OTR Wheel Engineering Inc et al v. West Worldwide Services Inc et al

Filing 392

ORDER Denying 384 Defendants' Motion for Reconsideration Re Trade Secret Misappropriation Inter Alia. Signed by Senior Judge Lonny R. Suko. (PL, Case Administrator) Modified on 3/21/2016 to correct document title (PL, Case Administrator).

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF WASHINGTON

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OTR WHEEL ENGINEERING, INC.,
BLACKSTONE/OTR, LLC, and F.B.T.
ENTERPRISES, INC.,

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Plaintiffs,
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v.
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WEST WORLDWIDE SERVICES, INC.,
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and SAMUEL J. WEST, individually and
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his marital community, et al.,
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Defendants.
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____________________________________ )

No. CV-14-085-LRS
ORDER DENYING
MOTION FOR
RECONSIDERATION
RE TRADE SECRET
MISAPPROPRIATION,
INTER ALIA

BEFORE THE COURT is “Defendants’ Motion For Reconsideration Of

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This Court’s Reconsideration Of Trade Secret Summary Judgment Ruling.” (ECF

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No. 384). This motion is heard without oral argument.

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Pursuant to Fed. R. Civ. P. 60(b)(6), Defendants ask the court to reconsider

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its “Order Granting [Plaintiffs’] Motion For Reconsideration Re Trade Secret

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Misappropriation, Inter Alia,” (ECF No. 380), which vacated the court’s previous

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order (ECF No. 317) granting summary judgment on Plaintiffs’ trade secret claim

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and reinstated that claim for adjudication at trial.

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I. PROTECTABLE TRADE SECRETS
In its order granting Plaintiffs’ motion for reconsideration, the court stated as
follows:
Not necessarily because it believes it committed a “clear error,”
ORDER DENYING MOTION
FOR RECONSIDERATION- 1

but because of what it believes are “highly unusual circumstances,”
the court vacates its prior ruling that Plaintiffs have failed to identify
their trade secrets with sufficient particularity and will allow that issue
to proceed to trial where it will be determined as a matter of law by
the court at the close of Plaintiffs’ case-in-chief or by a jury at the
close of the evidence.

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(ECF No. 380 at p. 8).
The court now clarifies that it was not only because of “highly unusual
circumstances,” but because it committed “clear error” that it vacated its summary
judgment ruling as a matter of law that Plaintiffs failed to identify their trade
secrets with sufficient particularity.1 This is a permissible basis for reconsideration
under Fed. R. Civ. P. 60(b) and does not require a showing by Plaintiffs that
“injury and circumstances beyond [their] control . . . prevented them from
proceeding in a proper fashion.” Latshaw v. Trainer Wortham & Co., 452 F.3d
1097, 1103 (9th Cir. 2006). Plaintiffs timely moved for reconsideration on an
appropriate basis.
The court did not “clearly err” in reconsidering its summary judgment
ruling. This reconsideration was not based on new evidence, but on evidence
already in the record (e.g., Fourth Declaration of Fredrick B. Taylor, ECF No.
251). Plaintiffs have produced sufficient evidence raising a genuine issue of
material fact that they have identifiable trade secrets consisting of the specific
instructions on how to prepare and manufacture the Outrigger tires that were
provided to its manufacturer, Superhawk, and that these tires are the result of a
unique layout of steel and nylon reinforcing materials, and a phased method of
construction using specific types of rubber. (Fourth Declaration of Fredrick B.

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The court’s order did make it clear that it found it committed “clear error”

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in concluding as a matter of law that Plaintiffs failed to reasonably protect any
trade secrets. (ECF No. 380 at p. 8).
ORDER DENYING MOTION
FOR RECONSIDERATION- 2

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Taylor, ECF No. 251 at Paragraphs 14, 16, 20, 21 and 32).

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The fact that Plaintiffs have not produced the actual written instructions is

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not dispositive of the question of whether Plaintiffs have identifiable trade secrets

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and does not allow the court to rule as a matter of law that Plaintiffs do not have

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identifiable trade secrets, those being “information, including a formula, pattern,

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compilation, program, device, method technique, or process, that . . . . [d]erives

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independent economic value, actual or potential, from not being generally known

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to the public or to other persons who can obtain economic value from its disclosure

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or use[.]” RCW 19.108.010(4)(a).2 In his declaration, Taylor states that he “gave

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to Solideal the building specifications that OTR and STA [Specialty Tire of

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America] had developed together [and] [t]o my knowledge Solideal turned this

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teaching into technical drawings, build instructions, green tire specifications and

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finish tire specifications that it uses to build Outrigger tires.” (ECF No. 251 at

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Paragraph 36). As this court previously noted, there is evidence in the record that

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Solideal communicated build specifications to tire manufacturers in China. (ECF

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No. 380 at p. 3). And there is the evidence of Defendants’ interactions with

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Alliance Tire Group and/or Michael Zhang which arguably suggest Defendants

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recognized the “independent economic value” of Plaintiffs’ tire technology. (ECF

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No. 312 at p. 12).

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All of this evidence gives rise to a reasonable inference that Plaintiffs’ build
specifications- although not produced in written form by Plaintiffs or Solideal-

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The requirement of “novelty and uniqueness” is inherent in this definition.

Machen, Inc. v. Aircraft Design, Inc., 65 Wn.App. 319, 327, 828 P.2d 73 (1992),

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overruled on other grounds, Waterjet Technology, Inc. v. Flow Intern. Corp., 140
Wn.2d 313, 323, 996 P.2d 598 (2000).
ORDER DENYING MOTION
FOR RECONSIDERATION- 3

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constitute trade secret information. As in Forro Precision, Inc. v. International

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Business Machines Corp., 673 F.2d 1045, 1056-57 (9th Cir. 1982), it will be

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Plaintiff’s burden at trial to prove this by a preponderance of the evidence to the

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satisfaction of a jury.3 A jury will determine if Plaintiffs have described “the

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subject matter of the trade secret with sufficient particularity to separate it from

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matters of general knowledge in the trade or of special knowledge of those persons

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. . . skilled in the trade.” Imax Corp. v. Cinema Technologies, Inc., 152 F.3d 1161,

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1164-65 (1998), quoting Universal Analytics v. MacNeal-Schwendler Corp., 707

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F.Supp. 1170, 1177 (C.D. Cal. 1989), aff’d, 914 F.2d 1256 (9th Cir. 1990). In

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making this determination, the jury will hear Defendants’ arguments regarding

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specificity and take into account the absence of actual written building

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instructions.4 The jury will decide if the building specifications testified to by

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Defendants assert that in Forro, “there was no dispute about the seminal

question here- did the plaintiff actually own any trade secrets?” (ECF No. 386 at

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p. 6). There was such a dispute in Forro because the judge instructed the jury that

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IBM must prove “the drawings allegedly used by Forro constituted trade secret

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information and were so treated by IBM,” 673 F.2d at 1056, and the Ninth Circuit

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found that “IBM introduced sufficient evidence to allow the jury to identify the

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secrets claimed to be misappropriated.” Id. at 1057.
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Of course, the court will not allow a “trial by ambush” whereby Plaintiffs

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present for the first time at trial, trade secret evidence which should have been
disclosed during discovery. As is typical in jury trials, the court anticipates that at
ORDER DENYING MOTION
FOR RECONSIDERATION- 4

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Plaintiffs are “fictional.”5

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II. FAILURE TO PROTECT ALLEGED TRADE SECRETS

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As Plaintiffs point out in their response brief (ECF No. 285 at pp. 9-10), the

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court did not consider new evidence in concluding there is a genuine issue of

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material fact whether Plaintiffs made a reasonable effort to protect any trade

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secrets. Defendants’ reply brief offers no rebuttal on this point.

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Defendants offered Mr. Zhang’s declaration in support of their Motion For

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Summary Judgment Re Trade Secret Misappropriation (ECF No. 196 at p. 7), and

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this court was aware from its own review of the record that there was a June 12,

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2007 Processing Agreement which amended the March 7, 2005 Processing

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Agreement. The June 12, 2007 Processing Agreement was included as part of the

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record in Ex. BR to ECF No. 208 (ECF No. 317 at p. 7, n. 1), but the companion

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June 12, 2007 “Supplementary Technology License Agreement” was not.

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the close of Plaintiffs’ case-in-chief, Defendants will make Fed. R. Civ. P. 50(a)
motions for judgment as a matter of law, including one specifically directed at

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Plaintiffs’ trade secret claim and whether there is enough evidence to allow the

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jury to consider that claim.

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Thus far, the court has no basis for concluding that Plaintiffs have

destroyed or deliberately withheld written building specifications. Therefore, there

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is no basis for presuming that such evidence does not exist now or did not exist at
one time. Burgin v. Universal Credit Co., 2 Wn. 2d 364, 384, 98 P.2d 291 (1940),

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a very old case that did involve a trade secret claim, is not persuasive. Plaintiffs’
evidence raises a genuine issue of material fact that building specifications exist.
ORDER DENYING MOTION
FOR RECONSIDERATION- 5

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Plaintiffs appropriately made it part of the record when they filed their motion for

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reconsideration so that the court could rule on a complete record.

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III. CONCLUSION

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This court did not commit “clear error” in granting Plaintiffs’ Motion For

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Reconsideration Re Trade Secret Misappropriation and reinstating Plaintiffs’ trade

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secret claim. “Defendants’ Motion For Reconsideration Of This Court’s

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Reconsideration Of Trade Secret Summary Judgment Ruling,” (ECF No. 384), is

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DENIED.

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Because the trade secrets claim has been reinstated, it is necessary to set

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deadlines for filing of amended exhibit and witness lists, objections to newly listed

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exhibits, new designations of deposition testimony, and objections to those

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designations. Amended exhibit and witness lists and new deposition designations

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shall be served and filed no later April 18, 2016. Any new deposition counter-

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designations shall be served and filed no later than April 25, 2016. Objections to

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newly listed exhibits shall be served and filed no later than May 2, 2016.

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Objections to new deposition designations and new counter-designations shall be

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served and filed no later than May 9, 2016. An amended joint proposed pre-trial

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order shall be served and filed no later than May 16, 2016. Copies of newly listed

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exhibits not previously provided to the court, shall be provided no later than May

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16, 2016.

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IT IS SO ORDERED. The District Executive is directed to forward copies
of this order to counsel of record.
DATED this 21st of March, 2016.

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s/Lonny R. Suko

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LONNY R. SUKO
SENIOR UNITED STATES DISTRICT JUDGE

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ORDER DENYING MOTION
FOR RECONSIDERATION- 6