Purchasing Power, LLC v. Bluestem Brands, Inc.
22 F. Supp. 3d 1305
N.D. Ga.2014Background
- Purchasing Power (PPL) markets a voluntary payroll-deduction program to employers allowing employees to buy "big ticket" items and pay via paycheck deductions. Bluestem explored a similar model after learning of PPL and entered an NDA while considering acquisition.
- Bluestem ran two internal projects: Project Braves (due diligence on PPL in connection with a possible acquisition) and Project Cortes (an independent effort to develop a payroll-deduction product). The teams were allegedly separated after the NDA.
- PPL disclosed confidential business information during due diligence and later alleged Bluestem used that information to build "PayCheck Direct," launched in beta in Nov. 2011 and marketed externally in May 2012.
- PPL sued Bluestem under Georgia law for trade secret misappropriation (GTSA), breach of the NDA (Sections 4 and 6), fraud (affirmative and omission), negligent misrepresentation, and later (improperly added) tortious-interference claims.
- At summary judgment, the court found PPL failed to specifically identify the asserted trade secrets, relied on only generalized/circumstantial similarities between programs, and Bluestem presented direct evidence of independent development; the court granted summary judgment for Bluestem on all substantive claims and dismissed the untimely tortious-interference counts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Trade secret misappropriation (GTSA) — existence | PPL: disclosed specific confidential business processes and datasets (marketing, underwriting, broker strategy, etc.) that qualify as trade secrets. | Bluestem: PPL only identified broad categories, not particularized secrets; some information was public or shared; Bluestem developed product independently. | Court: PPL failed to identify specific trade secrets; summary judgment for Bluestem. |
| Trade secret misappropriation — misuse/use | PPL: circumstantial similarity of PayCheck Direct to Purchasing Power shows misuse. | Bluestem: employees testified they did not use PPL information; documented, independent Project Cortes development. | Court: Direct nonuse evidence plus permissible differences defeats circumstantial claim; summary judgment for Bluestem. |
| NDA §4 (prohibition on use of confidential info) | PPL: Bluestem used disclosed confidential info to build PayCheck Direct. | Bluestem: no evidence of use; independent development. | Court: Same analysis as trade-secrets — insufficient evidence of use; summary judgment for Bluestem. |
| NDA §6 (inspection right) — damages | PPL: Bluestem denied inspection; claimed attorneys' fees and costs as damages. | Bluestem: PPL produced no proof of actual damages; NDA governed by Minnesota law requiring damages proof and NDA contains no fee provision. | Court: PPL offered no admissible evidence of damages and cannot recover attorneys' fees absent contract term; summary judgment for Bluestem. |
| Fraud / negligent misrepresentation (affirmative) | PPL: Bluestem executives said they had never considered a payroll-deduction product, implying concealment or falsity. | Bluestem: statements were literally true as to executives’ prior beliefs; no evidence they were false. | Court: Statements not shown to be false or fraudulent; summary judgment for Bluestem. |
| Fraudulent omission | PPL: Bluestem failed to disclose Project Cortes during due diligence. | Bluestem: no duty to disclose; negotiations were arm’s-length and NDA acknowledged parties were competitors. | Court: No confidential/joint-venture relationship or other duty to disclose; summary judgment for Bluestem. |
| Tortious interference (new counts) | PPL: added causes of action in amended complaint. | Bluestem: amendment was untimely and required consent/leave. | Court: Counts VI and VII dismissed for failure to obtain leave; summary judgment motion as to them denied as moot. |
Key Cases Cited
- Capital Asset Research Corp. v. Finnegan, 160 F.3d 683 (11th Cir.) (elements of trade-secret misappropriation)
- Camp Creek Hospitality Inns, Inc. v. Sheraton Franchise Corp., 139 F.3d 1396 (11th Cir.) (trade-secret question of fact; definition guidance)
- Penalty Kick Management Ltd. v. Coca-Cola Co., 318 F.3d 1284 (11th Cir.) (circumstantial-similarity vs. direct nonuse evidence; burden and misuse analysis)
- Optimum Technologies, Inc. v. Henkel Consumer Adhesives, Inc., 496 F.3d 1231 (11th Cir.) (affirmative-misrepresentation must be false; literal truth defense)
- Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S.) (summary judgment standard; circumstantial evidence and reasonable-inference limits)