William M. Bishop and Pinnacle Potash International, Ltd v. E. Barger Miller, III and Reunion Potash Company
412 S.W.3d 758
Tex. App.2013Background
- Ten Mile Area in southeastern Utah contains significant potash deposits; rights originally leased from the BLM by Buttes Resources in 1984.
- Bishop learned of Ten Mile around 1989 during PB-KBB’s evaluation; he reviewed Reunion/Buttes files and Gruschow report, forming a plan for selective solution mining using high ground temperatures.
- Bishop left PB-KBB, obtained rights to his mining process, and partnered with Miller; they sought investors and executed confidentiality agreements; Miller solicited investors and Bishop shared plan details.
- Miller later formed Carnallite Enterprises, acquired Reunion (and its Ten Mile leases) with financing, and Miller became Reunion’s president while continuing to pursue the project, including with BHP and Allied.
- Bishop/Pinnacle sued for fraud, breach, and misappropriation of trade secrets; Reunion counterclaimed for misappropriation; Miller’s conduct spanned before and after Reunion’s purchase, with some acts argued to be on Reunion’s behalf.
- Trial produced a 36-question jury charge; verdict found misappropriation by Miller and Reunion, with liability apportioned (Miller 80%, Reunion 20%), and damages of $1,696,428.55; the court awarded Pinnacle substantial sums and costs, and Reunion and Bishop/Pinnacle appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Legal sufficiency of evidence for Reunion misappropriating Bishop's trade secrets | Reunion argues Bishop owned no protectable secrets and no use/damages by Reunion were shown. | Bishop/Pinnacle contends the evidence supported ownership, use, and damages from Reunion. | Evidence supported ownership, use, and damages; holdings affirmed. |
| Validity of the compilation/trade secret findings under Bass factors | Reunion contends items were not individually secret and compilation was not proven. | Bishop/Pinnacle argues the six Bass factors and compilation evidence were adequately shown. | Six Bass factors supported secrecy; compilation findings sustained. |
| Proprtionate responsibility (Question 22) properly submitted | Bishop argues the court erred by submitting apportionment; Miller’s independent conduct not proven. | Reunion contends the submission was proper given Miller’s conduct while acting for Reunion. | Question 22 properly submitted; attribution allowed despite Miller’s agency concerns. |
Key Cases Cited
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (sufficiency review uses zone of reasonable disagreement; not substitute own judgment)
- In re Bass, 113 S.W.3d 735 (Tex. 2003) (six-factor test for determining trade secrets; compilations may protect secret combos)
- Romero v. KPH Consol, Inc., 166 S.W.3d 212 (Tex. 2005) (sufficiency of evidence measured against jury charge; appeal tied to charge)
- University Computing v. Lykes-Youngstown Corp., 504 F.2d 518 (5th Cir. 1974) (reasonableness of royalty damages in trade secrets; factors for calculation)
- Southwestern Energy Prod. Co. v. Berry-Helfand, 411 S.W.3d 581 (Tex. App.-Tyler 2013) (reasonableness of royalty damages; evidence of value and negotiations)