Knight Capital Partners Corp. v. Henkel AG & Co.
930 F.3d 775
6th Cir.2019Background
- KCP (Knight Capital Partners) and Henkel Corporation executed an NDA so KCP could disclose confidential information about a novel cleaning product while exploring a distribution deal.
- The NDA named only KCP and Henkel Corporation as the contracting parties, but permitted Henkel Corporation to share information with its "Affiliates," defined to include Henkel KGaA (the parent company).
- After about a year of information exchange, the NDA lapsed, no distribution agreement was reached, and communications ceased. KCP alleges Henkel KGaA used confidential information to develop the product and circumvent KCP.
- KCP sued Henkel KGaA for breach of the NDA and tortious interference with prospective business relations; Henkel KGaA moved for summary judgment.
- The district court granted summary judgment for Henkel KGaA on both claims, denied KCP’s late motion to amend to add a CUTPA claim, and denied (as moot) KCP’s sanctions motion.
- The Sixth Circuit affirmed summary judgment and denial of the motion to amend, but reversed and remanded the denial-as-moot of the sanctions motion for substantive consideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Henkel KGaA can be sued for breach of the NDA | KCP: Henkel KGaA assented to be bound (representations and internal documents show assent) | Henkel KGaA: not a signatory; NDA contemplates Affiliates as "Receiving Parties" but does not make them contracting parties | Court: Henkel KGaA is not a party to the NDA and cannot be sued for breach; assent evidence showed obligations as a Receiving Party, not contractual party |
| Whether a nonparty can become a contracting party by agreeing to follow terms | KCP: third-party assent/beneficiary principles permit liability when nonparty agrees not to violate contract | Henkel KGaA: Connecticut law requires being named or executing contract; NDA integration and non-assignment clauses preclude such adoption | Court: authority cited by KCP does not support that broad theory; NDA language shows intent that Affiliates be nonparties with limited obligations |
| Whether Henkel KGaA tortiously interfered with KCP’s business expectancy with Henkel Corp. | KCP: Henkel KGaA used confidential info and tried to circumvent KCP, showing improper motive/means | Henkel KGaA: under Michigan law parent cannot tortiously interfere with wholly-owned subsidiary; Henkel KGaA is parent and thus privileged | Court: Henkel KGaA is Henkel Corp.’s parent; parent-subsidiary privilege applies and KCP failed to show wrongful means or improper purpose sufficient to pierce it |
| Whether the district court abused discretion by denying KCP’s late motion to amend | KCP: amendment would add facts developed in discovery; no prejudice | Henkel KGaA: motion filed one day before discovery closed; new claim from different jurisdiction and theory would prejudice defendant | Court: denial affirmed—undue delay and prejudice justified refusal to allow amendment |
Key Cases Cited
- Blackmore v. Kalamazoo County, 390 F.3d 890 (6th Cir. 2004) (summary judgment standard and drawing inferences for nonmoving party)
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct. 1986) (movant’s initial burden in summary judgment and ways to meet it)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Sup. Ct. 1986) (plaintiff must set forth specific facts showing genuine dispute; more than a scintilla)
- FCM Group, Inc. v. Miller, 300 Conn. 774 (Conn. 2011) (only contracting parties are liable for breach)
- Bruno v. Whipple, 54 A.3d 184 (Conn. App. Ct. 2012) (participation in execution does not necessarily create personal contractual liability)
- Boulevard Assocs. v. Sovereign Hotels, Inc., 72 F.3d 1029 (2d Cir. 1995) (parent directing subsidiary’s actions is not wrongful means; extreme misconduct would be needed to pierce privilege)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (Sup. Ct. 1990) (district courts retain jurisdiction over collateral matters such as fee motions after judgment)