Title: Dicks v. Jensen

State: vermont

Issuer: Vermont Supreme Court

Document:

Dicks v. Jensen (2000-102); 172 Vt. 43; 768 A.2d 1279

[Filed 09-Feb-2001]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                No. 2000-102

James Dicks and Condotel Properties, Inc.	   Supreme Court

                                                   On Appeal from
     v.	                                           Windham Superior Court

Cary and Brenda Jensen	                           December Term, 2000

Richard W. Norton, J.

Kristen P. Swartwout of Crispe & Crispe, Brattleboro, for Plaintiffs-Appellants.

Kirsten A. Peske, Potter Stewart, Jr. Law Offices, Brattleboro, for 
  Defendants-Appellees.

PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       Johnson, J.  Plaintiff James Dicks appeals from an order of the
  Windham Superior Court  granting summary judgment to defendants Cary and
  Brenda Jensen.  Plaintiff claims that defendants  violated the Vermont
  Trade Secrets Act, 9 V.S.A.§§ 4601-4609, when they left plaintiff's employ
  at  the Lodge at Mount Snow and solicited the Lodge's bus tour customers to
  start their own lodge in  Bennington, Vermont.  Plaintiff also alleges that
  defendants breached a fiduciary duty, the covenant  of good faith and fair
  dealing, and intentionally interfered with business relations.  We affirm.

 

       Plaintiff has owned the Lodge at Mount Snow (Lodge) in Dover, Vermont
  since 1971.   During the non-winter months, the Lodge relies heavily on
  business from bus tours of senior citizen  groups.  These tours are run by
  organizers who return to the Lodge year after year.  The bus tour  industry
  is highly competitive with various hotel owners in the region aggressively
  soliciting  business from the tour groups.  In 1991, plaintiff hired
  defendants to manage the Lodge and market  and run a bus tour business at
  the Lodge.  The defendants worked without an employment agreement  and ran
  most aspects of the Lodge's business.  They were responsible for
  advertising, soliciting, and  organizing the Lodge's bus tours.  Securing
  tour groups to visit the Lodge involved mass mailings to  lists of senior
  citizen tour groups collected through chambers of commerce, agencies on
  aging, and  mail order catalogs throughout the Eastern United States. 
  Because these mass mailings typically  have a very low response rate,
  defendants had to send additional promotional material, followed by  direct
  telephone solicitation.  The telephone solicitations resulted in twenty to
  sixty actual bookings  from an initial mailing of ten to fifteen thousand. 
  Booking a tour required about six months of lead  time.

       In 1997, defendants left the Lodge to open their own competing lodge,
  the Autumn Inn, in  Bennington.  Defendants contacted Lodge customers to
  inform them of the move.  They also  solicited business from the Lodge's
  regular bus tour customers.  Nine of eleven tours booked by  defendants
  their first season were with customers who had reservations booked at the
  Lodge who   canceled their reservations and rebooked with defendants.

       Plaintiff filed suit alleging, inter alia, that defendants had
  misappropriated the Lodge's  customer list, violating the Vermont Trade
  Secrets Act; that, in soliciting the Lodge's customers,   defendants had
  breached their fiduciary duty and the covenant of good faith and fair
  dealing to 

 

  plaintiff; and that defendants had tortiously interfered with the Lodge's
  business relations.  The trial  court, on a motion for summary judgment by
  defendants, ruled that defendants did not violate the  Trade Secret Act. 
  The court noted that a customer list could not be a trade secret if the
  content was  readily ascertainable from publically available sources. 
  Because the court found that the Lodge's  customer list was not developed
  by "extraordinary effort," it was, therefore, readily ascertainable and 
  not protected.  As to the breach of fiduciary duty claim, the court held
  that this claim was more  properly analyzed as a matter of tortious
  interference with business relations, and these claims were  tried,
  resulting in a verdict for defendants.

       On appeal, plaintiff alleges that summary judgment on the trade secret
  claim was  inappropriate because there were genuine issues of material fact
  as to whether the list is a trade  secret.  Plaintiff also claims that the
  court erred in treating his claim for breach of fiduciary duty,  good faith
  and fair dealing as substantially the same as his claim for tortious
  interference with  business activity.

                        I. Vermont Trade Secrets Act

       The Vermont Trade Secrets Act, 9 V.S.A. §§ 4601-4609, was enacted in
  1996 to prevent the  misuse of business information.  The statute allows
  injunctive relief and damages for  misappropriation of trade secrets.  9
  V.S.A. §§ 4602, 4603.  The Act was explicitly designed to  displace other
  common law remedies for misappropriation of trade secrets.  Id. § 4607.  A
  "trade  secret" is defined as:

    [I]nformation, including a formula, pattern, compilation, program, 
    device, method, technique, or process, that: (A) 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 (B) is the subject of efforts that are
    reasonable under the  circumstances to maintain its secrecy.

 

  Id. § 4601(3).

  We have not yet had occasion to consider the extent of trade secret
  protection in this context.  The  statute, however, is based on the Uniform
  Trade Secrets Act (amended 1985), 14 U.L.A 437 (1990),  which has been
  adopted in some form in forty-one states.  See, e.g., S.D. Codified Laws §
  37-29-1(4)  (2000) (definition of trade secret); Wash. Rev. Code
  §19.108.010(4) (2000) (same).  Thus, in  interpreting this statute we draw
  from the decisions of our sister states.  See 9 V.S.A. § 4608 (the act 
  shall be "construed to effectuate its general purpose to make uniform the
  law . . . among states  enacting it").  Further, because the Uniform Act
  codifies the basic principles of common law trade  secret protection, see
  Ed Nowogroski Ins. Inc. v. Rucker,