In its September 16, 1999 order, the trial court denied Tronitec’s motion for summary judgment on Shealy, Black, Smith and FEI’s slander
To prevail on a motion for summary judgment, the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in a light most favorable to the
Case No. A01A0378
1. Tronitec claims the trial court erred in denying its motion for partial summary judgment on Shealy, Black, Smith and FEI’s slander claim. We agree.
(a) In a threshold issue, Shealy, Black, Smith and FEI challenge Tronitec’s right to appeal because Tronitec was denied a certificate of immediate review for the September 16, 1999 order. But because Tronitec makes a direct appeal of the trial court’s October 29, 1999 order, it may appeal other orders in the case which may affect the proceeding below, including the earlier order denying summary judgment. 3
Tronitec claims that Arrington’s statements do not constitute slander per se, as contended by Shealy, Black, Smith and FEI, because his comments were ambiguous and criminal activity was only inferred. Tronitec correctly notes that, “where the plain import of the words spoken impute no criminal offense, they cannot have their meaning enlarged by innuendo.” 4 But the statements here are specific and do plainly impute a criminal offense. Theft of trade secrets, which may include customer lists, is a crime. 5 Arrington’s alleged statements do not require innuendo or inference to amount to an acсusation of a crime. Such an accusation constitutes slander under OCGA § 51-5-4 (a) (1).
(c) Tronitec argues that even if Arrington’s statements constituted slander, the evidence would not authorize a jury to find that it slandered Shealy, Black, Smith and FEI. 6 We agree. An employer is not liable for the slanderous utterances of an employee acting within the scope of employment, unless it affirmatively appears the employer ordered or authorized the employee to make the statements. 7
Shealy, Blаck, Smith and FEI argue that Tronitec ordered or authorized Arrington to make the slanderous statements because Tronitec told Arrington that Shealy, Black, Smith and FEI had stolen the customer lists and because the statements made by Tronitec in its pleadings would be defamatory if not privileged. We fail to see how this reasoning demonstrates that Arrington made the slanderous statements on Tronitec’s order or authorization, as opposed to his independent volition. Shealy, Black, Smith and FEI can point to no evidence which would support their contention that Tronitec ordered or authorized Arrington to make the slanderous statements. 8
Although Shealy, Black, Smith and FEI urge us to follow Elder v. Cardoso, 9 it appears that in Elder we failed to apply the holding in the then recent Lau’s Corp., when we required the movant to affirmatively show, in order to prevail in its motion for summary judgment, that it did not order its employee to make slanderous statements.
A defendant who will not bear the burden of proof at trial need not affirmatively disprove the nonmoving party’s case; instead, the burden on the moving party may be discharged by pointing out by reference to the affidavits, depositions and other documents in the record that there is an absence of evidence to support the nonmoving party’s case. If the moving party discharges this burden, the nonmoving party cannot rest on its pleadings, but rather must point to specific evidence giving rise to a triable issue. 10
In this case, Shealy, Black, Smith and FEI failed to present any evidence that Tronitec ordered or authorized Arrington’s statements. Thus, the trial court erred in not granting summary judgment to Tronitec on their slander claim.
2. Tronitec requested a ruling that its counterclaims were not compulsory; it maintains that it could dismiss without prejudice and then refile permissive counterclaims in another jurisdiction. Tronitec claims that the trial court erred by ruling that its counterclaims were compulsory. We disagree and affirm.
Shealy, Black, Smith and FEI claimed that Arrington and Tronitec made slanderous accusations of theft. Tronitec’s counterclaims are based on allegations that Shealy, Black, Smith and FEI misappropriated Tronitec’s property. “The broad test to be applied in determining whether a counterclaim is compulsory is whether a logical relationship exists between the respective claims asserted by the opposing parties.” 12 The logical connection between the claim and counterclaim is that both concern whether Shealy, Black and Smith improperly took Tronitec’s property when they left to form FEI.
Tronitec’s reliance on Bigley v. Mosser 13 is misplaced. In Bigley, we found two slander claims unrelated because different factual inquiries were required in determining the truth or falsity of the statements. 14 Here, there are common facts in determining the acts underlying the slander claim and Tronitec’s counterclaims.
3. In its counterclaim, Tronitec alleged that Shealy, Black, Smith and FEI had misappropriated Tronitec’s proprietary information and trade secrets, including customer lists. The trial court granted partial summary judgment to Shealy, Black, Smith and FEI with respect to the misappropriation of customer lists, finding that “there is no evidence that FEI’s customer list was derived from a tangible customer list of Tronitec.” Tronitec claims the trial court erred in its finding of partial summary judgment. We disagree and affirm.
The Trade Secrets Act 15 maintains the common law distinction that while an employer’s customer lists were considerеd to be the employer’s property, a former employee’s knowledge of customer information was not. 16 To prevail on its claim, Tronitec needs to show evidence that Shealy, Black and Smith left with tangible customer lists. This it cannot do.
Tronitec’s president testified that “[F] El’s prospect list. . . is the same style and organization as the Tronitec prospect list, and is a virtual duplicate of the Tronitec prospect list.” Other evidence shows that Smith had access to Tronitec’s prospect and customer computer database. But the inferences to be drawn from similarities in Tronitec’s and FEI’s prospect lists, or Smith’s access to the customer database, do not necessarily indicate a misappropriation of Tronitec’s customer list. Smith’s prior access does not imply a physical taking, and a similarity in the two lists would be expected if Shealy, Black and Smith compiled FEI’s prospect list using their knowledge of Tronitec’s customer base. The trial court correctly grantеd partial summary judgment to Shealy, Black, Smith and FEI with respect to Tronitec’s counterclaim of misappropriation of customer lists.
4. Tronitec claims the trial court erred in dismissing its claims for interlocutory and permanent injunctive relief. The trial court denied relief because it found (1) that Tronitec’s claim for injunctive relief had been heard and decided in an action in Cobb County and (2) because Tronitec waited 13 months after FEI had commenced business before bringing a claim for injunctive relief.
Tronitеc argues that the trial court could not properly base its denial of injunctive relief on the Cobb County litigation because no certified copies of the pleadings or orders from the Cobb County court were filed. Accordingly, Tronitec argues, the trial court had no basis for recognizing the Cobb County proceeding.
17
“In order to prove res judicata or collateral estoppel, a litigant must
Our review of the record shows the following. In a motion for summary judgment, Shealy, Black, Smith and FEI argued that a Cobb County proceeding filed February 25, 1999, was res judicata as to Tronitec’s demand for injunctive relief. In its response, Tronitec refers to a February 25, 1999 Cobb County action, which it describes as “essentially, involving the same claims” as this action. But Tronitec does not address Shealy, Black, Smith and FEI’s res judicata argument. Then, in their motion for partial reconsideration, which was granted by the trial court, Shealy, Black, Smith and FEI again make the argument that the Cobb County proceeding was rеs judicata to Tronitec’s injunction request and this time refer to an attached exhibit “C.” However, the appellate record shows no attachment to that motion.
We find that Shealy, Black, Smith and FEI presented an argument to the trial court based on a February 25, 1999 Cobb County action, but did not support the argument with certified copies of the action. However, Tronitec cannot fail to object to this defect before the trial court and then raise it now. By waiting to make this argument for the first time on appeal, Tronitec has waived it. 19 Accordingly, we must affirm the trial court’s denial of Tronitec’s claims for injunctive relief.
5. Tronitec claims that the trial court erred in granting summary judgment in favor of Shealy, Black, Smith and FEI on Tronitec’s counterclaims for conversion and theft. The Trade Secrets Act generally supersedes conflicting tort, restitutionary or other laws providing civil remedies for misappropriation of trade secrets. 20 The trial court found that Tronitec’s counterclaims for conversion and theft were superseded by the Trade Secrets Act. The trial court ruled correctly to the extent Tronitec’s counterclaims of conversion and theft were limited to trade secrets. However, the trial court erred in granting Shealy, Black, Smith and FEI summary judgment with respect to Tronitec’s counterclaim for conversion and theft of a personal computer by Smith. The computer is personal property and not a trade secret. Questions of fact remain as to its ownership.
6. Tronitec claims that the trial court erred in granting summary judgment on its RICO claim. 21 In order to prevail on this claim, Tronitec is required to present clear and convincing evidence of a pattern of “racketeering activity” 22 directed against it by Shealy, Black, Smith and FEI. Including the evidence regarding the computer theft and the evidence authorizing a jury to conclude that Shealy, Black, Smith and FEI misappropriated Tronitec’s trade secrets, 23 as discussed in Division 7, Tronitec presented evidence of at leаst two instances of theft, which constitutes a racketeering activity. 24
The trial court found that Tronitec had failed to set forth clear and convincing evidence that Shealy, Black, Smith and FEI violated the Georgia RICO Act, as required by
Simpson Consulting v. Bar-clays
Bank.
25
’But the question of whether evidence is clear and convincing is usually for the jury.
26
We cannot say that, while there is evidence sufficient to allow a jury to find the
Case No. A01A0379
In the cross-appeal, Shealy, Black, Smith and FEI claim the trial court erred in (1) partially denying their motion for summary judgment on Tronitec’s counterclaim for misappropriаtion of trade secrets, (2) denying their motion for summary judgment on Tronitec’s counterclaim for breach of loyalty and fraud, and (3) denying their claim for attorney fees under OCGA § 10-1-764.
7. The trial court found sufficient evidence to deny Shealy, Black, Smith and FEI’s motion for summary judgment on Tronitec’s counterclaim for misappropriation of trade secrets. Construed in favor of Tronitec as the nonmovant, the record shows that Tronitec developed a digital test station (“DTS”) and a digital station interface box (“DSIB”) for use in tеsting and repair of circuit boards. The DTS/ DSIB connects a personal computer to a malfunctioning electronic circuit board. Through Tronitec’s internally produced software, the computer assists in analyzing a circuit board, resulting in time and cost savings in its repair. Although the DTS/DSIB is assembled from commercially available parts,, it is uniquely wired and adapted, cost over $25,000 in development, and required 2,000 hours of research and engineering work to produce.
Shealy, Black, Smith and FEI maintain that Tronitec’s data, programs, devices, methods or techniques for repairing circuit boards, including the DTS/DSIB, are not trade secrets and that there is no evidence that any of Tronitec’s data, programs, devices, methods or techniques, including the DTS/DSIB, was misappropriated by Shealy, Black, Smith and FEI.
A trade secret is information, without regard to form, including “a compilation, a program, a device . . . which is not commonly known by or available to the public,” and which: “(A) [d]erives 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) [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” 28
(a) Shealy, Black, Smith and FEI contend Tronitec’s DTS/DSIB is not a trade secret because it is composed of matters known by or available to the public. We disagree. The record indicates that there are functionally equivalent interface devices used by others in the circuit board repair industry and that the DTS/DSIB’s function could be reproduced through reverse engineering. But even if the function of Tronitec’s DTS/DSIB can be reproduced with a combination of commercially available components and reverse engineering, evidence shows that the actual system is unique to Tronitec. 29 Evidence also shows that such testing systems are not generally available for purchase. Shealy, Black, Smith and FEI were not entitled to summary judgment on the grounds that the DTS/DSIB was publicly available.
(b) Shealy, Black, Smith and FEI contend Tronitec cannot show that it derives economic value by the DTS/DSIB not being generally known to other persons who can obtain economic value from its disclosure or use. They argue that there are hundreds of interface systems in the circuit board repair industry, that they all do the same thing and even if Tronitec’s DTS/DSIB is unique, the difference is not economically important. We again disagree.
The evidence shows that the industry is highly competitive and secretive and that its
(c) Shealy, Black, Smith and FEI argue that Tronitec cannot show that it took reasonable efforts to maintain the secrecy of its DTS/DSIB. They point out that Tronitec allowed public tours of its facilities in which the DTS/DSIBs were on the shop floor in plain view. Shealy, Black, Smith and FEI also note that Tronitec had no confidentiality agreements protecting its purported trade secrets and that no more than locked doors protected the majority of company information. 30 ,
Tronitec points to evidence that access to its production floor and schematics was controlled and its DTS/DSIBs were covered in the presence of strangers. Testimony also indicates that even a skilled technician, upon viewing Tronitec’s testing equipment, could not duplicate its operation absent inspection of the internal circuitry. This would indicate that a casual viewing would not compromise the information’s secrecy. Evidence would support a jury finding that Tronitec took reasonable steps under the circumstances to protеct the secrecy of its information. 31
Authority relied upon by Shealy, Black, Smith and FEI can be distinguished. In Stargate Software Intl. 32 for instance, the employer ordered its employees to work for a competitor, thus necessarily divulging trade secrets. In addition, Equifax Svcs. v. Examination Mgmt. Svcs. 33 is distinguishable because the information which had allegedly been misappropriated was in the form of a written list of foreign correspondents, and it was protected only by an unenforceable confidentiality agreement.
(d) Shealy, Black, Smith and FEI also argue that the record in this case, which was subject to a protective order at the trial court level, was originally transmitted by the trial court to this court unsealed, resulting in public disclosure destroying any trade secret status the information may have enjoyed. It appears that the appellate record was placed under seal at Tronitec’s request a few weeks after the appeal was filed.
The general view is that absolute secrecy is not required for information to retain trade sеcret status. 34 Filing a trade secret with a governmental entity is not equivalent to its publication. 35 And while court records may be available to the public, there is no general dissemination of such information. We decline to find that Tronitec’s information lost its trade secret status merely because it was left unsealed in a court file for a few weeks.
(e) Shealy, Black, Smith and FEI claim that Tronitec cannot show that they misappropriated Tronitec’s trade secrets or otherwise obtained Tronitеc’s information by improper means. They argue that reverse engineering or other independent development is not considered improper means and that FEI’s systems, devices, methods and other information used in its circuit board repair business were fairly acquired. 36
We find, however, that theré is sufficient circumstantial evidence that Shealy, Black, Smith and FEI misappropriated Tronitec’s trade secrets to withstand their motion for
Evidence shows that from its first day of operation, FEI offered to repair over 100 circuit boards, although there is testimony that over 2,000 hours of technical work would be required to independently develop the testing procedures and schematics to repair those circuit boards. Evidence also shows that, within 90 days of commencing business, FEI was able to repair and ship “vapor-vac motors,” a repair ability that had taken Tronitec a year of research to accomplish. There is evidence that FEI acquired the ability to perform commercially competitive circuit board repairs faster than was reasonably possible by independent effort, and a jury could infer from circumstantial evidence that FEI acquired the ability to make the repairs from Tronitec information.
Circumstantial evidence may be sufficient to defeat a motion for summary judgment. 37 In the face of direct evidence, “if the other fact is circumstantial evidence, it must be inconsistent with the defendant’s evidence, or if consistent, it must demand a finding of fact on the issue in favor of the plaintiff.” 38 Testimony by Shealy, Black and Smith that they did not take Tronitec information is not direct evidence sufficient to avoid the inference of misappropriation. 39 The trial court correctly denied partial summary judgment to Shealy, Black, Smith and FEI on Tronitec’s counterclaim for misappropriation of its trade secrets.
8. Shealy, Black, Smith and FEI argue that the trial court erred in denying their motion for summary judgment on Tronitec’s claim for breach of duty. They maintain that Physician Specialists in Anesthesia v. Wil'dmon 40 establishes that an employer has no claim for breach of duty against an at-will employee. 41 But an employee who may bind his employer does have a fiduсiary duty to his employer. 42 There is evidence that, while employed by Tronitec, Smith held a managerial position and had the power to bind Tronitec in purchase agreements. Evidence shows that Smith identified 50 component parts available from a vendor at a favorable price while acting as a Tronitec purchasing agent and purchased 50 of them on his own account. A jury could conclude that Smith used his position with Tronitec for his personal gain to Tronitec’s injury. The trial court did not еrr in denying Shealy, Black, Smith and FEI’s motion for summary judgment on Tronitec’s counterclaim for breach of the duty of loyalty with respect to Smith. However, Tronitec has not come forward with evidence that Shealy, Black or FEI has breached a duty of loyalty, and the trial court erred by not granting summary judgment to Shealy, Black and FEI on this counterclaim.
9. Shealy, Black, Smith and FEI argue that the trial court erred in denying their claim for attorney fees under OCGA § 10-1-764. In denying their claim, the trial court noted that Shealy, Black, Smith and FEI had not prevаiled, in part, in their motion for summary judgment on Tronitec’s claim for misappropriation. Under OCGA § 10-1-764: “If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court
Although we have found evidence of misappropriation sufficient to avoid summary judgment, a jury could still rule in favor of Shealy, Black, Smith and FEI on Tronitec’s claim fоr misappropriation and thus they may yet be the “prevailing party” within the meaning of the statute. Furthermore, upon hearing the testimony, the trial court could determine that there was bad faith on Tronitec’s part in making its claims for misappropriation and thus be authorized to award attorney fees to Shealy, Black, Smith and FEI under OCGA § 10-1-764. The trial court erred in granting summary judgment to Tronitec on Shealy, Black, Smith and FEI’s claim for attorney fees.
Judgments affirmed in part and reversed in part.
Notes
OCGA § 16-14-1 et seq.
OCGA § 9-11-56 (c);
Lau’s Corp. v. Haskins,
Southeast Ceramics v. EJem,
(Citation omitted.)
Parks v. Multimedia Technologies,
OCGA § 16-8-13.
See
Gillis v. American Gen. Life &c. Ins. Co.,
Smith v. Trust Co. Bank,
See Desmond, supra.
See Lau’s Corp., supra at 491.
OCGA § 9-11-13 (a).
(Citations omitted.) See
Schoen v. Home Fed. Sav. &c.,
Id. at 587.
OCGA § 10-1-760 et seq.
Avnet, Inc. v. Wyle Labs.,
See Bigley v. Mosser, supra.
(Citations and punctuation omitted.)
Bradley v. British Fitting Group,
See Angelí v.
Hart,
OCGA § 10-1-767 (a).
OCGA § 16-14-6 (c).
OCGA §§ 16-14-4; 16-14-3 (8), (9) (A).
See OCGA § 16-8-13.
OCGA § 16-14-3 (9) (A) (ix).
Freeman v. Saxton,
(Punctuation omitted.)
Barber v. Perdue,
OCGA § 10-1-761 (4).
See
Essex Group v. Southwire Co.,
See
Stargate Software Intl. v. Rumph,
SeeAvnet, Inc. v. Wyle Labs., supra.
Supra.
See, e.g.,
Hoechst Diafoil Co. v. Nan Ya Plastics Corp.,
See
Theragenics Corp. v. Dept. of Natural Resources,
OCGA § 10-1-761 (1).
Furlong v. Dyal,
Michelin Tire Corp. v. Irving,
See
Quill v. Newberry,
Physician Specialists
has been distinguished on its facts. See
Tom’s Amusement Co. v. Total Vending Svcs.,
See
Jennette v. Nat. Community Dev. Svcs.,