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BTS, USA, Inc. v. Executive Perspectives, LLC

Court of Appeals of Connecticut

June 28, 2016

BTS, USA, INC.
v.
EXECUTIVE PERSPECTIVES, LLC, ET AL.

          Argued March 14 2016

         Appeal from Superior Court, judicial district of Waterbury, Complex Litigation Docket, Dubay, J. [motion to inspect]; Dooley, J. [motions for order, and attorney’s fees, costs; judgment].)

          James T. Baldwin, with whom, on the brief, were Catherine L. Creager and Douglas J. Varga, for the appellant (plaintiff).

          Joseph D. Garrison, with whom were Joshua R. Goodbaum and, on the brief, Robert A. Richardson, for the appellees (defendants).

          DiPentima, C. J., and Sheldon and Mullins, Js.

          OPINION

          SHELDON, J.

         The plaintiff, BTS, USA, Inc., appeals from the judgment of the trial court rendered in favor of the defendants, Executive Perspectives, LLC (EP), and Marshall Bergmann, on its claims against them for violation of the Connecticut Uniform Trade Secrets Act (CUTSA); General Statutes § 35-50 et seq.; and the Connecticut Unfair Trade Practices Act; General Statutes § 42-110a et seq.; and tortious interference with the plaintiff’s business relationships, and on its claim against Bergmann for breach of his employment contract with the plaintiff and against EP for tortious interference with that employment contract. On appeal, the plaintiff claims that the court abused its discretion by (1) precluding it from inspecting an adequate sampling of EP’s products; (2) determining that the name and identity of the plaintiff’s vendor was not a trade secret; (3) denying its request for injunctive relief; (4) finding that it had maintained its CUTSA claims in bad faith; and (5) awarding attorney’s fees to EP without distinguishing the fees associated with its colorable claims from the claims found to have been made in bad faith. We affirm the judgment of the trial court.

         The following facts, as found by the trial court, [1] are relevant to this appeal. ‘‘[The plaintiff] is part of a Swedish based international corporation which designs and markets training simulations, experiential educational exercises and related products to business and industry. The products include business simulations designed to educate and train client employees, whether upper management, middle management or front office workers. There are essentially three types of product[s]: learning maps, computer simulations, and board games. The products can be sold ‘as is’ or they can be customized to varying degrees. As needed, a simulation can be designed almost from scratch to suit the specific model or needs of the client. The president of [the plaintiff] is Jonas Akerman.

         ‘‘EPis a direct competitor of [the plaintiff]. EP designs and sells the same types of product to the same types of clients, with the exception of learning maps. EP does not have any learning map type products in its inventory. It does however have both computer simulations and board game products. EP can also sell product ‘as is’ or can customize the product to whatever extent is necessary to meet the needs of the client. Although a direct competitor of [the plaintiff], EP is much smaller than [the plaintiff]. The president of EP is John Wells.

         ‘‘EP has been in business since 1983. EP has changed names and has changed hands a few times over the years but in 2004, John Wells and John Thomas (both cofounders of the company in 1983) reacquired the business and all of its assets. The court credits the testimony of Wells that throughout its existence, EP’s simulation technology has gone largely unchanged and relies in large measure on the original technology acquired in 1983. Although it has expanded with time, the inventory of products has been unchanged, for the most part, since approximately 2009. EP has always had the ability and the manpower to customize its simulations. EP has had board game simulations in its inventory for many years. EP has not created any new products or simulations since approximately 2009.

         ‘‘The court further finds, crediting the testimony of Wells and the documentary evidence offered by the defendants, that as of the filing of this lawsuit, most of this information was known to [the plaintiff]. In 2008, [the plaintiff] considered acquiring EP. As a result, subject to a confidentiality and nondisclosure agreement, [the plaintiff]’s financial advisors and [the plaintiff] were given access to much of EP’s proprietary information. EP disclosed details of its corporate structure; personnel; sales history; client information; capabilities; liabilities and other information pertinent to a determination as to whether it was a good prospect for acquisition. During this time, Wells and Akerman had discussions about EP’s capabilities to include the scope and range of its customization ability. Ultimately, [the plaintiff] determined not to proceed.[2]

         ‘‘Marshall Bergmann was employed by [the plaintiff] from 2005 until mid-June, 2010. He was a senior director at the time he left. As such, he had access to much of[the plaintiff]’s proprietary information and was involved in many of the proprietary processes, i.e., product pricing . . . [of the plaintiff]. When Bergmann began work . . . [for the plaintiff], he signed an employment contract which contained a number of restrictions, to include a noncompete clause upon his departure. Material to the plaintiff’s claim that the contract was breached by Bergmann and/or interfered with by EP are the following provisions:

         ‘‘ ‘2.1 Employee shall not for a period of two (2) years immediately following the end of the Employee’s active duties with Employer, either directly or indirectly, either for himself or for any other person, company or other business entity:

         ‘‘ ‘a. Make known or otherwise make available to any person, company, and/or other business entity the names and addresses of any clients (whether the corporate entity or the individuals employed by such corporate entity) of Employer or any other information pertaining to them;

         ‘‘ ‘b. Call on, solicit, or take away, or attempt to call on, solicit, or take away or communicate in any manner whatsoever, with any of the clients of Employer;

         ‘‘ ‘c. Call on, solicit, or take away, or attempt to call on, solicit, or take away or communicate in any manner whatsoever, with any of the clients of Employer on behalf of any business which directly competes with employer.

         ‘‘ ‘2.2 For the purposes of this Agreement, clients shall be defined as any person, company or other business entity whom the Employer has performed work or services for, solicited business and/or collected monies from, with the twelve month period immediately preceding the end of the Employee’s active duties with the Employer.’

         ‘‘While [working for the plaintiff], Bergmann was involved in an effort to do business with the Royal Bank of Canada (RBC). Ultimately, RBC decided not to do business with [the plaintiff] and decided to give the business to a Canadian business school. RBC turned down [the plaintiff]’s offer in June, 2010. Prior to 2010, RBC was not a client of [the plaintiff]. [The plaintiff] had not previously done any business with RBC.

         ‘‘Also in June, 2010, Bergmann accepted a job offer from EP to work in its New York office. He gave two weeks’ notice to [the plaintiff]. He did not tell [the plaintiff] that he was going to work for a competitor. Bergmann testified that he did not take any contact lists, client lists, vendor lists or other . . . . information with him when he left. This testimony is credited. Further, Wells testified that Bergmann did not share [the plaintiff’s] client lists, client information, technology, product information, pricing strategies or other proprietary information. Nor did EP solicit any such information from Bergmann upon his arrival or at any time thereafter. This court finds Wells’ testimony credible.

         ‘‘Shortly after he began work at EP, Bergmann posted his new job to his LinkedIn account. Those to whom he was ‘linked’ on this social media could have received a notification of this posting. Whether a ‘linked’ individual received notice of the posting or not would depend on the particular settings selected by that person. One of the tasks given Bergmann when he joined EP was to improve and revamp the EP website, which he did. Upon completion he posted an invitation to ‘check out’ the new website via his LinkedIn account. Some of the individuals to whom Bergmann was ‘linked’ were clients and contacts he had developed while [working for the plaintiff]. He did not ‘unlink’ these people when he left [the plaintiff’s employ]. He was not asked to do so. He never had any discussions with anyone at BTS about his LinkedIn account. In fact, many people [employed by the plaintiff] have similar LinkedIn accounts and are still linked to Bergmann.

         ‘‘Shortly after he began work at EP, Bergmann contacted Liz Carreiro and Jan Wilmott, both of whom workedat RBC. Carreiro and Wilmott were the contacts at RBC Bergmann dealt with when trying to sell the [plaintiff’s] product/project shortly before his departure from [its employ]. He had known Jan Wilmott for years, to include a time when Wilmott did not work at RBC. In his correspondence, Bergmann advised RBC that he had taken a new job with EP and he attempted to meet with and discuss EP’s capabilities for possible business in the future. The correspondence was clearly designed to get business with RBC for EP, something readily acknowledged by Bergmann in his testimony. The correspondence also included some comparisons between EP and [the plaintiff], which were unfavorable to [the plaintiff] as well as some arguably disparaging comments about [the plaintiff]. The communications did not contain any proprietary information belonging to [the plaintff] and did not make reference to any such information. Ultimately, RBC did not do any business with EP. In fact, to date, RBC has done no business with EP. Bergmann’s last correspondence or contact with RBC occurred in November, 2010.

         ‘‘Conversely, after Bergmann left [the plaintiff’s employ], Akerman maintained regular contact with RBC. [The plaintiff] continued in discussions with RBC and in 2013, sold RBC an education/training product. During that process, [the plaintiff] initially quoted a particular price to RBC. RBC responded that the price was too high. As a result, [the plaintiff] developed different options by which RBC could obtain the same result or objective but which would beless costly. The product was scaled back in some respects in order to achieve these cost savings. Ultimately, RBC chose one of the options developed by [the plaintiff]. This option was $73, 000 less expensive than the originally quoted product proposal. [The plaintiff] provided the work/product to RBC and to this day enjoys a good business relationship with RBC. . . .

         ‘‘While at EP, within two years of his arrival, Bergmann was assigned to work in the field at Hewlett Packard (HP). He did not solicit HP and did not have any role in securing the business of HP. He was merely assigned to help deliver the product. HP was a client of [the plaintiff] as well, though Bergmann never did any work for HP while he was [employed by the plaintiff]. HP remains a client of [the plaintiff], and there was no evidence that Bergmann’s work on the HP project included the use of any [of the plaintiff’s] proprietary or confidential information. Nor was there evidence offered that Bergmann’s work on the HP project had any adverse impact on [the plaintiff] or its relationship with HP.

         ‘‘Richard Kelly is one of EP’s independent contractors in Australia. He is also a former employee of BTS, Australia, Inc. Kelly left BTS Australia in February, 2009. After he left BTS Australia, he went to work for a firm called AJ Lucas. While at AJ Lucas, he had discussions with BTS Australia about BTS Australia providing a product/training exercise to AJ Lucas. In connection with those discussions, BTS Australia gave Kelly a ‘participant kit’ for one of its learning map products called ‘Conductor.’ The kit was contained within a cardboard box, which was designed to look like a large envelope. It also bore artwork specific to the Conductor game. Kelly, individually or on behalf of AJ Lucas, was not asked to enter into a confidentiality agreement with respect to the participant kit. He was not advised that either the box or its contents were proprietary or that they were not to be shared with anyone else. Although AJ Lucas ultimately determined not to do business with BTS Australia, no one at BTS Australia asked Kelly to return the participants kit or the box in which it was housed. In sum, the box and the kit were given away by BTS [Australia] to AJ Lucas as a potential client without any restrictions. When Kelly left his employment with AJ Lucas, he took the box and the participant kit home.

         ‘‘In 2010, Kelly contacted EP about possible employment opportunities. He was hired as an independent contractor for marketing and sales of EP’s inventory of products in Australia. Also in 2010, EP was thinking about changing its packaging for one of its board game products, ‘Takeoff, ’ and perhaps ‘Wild Fire, ’ as well. During a discussion on this issue, Kelly advised EP that the box used by [the plaintiff] might be of interest. Thereafter, he took a photograph of the outside of the ‘Conductor’ box he had received when he was at AJ Lucas and sent the photographs to EP. EP then did a mock-up of its own art work for a similar style box. Bergmann advised EP that Ironwood Lithographers was the vendor that [the plaintiff] used for its packaging. He gave Kelly Snider, at EP, the name of Jay Topczewski as a point of contact at Ironwood and told her to mention his name as the reference. [The plaintiff’s] employees, to include Bergmann, were never told that vendor names are proprietary and not to be shared. Bergmann’s employment contract, which contained a lengthy description of information deemed ‘confidential, ’ did not include the names of vendors as subject to its nondisclosure provisions.

         ‘‘Snider contacted Topczewski by e-mail to inquire about a quote for packaging. She sent the EP mock-up as well as the photographs of the ‘Conductor’ participant kit box. Topczewski did not believe that he could or should be using the [the plaintiff’s] packaging as a base design for EP. He declined to do business with EP and advised [the plaintiff] of his interactions with EP.

         ‘‘All of the events which purport to comprise the tortious conduct complained of occurred in the latter six months of 2010. And notwithstanding these events, [the plaintiff] continues to enjoy an excellent and ongoing business relationship with Ironwood; RBC changed from being a prospective client of [the plaintiff] to an actual client; RBC and [the plaintiff] enjoy an ongoing business relationship; RBC never gave any business to EP; EP has done no business with Ironwood; EP never changed its ‘Take Off’ or ‘Wildfire’ packaging.’’[3] (Footnotes altered.)

         On the basis of these factual findings, the court concluded: ‘‘With these facts found, it is manifest that the plaintiff’s evidence is so lacking that the determination that the plaintiff has failed in its burden of proof is completely unremarkable.’’[4] (Footnote altered.) The court further found that the ‘‘[p]laintiff’s theory of damages is factually and legally unfounded.’’ The court thus rendered judgment in favor of the defendants on all five counts of the plaintiff’s complaint. The court also found that the plaintiff’s CUTSA claim, although ‘‘colorable at the outset, portions of it became objectively specious shortly into the discovery process, ’’ and thus that the plaintiff’s insistence in maintaining certain of those claims was motivated by improper purposes. ...


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