United States District Court, D. Connecticut
RULING ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
VICTOR A. BOLDEN, UNITED STATES DISTRICT JUDGE.
This action arises out of a dispute between an investment firm and its former employee. Plaintiff, Tourmaline Partners, LLC (“Tourmaline”), asserts six claims against Defendant, Nicola Monaco (“Monaco”): (1) violation of the Connecticut Uniform Trade Secrets Act, Conn. Gen. Stat. §§ 35-50, et seq. (“CUTSA”); (2) violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. §§ 42-110a, et seq. (“CUTPA”); (3) breach of common law fiduciary duty and duty of loyalty; (4) breach of contract; (5) replevin; and (6) conversion. Monaco moves under Federal Rule of Civil Procedure 56 for summary judgment as to all counts. For the following reasons, the motion is DENIED.
II. UNDISPUTED FACTS
Tourmaline is a Connecticut limited liability company with a principal place of business in Stamford, Connecticut. L.R. 56(a) Stmts. ¶ 1. On January 18, 2011, Tourmaline hired Monaco as an at-will employee. Id. ¶¶ 3, 10. Tourmaline hired Monaco because it wanted to expand its operations into the Canadian Stock Exchange, and Monaco was a Canadian citizen who had Canadian clients, some of which he brought to Tourmaline. Id. ¶¶ 6, 11, 12. Monaco became Tourmaline’s Director of Canadian Trading and Business Development. Id. ¶ 14. Tourmaline secured an H1-B visa for Monaco at its expense. Id. ¶¶ 8-9.
On January 15, 2011, Tourmaline and Monaco entered into a Restrictive Covenant Agreement (the “First Agreement”). Id. ¶ 16. On July 11, 2011, Tourmaline and Monaco entered into an Employee Secrecy, Non-competition and Non-solicitation Agreement (the “Second Agreement”). Id. ¶ 19.
In July 2012, Tourmaline allowed Monaco to relocate to California and work out of a home office there. Id. ¶¶ 4, 23. Tourmaline purchased telephone and computer equipment for Monaco’s home office. See Id. ¶ 22, 26. Monaco purchased a cell phone and Tourmaline reimbursed him for it. Id. ¶ 21.
On Friday, December 14, 2012, at approximately 4:05 p.m., Monaco resigned by e-mail. Am. Compl. ¶ 3; Answer ¶ 3. When he resigned, Monaco was servicing fifteen clients, thirteen of which were Canadian. L.R. 56(a) Stmts. ¶ 32. Since Monaco’s resignation, Tourmaline has done no business with, and received no revenue from, those clients. Hantman Aff. ¶ 39.
On, Monday, December 17, 2012, the next business day after he resigned, Monaco began working for Greenwich Prime, a firm located in Stamford, Connecticut that offers trading services for the asset management industry. L.R. 56(a) Stmts. ¶¶ 35, 38. Tourmaline’s principals had a prior business relationship with Greenwich Prime. Id. ¶ 38.
III. PROCEDURAL BACKGROUND
In September 2013, during the discovery period in this case, Monaco’s counsel withdrew and Monaco filed a pro se appearance. On December 24, 2013, Tourmaline filed a motion to compel following Monaco’s failure to respond to Tourmaline’s interrogatories and requests for production. ECF No. 45. The Court granted the Motion to Compel absent objection on January 15, 2014. ECF No. 46. Monaco failed to comply with the Court’s order compelling discovery. Tourmaline moved for sanctions. ECF No. 47. The Court held oral argument and entered a scheduling order for Monaco to provide all outstanding discovery responses. Monaco provided responses on or about April 17, 2014. He objected to ten of the twenty-five interrogatories, well beyond the appropriate time to file objections, and contended that he could not recall information requested. He objected to eleven of the twelve document requests and produced no documents.
On September 23, 2014, the Court ruled on Tourmaline’s motion for sanctions. The Court declined to enter a default judgment against Monaco and dismiss the case. Instead, the Court awarded attorneys’ fees and costs to Tourmaline, and ruled that “defendant is limited to the discovery responses provided, any objections to plaintiff’s discovery requests are waived, and defendant is precluded from offering a defense based on any discovery materials that have not been provided to date.” ECF No. 95 at 18. The Court did not reopen discovery, which had closed on January 3, 2014. Id. at 12, 18.
A. Count One: Violation of CUTSA
CUTSA prohibits misappropriation of trade secrets. “Misappropriation” means:
(1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (2) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was (i) derived from or through a person who had utilized improper means to acquire it; (ii) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use . . .; or (iii) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
Conn. Gen. Stat. § 35-51(b).
The Court will deny summary judgment as to this claim because Tourmaline has raised a genuine dispute as to whether (1) information allegedly acquired by Monaco constituted trade secrets, and (2) Monaco disclosed or used Tourmaline’s trade secrets and, at the time of the alleged disclosure or use, 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, or derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use.
1. Trade Secrets
Tourmaline has raised a genuine dispute as to whether information Monaco allegedly acquired constituted trade secrets. “Trade secret” means:
information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (1) 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 (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Conn. Gen. Stat. § 35-51(d).
Whether information constitutes a trade secret is a question of fact. Elm City Cheese Co. v. Federico, 251 Conn. 59, 68 (1999) (“The question of whether information sought to be protected by the trade secrets act rises to the level of a trade secret is one of fact for the trial court.”) (internal quotation marks and citation omitted); Charter Oak Lending Grp., LLC v. August, 127 Conn.App. 428, 455-56 n.8 (2011) (“The question of whether information sought to be protected by CUTSA rises to the level of a trade secret is a question of fact.”).
Tourmaline principal Aaron Hantman testified that, during his time at Tourmaline, Monaco “was given unfettered access to Plaintiff’s business plans and competitive strategies, as well as detailed information concerning its client base, including the identities and contact information for those clients that had insisted that their trading activities remain anonymous.” Hantman Aff. ¶ 13. He testified that Monaco “acquired proprietary and confidential information concerning Plaintiff’s business relationships, including client identities and investment preferences and practices, client contact information, client portfolio content revealing such things as risk appetite, commission production, vendor rates and trade history.” Id. ¶ 14. Finally, Tourmaline sent Monaco an interrogatory seeking all information related to Tourmaline’s business to which Monaco had access, including client portfolio content, client investment preferences, trading history, business plans, strategies, and processes. Pl.’s First Set of Interrogs. and Reqs. for Prod. of Docs. at 10-11. Monaco refused to respond to that interrogatory and others, leading to sanctions. As discussed infra, an adverse inference may appropriately be drawn from Monaco’s failure to respond to Tourmaline’s discovery requests.
As to whether the above-discussed information derives economic value from being secret, Mr. Hantman testified that Tourmaline “offers and strives to ensure complete confidentiality for all of its clients and, where requested, absolute anonymity for certain of its clients. Clients are offered the freedom to trade with anonymity, a circumstance that is integral to [Tourmaline]’s business model and essential to its financial success.” Hantman Aff. ¶ 5. He testified that “[t]he continued confidentiality of [Tourmaline]’s client confidentiality of [Tourmaline]’s client relationships is extremely valuable and vital to [Tourmaline] and [Monaco], armed with such knowledge, had the ability to utilize this information to benefit others and himself and inflict harm on [Tourmaline].” Id. ¶ 15.
As to reasonable efforts to maintain secrecy, Mr. Hantman testified that the information that Monaco allegedly acquired “is not commonly known and cannot be found by the public in the open marketplace.” Id. ¶ 14. He elaborated that Tourmaline “takes reasonable precautions to protect its confidential, proprietary and trade secret information, its customer database, and its resulting goodwill[, ]” including requiring employees to maintain client confidentiality, maintaining secure facilities, limiting access to its premises, and password protecting electronic equipment and systems. Id. ¶¶ 18-19. Moreover, Tourmaline submitted two agreements prohibiting Monaco from using or disclosing its confidential information. ECF No. 100-6.
Construing Mr. Hantman’s testimony and the other evidence in the light most favorable to Tourmaline, and drawing all reasonable inferences in Tourmaline’s favor, a reasonable jury could find that information that Monaco allegedly acquired constituted trade secrets. See Saye v. Old Hill Partners, Inc., 478 F.Supp.2d 248, 274-75 (D. Conn. 2007) (genuine dispute existed as to whether investment firm’s business formula, which included investment and trading strategy, investor lists, portfolio contents, financing methods, identities of broker-dealers from whom particular fixed-income securities could be purchased, marketing methods, and back-office operations, constituted a trade secret under CUTSA, precluding summary judgment in favor of former employee); Smi ...