Business Law Section

Facts:

Paul Carsey was a longtime employee of CDC which repaired and treated concrete. CDC entered into a preferred provider agreement for work with Kennecott which contained detailed pricing information for CDC’s work. Paul Allen was an independent contractor who supervised CDC’s work at Kennecott. Allen created a company by the name of Tradesmen and competed with CDC for their concrete work at Kennecott. The two companies bid directly against each other for a Kennecott job. Sometime before the job was awarded to Tradesmen, Carsey left CDC and joined Allen at Tradesmen. CDC believed that Carsey helped Tradesmen put together the winning bid while still working for CDC. CDC sued Tradesman, Carsey and Allen (among others), alleging: (1) misappropriation of trade secrets; (2) breach of fiduciary duty; (3) intentional inference with economic relations; and (4) civil conspiracy. All the claims against Carsey were based on the allegation that Carsey collaborated with Tradesman on the bid while still employed by CDC by sharing both CDC’s confidential pricing information and the specifics of CDC’s bid.

Procedural Posture:

The trial court granted the defendants’ motion for summary judgment on all of CDC’s claims.

Good Business Law Rules:

1. “The Utah [Uniform Trade Secrets Act] defines “trade secret” to include a compilation that (1) derives economic value from not being known or readily ascertainable by others, and (2) is the subject of reasonable efforts to maintain its secrecy.” ¶ 16.
2. “To establish a claim for misappropriation of a trade secret, the proponent of the trade secret must show “(1) the existence of a trade secret, (2) communication of the trade secret to [the defendant] under an express or implied agreement limiting disclosure of the secret, and (3) [defendant]’s use of the secret that injures [the proponent].” ¶ 15.
3. “A unique combination of generally known elements or steps can qualify as a trade secret, if it represents a valuable contribution attributable to the independent efforts of the one claiming to have conceived it . . . . The subject matter of the trade secret must be unknown; it should not be in the public domain nor within the knowledge of the trade . . . .” ¶ 17.
4. “[C]onfidential information of an employer . . . loses any protection to which it may have been entitled after it has been merged into the employee’s own faculties, skill and experience.” ¶ 23.
5. “With three delineated exceptions, the USTA . . . preempts conflicting state remedies based on the misappropriation of a trade secret.” The exceptions are contractual remedies, other civil remedies not based on misappropriation of a trade secret, and criminal remedies. ¶ 37.

Holding:

CDC’s misappropriation of trade secret claim with respect to company pricing information failed because they could not establish that the information qualified as a trade secret. However, the issue of whether or not their project bid qualified as a trade secret misappropriated by Carsey presented an issue of fact for remand. As an issue of first impression, CDC’s fiduciary duty, interference with economic relations and civil conspiracy claims all failed because they all relied on the facts giving rise to the UTSA claim and the USTA specifically preempts all other claims based on misappropriation of confidential information. If you can’t meet the UTSA standard for trade secret there is no lesser, common law remedy for misappropriation of confidential information.