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McDonald Apiary, LLC v. Starrh Bees, Inc.

United States District Court, D. Nebraska

October 10, 2016

MCDONALD APIARY, LLC, a Nebraska Limited Liability Company, Plaintiff,
v.
STARRH BEES, INC., a California Corporation, et al., Defendants.

          ORDER

          John M. Gerrard United States District Judge.

         This matter is before the Court on the defendants' motion for summary judgment (filing 141) and their motion in limine (filing 158). Both motions will be denied.

         BACKGROUND

         The plaintiff, McDonald Apiary, LLC, is in the beekeeping and honey production business in, among other places, western Nebraska. Filing 142 at 5.[1] Defendant Starrh Bees is in the same business. Filing 142 at 5. In 2014, McDonald Apiary and Starrh agreed that Starrh would bring about 6, 000 beehives to Oklahoma and Nebraska to place them at locations chosen by McDonald Apiary. Filing 142 at 5-6. The parties agreed to share transportation costs (although they now disagree about what those costs entail), McDonald Apiary would extract the resulting honey at its extraction facilities, and McDonald Apiary and Starrh would split the proceeds. Filing 142 at 6.

         After the parties moved their activity from Oklahoma to Nebraska, their relationship fell apart. See filing 142 at 6-7. McDonald Apiary accuses Starrh of misappropriating McDonald Apiary's database of foraging locations in western Nebraska. Filing 142 at 7. McDonald Apiary also accuses Jonathan Gonzalez, a Starrh employee, of trespassing and vandalism at McDonald Apiary's Lisco, Nebraska extraction facility. Filing 142 at 10. And McDonald Apiary contends that Starrh is tortiously interfering with McDonald Apiary's business relationships with the landowners on whose land it has placed its hives. Filing 142 at 11-12.

         McDonald Apiary's Second Amended Complaint (filing 59) alleges 12 claims for relief against Starrh; Gonzalez; Starrh's owner, Anne Ashley; and Anne's husband Dale Ashley, a Starrh employee (collectively, Starrh).[2] See, filing 59; filing 142 at 5. Two of McDonald Apiary's claims were dismissed at the pleading stage, see filing 40, and Starrh's motion for summary judgment seeks dismissal of nine of the remaining ten, see filing 142.

         DISCUSSION

         Summary judgment is proper if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). The movant bears the initial responsibility of informing the Court of the basis for the motion, and must identify those portions of the record which the movant believes demonstrate the absence of a genuine issue of material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). If the movant does so, the nonmovant must respond by submitting evidentiary materials that set out specific facts showing that there is a genuine issue for trial. Id.

         On a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts. Id. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the evidence are jury functions, not those of a judge. Id. But the nonmovant must do more than simply show that there is some metaphysical doubt as to the material facts. Id. In order to show that disputed facts are material, the party opposing summary judgment must cite to the relevant substantive law in identifying facts that might affect the outcome of the suit. Quinn v. St. Louis County, 653 F.3d 745, 751 (8th Cir. 2011). The mere existence of a scintilla of evidence in support of the nonmovant's position will be insufficient; there must be evidence on which the jury could conceivably find for the nonmovant. Barber v. C1 Truck Driver Training, LLC, 656 F.3d 782, 791-92 (8th Cir. 2011). Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Torgerson, 643 F.3d at 1042.

         Trade Secrets

         McDonald Apiary claims that Starrh violated the Nebraska Trade Secrets Act, Neb. Rev. Stat. § 87-501 et seq., in connection with its alleged misappropriation of McDonald Apiary's database. Filing 59 at 9-11. Starrh claims that McDonald Apiary's database is not a "trade secret" because it is ascertainable by proper means, and was not the subject of reasonable efforts to maintain its secrecy. Filing 142 at 17. Starrh also argues that there is no evidence that the database was misappropriated. Filing 142 at 17.

         Under Nebraska law, a "trade secret" is defined as information that:

(a) Derives independent economic value, actual or potential, from not being known to, and not being 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.

Neb. Rev. Stat. § 87-502(4). That definition is narrow; it means that if an alleged trade secret is ascertainable at all by any means that are not improper, the would-be secret is excluded from coverage under the Act. First Express Servs. Grp., Inc. v. Easter, 840 N.W.2d 465, 474 (Neb. 2013).

         So, for instance, in Easter, the Nebraska Supreme Court concluded that the Trade Secrets Act did not protect the customer list of a company that sold crop insurance, which included "customers' names and their 2009 information: what crops the farmers had, what counties the crops were located in, what insurance plan the farmers bought, what percentage of coverage each farmer had, and what commission [the insurer] had earned." Id. at 469. The court explained that "simple Internet searches could identify which farmers farmed what land and could provide contact information for those farmers." Id. at 475. And the other

information on the list essentially reflected the farmers' previous insurance coverage on their crops. It is undisputed that the individual farmers had all of that information and that [the defendant] could have obtained the information from them through a simple telephone call. Also, once a customer changed agencies, all of the customer's prior insurance information became available from the insurance carrier's Web site. Though the exact information required to transfer a customer is a bit unclear, the record shows that, at most, all that is required is the customer's name, address, type of crops, and signature, all of which are ascertainable by proper means.

Id. So, because the information on the customer list was ascertainable through proper means, the court concluded as a matter of law that it was not a trade secret. Id. at 476.

         On the other hand, in Home Pride Foods, Inc. v. Johnson, the Nebraska Supreme Court held that there was sufficient evidence to find that the customer list of a food service company was a trade secret, because "the customer list contained information not available from publicly available lists." 634 N.W.2d 774, 782 (Neb. 2001). The court explained that, while courts "are reluctant to protect customer lists to the extent that they embody information that is readily ascertainable through public sources[, ]" a customer list will be protected "where time and effort have been expended to identify particular customers with particular needs or characteristics, " because "[s]uch lists are distinguishable from mere identities and locations of customers that anyone could easily identify as possible customers." Id. at 781-82.

         Starrh argues that McDonald Apiary's location database was not a trade secret because, among other things, its beehive locations can be ascertained by looking for them while driving by on the road. Filing 142 at 26. And then, by observing the area and using Internet searches, an observer could collect information about the landowner and the crops in the area, which was also information that McDonald Apiary compiled. Filing 142 at 27.

         But the Court is not persuaded that the information identified by the parties is "ascertainable" just because beehives are not invisible. There is a difference between information that is readily ascertainable and that which is realistically ascertainable. It might have been possible, one supposes, to reconnoiter every highway, county road, and deer path in western Nebraska looking for every one of the approximately 23, 000 beehives that McDonald Apiary placed in the summer of 2014. See filing 143-1 at 24. But the Court is not convinced that such a theoretical possibility is enough to make the location database "ascertainable" within the meaning of Easter.

         Starrh also argues that McDonald did not use reasonable efforts to maintain the secrecy of its information. Filing 142 at 20. Starrh points out that McDonald Apiary shares its location information with competitors, does not hide its hives, did not require confidentiality agreements, and did not password-protect its GPS devices or lock the vehicles in which the devices were often kept. Filing 142 at 20-25.

         But the Court cannot conclude that the measures McDonald Apiary did take were unreasonable as a matter of law. Ed McDonald testified that while there were no signed confidentiality agreements, he did instruct people with whom information was shared that the information was secret and that they shouldn't tell anyone. Filing 143-1 at 42. Bryan Addington, McDonald Apiary's foreman, testified that sharecroppers were only given location information for their own bees, and that McDonald Apiary "didn't want a sharecropper knowing any other locations than what they needed to know to tend to their own hives." Filing 143-3 at 32. McDonald even threatened to fire Addington after Addington allowed Starrh to copy the entire database. Filing 143-3 at 32.

         It may be that a handshake agreement on secrecy and failing to lock the car door may be found unreasonable. But, the Court finds, it is a question that the jury must decide. Whether information sought to be protected by the Trade Secrets Act rises to the level of a trade secret is a question of fact. Home Pride Foods, 634 N.W.2d at 708. And there is a genuine issue of material fact here.

         Starrh also contends that there is not enough evidence that McDonald's location information was misappropriated. "Misappropriation" means

(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was ...

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