This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C3-01-1903

 

North Central Companies, Inc.,
Appellant,

vs.

William Gleason, et al.,
Respondents,

vs.

North Central Companies, Inc., et al.,
Counter-Defendants.

 

 

Filed July 9, 2002

Reversed and remanded

Poritsky, Judge*

 

Hennepin County District Court

File No. 9817394

 

 

Scott R. Carlson, Benjamin R. Skjold, Christine M. Middleton, Duckson, Carlson, Bassinger & Mitchell, LLC., 2100 Metropolitan Centre, 333 South Seventh Street, Minneapolis, MN 55402 (for appellant)

 

Philip W. Getts, Law Offices of Philip W. Getts, 2116 Second Avenue South, Minneapolis, MN 55404; and

 

Mark J. Vieno, Esq., 2116 Second Avenue South, Minneapolis, MN 55404 (for respondents)

 

            Considered and decided by Schumacher, Presiding Judge, Peterson, Judge, and Poritsky, Judge.

U N P U B L I S H E D  O P I N I O N

 

PORITSKY, Judge

 

            Appellant challenges the district court’s denial of its motion for a new trial or amended findings and argues that the court erred by (a) dismissing its trade-secret claim; (b) excluding evidence of respondents’ revenues as a measure of damages; (c) ruling that respondents were the prevailing party, and (d) sanctioning appellant under Minn. R. Civ. P. 11.  Because there was sufficient evidence to present a question of fact to the jury as to whether appellant possessed trade secrets and whether respondents misappropriated them, we find that the court erred in dismissing appellant’s trade-secret claim in a directed verdict.  We therefore reverse and remand for a new trial on appellant’s misappropriation-of-trade-secret claim.

FACTS

 

            Appellant North Central Companies, Inc., (North Central) is a commodity-trading firm that arranges purchases between buyers and sellers of various products and ingredients to the feed, pet food, chemical, and food-processing industries.  In April 1998, North Central filed suit against its former employees, respondents William Gleason and David Pichotta, and their employer, respondent Equinox Enterprises, Inc., alleging that respondents violated their employment contracts, misappropriated trade secrets, and misappropriated confidential information.  In January 2000, North Central filed a similar suit against former employees, respondents John Beatty, Timothy Krieger, and Thomas Beatty, and their employer, respondent Twin Cities Trading, LLC.  In March 2000, the district court consolidated the two suits.

            In June 2001, the court partially granted respondents’ summary-judgment motion, dismissing North Central’s noncompete-clause claims because the clause was “overbroad, both geographically and with respect to the scope of the competition that is proscribed.”  The court granted North Central’s motion to dismiss respondents’ counterclaims for unpaid commissions, except for Gleason’s and Pichotta’s claims.  The court also granted respondents’ motion to exclude evidence of respondents’ profits for North Central’s damage claim. 

At trial, after the close of North Central’s case, respondents moved for a directed verdict.  The court dismissed North Central’s claims for (a) misappropriation of trade secrets; (b) noninterference; and (c) unfair competition.  The court allowed North Central’s claim for misappropriation of confidential information to go to the jury. 

The jury returned its special verdict finding that (a) while respondents were employed by North Central, North Central possessed confidential information; (b) all individual respondents, except for Pichotta, used the confidential information; (c) all individual respondents, except for Pichotta, breached their confidentially clause in their employment contract; but (d) respondents’ use of the confidential information did not directly cause damage to North Central.  The jury’s findings have not been challenged on appeal.  The district court adopted the jury’s findings and concluded that, because respondents’ use of confidential information did not directly cause damage to North Central, respondents have no liability to North Central and respondents were therefore the prevailing parties. 

North Central moved for a new trial or for amended findings, arguing that the court erred by (a) not admitting respondents’ revenues as a measure of damages; and (b) dismissing North Central’s trade-secret claim.  In September 2001, the court denied the motion, concluding that (a) North Central’s failure to disclose its damage calculations for respondents’ revenues in pretrial discovery justified the exclusion of this evidence; and (b) North Central’s failure to produce its customer list at trial and failure to show that it had protectable information justified dismissal of the trade-secret claim.  On November 2, 2001, North Central filed a notice of appeal.  On November 7, 2001, the district court awarded respondents costs, disbursements, and $2,630 as sanctions for bad-faith attorney fees against North Central. 

D E C I S I O N

 

            On appeal from a denial of a motion for a new trial, appellate courts must view the verdict in a light most favorable to the verdict and should not disturb the verdict “unless it is manifestly and palpably contrary to the evidence.”  ZumBerge v. N. States Power Co., 481 N.W.2d 103, 110 (Minn. App. 1992) (citation omitted), review denied (Minn. Apr. 29, 1992).


I.

 

            Appellate courts review a district court’s directed verdict de novo and make an independent assessment of whether the evidence was sufficient to present a fact question to the jury.  Boone v. Martinez, 567 N.W.2d 508, 510 (Minn. 1997).  In making the independent determination, appellate courts review the evidence in a light most favorable to the nonmoving party.  Id. 

A directed verdict is appropriate only in the clearest of cases where but one conclusion can be drawn from the facts, and the question for determination becomes a question of law for the court. 

 

Beck v. Am. Sharecom, Inc., 514 N.W.2d 584, 587 (Minn. App. 1994), review denied (Minn. June 29, 1994). 

The Minnesota Uniform Trade Secrets Act protects certain information through an action for misappropriation.  Minn. Stat. §§ 325C.01-.08 (2000).  Misappropriation is defined as the improper acquisition, disclosure, or use of a trade secret.  Minn. Stat. § 325C.01, subd. 3 (2000).  There cannot be a misappropriation claim without a proven trade secret, even if defendant’s actions were wrongful.  Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 897 (Minn. 1983).

North Central contends that the district court erred in granting respondents’ directed verdict on its misappropriation-of-trade-secret claim.  North Central argued at trial that it has trade secrets—in the form of customer lists, purchasing schedules, specific product needs, production schedules, and volume requirements—that respondents used in their new trading companies to acquire customers and trades.  The court dismissed this claim because it found that such information did not qualify as a trade secret.  The court reasoned that most of the information was readily available through public sources, including appellant’s buyers and sellers.  The court also stated that it was reasonable to expect “a good salesman [to] keep notes but it’s difficult to grant trade secret status * * * for something that hasn’t even been produced in court.” 

The court allowed North Central’s common-law claim for misappropriation of confidential information to go the jury and gave the jury instructions for both the definition and the elements of confidential information.  The court instructed the jury that confidential information is defined as any “formula, pattern, device, or compilation of information which is used in one’s business and which gives him the opportunity to obtain an advantage over competitors who do not know or use it.”  In addition, the court told the jury that the elements comprising confidential information are (1) “the confidential information is not generally known or readily ascertainable;” (2) “it provides a demonstrable competitive advantage;” (3) “it was gained at expense to the employer;” and (4) “it is such that the employer intended to keep it confidential.”  As we have noted above in greater detail, the jury found that North Central possessed confidential information and that certain of the respondents used that information.  The jury’s finding that North Central possessed confidential information necessarily includes all the elements of the court’s instruction.    

In comparison, a trade secret is defined as a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value from not being readily ascertainable or generally known and is subject to reasonable efforts under the circumstances to maintain its secrecy.  4 Minnesota Practice CIVJIG 40.20 (2000).  And the following factors must be met for information to be considered a trade secret under Minnesota law: (1) the information must not be generally known or ascertainable; (2) the information must derive independent economic value from secrecy; and (3) the party asserting misappropriation must make reasonable efforts to maintain secrecy.  Newleaf Designs, LLC v. Bestbins Corp., 168 F. Supp. 2d 1039, 1043 (D. Minn. 2001).

Comparing the jury’s finding to the definition of trade secret shows that while the elements of each are not identical, there are the following similarities:  A trade secret is information that derives independent economic value from not being generally known; the jury found that North Central possessed confidential information – information not generally known that gave North Central a demonstrable economic advantage.  A trade secret must be subject to reasonable efforts to maintain its secrecy; the jury found that North Central intended to keep its information confidential.  To prove misappropriation of a trade secret, the plaintiff must show that (1) a trade secret existed; (2) the defendant acquired the trade secret through a confidential relationship; and (3) the defendant used and disclosed the trade secret.  The jury found that North Central possessed confidential information, that respondents acquired the information while employed by North Central, and that respondents used the information. 

As we have noted, the standard for reviewing a directed verdict requires the appellate court to view the evidence in a light most favorable to the party against whom the motion is made.  Here, there is more than evidence favorable to North Central’s position; there are unchallenged jury findings in support of it.  In light of the jury’s findings, we conclude that there was sufficient evidence to present a fact question to the jury on whether North Central possessed trade secrets and whether respondents misappropriated them. While we make no determination whether North Central’s alleged trade secrets actually warrant trade secret protection, we find that a directed verdict was not appropriate here because more than one conclusion can be drawn from the facts.  See Beck, 514 N.W.2d at 587 (“directed verdict is appropriate only in the clearest of cases where but one conclusion can be drawn from the facts”).

II.

 

            North Central next contends that the court abused its discretion by excluding evidence of respondents’ profits for North Central’s damage claim.  The district court excluded evidence of respondents’ profits on the ground that North Central did not disclose the calculation or the amount of damages it was seeking.  Because we remand for a new trial on whether North Central possessed trade secrets and whether respondents misappropriated them, the district court’s exclusion of damage calculations is moot; we assume that the parties will have sufficient time to conduct discovery of damages before the new trial.

III.

North Central argues that the court incorrectly determined that respondents were the prevailing parties in the underlying action.  In light of our decision to reverse and remand for a new trial, the court’s finding that respondents were the prevailing parties in the underlying jury trial is moot.

IV.

            North Central finally argues that the district court abused its discretion in imposing sanctions against North Central for discovery violations.  We are unable to review the issue because it is not before this court.  The district court entered its order denying North Central’s post-trial motion on September 11, 2001.  The judgment of dismissal was filed on October 26. As respondents note, North Central filed its notice of appeal from that judgment on November 1, 2001, but the district court’s order awarding sanctions was not filed until November 7, 2001, and the judgment on that order was entered on December 4, 2001.  North Central has not appealed from either the order or judgment awarding sanctions.

An appeal from a judgment does not bring up for review orders entered subsequent to its rendition but only prior orders and rulings which result in the judgment.

 

Konkel v. Fort, 245 Minn. 535, 536, 73 N.W. 2d 613, 614 (1955).

            Reversed and remanded.

 



* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.