In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 05-2282 & 05-2302

HICKLIN ENGINEERING, L.C.,

Plaintiff-Appellant, Cross-Appellee,

v.

R.J. BARTELL AND R.J. BARTELL & ASSOCIATES, L.L.C.,

Defendants-Appellees, Cross-Appellants.

____________

Appeals from the United States District Court

for the Eastern District of Wisconsin.

No. 00-C-1516—Patricia J. Gorence, Magistrate Judge.

____________

ARGUED JANUARY 11, 2006—DECIDED FEBRUARY 22, 2006

____________

Before FLAUM, Chief Judge, and EASTERBROOK and

MANION, Circuit Judges.

EASTERBROOK, Circuit Judge. Axi-Line Precision Products designs and makes testing equipment for auto and

truck transmissions. Since 1998 Axi-Line has been

a division of Hicklin Engineering. Between 1993 and 2000

R.J. Bartell, an engineer, worked part-time for Axi-Line. He

did not sign a restrictive covenant or confidentiality

agreement. After Bartell began a competing business (R.J.

Bartell & Associates) that sells transmission testing

equipment, Hicklin filed this suit under Wisconsin’s version

of the Uniform Trade Secrets Act. Wis. Stat. §134.90. The
2 Nos. 05-2282 & 05-2302

parties agreed to final decision by a magistrate judge, see

28 U.S.C. §636(c), and Bartell prevailed on summary

judgment; the judge also sanctioned Hicklin for its refusal

to admit that Bartell had worked for Axi-Line as an independent contractor rather than as an employee. See Fed. R.

Civ. P. 37(c). Hicklin appeals from these decisions. Bartell,

who wants additional recompense for the expense of

litigation, has filed a cross-appeal.

Two procedural issues come ahead of the merits. Subjectmatter jurisdiction is the first. Both plaintiff Hicklin

Engineering, L.C., and defendant R.J. Bartell & Associates,

L.L.C., are limited liability companies. (The abbreviations

differ because they were organized under different states’

laws; they mean the same, just as both “Corp.” and “Inc.”

designate corporations.) The district court assumed that a

limited liability company, like a corporation, has two

citizenships: its state of organization and its principal place

of business. That’s not right. The citizenship of a limited

liability company is that of its members, see Cosgrove v.

Bartolotta, 150 F.3d 729 (7th Cir. 1998), and its members

may include partnerships, corporations, and other entities

that have multiple citizenships. See Carden v. Arkoma

Associates, 494 U.S. 185 (1990). A federal court thus needs

to know each member’s citizenship, and if necessary each

member’s members’ citizenships.

R.J. Bartell & Associates has only one member, Bartell,

who is a citizen of Wisconsin. Hicklin has a more complicated structure. Its jurisdictional statement under

Circuit Rule 28(a)(1) listed the states of which lawyers

deemed the members to be citizens but gave no details, and

its corporate disclosure statement under Fed. R. App. P.

26.1 and Circuit Rule 26.1 was faulty. So at oral argument

we directed counsel to file a supplemental statement

detailing Hicklin’s members and their citizenships. The

statement reveals that Hicklin has 65 members, some of

which have multiple citizenships—and some of these posed
Nos. 05-2282 & 05-2302 3

complex legal issues. For example, its members include

trusts of which national banks are trustees. The citizenship

of a trust is that of the trustee, see Navarro Savings Ass’n

v. Lee, 446 U.S. 458 (1980), and until Wachovia Bank v.

Schmidt, 126 S. Ct. 941 (2006), issued six days after this

appeal was argued, there was a distinct possibility that

national banks would be deemed citizens of every state in

which they had offices. But Wachovia Bank held that

national banks are citizens only of the states in which their

main offices are located, and that decision saves this case

from a jurisdictional dismissal even though it turns out that

the list of citizenships that counsel furnished in the Circuit

Rule 28(a)(1) statement is incorrect. Hicklin’s members

include citizens of Alaska, Iowa, North Dakota, Minnesota,

and Missouri, but none is a citizen of Wisconsin.

The second procedural question is whether we can discuss

in public the district court’s reasoning. Magistrate Judge

Gorence ordered the district clerk to keep both of her

substantive opinions under seal—not just portions that

revealed trade secrets, but the whole opinions. The resolution of this litigation thus has been concealed from the

public. The judge did not explain what authority permits a

federal court to issue entire opinions in secret. Redacting

portions of opinions is one thing, secret disposition quite

another. We have insisted that litigation be conducted in

public to the maximum extent consistent with respecting

trade secrets, the identities of undercover agents, and other

facts that should be held in confidence. See, e.g., Baxter

International, Inc. v. Abbott Laboratories, 297 F.3d 544 (7th

Cir. 2002); Grove Fresh Distributors, Inc. v. Everfresh Juice

Co., 24 F.3d 893 (7th Cir. 1994); In re Continental Illinois

Securities Litigation, 732 F.2d 1302 (7th Cir. 1984). See

generally Nixon v. Warner Communications, Inc., 435 U.S.

589 (1978). This means that both judicial opinions and

litigants’ briefs must be in the public record, if necessary in

parallel versions—one full version containing all details,
4 Nos. 05-2282 & 05-2302

and another redacted version with confidential information

omitted. Hicklin has filed multiple briefs using this procedure; the sealed brief contains a trade secret diagram

omitted from the public brief but otherwise is identical.

What happens in the federal courts is presumptively open

to public scrutiny. Judges deliberate in private but issue

public decisions after public arguments based on public

records. The political branches of government

claim legitimacy by election, judges by reason. Any step

that withdraws an element of the judicial process from

public view makes the ensuing decision look more like

fiat and requires rigorous justification. The Supreme

Court issues public opinions in all cases, even those said

to involve state secrets. See New York Times Co. v. United

States, 403 U.S. 713 (1971). A district court issued public

opinions in a case dealing with construction plans for

hydrogen bombs. United States v. Progressive, Inc., 467

F. Supp. 990, rehearing denied, 486 F. Supp. 5 (W.D. Wis.),

appeal dismissed, 610 F.2d 819 (7th Cir. 1979). We issued

a public opinion in a case whose subject was attorney-client

confidences that required the parties’ names and many

details to be withheld. See A Sealed Case, 890 F.2d 15 (7th

Cir. 1989). It is impossible to see any justification for

issuing off-the-record opinions in a dispute about drawings

of transmission testing equipment. We inquired at oral

argument whether the district court’s opinions contain any

information that Hicklin claims as a trade secret; we were

told that they do not. Accordingly, there is no reason even

for redaction. The Clerk of this court will place the district

court’s opinions in the public record. We hope never to

encounter another sealed opinion.

Bartell did not promise to avoid future competition with

Axi-Line. Nor did he promise in writing not to use his

drawings and ideas for any other entity. The district

court concluded that this means that Bartell may do as he

pleases with any information that Axi-Line furnished him,
Nos. 05-2282 & 05-2302 5

plus whatever he developed on his own. The second half

of this proposition is unimpeachable. As an independent

contractor, Bartell presumptively owned his work product.

See Community for Creative Non-Violence v. Reid, 490 U.S.

730 (1989). He was free to sell engineering solutions to AxiLine on either an exclusive or a non-exclusive basis, just as

lawyers may sell their legal solutions to clients on an

exclusive or non-exclusive basis. In the absence of

an agreement, non-exclusivity is the norm. See ConFold

Pacific, Inc. v. Polaris Industries, Inc., No. 05-1285 (7th Cir.

Jan. 10, 2006), slip op. 11-14 (Wisconsin law).

Thus a lawyer who develops a new form contract, securities indenture, or tax shelter when working for Client X

may reuse the language when dealing with Client Y, or may

publish the language in a treatise for all to see and emulate, unless he has promised X to keep silent. A software

programmer, working as an independent contractor for

Client Z, who develops a novel way to organize a database

may re-use the source code for another client’s project,

unless he promises otherwise. Norms of the trade might

reverse this presumption, but Hicklin has not proffered any

evidence that a mechanical engineer’s human capital or

knowledge, built up when working for a client, belong to

that client rather than the engineer.

Things are otherwise when the client rather than the

independent contractor develops the information. Then the

client presumptively owns the data, and the contractor may

use it only with the client’s consent. Again the legal profession supplies an example. Bidder decides to make a tender

offer for Target and supplies that information to Lawyer so

that the necessary forms and contracts may be prepared.

Lawyer is free to use (or re-use) form templates developed

when working for other clients but is not free to disclose (or

trade on) the impending offer, for that information is

Bidder’s property. See United States v. O’Hagan, 521 U.S.
6 Nos. 05-2282 & 05-2302

642 (1997). By working on the deal, Lawyer did not acquire

any property rights in the information Bidder supplied.

The law of trade secrets follows the same approach

to ownership, both in general, see Restatement (Third)

of Unfair Competition §43 comment c (1995), and in Wisconsin. See Wis. Stat. §134.90(2)(a) plus the definition of

“improper means” in §134.90(1); RTE Corp. v. Coatings,

Inc., 84 Wis. 2d 105, 117-18 (1978) (“Where what is thought

to be a trade secret is disclosed [to an independent contractor], the question posed is whether, under the circumstances, the recipient of the information knew or should

have known that the information is a trade secret and that

the disclosure was made in confidence. . . . A confidential

relationship does not arise when the parties are dealing at

arm’s length and the recipient has not been put on notice of

the confidential nature of the disclosure.”). See also 2-7

Milgrim on Trade Secrets §7.01[9][e] (discussing the

situation of consulting engineers). So Bartell did not acquire

any rights in Axi-Line’s trade-secret data just because he

used those data in the performance of his duties.

Would the record permit a reasonable jury to find that

Bartell knew that Axi-Line treated at least some of the data

it provided as trade secrets? It would. The information’s

nature—dimensions, materials, and tolerances on the parts

used to make dynamometers and other equipment—is one

reason. Many of these details (especially materials and

tolerances) would be hard to obtain by reverse engineering.

See United States v. Lange, 312 F.3d 263 (7th Cir. 2002)

(criminal conviction for disclosing information of this kind).

Axi-Line’s safeguards, of which Bartell knew, are another

reason. The firm took standard precautions, such as

perimeter fences, excluding unescorted visitors, and keeping

data under lock and key. Bartell himself suggested to AxiLine that certain plans (which Bartell had converted from

hand-drawn blueprints to computer-assisted-design models)

bear confidentiality legends, and Axi-Line told Bartell to
Nos. 05-2282 & 05-2302 7

include appropriate legends in his CAD models. Even

bearing the legend, these detailed models (and printouts

made from them) were not shown to customers or competitors.

From Bartell’s knowledge, and the norm that a client’s

information remains its property after an independent

contractor has worked with the data, a reasonable jury

could infer that Bartell implicitly agreed to use the data for

Axi-Line’s benefit rather than his own. Wisconsin does not

require an express, written contract of confidentiality. RTE

says as much, and although that decision predates the

state’s adoption of the Uniform Trade Secrets Act, every

decision we could find applying that statute holds that an

implied undertaking to abide by the trade’s norms of

confidententiality suffices. See, e.g., News America Marketing In-Store, Inc. v. Marquis, 86 Conn. App. 527, 862 A.2d

837 (2004); Frantz v. Johnson, 116 Nev. 455, 999 P.2d 351

(2000); Stampede Tool Warehouse, Inc. v. May, 272 Ill. App.

3d 580, 651 N.E.2d 209 (1st Dist. 1995); Marsico v. Cole,

1995 Del. Ch. LEXIS 78 (1995). And breach of an implicit

promise to hold information for the client’s sole benefit in

turn violates the Trade Secrets Act, Wis. Stat. §134.90(2)(a).

There remains the question whether Bartell did disclose

or use Axi-Line’s confidential information improperly.

Bartell contends that he did not reveal to anyone else the

CAD models that he built using Axi-Line’s data but just

looked at them to ensure that the new plans he was creating for his own business did not contain any obvious

blunders. Whether that is permissible under Wisconsin law

is an interesting question, but not one we need resolve,

given Hicklin’s contention that Bartell copied and used the

trade secrets wholesale rather than capitalizing on more

general knowledge that he had gained while working on

testing gear. There will be time enough to address the legal

issue if the trier of fact should conclude that Bartell’s “just

checking” version is the right one.
8 Nos. 05-2282 & 05-2302

On remand the parties and trier of fact will need to

separate Axi-Line’s contributions (which Hicklin owns) from

Bartell’s (which he owns), determine which of Axi-Line’s

data are trade secrets, ascertain whether Bartell recognized

that these data are confidential, pin down the use that

Bartell made of those trade secrets, and if necessary decide

whether Wisconsin law permits such a use. If Hicklin

prevails on these issues, the district court will have to select

an appropriate remedy.

Hicklin has presented additional legal theories, but the

district court need not consider them. These common-law

approaches have been superseded by the Trade Secrets Act.

See §7(a) of the Uniform Trade Secrets Act, enacted as Wis.

Stat. §134.90(6); ConFold, slip op. 12-14 (Wisconsin law);

Hecny Transportation, Inc. v. Chu, 430 F.3d 402 (7th Cir.

2005) (discussing the Illinois version of this provision). They

would in any event add little or nothing to the statutory

remedy, so they should be put to one side if only to streamline the litigation.

With respect to the award of attorneys’ fees under Rule

37(c)(2), the district court acted properly. Hicklin alleged,

ambiguously, that “Axi-Line engaged [Bartell’s] services.”

Bartell asked Hicklin to admit that he had been engaged as

an independent contractor rather than an employee. Hicklin

refused to do this, and Bartell supported his position so

thoroughly that Hicklin now concedes the matter. Rule 37(c)

directs (and does not just permit) a district court to award

attorneys’ fees and other costs to the party put to such proof

by refusal to admit. Hicklin now contends that this issue

was so transparently irrelevant to the litigation that Bartell

should have saved the expense of proof. That’s legally

wrong; the distinction between employee and independent

contractor affects who (presumptively) owns the work

product, as Community for Creative Non-Violence shows.

Anyway, if this was beside the point, why did Hicklin refuse

to admit that Bartell was an independent contractor? Its
Nos. 05-2282 & 05-2302 9

intransigence has led us to wonder what other issues in this

litigation have been raised more for the expense they

will force Bartell to bear than for their merit or salience.

Because Hicklin has largely prevailed on this appeal,

Bartell’s cross-appeal—which asks us to hold that Hicklin’s

suit lacks a reasonable basis and thus leads to fee-shifting

under Wis. Stat. §134.90(4)(c)—is unavailing. But if on

remand Bartell demonstrates that Hicklin has been exaggerating with respect to the facts, the district court should

take a fresh look at the subject.

The judgment is vacated (except with respect to the award

under Rule 37) and the case is remanded for proceedings

consistent with this opinion.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—2-22-06