North Highland Inc. v. Jefferson Machine & Tool Inc.
898 N.W.2d 741
Wis.2017Background
- North Highland sued former employee Dwain Trewyn, Frederick Wells, Jefferson Machine, and Bay Plastics after confidential competing bids were submitted to Tyson Foods; Jefferson Machine (co-owned by Wells and Trewyn) won the bid but contract was later canceled.
- North Highland alleged (inter alia) misappropriation of trade secrets (the bid amount) and conspiracy/aiding-and-abetting by Wells to induce Trewyn to breach fiduciary duties.
- Depositions from Wells and Trewyn repeatedly stated Wells had no knowledge that Trewyn was submitting North Highland bids (including the Tyson bid) while employed by North Highland.
- The circuit court granted summary judgment dismissing claims against Wells; the court of appeals affirmed, and the Wisconsin Supreme Court granted review.
- The Supreme Court majority affirmed: it held North Highland failed to present sufficient evidence creating genuine issues of material fact on both conspiracy to breach fiduciary duty and trade-secret misappropriation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wells conspired with Trewyn to breach Trewyn's fiduciary duty | Wells and Trewyn worked together at Jefferson Machine, Wells financed and formed the company, and circumstances permit inference Wells knew of and agreed to use North Highland's bid info | Wells had no knowledge Trewyn was bidding for North Highland on the Tyson job; Wells left bidding to Trewyn and denied any agreement to compete improperly | Summary judgment for Wells affirmed — plaintiff produced only speculation and no evidence of an agreement or overt acts by Wells knowingly in furtherance of a conspiracy |
| Whether North Highland's confidential bid constituted a trade secret and was misappropriated | The bid amount is a compilation of cost/pricing data that derives economic value from secrecy and was kept confidential by company policy; circumstantial facts support misappropriation by Wells/Trewyn | Plaintiff cannot show Wells acquired, used, or had reason to know he obtained the bid through improper means; insufficient evidence of disclosure to or use by Wells | Summary judgment for Wells affirmed — court found insufficient evidence of misappropriation by Wells (did not reach whether a bid can be a trade secret in all circumstances) |
| Whether North Highland's settlement/dismissal of Trewyn precludes derivative claims against Wells (claim preclusion) | (Raised below; argued that settling with Trewyn should not extinguish claims against Wells) | Defendants argued derivative/conspiracy claims cannot proceed after dismissal/settlement with the primary tortfeasor | Majority did not reach merits because it disposed of case on sufficiency of evidence; dissent argued claim preclusion did not apply and that material issues remained |
Key Cases Cited
- Lambrecht v. Estate of Kaczmarczyk, 241 Wis. 2d 804 (2001) (standard of review on summary judgment).
- Maleki v. Fine-Lando Clinic, 162 Wis. 2d 73 (1991) (civil conspiracy requires more than suspicion; quantum of evidence needed for reasonable inference).
- Minuteman, Inc. v. Alexander, 147 Wis. 2d 842 (1989) (Wisconsin adopted the Uniform Trade Secrets Act and displaced prior continuous-use common-law test).
- Leske v. Leske, 197 Wis. 2d 92 (1995) (movant must make prima facie showing on summary judgment; discussion of burden-shifting).
- Wisconsin Elec. Power Co. v. Pub. Serv. Comm'n, 106 Wis. 2d 142 (1981) (earlier case discussing continuous-use concept under prior statute).
- Onderdonk v. Lamb, 79 Wis. 2d 241 (1977) (elements of civil conspiracy).