Atlantic Medical Specialists, LLC v. Gastroenterology Associates, P.A.
N15C-06-245 CEB
Del. Super. Ct.Apr 20, 2017Background
- AMS (anesthesia practice owned by Dr. Michael Katz) provided anesthesia services to the Endoscopy Center of Delaware (ECD) beginning in May 2012 and contracted with DMMS for billing; DMMS was controlled by physician-members of Gastroenterology Associates (GA).
- GA/Amsurg owned/control interests in the ASC; GA physicians debated bringing anesthesia "in‑house" and obtained financial projections and consulting advice.
- GA replaced AMS by hiring Katz as an employee (employment agreement signed June 2013, effective October 1, 2013) and ECD gave AMS 90‑day termination notice April 2013 to be effective August 1, 2013.
- Plaintiff sued GA, certain GA physicians, DMMS CEO Michele Camponelli, and GA practice manager Thomas Spahr for (1) trade‑secret misappropriation under DUTSA and (2) tortious interference with the AMS/DMMS contract, alleging DMMS disclosed AMS financials to GA.
- On summary judgment, the court held AMS failed to prove trade secrets (Count I) but allowed the tortious‑interference theory based on interference with a contractual confidentiality obligation; individual defendants Camponelli and Spahr obtained summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AMS' profitability data is a trade secret | Profitability, revenue, payer receipts and profit margins were confidential and provided economic value from secrecy | Profitability is not a protectable trade secret; it was readily ascertainable and has no independent value from secrecy | Not a trade secret; summary judgment for defendants on Count I (profitability) |
| Whether AMS' reimbursement rates are trade secrets | Specific negotiated "par" rates with insurers are confidential and were misappropriated | Although rates are negotiated, the specific rates here lacked the necessary secrecy and insurer is party to the rate; outsiders can approximate rates | Not a trade secret under DUTSA; plaintiff failed to show required elements |
| Whether AMS undertook reasonable efforts to maintain secrecy | AMS points to the AMS/DMMS confidentiality clause and contractual protections | AMS used DMMS (a party controlled by GA physicians), placed billing staff in shared offices, and failed to police or restrict disclosures—so efforts were not reasonable | AMS failed the secrecy‑protection element; supports dismissal of trade‑secret claim |
| Whether DUTSA preempts common‑law claims and whether tortious interference survives | AMS: its tortious‑interference claim is distinct from DUTSA and may proceed because disclosure breached DMMS' contractual confidentiality | Defendants: section 7 displaces state law claims based on misappropriation, preempting tort claims grounded on non‑trade‑secret confidential info | Court follows Delaware precedent (majority view): DUTSA displaces misappropriation‑based tort claims generally, but tortious interference based on breach of a contractual confidentiality obligation survives as an exception to displacement |
| Individual defendants' liability (Camponelli, Spahr) | They personally caused or participated in obtaining and sharing AMS financials | They acted under physician directions, believed Katz consented via employment, lacked improper motive or specific knowledge of confidentiality clause details | Summary judgment for Camponelli and Spahr: their conduct not "improper" under Restatement factors; no triable claim against them |
Key Cases Cited
- Erie R. Co. v. Tompkins, 304 U.S. 64 (establishes federal courts must apply state common law in diversity cases)
- Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (preemption theme re: federal patent law and state unfair competition law)
- Compco Corp. v. Day‑Bright Lighting, Inc., 376 U.S. 234 (related preemption principles)
- Savor, Inc. v. FMR Corp., 812 A.2d 894 (Del. 2002) (Delaware Supreme Court: UTSA displacement bars common‑law claims seeking remedies based solely on alleged trade‑secret misappropriation)
- ASDI, Inc. v. Beard Research, Inc., 11 A.3d 749 (Del. 2010) (recognizes fiduciary‑duty claims may survive separate analysis from DUTSA in some contexts)
- Leucadia, Inc. v. Applied Extrusion Techs., Inc., 755 F. Supp. 635 (D. Del. 1991) (court dismissed collateral tort claims that arose from same facts as trade‑secret claim)