900 N.W.2d 680
Mich. Ct. App.2017Background
- Planet Bingo (owner) and Melange (developer subsidiary) alleged Video King used Melange’s confidential EPIC software information to develop competing OMNI software, breaching a 2005 agreement with a broad confidentiality clause.
- Video King filed a declaratory-judgment action in Nebraska; Planet Bingo refiled in Michigan state court after a dismissed federal action. The Nebraska action was later revived on appeal and remains pending.
- The Michigan circuit court issued reciprocal preliminary injunctive relief, engaged in contentious discovery, and limited discovery temporally (initially to post-2005, later to post-Jan 28, 2005).
- Video King amended counterclaims (breach of contract; tortious interference/injurious falsehood) and sought summary disposition under MCR 2.116(C)(6) asserting a pending Nebraska action involving the same parties/claims.
- The circuit court dismissed most claims sua sponte under MCR 2.116(C)(6), left only Video King’s wrongful-injunction claim, then dismissed that claim on summary disposition; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MUTSA preempts plaintiffs’ common-law unfair competition claim | Plaintiffs argued their unfair-competition claim included non-trade-secret theories (product confusion and misrepresentation) and thus was not wholly displaced by MUTSA | Video King argued the unfair-competition claim was based on misappropriation of confidential information (trade secrets) and therefore preempted by MUTSA | Court: MUTSA displaces only claims based on misappropriation of trade secrets; plaintiffs’ allegations of product confusion and false representation survive—circuit court erred in wholly preempting the unfair-competition claim |
| Whether MCR 2.116(C)(6) dismissal was proper because of the pending Nebraska action | Plaintiffs argued dismissal under (C)(6) here was unfair/inconvenient and the rule should be applied flexibly | Video King argued the Nebraska action involved the same parties and claims, so (C)(6) dismissal was appropriate to avoid duplicative litigation | Court: (C)(6) can apply when a foreign action involving same parties/claims is pending; but remanded for factfinding about which specific claims in Nebraska correspond and whether dismissal or stay is appropriate (vacated the circuit court’s order as entered) |
| Whether the circuit court abused discretion in limiting temporal scope of discovery (pre-Jan 28, 2005) | Plaintiffs argued pre-2005 materials were relevant because the 2005 agreement’s confidentiality clause covered information received "at any time," and pre-2005 materials could show prior possession or origin of information | Video King argued discovery prior to VKGS’s Jan 28, 2005 acquisition was irrelevant and unduly burdensome | Court: Circuit court abused its discretion by imposing a hard cutoff at Jan 28, 2005; permitted reasonable pre-Jan 28, 2005 discovery relevant to remaining breach claims, subject to protective orders |
| Proper remedy where foreign action’s continuation is uncertain | Plaintiffs argued the Michigan action should proceed; dismissal would prejudice them if Nebraska didn’t resolve all claims | Video King argued dismissal without prejudice was acceptable given identical pending Nebraska action | Court: If uncertainty exists about the foreign action continuing, the Michigan court should stay proceedings or dismiss without prejudice; directed circuit court to make findings and consider stay or dismissal without prejudice as appropriate |
Key Cases Cited
- Wold Architects and Engineers v Strat, 474 Mich 223 (court admonition that Legislature must speak clearly to abrogate common law)
- Hoerstman Gen Contracting, Inc v Hahn, 474 Mich 66 (statutory abrogation of common law requires clear legislative intent)
- Valeo Switches & Detection Sys, Inc v Emcom, Inc, 272 Mich App 309 (foreign pending action can support dismissal under MCR 2.116(C)(6); consider dismissal without prejudice)
- Fast Air, Inc v Knight, 235 Mich App 541 (MCR 2.116(C)(6) requires another action between same parties/claims pending; stay may be appropriate if continuation is uncertain)
- Velez v Tuma, 492 Mich 1 (principle that courts will not lightly presume legislative abrogation of common law)
- Quinto v Cross & Peters Co, 451 Mich 358 (standard for appellate review of summary disposition based on record at time of ruling)