Jenkins v. APS Insurance, LLC
2013 Ark. App. 746
Ark. Ct. App.2013Background
- APS Insurance (APS) hired Pearl Jenkins as a customer-service rep; in June 2008 co-owner David Donley removed files/software and formed Donley & Associates (D&A); Jenkins emailed APS’s client list to Donley and deleted it from APS’s computer, then left to join D&A.
- APS sued Donley, D&A, and Jenkins asserting trade-secret theft, computer-fraud/trespass, conversion, tortious interference, civil conspiracy, and other claims; several claims were later nonsuited or withdrawn.
- After Donley filed bankruptcy, the jury found Jenkins liable and awarded APS actual damages and punitive damages against Jenkins; D&A was also found liable by the jury.
- The trial court later entered injunctive relief, ordered Jenkins to account for transactions and imposed a constructive trust/equitable lien on funds or property Jenkins received from former APS clients.
- Jenkins appealed, arguing (1) APS’s tort claims were preempted by the Arkansas Trade Secrets Act (ATSA), (2) the misappropriated information did not qualify as trade secrets, (3) APS failed to prove damages, and (4) punitive and compensatory damages were excessive.
Issues
| Issue | Plaintiff's Argument (APS) | Defendant's Argument (Jenkins) | Held |
|---|---|---|---|
| Preemption by ATSA of common-law torts | APS: some claims fall outside ATSA preemption (e.g., computer crimes, tortious interference not premised solely on misappropriation) | Jenkins: ATSA preempts APS’s tort claims; summary judgment and directed verdict should have been granted | Court: ATSA preempts claims that merely duplicate misappropriation (e.g., conversion/conspiracy), but claims not based on misappropriation (e.g., certain tortious-interference or computer-crime theories) may proceed; denial of earlier summary-judgment motion not reviewable post-trial |
| Whether taken information qualifies as "trade secrets" | APS: the files were a protected compilation (client data, policies, compensation, rates, insurer relations) | Jenkins: information does not meet ATSA factors to be a trade secret | Court: whether info is a trade secret is a fact question; sufficient evidence that the compilation qualified as information/trade secret; Jenkins failed to preserve some directed-verdict arguments |
| Sufficiency of proof of damages | APS: presented evidence of actual damages and loss traceable to defendants’ actions | Jenkins: APS failed to adequately prove damages | Court: Jenkins waived sufficiency challenge by not renewing a directed-verdict motion after all evidence; appellate review of sufficiency forfeited |
| Punitive damages and excessiveness | APS: punitive damages permissible under non-ATSA tort theories (e.g., tortious interference) | Jenkins: punitive damages unavailable under ATSA and the awards were excessive/passion-driven | Court: punitive damages not recoverable under ATSA but are available on other tort bases; Jenkins waived sufficiency challenge and failed to develop excessiveness argument, so award affirmed |
Key Cases Cited
- ConAgra Foods, Inc. v. Draper, 372 Ark. 361 (2008) (standard of appellate review for directed-verdict/JNOV; substantial-evidence review)
- R.K. Enter., LLC v. Pro-Comp Mgmt., Inc., 356 Ark. 565 (2004) (ATSA preempts tort claims that merely duplicate trade-secret misappropriation)
- Wal-Mart Stores, Inc. v. P.O. Mkt., Inc., 347 Ark. 651 (2002) (distinction between legal and factual questions under ATSA; whether something is "information" is a legal question)
- Advocat, Inc. v. Sauer, 353 Ark. 29 (2003) (preservation rule: to challenge sufficiency on appeal, a directed-verdict motion must be renewed at close of all evidence)
- Allstate Ins. Co. v. Dodson, 2011 Ark. 19 (2011) (punitive damages may be recovered on tortious-interference claims)