CAPITAL ASSET RESEARCH CORPORATION, Plaintiff-Counter-Defendant-Appellee, v. Roger FINNEGAN, Breen Capital Holdings, Inc., Defendants-Counter-Claimants-Appellants.
No. 97-9285.
United States Court of Appeals, Eleventh Circuit.
Nov. 13, 1998.
160 F.3d 683
When I reviewed ATI‘s business record ... I was “floored.” After reviewing these records it was apparent that the endorsements were not criminally made. To the extent that the records were produced, they completely exonerated the Strengths. None of the records produced indicated any criminal activity, but completely accounted for the money to which they related. I felt at the time and still feel that our office had been used and that we had been duped into indicting the Strengths.
Strength, 854 F.2d at 423. In finding that the Strengths could state a claim for conspiracy to violate their constitutional rights, this circuit recognized that persons have a right to be free from capricious prosecution, i.e., those prosecutions procured through false and misleading information that would cause a prosecutor to believe probable cause existed. Strength, 854 F.2d at 425. Therefore, we conclude that it was clearly established in the Eleventh Circuit that a conspiracy to violate the constitutional rights of another such as using false and misleading information to cause a malicious prosecution is actionable under
In order for a
CONCLUSION
For the foregoing reasons, we affirm the district court‘s denial of summary judgment in this case.
AFFIRMED.
William C. Collins, Jr., David Brenskelle, Brenskelle & Perry, Lawrenceville, GA, for Roger Finnegan.
Dan Douglass, Brendan J. McCarthy, Atlanta, GA, for Defendants-Counter-Claimants-Appellants.
S. Paul Smith, Bruce P. Brown, Atlanta, GA, for Capital Asset.
Before ANDERSON and BARKETT, Circuit Judges, and HILL, Senior Circuit Judge.
BARKETT, Circuit Judge:
Roger Finnegan and Breen Capital Holdings Corp. (“Breen“) appeal an adverse judgment entered after a bench trial holding that they violated the
CARC, a Florida corporation, and Breen, a New Jersey corporation, are sizeable institutional players in the business of purchasing tax liens from state and local governments. CARC‘s business in Georgia consists primarily of purchasing tax executions (or liens) and tax deeds on real properties for which property taxes are owed. CARC acquires a tax lien on the property by paying the delinquent taxes. If the property owner subsequently fails to satisfy the lien, and foreclosure proceedings take place, CARC bids on the deed to the property itself at public auction. Both CARC and Breen look to generate capital and profit by acquiring properties at bargain rates.
In September 1994, CARC hired Finnegan to establish CARC‘s business in the State of Georgia, particularly to negotiate bulk contract purchases of tax liens on behalf of CARC and to facilitate the acquisition of tax deeds. Through his own company, T.D. Investments (“TDI“), Finnegan helped negotiate a contract with Fulton County, Georgia, for CARC‘s bulk purchase of delinquent tax executions for the tax years 1988 through 1993.
After Finnegan‘s employment relationship with CARC began to deteriorate in 1995, Finnegan met with Douglas Breen on several occasions during the latter half of that year to discuss the possibility of employment with Breen. Finnegan ultimately signed on as an employee of Breen in January 1996. Despite this change in employment, TDI remained under contract with CARC until March 1996 in order to administer the foreclosure process on the Fulton County tax executions which CARC had already purchased with Finnegan‘s assistance. Finnegan therefore remained involved in CARC‘s day-to-day operations in Georgia until this time.
In February 1996, CARC filed this diversity action in federal district court against Finnegan,1 alleging breach of contract and both actual and threatened violation of the
After a bench trial, the district court found against CARC on its allegations of breach of the non-compete clauses of its contract with Finnegan, but concluded that Finnegan had misappropriated a computer diskette from CARC containing information which constituted a trade secret under the Act. After finding that Finnegan had used the information to CARC‘s disadvantage, the district court awarded CARC $30,694.93 in damages and entered an injunction enjoining Finnegan from having any dealings for one year with the properties included in CARC‘s $27 million portfolio of tax executions. Subsequently, the district court awarded CARC attorney‘s fees and costs in the amounts of $46,504.75 and $3,090.00 respectively. Finnegan appealed the district court‘s judgment on CARC‘s trade secret claim and the relief entered pursuant to it.
II. Discussion
A claim for misappropriation of trade secrets under the
information, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information:
(A) Derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(B) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
With reference to the alleged trade secret asserted by CARC, the district court found that CARC gave TDI a diskette containing CARC‘s information about the properties for sale during the May 1996 tax lien sale. TDI entered the data on the properties into TDI‘s computers. Thus, at least until March 18, 1996, TDI had a great deal of relevant information on the properties for sale during the May 1996 tax lien sale. From this finding, the district court concluded that Finnegan violated the
We note initially that CARC conceded at oral argument that, notwithstanding the district court‘s findings that Finnegan took a computer diskette from CARC and the computer diskette contained trade secret information, no diskette was ever introduced into evidence and there is no such diskette in the record. Indeed, CARC conceded that any discussion of a computer diskette and its contents is irrelevant to the trade secret claims made in this case. Thus, we must look elsewhere in the record for support for the district court‘s conclusion that CARC possessed some “method, program or formula not commonly known or available to the public, from which CARC derived economic value” and regarding which CARC took reasonable efforts to maintain secrecy. We are unable to find such support.
The testimony regarding the “method” or “formula” which constitutes CARC‘s alleged trade secret describes the process by which CARC evaluates the amount to be bid on a tax deed. That process involves the consideration of the following information: the assessed value of the property; the valuation reports on the property produced by third-party real-estate information database services; the attributes of the property and the neighborhood based on “drive-bys” of the site by CARC employees; and a prediction of the property owner‘s likelihood of redeeming the tax liens and making interest payments based on the specific owner‘s payment record and CARC‘s national averages of tax redemption behavior.
There is no question that the vast bulk of the information CARC uses in this process is available to the public or that the method utilized by CARC is the same basic method by which any informed buyer would prepare to submit an intelligent bid at any auction. The official assessed values of properties for tax purposes are a matter of public record. CARC derives its historical information about the property and the quality of the neighborhood, according to CARC‘s Vice-President, “just by reading the newspapers and being in tune with the local realty market,” methods which are clearly available to the public. The private computer databases containing relevant information about the properties are fee services provided by third parties and are commonly used throughout the real estate industry. And, obviously, anyone is free to drive by and physically observe the neighborhoods and the properties. Finally, because the specific properties scheduled to be sold at auction are advertised in the newspaper four weeks prior to the auction, a person experienced in the trade has sufficient time to compile the information from these public sources before the auction. Thus, as CARC‘s Vice-President admitted, a person interested in purchasing at auction any of the tax deeds to the properties in CARC‘s tax lien portfolio could utilize these public sources of information in the several weeks leading up to the auction to make a competitive bid.
The only considerations left which could comprise trade secret information are the property owner‘s redemption records, and the amount that CARC was prepared to bid on each property at the auction. Neither of these considerations finds adequate support in the record to qualify as a trade secret. First, the payment records of the owners of the properties underlying the tax executions are a matter of public record. It is true that the testimony at trial established that the public records do not indicate the dates on which the owners made payments. That information can be gleaned from local government computer records of the redemption transactions, something not made public and actually discarded by the agencies on a regular basis. CARC purchases the agencies’ computer records in order to ascertain this information and asserts that such information is a valuable predictor for redemption behavior. However, not only could these records also be purchased by others, but, more pertinently, CARC does not provide any evidence of how the information gleaned from them works as a predictor or why that information is meaningful in the valuation of a tax deed. The same lack of evidence hampers CARC‘s claim that its database of nationwide tax redemption behavior warrants trade secret status. Although CARC‘s witnesses testified that its nationwide statistics are useful predictors of whether and how long it might take an individual property owner to pay off the tax debt owing on his or her property, those witnesses failed to explain specifically how that information would be useful to valuing the tax deed to the property. Consequently, on this record, it is impossible for a court to say that either form of tax redemption behavior information meets the definition of a trade secret under the Act.
The same is true for CARC‘s “bid guidelines.” As described earlier, these numbers represent the product of CARC‘s overall assessment of the value of the tax deed (based on all of the information discussed above) and the “lending guidelines” imposed by CARC‘s institutional investors. The lending guidelines are essentially the amount of money that the investor, in this case Lehman Brothers, is willing to front for the purchase of a particular tax deed. Although CARC meets with its investors to determine the investors’ guidelines on each property before a sale, CARC‘s Vice-President admitted that CARC does not have an exclusive relationship with its institutional lenders and that a
CARC failed to explain, beyond the most general of assertions, how a competitor, armed with its own information about the value of the underlying properties and its own financial considerations, could reap economic value from knowledge of CARC‘s “bid guidelines.” There may conceivably be some conditions under which knowledge of a competitor‘s maximum possible bid could work to a bidder‘s advantage, but those conditions are not present here. At oral argument CARC conceded that it was not claiming that Finnegan had obtained or even memorized the specific amount CARC was prepared to bid on each property to be auctioned in May 1996. Rather, it argued that Finnegan had learned CARC‘s method of calculating an appropriate bid price for a particular piece of property (a method that CARC contends is a company secret) and that Finnegan used his knowledge of this method to reconstruct CARC‘s bid guidelines before the auction. The problem with this argument is that CARC‘s method—assembling public information about the value of a property and deciding what bid amount represents the permissible financial risk—is simply not a trade secret. It is something that any sufficiently informed and experienced bidder can and would do. Therefore, CARC‘s compilations of information in the form of its “bid guidelines” are not “‘unique combination[s], afford[ing their possessor] a competitive advantage.‘” Essex, 269 Ga. at 554, 501 S.E.2d 501 (quoting Water Servs., Inc. v. Tesco Chemicals, Inc., 410 F.2d 163, 173 (5th Cir.1969)).
Because we reverse the district court‘s finding that CARC proved that its “property information” is a trade secret under the Act, we also reverse the district court‘s award of attorneys’ fees to CARC. We need not address Finnegan‘s contention that the yearlong injunction which the district court imposed against him (and which has since expired) was legally invalid.
REVERSED and REMANDED.
Vickie K. COATES, Plaintiff-Appellant, v. SUNDOR BRANDS, INC., and Emmett E. Long, Defendants-Appellees.
No. 97-9102.
United States Court of Appeals, Eleventh Circuit.
Nov. 13, 1998.