate if no reasonable juror could find that such a likelihood exists.”274
While Section 32 of the Lanham Act protects owners of registered marks, Section 43 protects owners of valid
marks regardless of whether they are registered. See 15 U.S.C. §§ 1114(1)(a), 1125(a).
271
1-800 Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1238 (10th Cir. 2013) (internal quotation marks and
citations omitted). Although the Circuit Court was listing the elements for infringement of Section 43 of the
Lanham Act, it acknowledged the elements for a violation of Section 32 are “nearly identical,” with the only
difference being the presumption of the mark’s validity when asserting a Section 32 claim. Id.
272
273
Id. at 1239 (citing King of the Mountain Sports, Inc. v. Chrysler Corp., 185 F.3d 1084, 1089–90 (10th Cir. 1999)).
274
Id. at 1242 (citations omitted).
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JBT never discusses these factors, and Defendants do so only in passing.275 This
oversight is puzzling, particularly because “[t]he central question in a typical infringement action
under either § 32 or § 43(a) is whether the defendant’s use of the plaintiff’s mark is likely to
cause consumer confusion.”276 The court is left to assess the relevant evidence in light of these
factors notwithstanding the parties’ failure to do so in the first instance.
In its Motion, JBT asserts likelihood of confusion under a distinct theory known as
initial-interest confusion.277 “Initial-interest confusion ‘results when a consumer seeks a
particular trademark holder’s product and instead is lured to the product of a competitor by the
competitor’s use of the same or a similar mark.’”278 Thus, “the improper confusion occurs even
if the consumer becomes aware of the defendant’s actual identity before purchasing the
product.”279 In the internet context, initial interest confusion “derives from the unauthorized use
of trademarks to divert internet traffic, thereby capitalizing on a trademark holder’s goodwill.”280
Here, initial-interest confusion could arise as follows. A consumer, likely a contractor
preparing a bid, types “Jetaire PC Air unit” into an internet search engine. A link to JBT’s
website would invariably appear in the search results. However, because Defendants
incorporated that same trademark into BGSE’s metatags, a link to BGSE’s website would also
appear. The contractor may click on the BGSE link, believing she could learn more about or
obtain Jetaire equipment through BGSE. Although the contractor would eventually learn that
275
Dkt. 159 at 9.
276
1-800 Contacts, 722 F.3d at 1238 (emphasis added).
277
Dkt. 129 at 49.
278
1-800 Contacts, 722 F.3d at 1239 (quoting Australian Gold, 436 F.3d at 1238).
279
Id. (citing Australian Gold, 436 F.3d at 1238–39).
Australian Gold, 436 F.3d at 1239 (citing Nissan Motor Co. v. Nissan Comput. Corp., 378 F.3d 1002, 1018 (9th
Cir. 2004)).
280
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was not the case, Bullerdick or some other BGSE representative may be able to convince the
contractor to incorporate a competitor’s equipment into the bid in place of JBT’s.281
This theory of likelihood of confusion is evaluated under the same six-prong test laid out
above.282 Eschewing the test the court is required to apply, JBT instead cites several cases from
the Ninth Circuit suggesting it is enough to show initial interest confusion where the defendant
has used the plaintiff’s trademarks in the metatags of the defendant’s website.283 Because it is
undisputed Defendants used JBT’s trademarks in the metatags of BGSE’s website, JBT argues it
is entitled to summary judgment.284 The court disagrees.
Although the first two factors—similarity between the marks and the intent of the alleged
infringer—weigh in JBT’s favor, it has presented no evidence concerning the remaining four
factors. This deficiency is most notable regarding evidence of actual confusion, which “is often
considered the best evidence of a likelihood of confusion.”285 And weighing perhaps heaviest
against likelihood of confusion is the fifth factor, the degree of care likely to be exercised by
purchasers. Buyers of expensive, sophisticated military equipment for use with F-35 hangars are
unlikely to make such purchases on a whim. Unlike the purchasers of tanning lotions in
Australian Gold, Inc. v. Hatfield, contractors do not casually place PC Air units and GPUs into
their digital shopping carts. Indeed, from the parties’ papers it appears buyers do not purchase
See 1-800 Contacts, 722 F.3d at 1243–44 (quoting Vail Assocs., Inc. v. Vend–Tel–Co., Ltd., 516 F.3d 853, 872
(10th Cir. 2008)) (“Initial interest confusion is a ‘bait and switch’ tactic that permits a competitor to lure consumers
away from a service provider by passing off services as those of the provider, notwithstanding that the confusion is
dispelled by the time of sale.”).
281
282
Australian Gold, 436 F.3d at 1239.
283
Dkt. 129 at 49.
284
Id. at 49–50.
Hornady Mfg. Co., Inc. v. Doubletap, Inc., 746 F.3d 995, 1004 (10th Cir. 2014) (citing Water Pik, Inc. v. Med–
Sys., Inc., 726 F.3d 1136, 1144 (10th Cir. 2013)).
285
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the ground support equipment at issue here directly from a website.286 The fourth factor, the
similarity of products and manner of marketing, is largely inapplicable here as Defendants acted
as a distributor of JBT’s products and do not manufacture their own products. Finally, neither
party has submitted any evidence concerning the strength of JBT’s trademarks. The court
considers this final factor neutral.
Weighing these factors together, the court concludes a reasonable jury could return a
verdict for Defendants on the likelihood of confusion element. Accordingly, JBT is not entitled
to summary judgment.
Defendants’ Motion for Summary Judgment fares no better. Although Defendants assert
JBT failed to prove likelihood of confusion, Defendants acknowledge JBT submitted evidence
related to the first two factors of the likelihood of confusion test.287 As discussed above, JBT
submitted evidence Defendants used its trademarks exactly and did so with the intent to lure
customers away from JBT. No one factor is dispositive, “[b]ut the degree of similarity is the
most important factor.”288 Where a defendant uses its competitor’s mark exactly, the degree of
similarity factor weighs heavily in the plaintiff’s favor.289 Thus, even though Defendants are
correct that JBT failed to submit evidence pertaining to four of the six relevant factors, the court
nevertheless concludes a reasonable jury could return a verdict for JBT on the likelihood of
confusion element. In short, a genuine dispute of material fact exists concerning whether
See, e.g., Dkt. 126 ¶¶ 14–25 (explaining JBT and BGSE would work with contractors to submit bids for
government contracts).
286
See Dkt. 159 at 9 n.28 (“Defendants find nothing in the record that could support four of the six factors generally
considered when evaluating a trademark claim . . . .”). By negative implication, Defendants concede there is
evidence in the record supporting two of the six factors.
287
Affliction Holdings, LLC v. Utah Vap or Smoke, LLC, 935 F.3d 1112, 1115 (10th Cir. 2019) (citing Hornady, 746
F.3d at 1001 and King of the Mountain Sports, Inc., 185 F.3d at 1090).
288
Australian Gold, 436 F.3d at 1240 (“In this case, the degree of similarity of the marks weighed heavily in favor of
Plaintiffs, since the trademarked terms were identical to the terms used by Defendants.”).
289
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Defendants’ use of JBT’s trademarks was likely to cause confusion, and the court denies both
parties’ Motions on JBT’s trademark infringement claim.
D. Breach of Contract (Counts Six, Seven, & Eight)
JBT contends Defendants breached three agreements—the 2011 Confidentiality
Agreement between JBT and Bullerdick, the 2011 NDA between JBT and BGSE, and the 2012
Distributorship Agreement between JBT and BGSE.290 To prevail on its breach of contract
claims, JBT must prove: (1) existence of a contract, (2) performance by JBT, (3) breach of the
contract by the other party, and (4) damages.291 In both their Motion for Summary Judgment and
Opposition to JBT’s Motion, Defendants dispute only the third element, contending they did not
breach the relevant contracts or that their breach was excusable.292 Thus, the court confines its
analysis to that issue.293
1. 2011 Confidentiality Agreement (Against Bullerdick)
JBT argues Bullerdick breached the 2011 Confidentiality Agreement by “(1) failing to
maintain in confidence all confidential and proprietary information related to JBT’s business
290
Dkt. 129 at 57–60.
291
See Am. W. Bank Members, L.C. v. Utah, 2014 UT 49, ¶ 15, 342 P.3d 224.
292
See Dkt. 126 at 24–26; Dkt. 145 at 29–30.
At the summary judgment hearing, the court queried whether JBT had presented evidence it suffered damages
from Defendants’ breaches. JBT contended that it had throughout its briefing (though perhaps not specifically in the
contract section of its brief) and that, regardless, Defendants waived the issue by failing to raise it either in their
opposition to JBT’s Motion or in their own Motion. Defendants conceded they had not addressed the damages issue
in their papers but argued this failure was irrelevant as to JBT’s Motion because, as the party who will carry the
burden of persuasion at trial, JBT had an affirmative burden to establish each element of its claims. JBT has the
better argument here. “[A] party forfeits any issue so sparsely presented, as ‘[courts] need not . . . manufacture’
arguments for the litigants before [them].” Clark v. Colbert, 895 F.3d 1258, 1267 (10th Cir. 2018) (quoting Eateries,
Inc. v. J.R. Simplot Co., 346 F.3d 1225, 1232 (10th Cir. 2003)). Here, Defendants’ argument concerning the
sufficiency of JBT’s evidence of damages was not sparsely presented—it was never made at all until the court raised
the issue at the hearing. Moreover, JBT argued throughout its Motion that it had been damaged by Defendants’
serial contractual breaches. See Dkt. 129 at 59–60. By never disputing that assertion, Defendants conceded that
point. See Sykes v. Dudas, 573 F. Supp. 2d 191, 202 (D.D.C. 2008) (“[W]hen a party responds to some but not all
arguments raised on a Motion for Summary Judgment, a court may fairly view the unacknowledged arguments as
conceded.”). And notwithstanding JBT’s poor organization on this issue, there is ample evidence in the record
demonstrating that Defendants’ breaches damaged JBT.
293
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during his employment and after; and (2) failing to return JBT’s information upon termination of
his employment in April 2014.”294
The 2011 Confidentiality Agreement required that Bullerdick “agree to maintain in
confidence all information pertaining to [JBT’s] business” to which he had access, including
“information related to [JBT’s] products, inventions, trade secrets, know-how, systems,
formulae, [and] processes.”295 Further, Bullerdick “agree[d] not to use, communicate or disclose
. . . such information orally, in writing or by publication either during [his] employment or
thereafter . . . .”296 Finally, the 2011 Confidentiality Agreement required Bullerdick to return to
JBT “all writings, documents, files, records, drawings, models, tools, and other property of [JBT]
. . . upon termination of” his employment.297
In addition to retaining JBT’s confidential information long after Bullerdick was
terminated, JBT asserts “Defendants went on to use, communicate and disclose much of the
wrongfully-maintained JBT information, in further direct violation of the 2011 Confidentiality
Agreement.”298 For example, it is undisputed that in August and September of 2015, Bullerdick
emailed Twist representatives to provide them with portions of JBT’s proprietary information.299
Defendants never directly confront JBT’s arguments related to the 2011 Confidentiality
Agreement. In addressing JBT’s contract claims generally, Defendants instead explain that JBT
294
Dkt. 129 at 57.
295
Pl.’s Ex. 109 ¶ 5.
296
Id. (emphasis added).
297
Id.
298
Dkt. 129 at 58–59.
Pl.’s Ex. 54 (sealed) (August 27, 2015 email from Bullerdick to Twist representatives Don Maynard and Scott
Schrinner, explaining they “have a lot of ground to make up” and attaching “a library of confidential info to
reference”); Pl.’s Ex. 94 (sealed) (August 31, 2015 email from Bullerdick to Twist attaching an electronic copy of
the HPCF O&M Manual); Pl.’s Ex. 97 (sealed) (September 3, 2015 email to Twist attaching a file named “CAS
Master Controller.pdf”); Pl.’s Ex. 20 at 103:10–106:11.
299
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continued to provide Bullerdick documents and information as he continued to promote and sell
JBT’s products for several years after he was terminated.300 Although Defendants never
explicitly explain why this fact absolved Bullerdick of his contractual obligations, they imply
that Bullerdick and JBT’s continued business relationship empowered Bullerdick to use JBT’s
information as he saw fit in promoting JBT’s products.301 However, Defendants do not cite any
legal authority to support their argument, and their attempted defense presents no cognizable
legal theory that excuses Bullerdick’s clear breaches of the 2011 Confidentiality Agreement.
Nor do Defendants dispute that Bullerdick disclosed JBT’s proprietary information to Twist.302
That disclosure indisputably breached the 2011 Confidentiality Agreement’s requirement that
Bullerdick “maintain in confidence all information pertaining to [JBT’s] business” to which he
had access, including “information related to [JBT’s] products, inventions, trade secrets, knowhow, systems, formulae, processes.”303 JBT is entitled to summary judgment as to the 2011
Confidentiality Agreement.304
2. 2011 NDA (Against BGSE)
JBT’s claim that BGSE breached the 2011 NDA is premised on the same facts underlying
its contract claim against Bullerdick—“BGSE’s . . . extensive unauthorized use of JBT’s material
for its own benefit.”305 Under the 2011 NDA, BGSE was required to maintain “in confidence”
300
Dkt. 145 at 29.
301
See id. at 29–30.
Although Bullerdick’s employment with JBT ended before he disclosed this information, Bullerdick’s obligation
under the 2011 Confidentiality Agreement to maintain JBT’s information in confidence continued after his
termination. Pl.’s Ex. 109 ¶ 5.
302
303
Id.
To the extent Defendants assert an equitable estoppel defense to the 2011 Confidentiality Agreement, the court
rejects this theory for the same reasons discussed below concerning the 2011 NDA.
304
305
Dkt. 129 at 60.
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the confidential information it received from JBT and agreed “to refrain from the use of the
Confidential Information for any purpose other than in furtherance of the Disclosure purpose.”306
“Confidential Information” is defined broadly and includes “trade secrets, know-how, designs,
and proprietary commercial and technical information, methods, practices, procedures, processes
and formulas . . . .”307 The 2011 NDA bound the parties “for a period of five (5) years from the
date of last receipt of the Confidential Information.”308
Defendants advance three theories to excuse BGSE’s transmission of JBT’s confidential
information to third parties.
First, Defendants argue two contractual exceptions apply. The NDA did not apply to any
confidential information that “(b) was already known to the receiving party at the time of
disclosure hereunder as demonstrated by the receiving party’s prior written records; . . . or (e) is
approved for release in writing by an authorized representative of the disclosing party.”309
Defendants assert that at the time the NDA was signed, Bullerdick had already been an employee
of JBT for several months and was also a member of BGSE.310 Therefore, Defendants argue,
exception (b) applies here because JBT’s confidential information was already known to BGSE
through Bullerdick.311
Defendants’ argument is unavailing. To satisfy its own internal ethical concerns, JBT
insisted that Bullerdick could not be both a JBT employee and an owner of BGSE.312 Thus, at
306
Pl.’s Ex. 110 ¶ 2.
307
Id. ¶ 1.
308
Id. ¶ 2.
309
Id. ¶ 5.
310
Dkt. 126 at 25.
311
Id.
312
Dkt. 154 at 28 (citing Pl.’s Ex. 119) (sealed).
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the time JBT and BGSE executed the 2011 NDA, BGSE did not have access to JBT’s
confidential information through Bullerdick. And even if it had, exception (b) still would not
apply because Defendants have submitted no evidence showing they complied with exception
(b)’s requirement that the receiving party allegedly already in possession of the confidential
information must demonstrate its prior knowledge in its written records.
Defendants contend exception (e) of the NDA also applies here because “BGSE often
received written permission to use or release JBT documents or information.”313 It is unclear
why Defendants believe this fact absolves BGSE of liability for breach of the NDA. That is,
JBT does not dispute that it gave Defendants specific permission at times to disclose particular
documents to third parties. But Defendants make no attempt to show they were given written
permission to disclose the confidential information and documents that JBT complains about—
for example, “altering [JBT’s] documents to make them appear to be BGSE work product, and
then using such altered material as a marketing tool to sell non-JBT products.”314 Accordingly,
exception (e) does not apply.
Second, Defendants argue JBT cannot prevail on any of its contract claims because they
are barred by the doctrine of equitable estoppel.315 To prove equitable estoppel, Defendants must
establish:
(1) a statement, admission, act, or failure to act by one party inconsistent with a
claim later asserted; (2) reasonable action or inaction by the other party taken on
the basis of the first party’s statement, admission, act, or failure to act; and (3) injury
to the second party that would result from allowing the first party to contradict or
repudiate such statement, admission, act, or failure to act.316
313
Dkt. 126 at 25.
314
Dkt. 154 at 28–29 (citing Pl.’s Exs. 30, 38, 53, 58).
Dkt. 126 at 25. In arguing equitable estoppel, Defendants do not explain how the defense applies to each contract
individually. Rather, Defendants made a blanket assertion that equitable estoppel precludes the enforcement of all
three of the relevant contracts.
315
316
Whitaker v. Utah State Ret. Bd., 2008 UT App 282, ¶ 22, 191 P.3d 814.
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Defendants’ equitable estoppel defense is wholly inapplicable to their breaches of the
2011 NDA. Though unclear, Defendants appear to argue JBT should be estopped from
enforcing the confidentiality provisions of the 2011 NDA because “JBT regularly provided
documents and information to BGSE, and on occasion explicitly instructed Bullerdick and BGSE
to send information on to customers or to remove references to JBT.”317 But that is not evidence
of a statement or failure to act that demonstrates JBT would not enforce the NDA’s requirement
that BGSE maintain JBT’s information in confidence. JBT introduced evidence that Defendants
“routinely stripped JBT’s name, logo, confidentiality notices and other identifying information
from JBT original documents, and passed these original documents off as BGSE’s own
documents” to sell non-JBT equipment.318 No reasonable jury could conclude Defendants’
conduct was reasonably based on JBT’s prior actions simply because JBT at times gave BGSE
specific permission to alter JBT documents to help sell JBT equipment. Equitable estoppel is
inapplicable to Defendants’ violations of the 2011 NDA.
Finally, Defendants argue JBT’s failure to identify the specific dates on which it supplied
various documents to Defendants is fatal to its contract claims.319 The court disagrees. Under
the 2011 NDA, BGSE was required to maintain in confidence JBT’s confidential information for
five years after BGSE received it. JBT likely disclosed pieces of its confidential information to
BGSE over time. But even if JBT disclosed all the relevant confidential information on
November 11, 2011—the day the 2011 NDA was signed—BGSE’s confidentiality obligations
extended until at least November 11, 2016. Because most of the improper disclosures JBT
317
Dkt. 126 at 26.
318
Dkt. 154 at 29.
319
See Dkt. 159 at 14–15.
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complains of occurred before that date, it is irrelevant when the confidential information was
provided to BGSE.320
Bullerdick’s and BGSE’s improper uses and disclosures of JBT’s confidential
information clearly breached the 2011 NDA. None of Defendants’ asserted defenses excuses
those serial breaches. Accordingly, the court grants JBT summary judgment on its 2011 NDA
breach of contract claim.
3. 2012 Distributorship Agreement (Against BGSE)
JBT argues BGSE breached the 2012 Distributorship Agreement by “BGSE’s failure to
return JBT’s material” after the Agreement terminated.321 Under Paragraph 12, within thirty
days of termination of the Agreement, BGSE was required to return “all price lists, catalogs,
operating and service manuals, advertising literature and display material relating to the Products
. . . .”322
Here, it is undisputed that BGSE retained JBT materials beyond the thirty days within
which the 2012 Distributorship Agreement required BGSE to return them.323 Thus, absent a
valid defense, BGSE breached that contract.
320
See supra note 299.
Dkt. 129 at 60. JBT appears to argue that BGSE’s “extensive unauthorized use of JBT’s material for its own
benefit” also constitutes an independent breach of the 2012 Distributorship Agreement. See id. It is true that the
2012 Distributorship Agreement contained confidentiality requirements requiring BGSE to retain JBT’s confidential
information “in confidence” and forbidding BGSE from using JBT’s information “except as expressly agreed.” Pl.’s
Ex. 111 ¶ 6(B). But the confidentiality requirements under the 2012 Distributorship Agreement appear to have
expired when the contract terminated in 2013. See id. ¶ 3 (“This Agreement . . . shall remain effective for one
year.”); ¶ 12 (“[BGSE’s] obligations under Paragraphs 4(G), 4(H) and 8(A) shall survive the termination of this
Agreement.”). BGSE’s confidentiality obligations are located in Paragraph 6(B), indicating they did not continue
after the Agreement was terminated. Thus, because all JBT’s allegations of BGSE’s improper disclosure and use of
JBT information occurred after the 2012 Distributorship Agreement terminated, any claim for breach of the 2012
Distributorship Agreement must stem from BGSE’s failure to return JBT’s materials.
321
322
Id. ¶ 12.
323
Dkt. 129 at 58.
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Defendants argue equitable estoppel excuses their conduct, insisting JBT should be
barred from now enforcing Paragraph 12 because “[a]fter the expiration of the distributorship
agreement . . . Defendants relied on JBT’s failure to strictly enforce the contract terms limiting
Defendants’ use of JBT documents and information.”324 Presumably, Defendants mean they did
not return JBT’s materials in accordance with Paragraph 12 because they believed JBT wanted
them to continue using those documents to sell JBT equipment. As noted above, Defendants
must prove three elements to prevail on their estoppel argument: (1) a statement, admission, act,
or failure to act by JBT inconsistent with a later-asserted claim; (2) reasonable action or inaction
by BGSE taken on the basis of JBT’s statement, admission, act, or failure to act; and (3) injury to
BGSE that would result from allowing JBT to contradict its statement, admission, act, or failure
to act.325
As an initial matter, it is unclear to the court as a matter of Utah law that equitable
estoppel applies in this context, where one party seeks to modify the terms of a contract
negotiated at arms’ length by two sophisticated commercial parties. Defendants do not direct the
court to any legal authority applying equitable estoppel in a comparable case, nor has the court’s
own research revealed such a decision.
In any event, because equitable estoppel is an affirmative defense, Defendants bear the
burden of proving each element.326 Defendants have failed to carry their burden. Defendants do
not explain, for instance, why JBT was required to make a formal request of Defendants to
trigger BGSE’s obligation to return JBT’s materials. Paragraph 12 of the 2012 Distributorship
324
Dkt. 126 at 26.
325
See Whitaker, 2008 UT App 282, ¶ 22.
State v. Hamilton, 2003 UT 22, ¶ 35, 70 P.3d 111 (“Since estoppel is an affirmative defense, [Defendant] bore the
burden of proving reliance.”).
326
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Agreement states that within 30 days after the termination of the Agreement, BGSE “shall
return” JBT’s materials.327 BGSE’s contractual obligation was not conditional on JBT asking for
its materials back. Thus, there was no inaction on the part of JBT on which BGSE could have
relied to excuse its duty to return JBT’s documents and information. Indeed, JBT initiated this
lawsuit in part to enforce BGSE’s failure to return its materials. Having failed to establish a
necessary element of its defense, Defendants’ equitable estoppel argument fails. Because
Defendants raise no other defenses excusing their breach, JBT is entitled to summary judgment.
In sum, Bullerdick’s and BGSE’s improper uses and disclosures of JBT’s confidential
information clearly breached Bullerdick’s 2011 Confidentiality Agreement and the 2011 NDA,
and the court grants JBT summary judgment on those claims. And because Defendants advance
no valid defense for their breach of the 2012 Distributorship Agreement, the court similarly
grants JBT summary judgment on that claim.
E. Defamation (Count Nine)
JBT alleges Defendants published numerous false statements that defame JBT and its
products.328 Defendants argue the relevant one-year statute of limitations bars JBT’s claim, JBT
cannot present any evidence it was damaged by the allegedly defamatory statements, and
“critical” statements Defendants made about JBT are not actionable.329
The court need not take up Defendants’ argument vis-à-vis the statute of limitations
because it concludes that, even if the discovery rule saves JBT’s claim, 330 Defendants are
entitled to judgment as a matter of law on the merits. Defendants argue JBT’s claim fails
327
Pl.’s Ex. 111.
328
Dkt. 129 at 51–53.
329
Dkt. 126 at 27, 29.
See Williams v. Howard, 970 P.2d 1282, 1284 (Utah 1998) (“The discovery rule functions as an exception to the
normal application of a statute of limitation.”) (citations omitted).
330
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because it cannot point to any evidence it was damaged by any of their allegedly defamatory
statements.331 Tacitly conceding it has not submitted any evidence of damages, JBT responds
only that “a showing of special damages is not required because Defendants’ actions amount to
slander per se and entitle JBT to general damages.”332
To prevail on a defamation claim, JBT must prove Defendants “[1] published the
statements concerning [the plaintiff], [2] that the statements were false, defamatory, and not
subject to any privilege, [3] that the statements were published with the requisite degree of fault,
and [4] that their publication resulted in damage.”333 A statement is defamatory if it “impeaches
an individual’s honesty, integrity, virtue, or reputation and thereby exposes the individual to
public hatred, contempt, or ridicule.”334 However, a publication is not defamatory “simply
because it is nettlesome or embarrassing to a plaintiff, or even because it makes a false statement
about the plaintiff.”335
Claims of defamation per se face an even more stringent standard. Defamatory
statements that are slander per se fall into one of four categories: “(1) charge of criminal conduct,
(2) charge of a loathsome disease, (3) charge of conduct that is incompatible with the exercise of
a lawful business, trade, profession, or office; and (4) charge of the unchastity of a woman.”336
Further, “[w]hether defamatory words constitute slander per se depends on their injurious
331
Dkt. 126 at 29.
Dkt. 154 at 32. See Macris v. Sevea Int’l, Inc., 2013 UT App 176, ¶ 44, 307 P.3d 625 (citing Allred v. Cook, 590
P.2d 318, 321 (Utah 1979)) (“[S]lander per se does not require a showing of special damage because damages and
malice are implied.”).
332
West v. Thomson Newspapers, 872 P.2d 999, 1007–08 (Utah 1994). Where the plaintiff is not a public figure,
negligence is the requisite degree of fault. Oman v. Davis Sch. Dist., 2008 UT 70, ¶ 69, 194 P.3d 956.
333
334
West, 872 P.2d at 1008.
335
Id. at 1009 (internal quotation marks and citation omitted).
336
Allred, 590 P.2d at 320 (citation omitted).
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character. That is, the words must be of such common notoriety that the injury can be presumed
from the words alone.”337 The standard for libel per se is similar: “[l]ibel is classified per se if it
contains defamatory words specifically directed at the person claiming injury, which words must,
on their face, and without the aid of intrinsic proof, be unmistakably recognized as injurious.”338
JBT includes in its Motion numerous examples of Defendants’ allegedly false
statements.339 For example, JBT emphasizes Bullerdick’s representation to contractors that “JBT
AeroTech builds 270VDC and CAS as a licensee of BGSE Group design specifications” and that
“BGSE Group is the designer and owner of the technology.”340 However, in opposing
Defendants’ Motion, JBT highlights three statements in particular to support its argument that
Defendants’ actions constitute defamation per se:
•
“You have to remember [JBT was] our supplier and BGSE experience they steal
very easily as their experience . . . What JBT can’t come up with themselves
they lie and steel [sic] and just recently in Israel they told the customer they
would buy and resell USS PITs. A complete lie but they said this so they could
fool the customer into the order and then build themselves. . . . They are familiar
with these designs and like everything else they steal from their partner
companies they are clearly ready to steal some more.”341
•
“JBT takes my experience as their experience. The only orders JBT has ever
had are from BGSE for JBT to make our designs.”342
•
“[JBT] wanted to exploit our technology as their own and for a lot of reasons I
can’t discuss we have taken a step back from JBT.”343
337
Id. at 321 (citation omitted).
338
Seegmiller v. KSL, Inc., 626 P.2d 968, 977 n.7 (Utah 1981) (internal quotation marks and citation omitted).
339
Dkt. 129 at 51–53.
340
Id. at 51 (citing Pl.’s Ex. 40 (sealed)).
341
Pl.’s Ex. 146 (sealed) (e-mail from Bullerdick to Jason Bodine of DBS HVAC).
342
Pl.’s Ex. 42 at 3 (sealed) (e-mail from Bullerdick to Neil Barton of Oakland Construction).
343
Pl.’s Ex. 39 at 2 (sealed) (e-mail from Bullerdick to Bob Diez of Harris Construction).
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Some of these statements are defamatory. Indeed, there can be no question the first
statement impeaches JBT’s honesty, integrity, and reputation. But “rhetorical hyperbole”
vaguely accusing a business of wrongdoing does not rise to the level of defamation per se.344 In
Westmont Residential LLC v. Buttars, an apartment complex sued a former tenant for defamation
per se because the tenant posted an online review describing the complex as “crooks” that “will
take full advantage of you!”345 While acknowledging that the term “crooks” could carry a
criminal connotation, the Utah Court of Appeals held that “in the context of Defendants’ online
review, the term is clearly not being used in this manner.”346 Similarly, Bullerdick’s allegations
of JBT lying and stealing does not actually accuse JBT of unlawful conduct.347 At bottom,
though inappropriate, Defendants’ statements are not of such common notoriety or unmistakably
injurious to relieve JBT of its burden to prove it was damaged. Because the court determines
Defendants’ statements are not defamatory per se and JBT has not introduced evidence of special
damages, the court grants Defendants summary judgment on this claim.
F. Tortious Interference (Count Ten)
JBT argues Defendants tortiously interfered with JBT’s prospective economic advantage
by employing misrepresentations to try to convince contractors not to source JBT equipment.348
To prevail on its claim for tortious interference with prospective economic advantage, JBT must
show that Defendants “[1] acted without justification [2] in ‘inducing a third party to refrain
See Westmont Residential LLC v. Buttars, 2014 UT App 291, ¶ 24, 340 P.3d 183 (quoting Greenbelt Coop. Publ’g
Ass’n v. Bresler, 398 U.S. 6, 14 (1970)).
344
345
Id. ¶ 5.
346
Id. ¶ 24.
See Nunes, 299 F. Supp. 3d at 1231 (holding the defendant had not defamed the plaintiff despite describing the
plaintiff’s litigation fundraising as a “fraud,” “hoax,” and “scam” because there was no indication the defendant
“imputed specific criminal conduct” to the plaintiff).
347
348
Dkt. 129 at 55.
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from entering into a contract with them [3] which contract would have ensued but for the
interference.’”349
JBT asserts Bullerdick interfered with two prospective projects related to the Luke Air
Force Base.350 Specifically, Bullerdick told key contacts on those projects that JBT’s past
products were built “as a licensee of BGSE Group designs,” JBT was no longer making “the
design supplied previously under BGSE license agreement,” and JBT had not been forthcoming
with that information.351 Even if JBT has entered sufficient evidence to succeed on the first two
elements of its claim, Defendants correctly contend JBT failed to present evidence it would have
won the respective contracts but for Bullerdick’s misrepresentations.352 And Defendants present
evidence JBT acknowledged it may have lost contracts, including the Luke Air Force Base
projects, because it had not taken a bundled approach in its bids, and its unit price was too
high.353
JBT responds the evidence is “overwhelming” it would have obtained multiple PC Air
and GPU equipment contracts but for Defendants’ tortious interference.354 But while JBT’s
Motion relies solely on lost contracts for projects at Luke Air Force Base, its Reply emphasizes
evidence that Defendants were the but-for cause of its losing contracts on the Lemoore P-328,
Beaufort P-465, and Kadena P-803 projects.355 Because JBT argued why Defendants were the
Walker v. Sloan, 529 S.E.2d 236, 242 (N.C. Ct. App. 2000) (quoting Cameron v. New Hanover Mem’l Hosp., 293
S.E.2d 901, 916–17 (N.C. Ct. App. 1982)).
349
350
Dkt. 129 at 55.
351
Id. (quoting Pl.’s Ex. 40).
Dkt. 145 at 28. At the summary judgment hearing, JBT conceded it had not addressed this element in its opening
Motion.
352
Id. (citing Defs.’ Ex. 68) (“We have lost a few of these nice Project jobs recently (Lemoore, Luke and others) but
possibly due to either ‘approach’ (meaning lack of bundling with the Pits) or due to unit price??”).
353
354
Dkt. 164 at 18.
355
Id.
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“but for” cause of its lost contracts on those projects for the first time in Reply, Defendants were
deprived of the opportunity to respond. Thus, the court will not consider those arguments.356
Having failed to submit evidence concerning an essential element of its claim, JBT is not entitled
to judgment as a matter of law.
But neither are Defendants entitled to summary judgment. Defendants’ Motion relies on
the same argument just discussed, i.e., that JBT cannot show it would have won contracts “but
for” Defendants’ actions.357 In opposing Defendants’ Motion, however, JBT introduced
evidence it would have won contracts to supply PC Air for the Lemoore P-328, Beaufort P-465,
and the Kadena P-803 projects were it not for Defendants’ fraudulent conduct.358 That is, JBT
argues it was the only PC Air unit supplier whose products met the required specifications for
these projects. If Bullerdick had not submitted fraudulent bids representing that Twist also had
compliant products, JBT contends it would have won the contracts.359 Based on the evidence
JBT submitted, a reasonable jury could return a verdict in JBT’s favor. Accordingly, summary
judgment for Defendants is inappropriate.
To recap, the court grants JBT summary judgment on its federal and state
misappropriation of trade secrets claims, its false designation of origin claim, and each of its
breach of contract claims. The court grants Defendants summary judgment on JBT’s claims for
false advertising and defamation. Both parties’ motions are denied as to JBT’s trademark
infringement and tortious interference claims. Having resolved the parties’ cross-motions related
to JBT’s affirmative claims, the court turns to Defendants’ counterclaims.
“[A] party waives issues and arguments raised for the first time in a reply brief.” Gutierrez v. Cobos, 841 F.3d
895, 902 (10th Cir. 2016) (quoting Reedy v. Werholtz, 660 F.3d 1270, 1274 (10th Cir. 2011)).
356
357
Dkt. 126 at 30.
358
Dkt. 154 at 37–38.
359
Id.
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II.
Defendants’ Counterclaims
Defendants initially asserted six counterclaims.360 On JBT’s Motion, the court dismissed
Defendants’ sixth counterclaim concerning the Utah Truth in Advertising Act.361 In Defendants’
first counterclaim, they sought a declaratory judgment that “they are not prohibited from
disclosing their past relationship with JBT, that they have the right to install and service JBTmanufactured equipment currently in their possession and that they have the right to pursue
future service contracts over JBT-manufactured equipment.”362 After JBT represented at an
earlier hearing it was not disputing Defendants’ ability to make the relevant representations, the
court concluded “the relief sought in the declaratory judgment counterclaim is moot.”363 The
parties’ summary judgment briefing suggests the issues raised in Defendants’ first counterclaim
remain moot. Accordingly, the court dismisses without prejudice Defendants’ counterclaim for
declaratory judgment.
In the four remaining counterclaims, Defendants allege JBT is liable for negligent
misrepresentation, defamation, tortious interference, and unfair or deceptive trade practices for
conduct stemming from the parties’ business relationship as well as JBT’s actions after it filed
this lawsuit.364 JBT moves for summary judgment on all four counts.365 The court addresses
each counterclaim in turn.
360
Dkt. 108 at 29–34.
361
See Dkt. 121.
362
Dkt. 108 at 30 ¶ 67.
363
Dkt. 123 at 28:17–18.
364
See Dkt. 108.
365
Dkt. 134.
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A. Negligent Misrepresentation (Count Three)
Defendants ground their claim for negligent misrepresentation in JBT’s statements that it
would (1) enter into a renewed distribution agreement with Defendants and (2) assist Defendants
with their bid on the Lakehurst SMEPP deal.366 JBT maintains Defendants’ claim fails as a
matter of law because JBT owed Defendants no duty of care, and it did not make any negligent
misrepresentations. The court agrees.
“[T]he tort of negligent misrepresentation occurs when a party [1] justifiably relies [2] to
his detriment [3] on information prepared without reasonable care [4] by one who owed the
relying party a duty of care.”367 Whether a duty is owed to the plaintiff is “of paramount
importance.” 368 A party’s “obligation or duty to act may flow from explicit requirements, i.e.,
statutory or contractual, or may be implied from attendant circumstances.”369
Defendants’ claim fails because JBT owed them no duty of care when either of the
alleged negligent misrepresentations were made. As to the possible renewal of the
distributorship agreement, Defendants assert Bullerdick left his employment with JBT only
because DeRoche promised him JBT would enter into a new agreement with BGSE following
Bullerdick’s resignation.370 Even if DeRoche made that representation, however, an employeremployee relationship does not create a duty of care under North Carolina law.371
366
See Dkt. 108 at 31 ¶ 77.
Bob Timberlake Collection, Inc. v. Edwards, 626 S.E.2d 315, 321–22 (N.C. Ct. App. 2006) (quoting Raritan
River Steel Co. v. Cherry, Bekaert & Holland, 367 S.E.2d 609, 612 (N.C. 1988)).
367
368
Id. at 322 (quoting Marcus Bros. Textiles, Inc. v. Price Waterhouse, L.L.P., 513 S.E.2d 320, 325 (N.C. 1999)).
Oberlin Capital, L.P. v. Slavin, 554 S.E.2d 840, 846 (N.C. Ct. App. 2001) (quoting In re Huyck Corp. v. Mangum,
Inc., 309 S.E.2d 183, 187 (N.C. 1983)).
369
370
Dkt. 151 at 6.
See Jordan v. Earthgrains Cos., Inc., 576 S.E.2d 336, 339 (N.C. Ct. App. 2003) (holding that a CEO “owed a
duty of care to the corporation and not to individual employees”).
371
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Defendants’ arguments concerning the SMEPP project fare no better. Without citing to
any authority, Defendants claim JBT owed a duty of care to BGSE “based on the parties’ prior
course of conduct and agreement to submit a bid together.”372 But JBT and BGSE were two
commercial parties engaged in arm’s-length transactions. North Carolina courts have not found
a fiduciary relationship to arise from this type of business relationship.373 In short, because JBT
owed Defendants no duty of care, Defendants cannot sustain their claim for negligent
misrepresentation as a matter of law. The court grants JBT summary judgment on this claim.
B. Defamation (Count Four)
Defendants assert JBT defamed them by sending the Complaint to numerous industry
contacts, along with a cover letter containing allegedly false and defamatory statements.374 Two
statements in particular in the cover letter form the basis of Defendants’ defamation claim:375
•
372
“During the time period beginning on January 10, 2012 through January 9,
2013, B GSE served as a distributor for the Jetway Systems business unit of
JBT Corporation. . . . That distribution agreement was terminated on January 9,
2013, and only in-process sales at the time of the termination of the distribution
agreement are being supported by JBT.”376
Dkt. 151 at 7.
See USA Trouser, S.A. de C.V. v. Int’l Legwear Grp., Inc., No. 1:11-cv-00244-MR-DLH, 2014 WL 1230507, at *9
(W.D.N.C. Mar. 25, 2014) (“At best, [the parties] were mutually interdependent businesses engaged in arms’-length
transactions. North Carolina courts have held that this type of business relationship does not give rise to a fiduciary
duty.”) (citation omitted).
373
Dkt. 108 at 32 ¶¶ 83–88. Although Defendants mention the Complaint as part of their defamation claim,
Defendants limit their arguments to the statements made in the cover letter. See Dkt. 151 at 8–15. In any event,
North Carolina law is clear that “defamatory statements made in the course of a judicial proceeding are absolutely
privileged and will not support a civil action for defamation, even if made with malice.” Harris v. NCNB Nat’l
Bank of N.C., 355 S.E.2d 838, 841 (N.C. Ct. App. 1987) (citations omitted). This judicial proceeding privilege
unquestionably applies to statements made in the Complaint, which qualify as “statements made in pleadings.” Id.
at 842. Accordingly, even if the court determined that some of the statements in the Complaint are defamatory, they
could not support Defendants’ defamation claim.
374
Though there were some variations, the court understands that each cover letter JBT sent with the Complaint
contained essentially the same content. See Dkt. 151 at 8.
375
376
Dkt. 49, Ex. D.
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•
“In its support of its products, JBT does not require its customers to solve issues
with JBT’s suppliers, but instead serves as the sole point of contact for
support.”377
To recover for defamation under North Carolina law, “a plaintiff must allege that the
defendant caused injury to the plaintiff by making [1] false, [2] defamatory statements [3] of or
concerning the plaintiff, [4] which were published to a third person.”378 A statement’s falsity
does not automatically render it defamatory. To wit, “[a]lthough every defamation must be false,
not every falsehood is defamatory.”379 Whether a statement is defamatory is a matter of law.380
North Carolina recognizes three categories of libel defamation: “(1) publications
obviously defamatory which are called libel per se; (2) publications susceptible of two
interpretations one of which is defamatory and the other not; and (3) publications not obviously
defamatory but when considered with innuendo, colloquium, and explanatory circumstances
become libelous, which are termed libels per quod.” 381 Damages are presumed in cases of libel
per se, but a party alleging libel per quod must allege and prove special damages.382
Defendants have not advanced evidence of special damages (precluding a claim for libel
per quod), nor have they alleged the supposedly defamatory statements are susceptible to two
meanings. Accordingly, although Defendants do not specify which class of defamation they are
pursuing, the court construes their claim as one for libel per se.383 Libel per se is a publication
377
Id.
378
Boyce & Isley, PLLC v. Cooper, 568 S.E.2d 893, 897 (N.C. Ct. App. 2002) (citation omitted).
379
Renwick v. News & Observer Pub. Co., 312 S.E.2d 405, 410 (N.C. Ct. App. 1984).
380
Id. at 409.
381
Id. at 408 (quoting Arnold v. Sharpe, 251 S.E.2d 452, 455 (N.C. 1979)).
382
Id.
See id. (“The plaintiff’s complaints in these cases failed to bring the editorial complained of within the second
class of libel, since it was not alleged that the editorial is susceptible of two meanings . . . and . . . [t]he complaints
failed to bring the editorial within the third class—libel per quod —since it was not alleged that the plaintiff suffered
special damages.”).
383
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by writing that “(1) charges that a person has committed an infamous crime; (2) charges a person
with having an infectious disease; (3) tends to impeach a person in that person’s trade or
profession; or (4) otherwise tends to subject one to ridicule, contempt or disgrace.”384
The two statements in the cover letter Defendants rely on do not rise to the level of libel
per se. Even assuming the statements are false, this alone is insufficient to render them
defamatory. Indeed, the second statement Defendants complain of does not mention Defendants
at all. While it arguably overstates JBT’s ability to service its products without the help of thirdparty providers, it does not demean Defendants’ skill or capability in the profession.
As to the first allegedly false statement—that Defendants were not authorized to sell JBT
equipment after 2013—Defendants contend this statement “strike[s] at the very heart of
Bullerdick and BGSE’s business reputation.”385 But even if the statement may have caused
confusion among BGSE’s clients who had purchased JBT equipment from BGSE after 2013, it
hardly subjected Defendants to ridicule, contempt, or disgrace. Because the court concludes as a
matter of law that JBT’s statements in the cover letter are not defamatory, the court grants JBT
summary judgment on this claim.386
C. Tortious Interference (Count Two)
Defendants base their tortious interference claim on the same allegedly false and
misleading statements contained in the Cover Letter JBT sent to mutual industry contacts.387 By
384
Id. at 408–09 (citation omitted).
385
Dkt. 151 at 10.
Having concluded that JBT’s statements were not defamatory, the court need not address the parties’ arguments
concerning whether the cover letters’ content is privileged.
386
Dkt. 108 at 31 ¶ 73. Defendants allege in their Answer “JBT’s wrongful acts that prevented BGSE from winning
the Lakehurst contract” also supports their tortious interference claim. Id. But Defendants fail to contest JBT’s
arguments that it did not employ improper means to win the Lakehurst contract. See Dkt. 134 at 17–18; Dkt. 151 at
15–17. The court therefore considers only Defendants’ contention that the alleged false statements in the Cover
Letter are sufficient to establish its tortious interference claim.
387
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sending the Cover Letter “throughout the industry,” Defendants allege JBT interfered with
Bullerdick and BGSE’s expected business relationships.388
To succeed on a claim for tortious interference under Utah law, Defendants must show
“(1) that [JBT] intentionally interfered with [Defendants’] existing or potential economic
relations, (2) . . . by improper means, (3) causing injury to [Defendants].”389 JBT asserts the
Cover Letter does not contain false statements, and even if it does, false statements alone are not
enough to prevail on a tortious interference claim.390 Because Defendants cannot show JBT
employed improper means to interfere with Defendants’ business relationships, JBT contends
their claim fails.391 The court agrees.
Improper means includes “only those actions that are contrary to law, such as violations
of statutes, regulations, or recognized common-law rules, or actions that violate an established
standard of a trade or profession.”392 This element encompasses violence, threats or other
intimidation, deceit or misrepresentation, bribery, unfounded litigation, defamation, or
disparaging falsehoods.393 These acts constitute improper means because they are “illegal or
388
Dkt. 151 at 15.
SIRQ, Inc. v. Layton Cos., Inc., 2016 UT 30, ¶ 27, 379 P.3d 1237 (quoting Leigh Furniture & Carpet Co. v. Isom,
657 P.2d 293, 302 (Utah 1982)). Utah has explicitly abandoned the improper purpose rule. See Eldridge v.
Johndrow, 2015 UT 21, ¶ 14, 345 P.3d 553 (“[W]e hereby reject the improper-purpose rule. . . . [W]e hold that a
claim for tortious interference may only succeed where the defendant has employed an improper means.”).
389
390
Dkt. 160 at 16–17.
391
Id.
392
C.R. England v. Swift Transp. Co., 2019 UT 8, ¶ 42, 437 P.3d 343 (internal quotation marks and citation omitted).
393
See id.
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tortious in themselves.”394 Conduct that is not independently tortious or wrongful is insufficient
to establish the improper means prong of a tortious interference claim.395
Defendants raise two arguments in response. First, Defendants assert the allegedly false
and misleading statements in the Cover Letter rise to the level of defamation,396 which qualifies
as improper means under Utah law. But the court previously concluded JBT is entitled to
summary judgment on Defendants’ defamation claim.
Second, Defendants cite Anderson Development Company v. Tobias397 for the proposition
that false and misleading statements alone are enough to satisfy the improper means element.
But Anderson makes no such declaration. In Anderson, the plaintiff presented evidence the
defendants misrepresented that they obtained a written offer to purchase a piece of property
around which the dispute centered.398 The court held that the sworn statements introduced to
evince that misrepresentation were sufficient to create a genuine dispute of material fact about
the improper means element of the plaintiff’s tortious interference claim.399 In other words,
Anderson is consistent with C.R. England’s confirmation that the conduct allegedly constituting
394
Id. (internal quotation marks and citation omitted).
See id. ¶ 45 (“[W]e have been careful to limit the scope of actionable conduct within the tortious interference
context to those situations where a defendant employs a means that is independently tortious or wrongful.”); see also
First Am. Title Ins. Co. v. Nw. Title Ins. Agency, LLC, No. 2:15-cv-229-DN, 2016 WL 6956603, at *1 (D. Utah Nov.
27, 2016) (“The improper means must be independently actionable conduct.”) (internal quotation marks and citation
omitted).
395
396
See Dkt. 151 at 16.
397
2005 UT 36, 116 P.3d 323.
398
Id. ¶ 32.
399
Id.
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improper means must be independently actionable.400 In Anderson, the underlying conduct was
misrepresentation, which is an independently actionable tort.401
Defendants conflate the making of a false statement with the tort of misrepresentation.
Although making a false statement is a component of misrepresentation, a party who makes a
false statement is not necessarily liable for misrepresentation. For liability to attach, for
example, the false statement must concern “a presently existing material fact” and must induce
reliance upon the statement.402 In short, false statements of fact alone cannot satisfy the
improper means element because they are not independently actionable.403 Accordingly, even if
the Cover Letter contained false statements, the act of sending those letters to industry contacts
does not itself constitute improper means. Defendants’ claim therefore fails, and the court grants
JBT summary judgment.
D. Unfair or Deceptive Trade Practices (Count Five)
Here again, Defendants’ unfair or deceptive trade practices claim stems from (1) JBT’s
alleged misrepresentation that it would enter into a renewed distribution agreement with
Defendants and (2) the alleged falsehoods in the Cover Letter.404 Defendants argue their claims
for negligent misrepresentation and defamation are sufficient to support their statutory trade
practices claim as well.405 Defendants assert that the same evidence they advanced in support of
their other claims also precludes the court from granting JBT summary judgment on Defendants’
400
2019 UT 8, ¶ 45.
See State v. Apotex Corp., 2012 UT 36, ¶ 58, 282 P.3d 66 (reciting elements of fraudulent misrepresentation
claim).
401
402
See id.
See C.R. England, 2019 UT 8, ¶ 45; see also Nunes, 299 F. Supp. 3d at 1232–33 (holding the plaintiff could not
satisfy the improper means element despite finding the defendant had published several false statements of fact).
403
404
See Dkt. 108 at 32–33 ¶¶ 90–94.
405
Dkt. 151 at 17–19.
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deceptive trade practices claim.406 But the court has granted JBT summary judgment on
Defendants’ negligent misrepresentation and defamation claims. Accordingly, those claims
cannot provide the basis for Defendants’ Section 75-1.1 claim.
Defendants advance one additional argument to support the present claim. They contend
their claim stands regardless of the fate of their negligent misrepresentation and defamation
claims because “it is enough that [Defendants] have forecast evidence that JBT made knowingly
false statements for the purpose of driving business away from BGSE, its competitor[.]”407 JBT
fails to respond to this point, arguing in its Reply only that Defendants’ claim fails because its
negligent misrepresentation and defamation claims fail.408
Viewing the evidence and drawing reasonable inferences in Defendants’ favor, the court
denies JBT’s Motion on this claim. To establish a claim for unfair or deceptive trade practices
under N.C. Gen Stat. § 75-1.1, “the plaintiff must show: (1) the defendant committed an unfair or
deceptive act or practice, (2) the action in question was in or affecting commerce, and (3) the act
proximately caused injury to the plaintiff.”409 The only relevant question here is whether JBT
committed an unfair or deceptive act by sending the Cover Letter to industry contacts.410
406
Id.
407
Id. at 19.
408
Dkt. 160 at 19.
409
Pleasant Valley Promenade v. Lechmere, Inc., 464 S.E.2d 47, 58 (N.C. Ct. App. 1995) (citations omitted).
JBT does not dispute that its actions were “in or affecting commerce.” See Dkt. 134 at 31–32. As to the injury
prong, JBT argues Defendants fail to show they were injured by JBT’s negotiations with BGSE concerning a
renewed distribution agreement “because BGSE was actively pursuing other business options during the pendency
of such negotiations.” Id. at 32. But JBT does not cite to any evidence—or even argue—that Defendants fail to
show they were injured by JBT sending the Cover Letter to relevant business contacts. Because the moving party
bears the initial burden of showing the absence of a genuine dispute of material fact, JBT has failed to contest the
injury prong of the present claim. See Celotex Corp., 477 U.S. at 323. In any event, Defendants have forecast
circumstantial evidence that they lost a contract because of the Cover Letter, which is sufficient to create a genuine
dispute of material fact about injury. See Dkt. 151 at 17.
410
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North Carolina courts have recognized that Section 75-1.1 “creates a cause of action
broader than traditional common law actions.”411 Consistent with that understanding, North
Carolina courts have given an expansive definition of a deceptive practice. “A practice is
deceptive if it has the capacity or tendency to deceive; proof of actual deception is not required. .
. . The consumer need only show that an act or practice possessed the tendency or capacity to
mislead, or created the likelihood of deception.”412 Further, “[n]either the actor’s intent nor good
faith are relevant.”413
The court concludes as a matter of law that sending the Cover Letter qualifies as a
deceptive act under Section 75-1.1.414 As discussed above, Defendants contend two statements
in the Cover Letter were false and misleading:
•
“During the time period beginning on January 10, 2012 through January 9,
2013, B GSE served as a distributor for the Jetway Systems business unit of
JBT Corporation. . . . That distribution agreement was terminated on January 9,
2013, and only in-process sales at the time of the termination of the distribution
agreement are being supported by JBT.”415
•
“In its support of its products, JBT does not require its customers to solve issues
with JBT’s suppliers, but instead serves as the sole point of contact for
support.”416
Media Network, Inc. v. Long Haymes Carr, Inc., 678 S.E.2d 671, 684 (N.C. Ct. App. 2009) (quoting Winston
Realty Co. v. G.H.G., Inc., 331 S.E.2d 677, 680 (N.C. 1985)); see also id. at 683 (noting that although tort actions
for deceit or fraud “require showing intent to deceive or scienter,” a deceptive trade practices claimant “need not
establish the defendant’s bad faith, intent willfulness, or knowledge”).
411
Love v. Keith, 383 S.E.2d 674, 677 (N.C. Ct. App. 1989), disapproved of on other grounds, Custom Molders, Inc.
v. Am. Yard Prods., Inc., 463 S.E.2d 199, 201–02 (N.C. 1995) (quoting Marshall v. Miller, 276 S.E.2d 397, 403
(N.C. 1981)).
412
413
Id.
Id. (“It is a question for the jury as to whether the defendants committed the alleged acts, and then it is a question
of law for the court as to whether these proven facts constitute an unfair or deceptive trade practice.”) (internal
quotation marks and citation omitted).
414
415
Dkt. 49, Ex. D.
416
Id.
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Brian DeRoche explicitly admitted the first statement was untrue because JBT accepted
multiple sales after January 9, 2013, that it knew about, authorized, and supported.417 While
DeRoche attempted to walk back that admission in his 30(b)(6) deposition a month later,418 he
did not deny JBT sold equipment to BGSE after January 9, 2013.419 In any event, there can be
no question the statement had the capacity or tendency to deceive recipients of the Cover Letter
that JBT had cut off its sales relationship with BGSE in January 2013.
Considering the second statement, the second half of the statement is false. JBT argues
the statement is accurate because JBT would respond to end user’s repair needs even if a call
came in under a warranty BGSE offered.420 But this ignores the statement’s use of the word
“sole.” That is, Defendants are not disputing that JBT would service or repair one of its products
if a customer sought help. Rather, Defendants take issue with the statement’s suggestion that
only JBT performed maintenance on its equipment and therefore that BGSE was unauthorized to
do so.421
The court recognizes the uphill battle Defendants will face to prove these relatively
benign misstatements proximately caused Defendants’ alleged injuries. But JBT’s Motion
depends on its argument that it did not commit a deceptive act within the meaning of § 75-1.1.
The court disagrees. Accordingly, a genuine dispute of material fact exists concerning whether
JBT’s actions proximately caused Defendants’ alleged injuries. JBT’s Motion is denied as to
Defendants’ deceptive practices act claim.
417
Defs.’ Ex. 83 at 123:17–124:8 (sealed).
418
Dkt. 160 at 4–5.
419
Pl.’s Ex. 133 at 71:14–16 (sealed).
420
Dkt. 160 at 5.
421
Dkt. 151 at 10.
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CONCLUSION
For the reasons explained above:
1. JBT’s Motion for Partial Summary Judgment on its affirmative claims422 is
GRANTED IN PART and DENIED IN PART as follows:
a. The court GRANTS summary judgment in JBT’s favor on JBT’s federal and
state misappropriation of trade secrets claims (Counts One & Two);
b. The court GRANTS summary judgment in JBT’s favor on JBT’s false
designation of origin claim (Count Three);
c. The court GRANTS summary judgment in JBT’s favor on each of JBT’s
breach of contract claims (Counts Six, Seven, and Eight);
d. The court DENIES JBT’s Motion in all other respects.
2. Defendants’ Motion for Summary Judgment423 is GRANTED IN PART and DENIED
IN PART as follows:
a. The court GRANTS summary judgment in Defendants’ favor on JBT’s false
advertising claim (Count Four);
b. The court GRANTS summary judgment in Defendants’ favor on JBT’s
defamation claim (Count Nine);
c. The court DENIES Defendants’ Motion in all other respects.
422
Dkt. 129.
423
Dkt. 126.
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3. JBT’s Motion for Summary Judgment on Defendants’ counterclaims424 is GRANTED
IN PART as follows:
a. The court GRANTS summary judgment in JBT’s favor on Defendants’
tortious interference counterclaim (Count Two);
b. The court GRANTS summary judgment in JBT’s favor on Defendants’
negligent misrepresentation counterclaim (Count Three);
c. The court GRANTS summary judgment in JBT’s favor on Defendants’
defamation counterclaim (Count Four);
d. The court DENIES JBT’s Motion in all other respects.
4. Defendants’ Motion to Exclude JBT’s expert is denied without prejudice to refile it in
connection with pre-trial proceedings.425
In addition to the amount of damages JBT seeks, the issues that remain for trial are (1)
whether Defendants’ use of JBT’s trademarks in BGSE’s website metatags was likely to cause
confusion, (2) whether Defendants tortiously interfered with JBT’s business relationships, and
(3) whether JBT proximately caused Defendants’ alleged injuries on their claim for unfair or
deceptive trade practices.
SO ORDERED this 13th day of August 2020.
BY THE COURT:
________________________________________
ROBERT J. SHELBY
United States Chief District Judge
424
Dkt. 134.
425
Dkt. 128.
79
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