Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

West Plains, L.L.C. v. Retzlaff Grain Co. Inc.

United States District Court, D. Nebraska

January 13, 2016

WEST PLAINS, L.L.C., Plaintiff,
v.
RETZLAFF GRAIN COMPANY INCORPORATED, BRYCE WELLS, JEFFREY BRADLEY, THOMAS DANNER, REBECCA DANNER, JODY MAY, CHAD NEEDHAM, TODD PAYZANT, SAMANTHA RHONE, CRYSTAL KONECKY, CINDY SCHOLTING, AND DREW WAGGONER, Defendants.

MEMORANDUM AND ORDER

Laurie Smith Camp Chief United States District Judge

This matter is before the Court on the Defendants’ Motion in Limine (Filing No. 152) and the Plaintiff’s Motion in Limine (Filing No. 157). For the reasons stated, the Defendants’ Motion will be denied, and the Plaintiff’s Motion will be granted in part.

BACKGROUND

Plaintiff West Plains, L.L.C. d/b/a CT Freight Company (“Plaintiff”) asserted seven causes of action against a competing freight brokerage business, Retzlaff Grain Company, Inc. d/b/a RFG Logistics (“RFG”) and several of the Plaintiff’s former employees, Bryce Wells (“Wells”), Jeffrey Bradley (“Bradley”), Thomas Danner, Rebecca Danner, Jody May (“May”), Chad Needham (“Needham”), Todd Payzant (“Payzant”), Crystal Konecky (“Konecky”), Samatha Rhone (“Rhone”), Cindy Scholting (“Scholting”) and Drew Waggoner (“Waggoner”) (collectively the "Individual Defendants"). The causes of action included (1) misappropriation of trade secrets by Plaintiff’s former employees in violation of Neb. Rev. Stat. § 87-504; (2) misappropriation of trade secrets by RFG and Wells in violation of Neb. Rev. Stat. § 87- 504; (3) tortious interference with business relationships by all Defendants; (4) tortious interference with employment relationships by RFG and Wells; (5) breach of the duty of loyalty by Plaintiff’s former employees; (6) conspiracy by all Defendants; and (7) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, by Needham. On October 28, 2015, the Court dismissed Plaintiff’s claims for tortious interference with employment relationships and for violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030. (See Filing No. 167.)

STANDARD OF REVIEW

In both Motions, the parties assert that the evidence at issue is either irrelevant or, if relevant, is unfairly prejudicial. Under Federal Rule of Evidence 402, irrelevant evidence is inadmissible. Rule 401 of the Federal Rules of Evidence states: “Evidence is relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action.” Fed.R.Evid. 401. Even if evidence is relevant, it may be excluded “if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence. Fed.R.Evid. 403. The Eighth Circuit has explained that “Rule 403 ‘does not offer protection against evidence that is merely prejudicial in the sense of being detrimental to a party's case. The rule protects against evidence that is unfairly prejudicial, that is, if it tends to suggest decision on an improper basis.’” United States v. Myers, 503 F.3d 676, 681 (8th Cir. 2007). “Generally, the balance of Rule 403 weighing should be struck in favor of admission.” Smith v. Tenet Healthsystem SL, Inc., 436 F.3d 879, 885 (8th Cir. 2006). However, whether the probative value of challenged evidence is substantially outweighed by unfair prejudice “is a fact-intensive question, ” which must often be answered by the trial court in the course of trial. Bennett v. Nucor Corp., 656 F.3d 802, 813 (8th Cir. 2011).

DEFENDANTS’ MOTION IN LIMINE

Defendants assert that several categories of evidence related to Plaintiff’s damages are inadmissible.

I. “Total Loss of Value” Theory of Damages

Defendants argue that a “total loss of value” theory of damages is inapplicable to any of Plaintiff’s claims and Plaintiff should be precluded from introducing any evidence to support such a theory. Although Defendants argue that the theory is inapplicable to each of Plaintiff’s claims, Defendants provided argument only with respect to Plaintiff’s trade secrets misappropriation claim and its remaining tortious interference claim.

a. Misappropriation of Trade Secrets Claims

Defendants argue that Plaintiff’s damages for misappropriation of trade secrets are limited to (1) lost profits, (2) Defendants’ unjust enrichment, or (3) some combination of the two.[1] The Court recognizes that lost profits and unjust enrichment are the most common methods to measure damages in misappropriation cases. See Home Pride Foods, 634 N.W.2d 774, 783 (Neb. 2001) (affirming damages award based on lost profits); Pioneer Hi-Bred Int'l v. Holden Found. Seeds, Inc., 35 F.3d 1226, 1244 (8th Cir. 1994) (“In general, both lost profits and unjust enrichment theories have been widely accepted.”); DeVries v. Starr, 393 F.2d 9, 19 (10th Cir. 1968) (“Loss of profits, where reasonably ascertainable, have been the usual measure of compensatory damages in cases like these.”). The question before the Court is not the most appropriate measure of damages for this case, but whether evidence of damages based on loss of value is admissible with respect to Plaintiff’s claim for trade secret misappropriation. Thus, the Court first looks to whether the Nebraska Deceptive Trade Practices Act (“NDTPA”), Neb. Rev. Stat. §§ 87-501 to 87-507 (Reissue 2014), limits damages to lost profits and/or unjust enrichment. With respect to damages, the NDTPA states:

[A] complainant shall be entitled to recover damages for misappropriation. Damages may include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret.

Neb. Rev. Stat. § 87-504. The statute, on its face, does not limit damages in a misappropriation case to lost profits and/or unjust enrichment. Although the statute identifies some methods of computing damages, it does not create an exhaustive list of methods. It refers to “actual loss” as a method of computation, and specifically states that a royalty may be imposed in lieu of “damages measured by any other methods.” Neb. Rev. Stat. Ann. § 87-504; see also Pioneer Hi-Bred, 35 F.3d at 1243 (“Courts have used a wide variety of methods to measure damages in trade secret cases, including lost profits, unjust enrichment and reasonable royalty.”) (emphasis added).

While the Nebraska Supreme Court has not addressed the issue, other jurisdictions have determined that “a particular measure of damages has been held to be inappropriate only where the causal relationship between the misappropriation and the particular loss or gain being measured was not sufficiently shown, where application of the measure would have resulted in double recovery, or where another measure afforded more substantial relief.” Michael A. Rosenhouse, Annot., Proper Measure and Elements of Damages for Misappropriation of Trade Secret, 11 A.L.R.4th 12 (1982 & Supp. 2015)). For example, in De Vries v Starr, although the court recognized that lost profits, where ascertainable, is the usual measure of damages in a misappropriation case, the court held that a plaintiff whose business was destroyed through misappropriation of a trade secret was entitled to recover damages measured by the value of his business. 393 F.2d at 20.

The Court is persuaded by the plain language of § 87-504, and the reasoning of courts in other jurisdictions, that recovery in a trade secrets case is not limited to lost profits or unjust enrichment. While Plaintiff will bear the burden of demonstrating that loss of value is the appropriate measure of damages and that the loss of value, if any, was caused by Defendant’s misappropriation, Plaintiff is not precluded from offering evidence to support its loss-of-value theory. Accordingly, Defendants’ Motion in Limine with respect to the misappropriation of trade secrets claim will be denied at this stage of the proceedings.

b. Tortious Interference Claims

Defendants also argue that lost value is not the proper measure of damages for Plaintiff’s tortious interference claims. Defendants draw the Court’s attention to a case involving a claim for breach of loyalty in which the Eighth Circuit said:

Under Nebraska law, “prospective profits from an established business, prevented or interrupted by the tortious conduct of the defendant, are recoverable when it is proved (1) that it is reasonably certain such profits would have been realized except for the tort, and (2) that the lost profits can be ascertained and measured, from evidence introduced, with reasonable certainty.”

Triple R Indus., Inc. v. Century Lubricating Oils, Inc., 912 F.2d 234, 237-38 (8th Cir. 1990) (quoting K & R, Inc. v. Crete Storage Corp., 231 N.W.2d 110, 114 (Neb. 1975)). Defendants suggest this language indicates that lost profits are the only acceptable measure of damages in a tortious interference case. However, this Court does not draw such an inference. Defendants acknowledge that courts in other jurisdictions have contemplated loss-of-value damages in certain circumstances. For example, the Eleventh Circuit held that under Florida law,

if a business is completely destroyed, the proper total measure of damages is the market value of the business on the date of the loss. If the business is not completely destroyed, then it may recover lost profits. A business may not recover both lost profits and the market value of the business.

KMS Rest. Corp. v. Wendy's Int'l Inc., 194 F.App'x 591, 601 (11th Cir. 2006) (citations omitted). In KMS, the Eleventh Circuit upheld the district court’s refusal to include an instruction to the jury on this statement of the law because there was no evidence that the plaintiff’s business was completely destroyed. The reasoning in KMS may support an argument that, to recover lost value damages for tortious interference, Plaintiff must demonstrate that its business was destroyed; however, the Court cannot determine at this stage of the proceedings whether Plaintiff is limited to a lost profits theory of damages on its tortious interference claim. Accordingly, Defendants’ Motion in Limine will be denied.

II. Duplicative Damages

Defendants contend that Plaintiff cannot, as a general matter, recover both lost value and lost profit damages because such a recovery would be duplicative. Although the parties have not cited any relevant Nebraska statutes or case law on this issue, the Court recognizes that courts in other jurisdictions have concluded that, for certain claims, lost profits and loss-of-value damages are duplicative. KMS Rest. Corp., 194 F.App'x at 601. As noted above, however, the record presently before the Court prevents a pretrial determination of whether the Plaintiff is precluded from offering evidence of loss of value as a potential measure of damages for some claims. The question of whether the probative value of such evidence may be unfairly prejudicial is fact-intensive and claim-specific, and likely can only be answered in the course of the trial. See Bennett, 656 F.3d at 813. While an award of damages based on both lost profits and loss of value likely ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.