Opinion
No. UWY-CV-09-5015363S
January 4, 2011
MEMORANDUM OF DECISION
I PROCEDURAL AND FACTUAL BACKGROUND
The plaintiff, Gary's Auto Parts, Inc., commenced this action by filing a six-count complaint against the defendants Shawn Worden, Gary Beaulieu, and West Springfield Auto Parts, Inc. On July 6, 2010, the plaintiff amended its complaint and asserted sixteen counts against the defendants, including a breach of contract claim against the defendant Worden for misappropriation of trade secrets.
The plaintiff's amended complaint alleges the following facts. It is a supplier of paint and supplies to auto body shops. The defendant Worden began his employment with the plaintiff in 2006 and his employment was terminated in accordance with a Severance Agreement and General Release on December 19, 2007 (the Agreement). Pursuant to the Agreement, the defendant Worden agreed, inter alia, to refrain from using the plaintiff's confidential information or disclosing such information to anyone else and for a period of six months not to compete with plaintiff's business, interfere with plaintiff's relationships with any of its customers or vendors, nor to hire or solicit any employee of the plaintiff. Following his termination, the defendant Worden went to work for a competing auto parts business. In the Fifth Count of the amended complaint, the plaintiff alleges that the defendant breached the Agreement by using the plaintiff's confidential information for his own benefit and by disclosing such information to other individuals and entities.
The defendant Worden contends that this breach of contract claim relating to misappropriation of trade secrets is superseded by General Statutes § 35-50 et seq., the Connecticut Uniform Trade Secrets Act (CUTSA) and has moved to strike the Fifth Count of the amended complaint. The plaintiff filed a memorandum in opposition to the defendant Worden's Motion to Strike and oral argument was heard on this motion on December 6, 2010.
II DISCUSSION Legal Standards for Motion to Strike
Under Practice Book § 10-39, "whenever any party wishes to contest (1) the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof, to state a claim upon which relief may be granted, or (2) the legal sufficiency of any prayer for relief in any such complaint, counterclaim or cross complaint . . . that party may do so by filing a motion to strike the contested pleading or part thereof."
The proper method to challenge the legal sufficiency of a complaint is to make a motion to strike prior to trial. Gulack v. Gulack, 30 Conn.App. 305, 309, 620 A.2d 181 (1993). "[F]or the purpose of a motion to strike, the moving party admits all facts well pleaded." RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 383 n. 2, 650 A.2d 153 (1994). In ruling on a motion to strike, "[t]he role of the trial court [is] to examine the [complaint] construed in favor of the plaintiffs, to determine whether the [pleading party has] stated a legally sufficient cause of action." (Quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997). "[I]f facts provable in the complaint would support the cause of action, the motion to strike must be denied . . . Moreover, . . . [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . . It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). The court must "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 117, 889 A.2d 810 (2006). A motion to strike is properly granted if "the plaintiff's complaint [does not] sufficiently [state] a cognizable cause of action as a matter of law." Mora v. Aetna Life and Casualty Ins. Co., 13 Conn.App. 208, 211, 535 A.2d 390 (1988).
A. Connecticut Uniform Trade Secrets Act
The defendant Worden has moved to strike the Fifth Count of the amended complaint on the ground that the breach of contract claim asserted therein is superseded by General Statutes § 35-50 et seq., the Connecticut Unfair Trade Secrets Act (CUTSA). CUTSA provides, in pertinent part, that misappropriation means the "disclosure or use of a trade secret of another without express or implied consent by a person who . . . at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was . . . acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use . . ." General Statutes § 35-51(b)(2)(B)(ii). A trade secret is defined as "information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (1) Derives independent 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 (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." General Statutes § 35-51(d).
General Statutes § 35-57 also states in relevant part: "(a) unless otherwise agreed by the parties, the provisions of this chapter supersede any conflicting tort, restitutionary, or other law of this state pertaining to civil liability for misappropriation of a trade secret; b) this chapter does not affect: (1) contractual or other civil liability or relief that is not based upon misappropriation of a trade secret."
The parties dispute whether a contract claim that is based upon a misappropriation of a trade secret is superseded by CUTSA. There is no Connecticut state case law on point for the factual scenerio presented in this action. However, the United States District Court, for the District of Connecticut in Imaginative Research Associates, Inc. v. Ramirez et al., 718 F.Sup.2d 236 (D.Conn. 2010) recently ruled on the issue of whether a breach of contract claim arising out a misappropriation of trade secrets is preempted by CUTSA.
In its decision, the federal district court looked to the statutory language of CUTSA, General Statutes § 35-50 et seq., its legislative history and case law from other states. The court found that the purpose of the Uniform Trade Secrets Act, "was to harmonize and clarify the law of trade secrets, whose principles var[ied] from jurisdiction to jurisdiction because it was a common law development." (Internal quotation marks omitted.) Id., 248-49; see also, Ramon A. Klitzke, The Uniform Trade Secrets Act, 64 Marq. L. Rev. 277 (1980). "Because privately negotiated contractual obligations are applicable only to the parties to a contract, they do not create the variance in `duties imposed by law' among jurisdictions that UTSA sought to `harmonize and clarify.'" Imaginative Research Associates, Inc. v. Ramirez et al., supra, 718 F.Sup.2d 249.
In its decision, the federal district court carefully examined the legislative history of CUTSA. It held that "[t]he Connecticut legislature enacted the current § 35-57(b)(1) by adopting, without alteration, the version of section 7(b)(1) of the Uniform Trade Secrets Act ("UTSA") that the National Conference of Commissioners on Uniform State Law adopted at its 1979 Annual Conference, with the comment that: This Act is not a comprehensive remedy. It applies to duties imposed by law in order to protect competitively significant secret information. It does not apply to duties voluntarily assumed through an express or an implied-in-fact contract. The enforceability of covenants not to disclose trade secrets and covenants not to compete that are intended to protect trade secrets, for example are governed by other law . . . The 1985 amendments to the UTSA, which clarified the intent of the 1979 Official Text, eliminated any ambiguity in the statutory text itself by providing that the Act does not affect: (1) contractual remedies, whether or not based upon misappropriation of a trade secret." (Citation omitted; internal quotation marks omitted.) Id., 248 citing UTSA § 7(b)(1) (1985).
The federal district court also cited to Boeing Co. v. Sierracin Corp., 738 P.2d 665, 108 Wash.2d 38 (1987), which held that its trade secrets act, which contained language substantially similar to General Statutes § 35-57, did not preempt or displace contract claims based on trade secret misappropriation. In Boeing, the defendant had signed over 270 contracts that included language requiring it to keep confidential all proprietary information. The Boeing court expressly "reject[ed] th[e] argument that the claims should be consolidat[ed] holding that the breach of contract and trade secret misappropriation claims included non-overlapping elements, that breach of confidentiality claims . . . may be brought independently of trade secret claims . . ." (Internal quotation marks omitted.) Imaginative Research Associates, Inc. v. Ramirez et al., supra, 718 F.Sup.2d 249-50 (citing Boeing Co. v. Sierracin Corp., supra, 738 P.2d 674).
While not ruling on the issue of whether CUTSA preempts breach of contract claims alleging misappropriation of trade secrets, the Connecticut Supreme Court has recognized and highlighted the difference between contractual and tort law. In Perricone v. Perricone, 292 Conn. 187, 972 A.2d 66 (2009), the Supreme Court discussed the distinction between contractual and tort law. "[T]he distinction between tort law and contractual law . . . is that contractual liability is consensual in nature. Although a state creates the background rules regarding when private agreements will be enforceable, contractual obligations arise only when a party makes a promise and another party offers consideration in exchange for that promise. By contrast, courts impose tort obligations, as a matter of law, for policy reasons. The state, rather than private parties, defines the conduct that will be subject to sanction." Id., 203, n. 15 (citing A. Garfield, "Promises of Silence: Contract Law and Freedom of Speech," 83 Cornell L. Rev. 261, 348 (1988)).
The defendant directs the court to two cases for the proposition that CUTSA preempts the plaintiff's breach of contract claim. Those cases are Pro-Fitness, Inc. v. Plankenhorn, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 95 0144106 (December 6, 1995, Karazin, J.) and Brodeur Co., CPA's, P.C. v. Charlton, Superior Court, Complex Litigation Docket at New London, Docket No. X04 CV 01 0124519 (May 9, 2003, Quinn, J.) [ 34 Conn. L. Rptr. 560]. The court has reviewed both cases and it is clear that neither case involved a situation where a breach of contract claim was asserted which alleged a misappropriation of trade secrets. Instead, the plaintiffs in both Pro-Fitness and Brodeur, asserted a common-law claim for misappropriation of trade secrets. These cases are inapposite to the factual situation present in this case.
Based on the foregoing cases, commentary and legislative history relating to CUTSA, the court finds that a breach of contract claim relating to the misappropriation of trade secrets arising out of a contractual provision designed to protect against disclosure is not preempted by CUTSA and such claims may be brought independently of trade secrets claims.
In this action, the plaintiff and defendant signed an Agreement, whereby the defendant Worden agreed, among other things to refrain from using the plaintiff's confidential information or disclosing such information to anyone else. In consideration of the defendant Worden's entering into the Agreement and agreeing to be bound by the provisions contained therein, he received $4,300 in severance payments. In the Fifth Count of the amended complaint the plaintiff alleges that by using the plaintiff's confidential information, in this case pricing discounts, for his own benefit, and disclosing such information to other individuals and entities, the defendant breached the Agreement entered into by the parties. After reviewing the allegations in the Fifth Count of plaintiff's amended complaint and construing such count in the manner most favorable to sustaining its legal sufficiency, the court finds that CUTSA does not preempt the plaintiff's breach of contract claim as against the defendant Worden relating to defendant's alleged misappropriation of trade secrets.
III CONCLUSION
Based on the foregoing, defendant's Motion to Strike the Fifth Count of plaintiff's amended complaint is denied.