UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF INDIANA 

SOUTH BEND DIVISION 

HUNTING ENERGY SERVICES, INC., 

 Plaintiff, 

 v. 

JAMES KAVADAS and TUFF ROD, 

LLC, 

 Defendants. 

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Case No. 3:15-CV-228 JD 

OPINION AND ORDER

James Kavadas was a salesperson for Hunting Energy Services, Inc., which sells pipe for 

use in horizontal directional drilling. While still employed by Hunting, Mr. Kavadas began 

developing plans with one of his customers to start a new company to sell that same product in 

direct competition to Hunting. Those plans came to fruition, and Mr. Kavadas left Hunting to 

form Tuff Rod LLC, which began selling pipe to that customer and other Hunting customers. 

Hunting responded with this suit against Mr. Kavadas and Tuff Rod. It asserted a claim 

against both defendants for misappropriation of trade secrets, arguing that they built their 

business using the proprietary specifications for Hunting’s pipe, along with other information 

like its sales data and projections. Hunting also asserted other claims against Mr. Kavadas, 

including for breach of his confidentiality and non-compete agreement, for breach of his duty of 

loyalty for having competed against Hunting while still employed with it, and for fraud for 

requesting travel reimbursements for meetings with his customer when they were actually 

discussing plans to start the new company and take away Hunting’s business. 

Discovery has now closed, and the defendants have moved for summary judgment on all 

of Hunting’s claims. They also filed motions to strike expert opinions by a liability expert and a 
2 

damages expert. Hunting responded in opposition to each of those motions, and also filed a 

motion for default judgment. It argues that Mr. Kavadas and Tuff Rod intentionally destroyed 

documents even after becoming aware of their duty to preserve them for litigation. While some 

information has been recovered, other critical information, such as metadata that would show 

whether and when Mr. Kavadas accessed Hunting’s confidential information following his 

employment, has been lost forever. Hunting argues that this destruction of evidence warrants a 

default judgment as a sanction, or at the very least justifies an inference that any lost evidence 

would have been adverse to the defendants’ positions. 

The Court begins by addressing Hunting’s motion for default judgment. It then addresses 

the defendants’ motion to strike Hunting’s liability expert and their motion for summary 

judgment. Finally, the Court addresses the defendants’ motion to strike Hunting’s damages 

expert. 

I. FACTUAL BACKGROUND 

Hunting Energy Services is a corporation that provides a range of products and services 

in the oil and gas industry. One of its lines of business involves products for use in horizontal 

directional drilling. This method of drilling allows pipes to be inserted underground without 

having to dig a trench along the length of the pipe, making it useful for pipes that need to be 

installed under rivers or roadways, for example. Using this method, a portable drilling machine 

drives drill pipe underground at a shallow angle. As the pipe extends farther underground, 

additional lengths of pipe are attached to the end to continue drilling until the pipe reaches the 

ground on the other side. Once the path has been drilled, pipes or cables can be pulled through 

and placed without the need to dig a trench. 

A key component of this process is the drill pipe itself. Hunting manufactures a premiumgrade horizontal-directional drill pipe. The chemistry of the pipe’s steel is a key factor in how 
3 

well the pipe performs in the field, and Hunting uses a proprietary formula that it developed over 

years of trial and error and field and lab testing. The formula for Hunting’s pipe is set forth in a 

specification that outlines the pipe’s chemical composition, as well as its mechanical properties 

and the testing and quality control requirements. The formula does not contain set amounts for 

each ingredient; it specifies acceptable ranges of each of the alloying elements and maximum 

allowable levels for certain contaminants. Once the pipe has been forged based on that formula, 

it then goes through a treatment process known as quenching and tempering, during which the 

pipe is heated and then rapidly cooled. There are many variables in the way that process can be 

performed, and those variables can need to be adjusted due to even minor changes in the pipe’s 

chemistry. The performance of Hunting’s pipe in the field is a function of the chemistry, the 

quenching and tempering of the steel, and Hunting’s internal quality requirements. Once the pipe 

is forged according to that process, it undergoes a finishing process that includes threading the 

ends of the pie. 

James Kavadas joined Hunting as a salesperson in 2008. His territory included a number 

of states in the Midwest, plus Western Canada. In July 2009, Mr. Kavadas signed a contract 

entitled “Agreement Relating to Inventions, Confidential Information and Other Intellectual 

Property.” In the agreement, Mr. Kavadas agreed not to use any of Hunting’s confidential 

information except as required by his position, not to disclose any of Hunting’s confidential 

information without prior authorization, and to return all confidential information in his 

possession upon the termination of his employment. The agreement also included non-compete 

provisions. Mr. Kavadas agreed that for two years after the termination of his employment with 

Hunting, he would not compete for, solicit, or provide services to any customer with whom he 

had material contact and dealings in the last two years of his employment. 
4 

Sometime later, Mr. Kavadas’ boss asked him to consider changing his compensation 

structure from salary-only to a combination of salary and commissions. Mr. Kavadas was not 

required to do so, but after considering the arrangement he agreed to the new compensation 

structure. His supervisor thus gave him a two-page offer letter that outlined the new terms of his 

compensation, including his salary, commissions, benefits, and reimbursements. Mr. Kavadas 

signed that offer letter in February 2013. 

During his time with Hunting, Mr. Kavadas’ best customer was Underground Tools, Inc., 

a dealer located in Minnesota. UTI’s owners were Mike Burns and Jamie Lindahl. In January 

2013, Mr. Burns and Mr. Lindahl approached Mr. Kavadas about forming a new company called 

Tuff Rod, which would sell drill pipe in competition to Hunting. They wanted to have the pipe 

manufactured in China and imported, which they believed would allow them to sell it for cheaper 

prices. Mr. Kavadas agreed, and the three of them began making arrangements to develop their 

new business, as Mr. Kavadas remained employed by Hunting. 

Hunting alleges that Mr. Kavadas began using and disclosing its trade secrets and 

confidential information at that point as part of his efforts to develop Tuff Rod. Mr. Kavadas 

began speaking to a supplier in China, Wuxi Double Horse Drilling Tool Co., which he wanted 

to manufacture the pipe. In January 2013, Mr. Kavadas emailed the specification for Hunting’s 

pipe to himself, for reasons he was unable to explain except to note that he also drafted Tuff 

Rod’s specification that month. Although the chemical formulas contained in Tuff Rod’s 

specification were not the same as Hunting’s, much of the rest of its content matched Hunting’s 

verbatim. Mr. Kavadas even admitted that, other than its chemistry, he created Tuff Rod’s 

specification using Hunting’s. Mr. Kavadas asserts that the chemistry included in the 

specification had been proposed to him by Wuxi, but that communication has never been 
5 

produced. Mr. Kavadas later proposed “tweaking” the chemistry, even though he is not a 

metallurgist. 

Over the ensuing months, Mr. Kavadas also drafted a set of projections for sales of Tuff 

Rod’s pipe, and he updated those projections on multiple occasions. Throughout that time, he 

had access to his own sales data and projections for Hunting’s products. In addition, in January 

2014, Mr. Kavadas gathered the sales data for all of Hunting’s salespeople, to compile into a 

presentation for the annual sales meeting. Shortly after that meeting, Mr. Kavadas sent an email 

to Wuxi in which he mentioned Tuff Rod’s projections and noted that they had “spent the last 

couple months (especially last 4 weeks) learning what each company wants and needs.” Mr. 

Kavadas was unable to recall during his deposition what he had been doing over that time to 

learn the companies’ needs, and testified that he came up with the projections based only on his 

experience in the industry. 

Also in January 2014, Mr. Kavadas asked Wuxi if they could send him the technical 

drawings for Vermeer’s pipes, another competing seller of drill pipe. Wuxi declined, noting that 

they had a confidentiality agreement with Vermeer. Mr. Kavadas forwarded the email to Mr. 

Burns and Mr. Lindahl, saying, “Need to move to plan B for tong space dimensions,” referring to 

a particular dimension of drill pipe. Two weeks later, Mr. Kavadas sent Wuxi tong space 

dimensions for five different lengths of pipe. Mr. Kavadas testified that he determined those 

dimensions by holding his phone up to Hunting’s finished pipes to estimate their length. 

However, those dimensions—set forth in acceptable ranges, not specific lengths—matched 

exactly the dimensional ranges in Hunting’s drawings for its pipes after forging. And even 

though the lengths were each in quarter-inch increments, Mr. Kavadas wrote the decimals out to 

the thousandth of an inch, just as in Hunting’s drawings. 
6 

As part of his job as a salesperson for Hunting, Mr. Kavadas was required to make sales 

calls to his customers. Three of those customers, including UTI, were located in Minnesota. Mr. 

Kavadas thus made a number of trips to Minnesota in the same period as he was developing Tuff 

Rod. On each of those trips, Mr. Kavadas would meet with each of the three customers on 

successive days. Mr. Kavadas admits that, when he met with UTI, he would sometimes also 

discuss Tuff Rod’s business with Mr. Burns and Mr. Lindahl. As with all of his travel, Mr. 

Kavadas submitted expense reports to Hunting for reimbursements for the costs of his travel. 

Hunting was not aware during this time that Mr. Kavadas was developing a new 

competing business. In fact, Mr. Kavadas even communicated with Wuxi using a pseudonym 

instead of his real name. By March 2014, however, Tuff Rod had already imported pipe into the 

country and was ready to begin making sales. On March 31, 2014, Mr. Kavadas gave his two 

weeks’ notice to Hunting; Hunting terminated his employment immediately. The next day, Tuff 

Rod was officially formed and began operations. Tuff Rod thereafter began selling its drill pipe 

in competition to Hunting, and was successful in selling to many customers who had previously 

purchased from Hunting. 

Prior to leaving Hunting, Mr. Kavadas had communicated with Mr. Burns and Mr. 

Lindahl and Tuff Rod’s suppliers using his personal email account and another account they 

created for use for Tuff Rod business, usadrillpipe@yahoo.com. Shortly after Tuff Rod officially 

launched, they deleted the usadrillpipe account, so its contents were destroyed. In addition, Mr. 

Kavadas’ personal email account has not be searched in response to the requests for production 

in this case, even though the defendants agree that it would contain responsive documents. Mr. 

Kavadas also had many Hunting documents on his personal computer, as he used that computer 
7 

as his work computer. Upon leaving Hunting, though, he did not return any of the documents or 

files in his possession. 

In December 2014, Hunting sent Mr. Kavadas a cease and desist letter. The letter alleged 

that Mr. Kavadas had used Hunting’s trade secrets and confidential information in forming Tuff 

Rod. The letter contended that Mr. Kavadas was in breach of his non-compete agreement and 

that he had misappropriated its trade secrets, among other claims. The letter further outlined the 

remedies Hunting believed it was entitled to, including damages, attorneys’ fees, and an 

injunction. The letter also insisted that Mr. Kavadas identify all of the Hunting information in his 

possession and allow Hunting to inspect his computer and electronic devices. In March 2015, 

Hunting sent a letter to Mr. Burns, notifying him that litigation was “imminent” and directing 

him to preserve all relevant documents. Mr. Burns forwarded that letter to Mr. Kavadas. After 

receiving that letter, though, Mr. Kavadas intentionally deleted from his computer all of the files 

relating to Hunting. Those included the specification for Hunting’s pipe and various other 

confidential information. A computer expert was later able to recover some of the files Mr. 

Kavadas deleted. However, the metadata for those files, which would have shown when Mr. 

Kavadas had last accessed them, among other information, was lost forever. 

Hunting filed this suit in May 2015.1

 Its complaint first asserts a claim against Mr. 

Kavadas and Tuff Rod for misappropriation of trade secrets. It also asserts three claims against 

Mr. Kavadas alone, including breach of contract, breach of fiduciary duty, and fraud. Discovery 

 

1

 The Court has diversity jurisdiction under 28 U.S.C. § 1332. According to the complaint, 

Hunting is a corporation that is incorporated in the state of Delaware with its principal place of 

business in Texas, so it is a citizen of Delaware and Texas [DE 38 ¶ 1]; Mr. Kavadas is a citizen 

of Indiana, id. ¶ 6; and Tuff Rod is a limited liability company whose sole member, Michael 

Burns, is a citizen of Minnesota, id. ¶ 3, so Tuff Rod is a citizen of Minnesota. The amount in 

controversy also exceeds $75,000.
8 

has now closed, and the parties have filed a number of motions. Hunting moved for a default 

judgment for the defendants’ spoliation of evidence. In the alternative, it requests an adverse 

inference that the destroyed evidence would have been unfavorable to the defendants. The 

defendants filed a motion for summary judgment, as well as motions to strike testimony by two 

expert witnesses for Hunting. All of those motions have been fully briefed. 

II. MOTION FOR DEFAULT JUDGMENT 

Hunting moves for default judgment as a sanction for the defendants’ destruction of 

evidence. In the alternative, it requests an adverse inference that the materials in question would 

have been unfavorable to the defendants. Hunting identifies four categories of evidence that was 

destroyed or that the defendants failed to produce: (1) samples of drill pipe that Tuff Rod had 

tested, the results of which the defendants’ expert relied on; (2) Mr. Kavadas’ personal email 

account—the “jkcubs” account—which the defendants failed to search for documents responsive 

to Hunting’s discovery requests and the Court’s order to compel; (3) the 

usadrillpipe@yahoo.com email account, which was deleted shortly after Tuff Rod began 

operations; and (4) documents on Mr. Kavadas’ personal computer, which he “purged” of files 

relating to Hunting even after receiving a demand letter and a preservation request. 

Parties have a duty to preserve evidence once they know or should know that litigation is 

imminent. Trask-Morton v. Motel 6 Operating L.P., 534 F.3d 672, 681 (7th Cir. 2008); Weitzman 

v. Maywood, Melrose Park, Broadview Sch. Dist. 89, No. 13 C 1228, 2014 WL 4269074, at *2 

(N.D. Ill. Aug. 29, 2014) (“When a party first reasonably foresees that litigation is on the 

horizon, it must suspend its ordinary policies governing how information is retained or destroyed 

and put into place a litigation hold to preserve relevant material.”). If a party violates that duty in 

bad faith, a court can enter default judgment or draw an adverse inference that the destroyed 

evidence would have been unfavorable to the party’s position. Park v. City of Chi., 297 F.3d 606, 
9 

615 (7th Cir. 2002); Fed. R. Civ. P. 37(e)(2). In this context, “‘bad faith’ means destruction for 

the purpose of hiding adverse information.” Mathis v. John Morden Buick, Inc., 136 F.3d 1153, 

1155 (7th Cir. 1998); Bracey v. Grondin, 712 F.3d 1012, 1019 (7th Cir. 2013) (“[T]he crucial 

element is not that the evidence was destroyed but rather the reason for the destruction.”). Absent 

a finding of bad faith, a court can take lesser measures as may be necessary to cure any prejudice 

if a party has failed to take reasonable steps to preserve evidence. See Fed. R. Civ. P. 37(e)(1). 

The authority to impose sanctions comes from both the federal rules and a court’s inherent 

authority to manage judicial proceedings and to regulate the conduct of those appearing before it. 

Ramirez v. T&H Lemont, Inc., 845 F.3d 772, 775–76 (7th Cir. 2016). 

A. Pipe Samples 

First, Hunting argues that the defendants failed to preserve pipe samples that Tuff Rod 

sent for testing. In September 2015, Mr. Lindahl sent three samples of pipe to Element Materials 

Technology for testing on behalf of Tuff Rod: one Hunting pipe, one Tuff Rod pipe, and one 

pipe from a competitor. Mr. Lindahl states that he sent those samples for testing in the ordinary 

course of Tuff Rod’s business, not for purposes of litigation. He did not request that the samples 

be returned once the testing was completed, so the pipe was disposed of by Element Materials 

following the testing. The defendants and their expert argue that the test results show that Tuff 

Rod’s pipe is not the same as Hunting’s, and is more comparable to the competitor’s. Hunting 

argues that it has been prejudiced by the loss of samples because it cannot perform its own 

confirmatory tests on those samples and it cannot examine identifying information on the 

samples that would indicate their origin and date. Hunting argues that those details are important 

to its case in light of its theory that the defendants modified their pipe over time to more closely 

match Hunting’s formula. 
10 

First, Tuff Rod’s duty to preserve evidence had already attached by the time these 

samples were destroyed, as Hunting had filed its complaint months earlier. Cohn v. Guaranteed 

Rate, Inc., 318 F.R.D. 350, 354 (N.D. Ill. 2016) (“At the latest, this duty [to preserve] attaches 

when the plaintiff informs the defendant of [its] potential claim.”). All Tuff Rod had to do to 

prevent these samples from being destroyed was to request that they be returned after the testing 

was done, but it failed to do so. See Fed. R. Civ. P. 37(e) (authorizing sanctions to cure prejudice 

for evidence that is lost “because a party failed to take reasonable steps to preserve it”). And 

when Tuff Rod received the results, it clearly drew a connection to Hunting’s claims of 

misappropriation: Mr. Kavadas sent an email to his partners with the test results, stating, “Our 

steel is no where [sic] near Hunting. We are very close to Vermeer.” [DE 104-15 p. 1–2]. Yet, 

despite being under an obligation to preserve evidence, and understanding the relevance of the 

tests to this case, the defendants failed to preserve this evidence. 

The Court must therefore consider whether sanctions are warranted for this loss of 

evidence pursuant to its inherent authority.2 See Ramirez, 845 F.3d at 776. The defendants argue 

that sanctions are not warranted for the loss of this evidence because Hunting could have bought 

pipes made by each of the different companies and performed its own tests on those samples at 

any time during (or before) this litigation, just as Tuff Rod did as to these samples. The Court 

agrees for that reason that a default judgment or adverse inference are not appropriate as to this 

evidence. This was not evidence that Hunting needed to support its claim; the harm is that 

Hunting is impaired in its ability to fully respond to the defendants’ use of this evidence. 

 

2

 As the defendants note, Rule 37(e) is not applicable here, as it applies to electronically stored 

information.
11 

Hunting has still been prejudiced in that respect, though. Hunting’s inability to perform 

confirmatory tests on the samples is perhaps less concerning, as the fact that the testing was 

performed by an independent lab provides a basis for confidence in its accuracy. The failure to 

provide identifying information for each of the samples (which would have been available had 

the samples themselves been preserved) is more problematic, though. Without information about 

the samples’ origin and when they were manufactured, Hunting cannot meaningfully respond to 

this evidence and place it in its context. It would not be fair to allow the defendants to rely on 

this evidence—the support for which they failed to preserve—without allowing Hunting to 

respond to it in that manner. Accordingly, the Court believes that the appropriate consequence is 

to bar the defendants from relying on these tests, so the Court will not permit the defendants to 

use these test results at trial. See Fed. R. Civ. P. 37 advisory committee notes to 2015 amendment 

(“[I]t may be appropriate to exclude a specific item of evidence to offset prejudice caused by 

failure to preserve other evidence that might contradict the excluded item of evidence.”). 

B. “jkcubs” E-Mail Account 

Next, Hunting seeks sanctions for the defendants’ failure to search the “jkcubs” email 

account for documents responsive to its requests for documents, which were also the subject of 

an order compelling discovery. Unlike the other documents at issue, these documents have not 

been destroyed, they just have not been produced. This was Mr. Kavadas’ personal email 

account, which he used to communicate with Wuxi and others while still employed by Hunting. 

The parties agree that this account contains emails that would be responsive to Hunting’s 

document requests. In addition, when a dispute arose as to the scope of those requests, the Court 

granted a motion to compel, ordering the defendants to produce emails through April 1, 2016 

relating to their communications with Tuff Rod’s suppliers. [DE 73]. Complying with that order 

would have required the defendants to search this email account, but they have not done so. 
12 

The defendants represent that this account was collected by their discovery vendor as part 

of the discovery process. For unknown reasons, however, this account was not included in the 

documents that were searched in producing discovery. That fact was not disclosed to Hunting 

until it came to light during Mr. Kavadas’ deposition, shortly before the close of discovery. 

Defense counsel represent that that was the first they learned of this as well. Hunting then moved 

to extend the discovery deadline to address this and other issues, but the defendants opposed that 

motion and the magistrate judge denied it, noting that the deadline to file motions to compel 

discovery had passed months ago.3

The defendants argue that no sanctions are warranted for their failure to produce these 

documents because it was an “innocent oversight.” Conspicuously absent from their response 

brief, however, is a representation that they have since cured that oversight. To the contrary, they 

admit that they have not done so. The defendants’ oversight might have been innocent initially, 

but that is no longer the case—in failing to produce documents from this account, the defendants 

are openly violating the Court’s order to compel and their Rule 26(e) obligation to supplement 

their discovery responses. 

Under Rule 26(e), a party who has responded to a request for production must 

supplement its response “in a timely manner if the party learns that in some material respect the 

disclosure or response is incomplete or incorrect.” Fed. R. Civ. P. 26(e)(1)(A). The defendants 

learned that their response was incomplete during Mr. Kavadas’ deposition in April 2017. Over 

seven months later, when they responded to the motion for default judgment, they still had not 

 

3

 The defendants argue that the motion for default judgment is itself untimely under the deadline 

for discovery motions. This is not a motion to compel or for a protective order, though, so that 

deadline is not applicable here.
13 

produced this discovery.4

 The fact that discovery has since closed does not relieve them of this 

obligation, either, as “a party’s obligation to supplement discovery under Rule 26(e) does not end 

when discovery closes.” MemberSelect Ins. Co. v. Electrolux Home Prod., Inc., No. 13 CV 4097, 

2015 WL 6083201, at *6 (N.D. Ill. Oct. 15, 2015); accord United States v. Dish Network, L.L.C., 

No. 09-3073, 2016 WL 29244, at *6 (C.D. Ill. Jan. 4, 2016); Francis v. AIT Labs., No. 1:07-CV0626, 2008 WL 2561222, at * 1 (S.D. Ind. June 26, 2008); Episcopo v. Gen. Motors Corp., No. 

02 C 8675, 2004 WL 628243, at * 7 (N.D. Ill. Mar. 29, 2004). Moreover, the magistrate judge’s 

denial of the motion to extend discovery does not absolve the defendants of their discovery 

violations—the defendants cannot get off scot-free for these violations and avoid producing these 

relevant materials just because they were able to run out the clock on the discovery period 

through their own neglect. 

The defendants also argue that Rule 37(e) is inapplicable here because these documents 

were not “lost,” only withheld. That is true, but Rules 37(b) and (c) do apply. Under Rule 37(b), 

a Court may impose sanctions if a party “fails to obey an order under Rule . . . 37(a).’ Fed. R. 

Civ. P. 37(b)(2). There is no dispute that the Court’s order required the defendants to produce 

responsive emails from this account and that they have not done so, thus failing to obey the 

Court’s order. Likewise, Rule 37(c) authorizes sanctions if “a party fails to provide information 

or identify a witness as required by Rule 26(a) or (e).” Fed. R. Civ. P. 37(c)(1). The defendants 

learned that their discovery responses were incomplete yet failed to supplement them as required 

by Rule 26(e). The Court also has inherent authority to impose sanctions for discovery abuses. 

Ramirez, 845 F.3d at 776. 

 

4

 Nor, during the period in which these motions have been pending, has either party notified the 

Court that these documents have now been produced.
14 

The defendants’ conduct and ongoing failure to produce these documents leave the Court 

with no choice but to impose sanctions. The defendants argue that the prejudice is limited 

because any emails that Mr. Kavadas sent from this account to Mr. Burns or Mr. Lindahl would 

have been produced from those individuals’ accounts. However, those individuals’ accounts 

would not necessarily include emails between Mr. Kavadas and Tuff Rod’s suppliers in China.5

And the extent of information that Mr. Kavadas sent to the suppliers is central to Hunting’s 

claims. The Court does not find that default judgment is warranted on this basis, though, in part 

because this conduct is potentially remediable, and also because lesser sanctions would suffice to 

address the prejudice, as discussed below. However, the Court agrees with Hunting that an 

adverse inference is warranted, at least at this stage. The defendants have the ability to—and 

have been ordered to—produce emails from this account. In failing to do so, they are willfully 

preventing Hunting from accessing or relying on those documents in support of its case, thus 

warranting an inference that these materials would be harmful to their case. The Court will 

consider lifting this sanction for purposes of trial, though, if the defendants produce all 

responsive documents from this account within 28 days and compensate Hunting for the costs it 

incurred due to the untimely disclosure. 

C. usadrillpipe@yahoo.com Account and Mr. Kavadas’ Personal Computer 

Finally, Hunting seeks sanctions for the defendants’ deletion of the 

usadrillpipe@yahoo.com email account and Mr. Kavadas’ “purge” of discoverable information 

from his computer. The defendants created and used the usadrillpipe account to communicate 

with suppliers and others while they were in the process of developing Tuff Rod. After they 

 

5

 The defendants suggest that Hunting should have sought discovery from Wuxi, but they have 

not shown that seeking discovery from a foreign non-party to this litigation would have been 

practicable. As Hunting outlines in its reply, that could be a protracted process with questionable 

likelihood of success.
15 

officially began Tuff Rod in April 2014, however, at which time they had Tuff Rod-hosted email 

accounts, they deleted usadrillpipe account, leading to the loss of its contents. As to the 

computer, Mr. Kavadas used his personal computer for his work for Hunting, so it contained 

many Hunting documents. Those included the specification for Hunting’s pipe and other 

confidential information that Hunting accuses the defendants of misappropriating. At some point 

in early 2015, however, he intentionally deleted all Hunting-related documents from that 

computer. The defendants’ discovery consultant was successful in restoring some of those 

documents, but it has no way of knowing how many additional documents were deleted but not 

recovered. In addition, the defendants were unable to restore any of the metadata for any of those 

files, which would have included information about when Mr. Kavadas accessed those files. 

There is no question that the duty to preserve evidence had attached before Mr. Kavadas 

deleted the documents from his computer. In December 2014, counsel for Hunting sent Mr. 

Kavadas a cease and desist letter. The letter outlined the claims that Hunting believed it had 

against Mr. Kavadas and the damages it would seek, and the letter insisted that Mr. Kavadas 

provide Hunting with a variety of information and with access to his computers and electronic 

devices. In March 2015, Hunting also sent a letter to Mr. Burns stating that litigation between 

Hunting and Mr. Kavadas “is imminent,” and directing Mr. Burns to preserve evidence. Mr. 

Burns forwarded a copy of that letter to Mr. Kavadas. The defendants’ attorneys also issued the 

defendants a litigation hold letter of their own around the same time. Nonetheless, sometime 

later, Mr. Kavadas intentionally deleted all Hunting files from his computer. 

The defendants dispute, however, whether the duty to preserve had attached when the 

usadrillpipe email account was deleted. That occurred in April or May 2014, before suit was 

filed and before Hunting had sent a demand letter or preservation request. In arguing that the 
16 

defendants were nonetheless aware of the likelihood of litigation at that point, Hunting relies on 

an email that Mr. Kavadas sent to Mr. Burns and Mr. Lindahl in October 2013. In the email, Mr. 

Kavadas identified a number of issues that needed to be addressed in developing Tuff Rod as a 

business. Under the heading of “Documentation,” he stated: 

One of the things my attorney strongly suggested was that in case Hunting tries to 

enforce non-compete we need to have documentation trail about job description 

etc. I need you guys to start sending me some mails inquiring about a new venture 

you guys are looking at and wondered if I were interested as Purchasing Manager 

etc. 

[DE 104-18 p. 3 (verbatim)]. Below that Mr. Kavadas listed four “Major Risks in the Business 

Model,” the fourth of which was “JK [James Kavadas] getting sued.” Id.

The duty to preserve evidence attaches when a party knows or should know that litigation 

is imminent. Trask-Morton, 534 F.3d at 682. Court have also described that duty as applying 

when a party has “reason to anticipate litigation,” Buonauro v. City of Berwyn, No. 08 C 6687, 

2011 WL 3754820, at *6 (N.D. Ill. Aug. 25, 2011), “reasonably foresees that litigation is on the 

horizon,” Weitzman, 2014 WL 4269074, at *2, or has notice “that litigation is likely to 

commence,” Larson v. Bank One Corp., No. 00 C 2100, 2005 WL 4652509, at *10 (N.D. Ill. 

Aug. 18, 2005); see also Jones v. Bremen High Sch. Dist. 228, No. 08 C 3548, 2010 WL 

2106640, at *5 (N.D. Ill. May 25, 2010) (“This duty [to preserve] arises when a reasonable party 

would anticipate litigation and does not depend on a court order.”); Zubulake v. UBS Warburg 

LLC, 200 F.R.D. 212 (S.D.N.Y. 2003) (“The obligation to preserve evidence arises when the 

party has notice that the evidence is relevant to litigation or when a party should have known that 

the evidence may be relevant to future litigation.”). 

The Court finds that standard was met here by the time the usadrillpipe account was 

deleted. In his October 2013 email, Mr. Kavadas identified “getting sued” as one of the “Major 

Risks in the Business Model.” [DE 104-18 p. 3]. He also mentioned having spoken to an attorney 
17 

about the potential to be sued by Hunting to enforce his non-compete agreement. And perhaps 

most notably, he asked his partners to send him phony emails to create a paper trail to be used to 

defend against such a suit. The defendants argue that this does not suffice because “litigation is 

an ever-present possibility in our society,” so the mere possibility of a future suit cannot trigger 

the duty to preserve evidence. This was not a mere possibility of future litigation, though. The 

defendants anticipated a specific claim by a specific party, had discussed that claim with an 

attorney, and identified “getting sued” as a “major risk.” They also viewed litigation as 

sufficiently likely to warrant fabricating a paper trail; they can hardly argue that they were 

entitled to destroy harmful evidence at the same time they were discussing creating evidence to 

be used in their favor. 

Hunting had not filed suit or sent a cease and desist letter at that point, but that was 

because the defendants did not disclose their plans or activities, so Hunting had no reason to 

know about them. In fact, Mr. Kavadas went so far as to communicate with the suppliers using a 

pseudonym in order to conceal his participation. The defendants also argue that, at the time the 

email was sent in October 2013, they were still in the planning phases of determining whether 

the business was a viable option. When the usadrillpipe account was deleted in April or May 

2014, though, they had already gone ahead with the idea and formed the business. The 

defendants clearly anticipated that litigation was likely once they began competing and Hunting 

learned of their plans, so the duty to preserve had attached by that time. 

Other courts have found that the duty to preserve attached in similar circumstances. In 

Buonauro, the court found that a city was obligated to preserve evidence relevant to a licensing 

dispute by the time the matter was discussed at a committee meeting, as the minutes for that 

meeting indicated that the council “understood that its consideration of this issue included 
18 

potential litigation.” 2011 WL 3754820 at *6. And in Zubulake, which involved employment 

claims, the court held that the duty to preserve was triggered even while the plaintiff was still 

employed. 220 F.R.D at 216–17. Emails in which other employees discussed the plaintiff 

included “attorney client privilege” in the subject line, even though the emails did not include 

attorneys. One of the employees also testified that he feared litigation by that time. The court 

found that “almost everyone associated with [the plaintiff] recognized the possibility that she 

might sue,” so the duty to preserve had attached. Id. at 217. Here, Mr. Kavadas feared litigation, 

noting it as one of the “major risks” of the business; he directly referred to the possibility that 

Hunting would sue to enforce the non-compete agreement; and he sought to prepare for that 

potentiality. Thus, the Court concludes that the duty to preserve had attached by the time the 

usadrillpipe account was deleted. 

This destruction of both the usadrillpipe account and the files on Mr. Kavadas’ computer 

carries a great potential for prejudice to Hunting. Mr. Kavadas used the usadrillpipe account to 

communicate with his suppliers while he was developing Tuff Rod’s drill pipe, and the contents 

of those communications are central to Hunting’s claims. An unknown number of those 

communications have been lost, though. The defendants claim that Wuxi sent them proposed 

chemistries for the pipe, but that email has never been produced. There are other instances as 

well where the defendants testified about specific communications (or the lack thereof) that have 

not been produced or cannot be verified. The deletion of documents from Mr. Kavadas’ 

computer is also highly prejudicial. It is undisputed that Mr. Kavadas had many of Hunting’s 

confidential files on his computer even after his employment ended. A key question to Hunting’s 

claims is whether Mr. Kavadas continued to access or rely on that confidential information after 

his employment. The metadata to those files may have answered that question, as it would show 
19 

when those files were last accessed. However, the metadata was lost when the files were deleted, 

and the defendants’ discovery consultant represents that it is impossible to restore that 

information. The destruction of that important evidence thus cannot go unanswered. 

The Court finds that the appropriate resolution is to present this issue to the jury and 

instruct it that it should draw an adverse inference as to any documents it concludes were 

destroyed in bad faith. To begin with, the Court does not find that default judgment is warranted. 

Some of the disputed elements of Hunting’s claims are unrelated to the evidence in question—

such as whether Hunting’s information constitutes trade secrets, and whether the non-compete 

agreement is enforceable—so entering a default judgment would be punitive, not compensatory. 

The Court does not find that the circumstances here warrant that response. 

In Global Material Techs., Inc. v. Dazheng Metal Fibre Co., No. 12 CV 1851, 2016 WL 

4765689 (N.D. Ill. Sept. 13, 2016), on which Hunting relies, the defendants not only destroyed 

evidence and failed to produce discovery, they also repeatedly lied to the court and committed a 

number of other discovery violations. And in Krumwiede v. Brighton Assocs., L.L.C., No 05 C 

3003, 2006 WL 1308629 (N.D. Ill. May 8, 2006), the defendant modified or deleted thousands of 

files even after the complaint was filed and after the defendant was ordered to turn over the 

computer, and also lied to the court. Here, although Hunting disbelieves the sincerity of the 

defendants’ explanations for why they destroyed the documents, the defendants have been 

forthright in admitting that the documents were destroyed. They have also made at least some 

effort to mitigate the prejudice, restoring as many of the deleted files as they could from Mr. 

Kavadas’ computer. 

In addition, the Court believes that an adverse inference would appropriately account for 

the destruction of this evidence should the jury find the destruction to be in bad faith. An adverse 
20 

inference would equate to a finding that Mr. Kavadas disclosed Hunting’s specification to Tuff 

Rod’s supplier, and that he improperly used and disclosed other confidential information while 

working for Hunting and after moving to Tuff Rod. That would establish that he violated the 

confidentiality agreement and his duty of loyalty, and that the defendants misappropriated any 

information found to be a trade secret. Given the severity of that outcome, the greater sanction of 

default judgment is unwarranted. At the same time, imposing no sanctions at all, as the 

defendants suggest, would be inappropriate. The prejudice to Hunting is substantial, and a 

finding that the defendants destroyed the documents in bad faith would justify this significant 

consequence. 

The Court also believes that it is appropriate for the jury, rather than the Court, to decide 

whether the destruction of this evidence was in bad faith. The committee notes to Rule 37 

contemplate that possibility. Fed. R. Civ. P. 37 advisory committee notes to 2015 amendments 

(“If a court were to conclude that the intent finding should be made by a jury, the court’s 

instruction should make clear that the jury may infer from the loss of the information that it was 

unfavorable to the party that lost it only if the jury first finds that the party acted with the intent 

to deprive another party of the information’s use in the litigation.”). The Seventh Circuit has also 

issued a pattern jury instruction addressing an adverse inference finding. Seventh Circuit Pattern 

Civil Jury Instructions § 1.20. 

There is evidence from which the jury could make such a finding. The defendants 

anticipated litigation with Hunting and surely knew that these materials would be relevant to that 

litigation. And by the time he deleted the documents from his computer, Mr. Kavadas had 

received a cease and desist letter in which Hunting demanded access to his computer, plus 

preservation letters from Hunting and from his own attorneys. He nonetheless intentionally 
21 

deleted hundreds of files. Mr. Kavadas had also previously suggested fabricating a paper trail to 

defend against Hunting’s claim, which could suggest a willingness to manipulate the documents 

in his favor. The jury could thus find that the defendants destroyed the evidence in order to cover 

their tracks. On the other hand, the defendants proffer facially neutral reasons for these actions. 

They indicate that they closed the usadrillpipe account because they created their own Tuff Rodhosted email accounts, so the account was no longer necessary. Mr. Kavadas also states that he 

deleted the documents from his computer because he believed he was not supposed to have 

Hunting documents on his computer anymore. 

If the jury accepts the defendants’ explanations, then an adverse inference would not be 

appropriate. Bracey, 712 F.3d at 1019 (“[T]he crucial element is not that the evidence was 

destroyed but rather the reason for the destruction.”); Mathis, 136 F.3d at 1155 (“That the 

documents were destroyed intentionally no one can doubt, but ‘bad faith’ means destruction for 

the purpose of hiding adverse information.”). This issue thus depends on a credibility analysis 

and a finding as to the defendants’ mental state. Those are prototypical functions of a jury and 

questions that the jury will be able to fairly evaluate and resolve. In addition, Mr. Kavadas will 

already be a witness in this case, and his credibility will already be a central issue as to Hunting’s 

claims, so allowing the jury to make this finding as well is appropriate. 

Accordingly, the Court grants Hunting’s motion to the extent that the Court will give an 

adverse inference instruction, instructing the jury that it should infer that any destroyed 

documents would have been adverse to the defendants if it finds that the documents were 

destroyed in bad faith. 

III. MOTION TO STRIKE MS. ROMERO’S OPINION 

The Court next addresses the defendants’ motion to strike expert opinions by Andrea 

Romero. Ms. Romero works for Hunting as a metallurgical and quality engineer. Hunting 
22 

disclosed Ms. Romero as a non-retained expert witness to testify on a number topics related to 

Hunting’s products and their value, and her analysis of Tuff Rod’s products. The defendants 

moved to strike certain of those opinions. First, they seek to exclude any opinion about what Ms. 

Romero believes the defendants intended, were thinking, or were trying to do with their 

products. In response, Hunting indicated that it has no intent to elicit testimony from Ms. 

Romero on those subjects. Accordingly, this aspect of the motion is moot. 

Next, the defendants move to exclude any opinion about what it would take to reverse 

engineer Hunting’s pipe specification. In arguing that Hunting’s specification does not constitute 

a protectable trade secret, the defendants argue that it can be easily recreated by performing a 

$3,000 test to determine its chemical composition. The defendants argue that this shows that 

Hunting’s pipe specification is readily ascertainable by proper means, in which case it would not 

qualify for protection as a trade secret. Ind. Code § 24-2-3-2. Ms. Romero offers a number of 

responses to that contention. She opines that a single test, or even a series of tests, would not 

provide sufficient information to recreate Hunting’s specification or to manufacture comparable 

pipe. She notes, among other things, that the specification sets forth acceptable ranges of various 

elements, and that while a chemical test could provide a single data point, it would not establish 

the ranges set forth in the specification. She further notes that even small changes in the 

chemistry could require adjustments to the way in which the material is treated—a process 

known as “quenching and tempering,” which entails heating and cooling the pipe. A chemical 

test would not disclose the parameters of that process, nor would it reveal the quality control 

requirements set forth in the specification. Thus, Ms. Romero opines that reverse engineering 

Hunting’s specification would require an iterative, trial-and-error process that would take over a 

year and would cost hundreds of thousands of dollars, and may even be impossible. 
23 

The defendants move to exclude these opinions under Rule 702 and Daubert, arguing that 

the opinions are not sufficiently reliable. Under Rule 702, an expert witness must be qualified, 

the testimony must be “the product of reliable principles and methods,” and the expert must 

“reliably appl[y] the principles and methods to the facts of the case.” Fed. R. Evid. 702. A court 

has a gatekeeping role to ensure that expert testimony meets those criteria. Daubert v. Merrell 

Dow Pharm., Inc., 509 U.S. 579 (1993); C.W. ex rel. Wood v. Textron, Inc., 807 F.3d 827, 834–

35 (7th Cir. 2015). In conducting that analysis, a court is not concerned with the correctness of 

the expert’s conclusions, but only “the soundness and care with which the expert arrived at her 

opinion.” Textron, 807 F.3d at 834. 

The defendants argue that Ms. Romero’s testimony is not sufficiently reliable, as she has 

never attempted to reverse engineer drill pipe herself, nor has she personally developed a new 

drill pipe. They further argue that her opinions have not been tested or peer reviewed and do not 

have a known error rate. As to certain types of expert testimony, those factors could be 

important. See Daubert, 509 U.S. at 593–94 (identifying a non-exclusive set of factors that may 

be relevant in evaluating the reliability of expert testimony). However, “the test of reliability is 

‘flexible,’ and Daubert’s list of specific factors neither necessarily or exclusively applies to all 

experts or in every case.” Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999). “An 

expert’s testimony is not unreliable simply because it is founded on [her] experience rather than 

on data; indeed, Rule 702 allows a witness to be ‘qualified as an expert by knowledge, skill, 

experience, training, or education.’” Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748, 761 

(7th Cir. 2010); see also United States v. Allen, 269 F.3d 842, 846 (7th Cir. 2001) (noting that 

“[i]n certain fields, experience is the predominant, if not the sole, basis for a great deal of reliable 

expert testimony”). In those circumstances, experts still “cannot simply assert a ‘bottom line,’” 
24 

but their testimony may be sufficiently reliable if they explain how their experience leads them 

to their conclusions in light of the facts of the case. Metavante, 619 F.3d at 761–62; see also Lees 

v. Carthage College, 714 F.3d 516, 524–25 (7th Cir. 2013). 

Here, the Court finds that Ms. Romero has sufficiently explained how her education and 

experience lead her to the conclusions she offers, such that they satisfy Rule 702’s reliability 

elements. Ms. Romero has a bachelor’s degree in metallurgical and materials engineering, and 

has over 20 years of metallurgical experience in various industrial settings. She has been 

Hunting’s metallurgical and quality engineer since 2011. In that role, she audits steel mills and 

other steel suppliers to ensure they meet Hunting’s specifications and quality requirements. That 

education and experience gives Ms. Romero an understanding of what it takes to manufacture 

pipe, as well as an understanding of the uses and limitations of the tests that the defendants rely 

on as a means of reverse engineering the pipe. 

Ms. Romero also explains how those factors lead to her conclusions in this case. She 

notes that a chemical analysis performed on Hunting’s pipe would only give a single data point 

as to its chemical composition, whereas the specification defines the pipe’s chemical 

composition in terms of acceptable ranges of each of the various elements. Thus, tests on many 

different pipes would have to be performed to begin to approximate the ranges in the 

specification. Ms. Romero notes that another step in manufacturing the pipe is the quenching and 

tempering process, which could need to be adjusted based on even small changes to the chemical 

composition of the pipe. Recreating the pipe would thus require purchasing samples of pipe in 

varying chemistries, experimenting with the quenching and tempering process for each sample, 

and then testing the performance of each pipe. Ms. Romero noted that samples of pipe would 

have to be ordered in large lots, as suppliers generally do not manufacture individual lots for 
25 

testing. Each lot would cost tens of thousands of dollars and could take a month or more to 

manufacture, and each test could cost thousands of dollars. That process could have to be 

repeated multiple times to adjust the chemistry, the quenching and tempering, and the quality 

control, in order to produce a quality pipe. In light of this process, Ms. Romero opined that 

developing a pipe that performs comparably to Hunting’s “would easily take over a year and 

hundreds of thousands of dollars.” 

Given the nature of this testimony, this explanation more than suffices to trace Ms. 

Romero’s reasoning from her education and experience to her conclusions, so her testimony is 

sufficiently reliable to meet Rule 702’s reliability threshold. See Lutheran Homes, Inc. v. Lock 

Realty Corp. IX, No. 1:14-cv-102, 2015 WL 8180196, at *7 (N.D. Ind. Dec. 7, 2015) 

(“[B]ecause [the expert] was qualified based on his experience in the field and adequately traced 

his reasoning from that experience to his conclusions, the absence of a formal, scientific 

methodology does not justify the exclusion of his testimony.”). It is also worth noting that Ms. 

Romero does not—and Hunting need not—purport to identify a specific cost or amount of time it 

would take to reverse engineer the pipe. The relevance of this testimony is that information 

constitutes a trade secret only if it is not “readily ascertainable by proper means,” meaning that 

duplicating the information would require “a substantial investment of time, expense, or effort.” 

Amoco Prod. Co. v. Laird, 622 N.E.2d 912, 919 (Ind. 1993). If Hunting was required to prove a 

specific amount of time or money that would be required to recreate its specification, perhaps a 

more formal or searching methodology would be warranted. As it is, however, Ms. Romero 

opines at a relatively high level of generality that reverse engineering the specification would be 

time-consuming and costly. She adequately grounds that opinion in her knowledge and 

experience in manufacturing and testing the pipe—explaining why it would take time and what 
26 

would generate the costs—so her opinion is admissible under Rule 702. Accordingly, the Court 

denies the motion to strike Ms. Romero’s opinions. 

IV. MOTION FOR SUMMARY JUDGMENT 

Next, the defendants moved for summary judgment. Hunting asserts four claims against 

the defendants. The first, against Mr. Kavadas and Tuff Rod, is for misappropriation of trade 

secrets. The remaining claims are against Mr. Kavadas only. They assert that he breached the 

confidentiality and non-compete provisions in his contract; violated his duty of loyalty to 

Hunting; and committed fraud. The defendants move for summary judgment on all claims. 

A. Misappropriation of Trade Secrets 

First, Hunting asserts a claim against both Mr. Kavadas and Tuff Rod for 

misappropriation of trade secrets. Hunting identifies a number of categories of trade secrets that 

it alleges the defendants wrongfully used in furtherance of Tuff Rod’s business. Those include 

the specification and drawings for Hunting’s drill pipe, as well as other internal information such 

as its sales data and projections. Hunting alleges that Mr. Kavadas accessed and relied on that 

information both in developing Tuff Rod while he was still employed by Hunting, and in 

conducting Tuff Rod’s business after it was formed. 

Indiana’s Uniform Trade Secrets Act provides a cause of action for misappropriation of 

trade secrets. Ind. Code § 24-2-3-4. A “trade secret” is defined as: 

Information, including a formula, pattern, compilation, program, device, method, 

technique, or process, 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. 
27 

Id. § 24-2-3-2. A protectable trade secret thus has four characteristics: “(1) information, 

(2) which derives independent economic value, (3) that is not generally known, or readily 

ascertainable by proper means by other persons who can obtain economic value from its 

disclosure or use, and (4) is the subject of efforts reasonable under the circumstances to maintain 

its secrecy.” Steve Silveus Ins., Inc. v. Goshert, 873 N.E.2d 165, 179 (Ind. Ct. App. 2007). The 

statute also defines “misappropriation,” in relevant part, as the “disclosure or use of a trade 

secret” by a person who “knew or had reason to know that his knowledge of the trade secret 

was: . . . (ii) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its 

use; or (iii) derived from or through a person who owed a duty . . . to maintain its secrecy or limit 

its use.” Ind. Code § 24-2-3-2. 

In moving for summary judgment, the defendants argue that some of the information is 

readily ascertainable by proper means, or that Hunting has not taken reasonable efforts to 

maintain its secrecy, so it does not constitute a trade secret. They further argue that there is no 

evidence that they misappropriated any of the information in question. The Court need not 

address every category of trade secrets at issue, as there is ample evidence from which to find 

that Hunting’s specification and drawings for its drill pipe, and its sales data and forecasts, 

constitute trade secrets and that the defendants misappropriated that information, so summary 

judgment is unwarranted on this claim. 

First, the defendants argue that the information in the specification and drawings for 

Hunting’s drill pipe is readily ascertainable by proper means, so it cannot constitute a trade 

secret. They argue that the chemistry of Hunting’s pipe can be reverse engineered through 
28 

chemical testing,6

 and that the completed pipes can be measured to determine their dimensions. 

To be a trade secret, information must not be “readily ascertainable by proper means.” Id. § 24-

2-3-2. That does not mean, though, that it must be impossible, or even economically infeasible, 

to ascertain the information by proper means. Amoco, 622 N.E.2d at 919. Rather, information 

qualifies for protection as a trade secret if duplicating the information “requires a substantial 

investment of time, expense, or effort.” Id.

Hunting has offered sufficient evidence to create a dispute of fact as to whether this 

information is readily ascertainable by proper means. The defendants argue that chemical 

composition of the pipe can be determined by performing a simple test on a finished pipe. As 

discussed already in relation to Ms. Romero’s opinion, however, such a test would offer only 

limited information. The specification does not set forth a specific recipe with precise amounts, 

as if for baking a cake; it identifies acceptable ranges of each of the various alloying elements 

(and maximum levels for any contaminants) in the pipe. A chemical test would not reveal those 

ranges; it would offer only a single data point. Determining the chemistry set forth in the 

specification would thus require many tests on many different samples from many different 

pipes. Even the defendants’ expert conceded that it would be very unlikely that someone could 

reverse engineer the exact formula in Hunting’s specifications. And Ms. Romero opined that 

reverse engineering the pipe, even with the use of the chemical tests, would be very expensive 

and time-consuming. Moreover, in addition to the chemistry, the specification contains some 

information relating to Hunting’s testing and quality requirements, which would not be revealed 

by any test. 

 

6

 To be clear, the defendants do not claim that they did reverse engineer Hunting’s pipe, only that 

it would be possible to do so.
29 

The defendants likewise argue that the dimensions in Hunting’s drawings for its pipe 

could be ascertained by simply measuring finished products. Again, however, Hunting’s 

drawings set forth the acceptable ranges for the particular dimension at issue—the “tong 

space”—not a single length that could be measured from any pipe. In addition, the drawings at 

issue reflect the acceptable range of tong-space dimensions for “as-forged” pipe, meaning before 

the pipe undergoes threading and other finishing. Measuring finished pipe would not necessarily 

reveal those dimensions. These facts suffice to at least create a dispute of fact as to whether 

duplicating this information would require a substantial investment of time, expense, or effort, so 

summary judgment on that issue is unwarranted. 

The defendants also argue that Hunting has not taken sufficient efforts to maintain the 

secrecy of the information in question, but again, there are genuine disputes of fact on that 

question. The defendants note that Hunting does not place the word “confidential” on its 

specification, and they suggest that Hunting has provided the specification to its suppliers 

without having a confidentiality agreement in place. However, Hunting’s general manager 

submitted an affidavit stating that Hunting’s policy is to disclose its specification and drawings 

to a supplier only if they have an executed confidentiality agreement in place. To his knowledge, 

Hunting has never disclosed that information without such an agreement. Hunting has also 

identified a number of steps that it takes to protect the confidentiality of its specification and 

drawings and other confidential information. Hunting’s personnel policies prohibit the 

unauthorized use or disclosure of confidential information, prohibit the use of cameras in a 

manner that could disclose Hunting’s confidential information, and prohibit the use of removable 

media devices (like thumb drives) for storing confidential information. Hunting requires its 

employee to sign written acknowledgments of its policies. Hunting’s computer system is 
30 

password protected, and employees are required to maintain complex passwords. Hunting also 

keeps its specification and drawings on a protected server and limits access to that server to 

employees with a business reason to know the information. 

The owner of a trade secret need only take “reasonable” steps to maintain the secrecy of 

the information; “overly extravagant” measures and “[a]bsolute secrecy” are not required. N. 

Elec. Co., Inc. v. Torma, 819 N.E.2d 417, 427 (Ind. Ct. App. 2004). Even if Hunting could have 

done more, or may have imperfectly implemented its secrecy measures in some instances, a jury 

could find that Hunting has at least taken reasonable steps to protect its information. See 

Bodemer v. Swanel Beverage, Inc., 884 F. Supp. 2d 717, 727 (N.D. Ind. 2012); Zemco Mfg., Inc. 

v. Navistar Int’l Transp. Corp., 759 N.E.2d 239, 246–49 (Ind. Ct. App. 2001). Thus, summary 

judgment is not warranted on that basis. 

Finally, a jury could find that the defendants misappropriated the information in question. 

The possibility of an adverse inference is itself enough to deny summary judgment on this issue. 

The destroyed evidence could have shown that Mr. Kavadas sent Hunting’s confidential 

information, including its specification, to Tuff Rod’s supplier, and that he was accessing the 

confidential information at the same time he was preparing Tuff Rod’s sales projections or 

“tweaking” its chemistries. Summary judgment is thus unwarranted for that reason alone. 

Even aside from the adverse inference, there is ample evidence from which a jury could 

find that the defendants misappropriated Hunting’s trade secrets. As to the tong space 

dimensions, Mr. Kavadas asked Wuxi in January 2014 if he could give him the dimensions for 

Vermeer’s pipe, but Wuxi declined, stating that he signed a confidentiality agreement with 

Vermeer. Mr. Kavadas forwarded that email to his partners, stating “Need to move to plan B for 

tong space dimensions.” [DE 124-9]. Two weeks later, Mr. Kavadas sent the supplier a list of 
31 

tong space dimensions that exactly matched the dimensions in Hunting’s drawings. Mr. Kavadas 

states that he came up with those dimensions by looking at Hunting’s finished pipes and 

comparing the dimensions to the length of his phone. But a jury could easily reject the story that 

Mr. Kavadas determined dimensional ranges that just happened to match Hunting’s drawings 

exactly by eyeballing the pipes in that manner. In addition, the dimensions were all in quarterinch increments, yet Mr. Kavadas wrote them with decimals to the thousandth of an inch (e.g., 

5.000–5.500). That would be odd if he had actually just measured them in comparison to his 

phone, but that is exactly how the dimensions appear in Hunting’s drawings. 

As to Hunting’s specification, Mr. Kavadas admitted that he relied on Hunting’s 

specification in order to create Tuff Rod’s, other than for its chemistry. The chemistry in Tuff 

Rod’s specification is not the same as Hunting’s, but the format and much of the content 

(including the testing and quality control components) were taken verbatim from Hunting’s 

specification. Hunting’s expert also opined that Tuff Rod’s chemistry became closer to 

Hunting’s chemistry over time. Over that period, Mr. Kavadas, who is not a metallurgist, 

suggested a number of “tweaks” to the formula. Hunting argues that the likely explanation is that 

Mr. Kavadas was relying on Hunting’s specification in order to tweak Tuff Rod’s formula to 

more closely approximate Hunting’s. 

A jury could also find that the defendants misappropriated Hunting’s sales data and 

projections. While still employed with Hunting, Mr. Kavadas created detailed projections for 

Tuff Rod’s sales, and he updated those projections a number of times, including in January 2014. 

Just prior to that, Hunting had held its annual sales meeting. At those meetings, each salesperson 

would typically present information about their own territories, including their sales performance 

over the preceding year and their goals and strategies for the coming year. For the January 2014 
32 

meeting, though, Mr. Kavadas collected that information from each of the other salespeople to 

compile into a single presentation. In an email to his supplier shortly thereafter, in which he 

discussed Tuff Rod’s plan to begin placing orders, Mr. Kavadas stated that he had “spent the last 

couple months (especially the last 4 weeks) learning what each company wants and needs.” [DE 

124-3 p. 47]. Mr. Kavadas was unable to explain at his deposition what he had been doing to 

learn the companies’ needs. A jury could conclude that this was a reference to the sales data and 

forecasts that Mr. Kavadas had received relative to Hunting’s sales meeting. A jury could thus 

find that Mr. Kavadas had improperly used this information in preparing his forecasts for Tuff 

Rod’s sales. 

The defendants argue that this would not constitute misappropriation because Mr. 

Kavadas did not acquire the information by improper means, since he acquired it through his 

employment. Acquiring trade secrets by improper means is one method of committing 

misappropriation, but not the only one. Misappropriation also occurs when someone who 

acquires the information under circumstances giving rise to a duty to maintain its secrecy 

discloses or uses the information without consent. Ind. Code § 24-2-3-2. Mr. Kavadas had a duty 

to keep Hunting’s information confidential, and a jury could find that he used or disclosed that 

information without Hunting’s consent. Accordingly, the Court finds that summary judgment on 

the claim for misappropriation of trade secrets is unwarranted.

B. Breach of Contract 

Hunting next asserts a claim against Mr. Kavadas for breach of contract, based on the 

agreement he signed in 2009 regarding non-disclosure of confidential information and a 

covenant not to compete. In moving for summary judgment on this claim, Mr. Kavadas first 

argues that the 2009 agreement is no longer operative, and that it was superseded by a separate 
33 

agreement he signed in 2013. Next, he argues that the non-compete provisions in the agreement 

are unenforceable because they are unreasonably overbroad. 

1. Applicability of the 2009 Agreement 

Mr. Kavadas first argues that the 2009 agreement is no longer in effect because it was 

superseded by a subsequent contract signed in 2013. The 2009 agreement is a five-page 

document that addresses Hunting’s confidential information, Hunting’s ownership of any 

inventions, and Mr. Kavadas’ obligation not to compete with Hunting for two years after the 

termination of his employment. The agreement was not signed in conjunction with any 

employment agreement, and it did not address Mr. Kavadas’ job duties or compensation. Several 

years later, Mr. Kavadas’ supervisor asked him to consider accepting a new compensation 

structure under which his compensation would be based more on commissions. The supervisor 

gave him a two-page offer letter setting out the details. It first included a description of the job 

duties, and then outlined the details of the salary and commission, benefits, and reimbursements. 

The letter did not acknowledge or address the 2009 non-compete agreement, nor did it contain 

any terms relating to confidential information, inventions, or restrictive covenants. Mr. Kavadas 

chose to accept the offer letter and signed it in 2013 

Mr. Kavadas argues that the 2013 offer letter superseded the 2009 agreement, rendering 

the 2009 agreement unenforceable. Hunting disagrees, arguing that the 2013 offer letter only 

addressed Mr. Kavadas’ compensation and had no effect on the 2009 agreement, which 

addressed a different subject matter.7

 In support of his argument, Mr. Kavadas relies heavily on 

 

7

 The Court could not grant summary judgment in Mr. Kavadas’ favor for a different reason, 

regardless of how the Court resolved this particular dispute. The 2009 agreement states that it 

can only be modified or amended “in writing signed by an officer of [Hunting] and [Mr. 

Kavadas].” The 2013 offer letter that is in the record is not signed by either party, and while Mr. 

Kavadas states in his affidavit that he signed the offer letter, neither party cites evidence that an 
34 

the following provision at the end of the offer letter: “You acknowledge that this offer letter 

represents the agreement between you and Hunting Energy Services and that no verbal or written 

agreements, promises or representations that are not specifically state[d] in this offer, are or will 

be binding upon Hunting Energy Services.” [DE 112-1 p. 7]. Mr. Kavadas argues that this 

provision establishes that the 2013 offer letter is the only agreement between the parties, and that 

no previous agreements, including the 2009 agreement, remain binding. 

Mr. Kavadas’ argument fails to account for the last four words of that provision—that no 

other agreements will be binding “upon Hunting Energy Services.” With that limitation, this 

provision actually weighs heavily in Hunting’s favor. Given that the offer letter modifies the 

terms of Mr. Kavadas’ compensation—an obligation that Hunting owes to Mr. Kavadas—it 

makes perfect sense for the letter to clarify that no previous agreement will be binding upon 

Hunting, such that it could be bound to pay him any additional amounts. The offer letter does not 

say, though, that no previous agreements would be binding on Mr. Kavadas. Again, that makes 

perfect sense under Hunting’s interpretation, as the offer letter does not alter Mr. Kavadas’ 

duties, only the structure of his compensation. If the 2013 offer letter was meant to supersede the 

2009 agreement—an obligation Mr. Kavadas owes to Hunting—this provision would be mutual, 

but instead it specifies that no previous agreement would be binding upon Hunting. Thus, this 

provision does not indicate that the parties intended for the 2009 agreement to be no longer 

binding upon Mr. Kavadas. 

Without any provision in the 2013 offer letter stating that it supersedes the 2009 

agreement, the 2009 agreement remains in effect. In Indiana, “a written contract merges all prior 

 

officer of Hunting signed it as well. Since the Court agrees with Hunting that the 2009 agreement 

was not superseded by the 2013 offer letter, though, the Court need not rest on that basis.
35 

and contemporaneous negotiations in reference to the same subject.” Buschman v. ADS Corp., 

782 N.E.2d 423, 429 (Ind. Ct. App. 2003) (emphasis added); see also Skaggs v. Merchants Retail 

Credit Ass’n, Inc., 519 N.E.2d 202, 204 (Ind. Ct. App. 1988) (“It is an old rule in Indiana that 

where a contract embraces the entire substance of a former contract, with some variations, the 

first contract is merged in the second.”); GCIU Emp. Ret. Fund v. Chi. Tribune Co., 66 F.3d 862, 

865 (7th Cir. 1995) (“The fact that an agreement is completely integrated does not, of course, 

affect an attempt to show an entirely separate and distinct agreement between the same parties.” 

(quoting E. Farnsworth, Contracts § 7.3 at 207 (1990))); Restatement (Second) of Contracts 

§ 213 (“A binding completely integrated agreement discharges prior agreements to the extent 

that they are within its scope.” (emphasis added); id. cmt. c (“Where the parties have adopted a 

writing as a complete and exclusive statement of the terms of the agreement, even consistent 

additional terms are superseded. But there may still be a separate agreement between the same 

parties which is not affected.”). 

Here, the two agreements address different subject matters, so the 2013 offer letter does 

override the terms of the 2009 agreement. Both agreements include the same parties and pertain 

in general to Mr. Kavadas’ continued employment, but the overlap stops there. The 2009 

agreement addresses Mr. Kavadas’ duties not to disclose Hunting’s confidential information, to 

transfer ownership of any inventions to Hunting, and to refrain from competing against Hunting 

after his employment ends. That agreement does not address the scope of Mr. Kavadas’ job 

duties or his compensation. By contrast, the 2013 offer letter only addresses the scope of Mr. 

Kavadas’ job duties and his compensation, and it says nothing about Hunting’s confidential 

information, ownership of inventions, or any restrictive covenants. Plainly, these agreements 
36 

were meant to address separate topics, and Mr. Kavadas offers no reason to conclude that one 

was meant to supplant the other. 

Mr. Kavadas also argues that since the 2009 agreement referred to prior confidentiality 

agreements, that shows that Hunting knew how to address the effect of prior agreements when it 

wanted to. See Burford v. Accounting Practice Sales, Inc., 786 F.3d 582, 587 (7th Cir. 2015); 

Delta Mining Corp. v. Big Rivers Elec. Corp., 18 F.3d 1398, 1404 (7th Cir. 1994). He thus 

argues that since the 2013 offer letter did not expressly incorporate the 2009 agreement, that 

must mean that Hunting did not intend to preserve that agreement. First, the Court doubts the 

usefulness of that comparison between two such different contracts. The 2009 agreement was a 

formal, deliberately drafted document; the 2013 offer letter was drafted years later, and was a 

two-page agreement that outlined its terms in a bullet-point-like fashion, often without even 

using complete sentences. That the more formal document addressed an issue in one fashion 

offers little insight into the interpretation of a document drafted years later under different 

circumstances. Assuming this principle applies here, though, the Court believes that it would cut 

in the other direction. The 2009 agreement states that it “shall incorporate and/or supersede” the 

term of the previous confidentiality agreement. The 2013 offer letter does not identify any 

previous agreement or state that it intended to supersede such an agreement, which indicates that 

it did not intend to do so. 

Moreover, applying this principle within the 2013 offer letter itself strongly favors 

Hunting, as already discussed. That the offer letter specified that no previous agreements would 

be binding “upon Hunting” shows that the drafter knew how to relieve a party of its obligations 

under prior agreements when it wanted to. Delta Mining, 18 F.3d at 1404. Its failure to likewise 
37 

specify that no previous agreements would be binding upon Mr. Kavadas shows that it did not 

intend to relieve Mr. Kavadas of his obligations under the previous 2009 agreement. 

Finally, Mr. Kavadas argues that any ambiguity should be resolved against Hunting as 

the drafter of the agreements. The Court does not find there to be an ambiguity in this respect, 

though. The 2013 offer letter does not state that no prior agreement will be binding upon Mr. 

Kavadas, and the two agreements addressed different subject matters. Thus, there is no basis 

upon which to conclude that the 2009 agreement is no longer in effect in light of the offer letter. 

Accordingly, the Court cannot grant summary judgment on that basis. 

2. Enforceability of the Non-Compete Agreement 

Mr. Kavadas also argues that the non-compete portions of the agreement are 

unenforceable because they are overbroad. The Indiana Supreme Court “has long held that 

noncompetition covenants in employment contracts are in restraint of trade and disfavored by the 

law.” Cent. Ind. Podiatry, P.C. v. Krueger, 882 N.E.2d 723, 729 (Ind. 2008); accord Clark’s 

Sales & Serv., Inc. v. Smith, 4 N.E.3d 772, 780 (Ind. Ct. App. 2014). Indiana courts “construe 

these covenants strictly against the employer and will not enforce an unreasonable restriction.” 

Krueger, 882 N.E.2d at 729; Clark’s Sales, 4 N.E.3d at 780. “In order for a noncompetition 

agreement to be enforceable it must be reasonable, and such reasonableness is a question of 

law.” Clark’s Sales, 4 N.E.3d at 780; Krueger, 882 N.E.2d at 729. The employer bears the 

burden of proving that the agreement is reasonable. Krueger, 882 N.E.2d at 729. 

To establish that a non-compete agreement is reasonable, an employer “must first show 

that it has a legitimate interest to be protected by the agreement.” Clark’s Sales, 4 N.E.3d at 780. 

Second, an employer must “show that the agreement is reasonable in scope as to the time, 

activities, and geographic area restricted.” Id. The reasonableness of the scope of an agreement 

“depends on the interest of the employer that the restriction serves.” Krueger, 882 N.E.2d at 730. 
38 

Mr. Kavadas does not dispute that Hunting has a protectable interest in its goodwill and its 

relationships with its customers. However, he argues that the scope of the agreement is 

overbroad as to the geographic area and the activities restricted. 

The Court need not address the geographic scope of the agreement—which is limited to 

Hunting’s customers with whom Mr. Kavadas “had material contact and dealings, directly or 

indirectly,” within two years of the termination of his employment—because it agrees that the 

agreement is overbroad in the scope of activities restricted. “‘A non-competition agreement 

drafted so broadly as to prohibit seemingly harmless conduct is not reasonable . . . . More 

specifically, a covenant restricting the employee from competing with portions of the business 

with which he was never associated is invalid.’” MacGill v. Reid, 850 N.E.2d 926, 930–31 (Ind. 

Ct. App. 2006) (quoting Seach v. Richards, Dieterle & Co., 439 N.E.2d 208, 214 (Ind. Ct. App. 

1982)). Indiana courts “have found covenants not to compete that restrict an employee from 

working in any capacity for an employer’s competitor or from working within portions of the 

business with which the employee was never associated to be unreasonable because such 

restrictions extend beyond the scope of the employer’s legitimate interest.” Id. at 932; see also 

Clark’s Sales, 4 N.E.3d at 782. 

The agreement here has each of those flaws. It states that Mr. Kavadas may not “call 

upon, compete for, solicit, divert, provide services to, or take away” any of the customers in 

question, or attempt to do any of those things. These restrictions would prevent Mr. Kavadas 

from working for or providing services to the customers in any capacity, regardless of whether 

that would entail any competitive threat to Hunting or would relate to Mr. Kavadas’ employment 

with Hunting. It would prevent him from selling products to those customers that do not compete 

with Hunting’s products, and it would also prevent him from selling competing products 
39 

unrelated to the HDD pipe that he sold for Hunting. The agreement thus extends beyond 

Hunting’s protectable interests and is unenforceable. Id.; Gleeson v. Preferred Sourcing, LLC, 

883 N.E.2d 164, 175–77 (Ind. Ct. App. 2008); MacGill, 850 N.E.2d at 930–31; Seach v. 

Richards, Dieterle & Co., 439 N.E.2d 208, 214 (Ind. Ct. App. 1982). 

In defending this aspect of the agreement, Hunting argues that by limiting the scope of 

customers as to whom Mr. Kavadas was restricted, the agreement also narrowed the scope of 

activities restricted. However, this argument conflates the geographic scope of the agreement 

with the scope of activities restricted as to those customers. To be enforceable, an agreement 

must be reasonable in scope “as to the time, activity, and geographic area restricted.” Krueger, 

882 N.E.2d at 729 (emphasis added). Those are distinct requirements, and Indiana courts have 

held that agreements were overbroad as to the scope of activity restricted even when the 

geographic scope was appropriately narrow. E.g., Pathfinder Commc’ns Corp. v. Macy, 795 

N.E.2d 1103, 1114 (Ind. Ct. App. 2003); see MacGill, 850 N.E.2d at 922–23 (declining to reach 

the geographic scope since the scope of activities restricted was overbroad). The customers 

affected here would only be those who bought drill pipe from Hunting, but the agreement does 

not limit Mr. Kavadas’ activities with those customers only in regard to drill pipe—Mr. Kavadas 

would be prohibited from soliciting or providing any services at all to the customers to whom he 

sold drill pipe for Hunting, even if it had nothing to do with drill pipe. 

Hunting suggests that the Court could cure any overbreadth by striking some of the 

activities specified in the agreement. See Clark’s Sales, 4 N.E.3d at 783 (“[I]f the 

noncompetition agreement is divisible into parts, and some parts are reasonable while others are 

unreasonable, a court may enforce the reasonable portions only.”). It proposes striking “call 

upon” and “provide services to,” in which case the agreement would state that Mr. Kavadas 
40 

cannot “compete for, solicit, divert, or take away” Hunting’s customers. The blue pencil doctrine 

is of no help here, though, as those activities are each overbroad as well. 

Barring Mr. Kavadas from “soliciting” any of the customers would prevent him from 

selling products that do not compete with Hunting, which is unacceptable. The other activities 

come closer, as they at least imply competition in some respect with Hunting. They fall short, 

however, in that they do not require that the competition relate to the portion of Hunting’s 

business with which Mr. Kavadas was involved. As already noted, “a covenant that restricts the 

employee from competing with portions of the business with which he was never associated is 

invalid.” Clark’s Sales, 4 N.E.3d at 782. Hunting is a large and multi-faceted company. 

According to its complaint, Hunting is “a leading provider of products and services to the 

upstream oil and gas industry,” and offers “a broad range of products and services, including 

drilling tools, electronics, subsea products and manufacturing services, among others.” [DE 38 

¶¶ 12–13]. Horizontal-directional drill pipe is one of many of Hunting’s product lines, but it is 

the only one with which Mr. Kavadas was involved. The agreement, however, would prevent 

Mr. Kavadas from competing with Hunting for the customers in question as to any of its other 

activities. 

In that respect, this case is difficult to distinguish from Clark’s Sales. There, as here, the 

agreement prohibited the employee from providing any services “competitive to ‘those offered 

by’” the employer. 4 N.E.3d at 782. Yet, as here, the employer offered a wide range of services, 

many of which were unrelated to the employee’s employment. Id. The court held that the 

agreement was thus overbroad because it was “not limited to restricting [the employee] from 

providing those services that he actually provided to [the employer].” Id. Hunting attempts to 

distinguish Clark’s Sales on the ground that the agreement there was also overbroad as to the 
41 

scope of customers involved. However, the court held that those were two separate flaws, not 

that one was overbroad because of the other. Id. (“In addition to the overly broad customer base 

referenced, the scope of activities prohibited . . . is also overly broad, as the activities prohibited 

are unrelated to the services [the employee] actually provided to [the employer] during his 

employment.” (emphasis added)); id. at 784 (holding that, even if the scope of customers could 

be cured by blue-penciling, that modification “does nothing to remedy the overbreadth of the 

scope of activities prohibited”). Thus, the Court views Clark’s Sales as conclusive on this issue. 

There is no question that Hunting could properly prevent Mr. Kavadas from competing 

with it for sales of horizontal-directional drill pipe. The agreement here includes a restriction on 

those activities, but it is not limited to them. Because none of the activities specified in the 

agreement entail such a limit, the agreement is overbroad and cannot be salvaged by bluepenciling. Therefore, the Court grants the motion for summary on the breach of contract claim 

insofar as it is based on the non-compete portions of agreement. However, Hunting also bases 

this claim on the agreement’s restrictions on Mr. Kavadas’ use and disclosure of confidential 

information. Mr. Kavadas does not argue that those provisions are unenforceable (except to 

argue that the agreement as a whole was superseded, as already discussed), and for essentially 

the same reasons already discussed as to the trade secrets claim, the jury could find that Mr. 

Kavadas improperly used and disclosed Hunting’s confidential information. Therefore, that 

aspect of the breach of contract claim remains pending. 

C. Breach of Fiduciary Duty 

Hunting next asserts a claim against Mr. Kavadas for breach of fiduciary duty. It argues 

that Mr. Kavadas beached this duty by beginning to compete against it while he was still its 

employee. In Indiana, an “employee owes his employer a fiduciary duty of loyalty.” SJS 

Refractory Co., LLC v. Empire Refractory Sales, Inc., 952 N.E.2d 758, 768 (Ind. Ct. App. 2011); 
42 

accord Kopka, Landau & Pinkus v. Hansen, 874 N.E.2d 1065, 1070 (Ind. Ct. App. 2007). Thus, 

“an employee who plans to leave his current job and go into competition with his current 

employer must walk a fine line.” SJS Refractory, 952 N.E.2d at 768. “Prior to his termination, an 

employee must refrain from actively and directly competing with his employer for customers and 

employees and must continue to exert his best efforts on behalf of his employer.” Id. “An 

employee may make arrangements to compete with his employer, such as investments or the 

purchase of a rival corporation or equipment,” but “cannot properly use confidential information 

specific to his employer’s business before the employee leaves his employ.” Id.

In moving for summary judgment, Mr. Kavadas argues that there is no evidence that he 

went beyond planning or preparing to compete while he was still employed with Hunting. See 

Kopka, 874 N.E.2d at 1071 (“[A]lthough an employee may not actively and directly compete 

with his current employer, he may prepare to do so without breaching his duty of loyalty.”). The 

possibility of an adverse inference forecloses that argument, but there is sufficient evidence to 

avoid summary judgment on this claim even without an adverse inference. Mr. Kavadas argues 

that he did not discuss Tuff Rod with any of Hunting’s customers before he left Hunting. This 

argument overlooks, however, that UTI was one of Hunting’s customers. In fact, it was 

Hunting’s largest customer. Yet Mr. Kavadas had been developing Tuff Rod for over a year with 

the principals of UTI, Mr. Burns and Mr. Lindahl. A jury could find that, at least as to UTI, Mr. 

Kavadas was no longer advancing Hunting’s interests as he worked with his customer to form 

Tuff Rod in order to divert Hunting’s sales to that customer. In addition, an employee can breach 

his duty of loyalty by using his employer’s confidential information. SJS Refractory, 952 N.E.2d 

at 768; Torma, 819 N.E.2d at 430 (holding that, by misappropriating the employer’s trade secrets 

and using them to compete against the employer after his employment, the employee violated his 
43 

fiduciary duty of loyalty). As already discussed, there is ample evidence that Mr. Kavadas used 

Hunting’s confidential information in furtherance of Tuff Rod’s business. Accordingly, the Court 

denies the motion for summary judgment as to this claim. 

D. Fraud 

Finally, Hunting asserts a claim against Mr. Kavadas for fraud. This claim is based on 

expense reports that Mr. Kavadas submitted for his trips to Minnesota to visit Hunting’s 

customers in the area, including UTI. As part of his job, Mr. Kavadas had to travel to visit 

Hunting’s customers. Hunting had three customers in Minnesota, so Mr. Kavadas would make 

trips to Minnesota in which he would meet with each of those three customers on successive 

days. Mr. Kavadas admits that during some of his visits to UTI, he also discussed Tuff Rod with 

Mr. Burns and Mr. Lindahl. Hunting argues that by submitting expense reports for that travel 

without disclosing that he was also discussing a competing business, Mr. Kavadas committed 

fraud. 

The elements of a claim of fraud are: (1) a material misrepresentation of past or existing 

facts, (2) which was false, (3) which was made with knowledge or reckless ignorance of the 

falseness, (4) was relied upon by the complaining party, and (5) proximately caused the injury. 

Reed v. Reid, 980 N.E.2d 277, 292 (Ind. 2012). Hunting argues that Mr. Kavadas committed 

fraud by making “material misrepresentations regarding the purpose and intent of his meetings 

with UTI in Minnesota.”8

 However, it does not identify any statements that Mr. Kavadas made 

about the purpose or intent of those meetings. It relies only on the facts that Mr. Kavadas 

submitted expense reports for those trips, and that he also discussed Tuff Rod on some of those 

 

8

 Hunting’s brief asserts that Mr. Kavadas’ motion does not dispute this statement. To the 

contrary, he expressly argued that he “did not make material misrepresentations regarding the 

expenses incurred on his visits to Hunting’s three dealers in Minnesota.” [DE 110 p. 42].
44 

trips. Hunting has not shown how that constitutes a fraudulent misrepresentation, as opposed to a 

breach of the duty of loyalty. Mr. Kavadas’ job required him to travel to meet with Hunting’s 

customers. UTI was Hunting’s customer, as were the other two companies he met with on each 

of those trips. He therefore traveled to meet with those customers, and his expense reports 

included the costs for that travel. There is no evidence that Mr. Kavadas made any 

misrepresentations about those expense reports. 

Hunting argues that it would not have reimbursed these expenses if it knew that Mr. 

Kavadas was also discussing Tuff Rod with a customer. That may be true, but Hunting likely 

would not have continued paying his salary either if it knew that he was planning on going into 

competition against it—that does not turn his breach of his duty of loyalty into fraud. There is no 

evidence that the expenses would have been any different had Mr. Kavadas not discussed Tuff 

Rod on any of those trips. That he seized on the opportunity to discuss Tuff Rod as well, or may 

have otherwise fallen short of Hunting’s expectations of its employees, does not make the 

expense reports any more fraudulent than Mr. Kavadas’ acceptance of his salary during that 

same period. Therefore, the Court grants the motion for summary judgment as to this claim. 

V. MOTION TO STRIKE MR. JOHNSON’S DAMAGES OPINIONS 

The defendants also move to strike the testimony by Hunting’s damages expert, Chris 

Johnson. Mr. Johnson has bachelor’s and master’s degrees in economics, is a Certified Valuation 

Analyst, and has experience in economic and financial analysis. Hunting retained him as an 

expert witness to calculate the damages on each of its claims. The defendants do not dispute his 

qualifications, but they challenge the reliability and relevance of his opinions. However, as 

discussed below, the Court finds that the defendants’ arguments predominantly address facts and 

assumptions underlying Mr. Johnson’s opinions and the conclusions he reached, which are not 

grounds for striking expert opinions. 
45 

As to the claim for misappropriation of trade secrets, Mr. Johnson began by calculating 

Hunting’s lost profits. Those consisted of lost profits on actual sales due to discounts Hunting 

had to offer to compete with Tuff Rod’s bids, and lost profits on sales that Hunting lost to Tuff 

Rod. For the first category, Mr. Johnson added up the amounts of “bid assistance” that Hunting 

had to offer to its dealers to match competing bids by Tuff Rod, which came to $38,876. To 

determine Hunting’s lost profits on lost sales, he first identified each of the Hunting customers 

that Tuff Rod sold product to. He then determined how many drill pipes Tuff Rod sold to each of 

those customers that corresponded to pipes that Hunting also offered. He assumed that, but for 

the misappropriation, Hunting would have instead made those sales. Because Tuff Rod’s entry 

into the market did not expand the demand for drill pipe, and because customers’ demand for 

drill pipe was based on the requirements of their projects and equipment, not the price of the drill 

pipe, he concluded that Hunting would have sold the same number of those pipes as Tuff Rod. 

He then calculated the profit that Hunting would have made on those lost sales, which was 

$1,669,348. Adding the losses on its actual sales, Hunting’s total lost profits came to $1,708,224. 

Mr. Johnson then calculated Tuff Rod’s unjust enrichment as a result of the 

misappropriation. He began with the assumption that the alleged misappropriation of trade 

secrets is what allowed Tuff Rod to enter the market for drill pipe. He then determined that Tuff 

Rod’s revenues on the sales of its drill pipe amounted to over $8 million. He then subtracted Tuff 

Rod’s cost of goods sold of about $5 million. He also considered whether additional costs should 

be subtracted, and he considered Tuff Rod’s financial information. However, he concluded that 

this information did not justify subtracting any additional costs. Thus, he concluded that Tuff 

Rod’s unjust enrichment amounted to $3,117,940. 
46 

Next, Mr. Johnson calculated the amount of Hunting’s lost profits, as already discussed, 

plus the amount of Tuff Rod’s unjust enrichment on sales not reflected in Hunting’s lost profits. 

To do so, he removed the sales that were reflected in his analysis of Hunting’s lost profits from 

his analysis of Tuff Rod’s unjust enrichment. He concluded that Tuff Rod’s profits on sales that 

would not have been made by Hunting were $1,200,083. He added that amount to Hunting’s lost 

profits, for a total damages calculation of $2,908,307. 

As an alternative to the lost profits and unjust enrichment, Mr. Johnson also calculated a 

reasonable royalty as a measure of damages on the trade secrets claim. He considered a number 

of factors to try to identify a royalty agreement that could have resulted from a hypothetical 

arms-length negotiation between Hunting and Tuff Rod for the trade secrets at issue. He 

identified the assumptions upon which his opinion was based, and he explained each of the 

factors he investigated and considered in ascertaining a reasonable royalty, such as the amount of 

sales that Hunting stood to lose, the profits Tuff Rod could expect to earn, and the discount at 

which Tuff Rod expected to sell its product compared to Hunting’s prices. He concluded that the 

parties would agree to a royalty that would cause Tuff Rod’s products be sold for the same price 

as Hunting’s, or a rate of 22 percent. That would amount to a damages award of $1,807,639. 

Mr. Johnson then addressed the claim for breach of contract. As to this claim, he 

reiterated each of his opinions as to the misappropriation of trade secrets claim, except for the 

royalty. Finally, as to the breach of fiduciary duty claim, Mr. Johnson assumed that Mr. Kavadas 

began breaching his fiduciary duty in January 2013. The damages on that claim include the 

compensation that an employee earned during the period in which he was breaching his duty. 
47 

Mr. Johnson thus calculated Mr. Kavadas’ compensation from January 2013 through March 

2014, which came to $200,588.9

As discussed already, Rule 702 permits testimony by a qualified expert if the expert’s 

testimony is helpful, is based on sufficient facts or data, and is the product of reliable principles 

and methods, and the expert has reliably applied the principles and methods to the facts of the 

case. Fed. R. Evid. 702. The Court has a gatekeeping role in admitting expert testimony, but its 

role is to evaluate “the validity of the methodology employed by an expert, not the quality of the 

data used in applying the methodology or the conclusions produced.” Manpower, Inc. v. Ins. Co. 

of Penn., 732 F.3d 796, 806 (7th Cir. 2013). “The soundness of the factual underpinnings of the 

expert’s analysis and the correctness of the expert’s conclusions based on that analysis are 

factual matters to be determined by the trier of fact . . . .” Id.

Beginning with the trade secret claim, the defendants first object that Mr. Johnson failed 

to offer separate calculations of damages attributable to each of the ten categories of trade secrets 

that Hunting identified in discovery. There is no reason he needed to do so, though. Though it 

identifies various categories of trade secrets, Hunting asserts a single claim for misappropriation 

of trade secrets. To calculate damages for that claim, Mr. Johnson assumed that Tuff Rod would 

not have made any sales of drill pipe but for its misappropriation of trade secrets, and he then 

calculated the profits that Hunting lost on those sales. Of course, Hunting will have to offer 

evidence to prove that premise, and if the jury finds that Tuff Rod would have made any of those 

 

9

 Mr. Johnson also attempted to calculate the damages for Hunting’s fraud claim. To do so, he 

identified every expense that Mr. Kavadas reported from January 2013 on that “may relate” to a 

customer that later became a customer of Tuff Rod. He added those expenses to conclude that 

the damages for the fraud claim “could be as high as $17,209.” [DE 107-1 p. 36]. Since the Court 

granted summary judgment on this claim, Mr. Kavadas’ objections to this opinion are moot.
48 

sales even without the use of any trade secrets it finds to have been misappropriated, the jury can 

discount or reject Mr. Johnson’s opinion. But that is not a basis on which to exclude his opinion. 

The defendants also argue that Mr. Johnson’s opinion on lost profits should be excluded 

because he did not independently verify that the customers in question would have bought from 

Hunting if they had not bought from Tuff Rod, and did not independently verify the amounts of 

bid assistance that Hunting had to offer on its actual sales. In fact, the defendants object to nearly 

every opinion Mr. Johnson offers on the basis that he did not independently verify every fact or 

assumption upon which he relied. Again, however, there is no requirement that an expert do so. 

Experts are entitled to rely on facts and assumptions that are provided to them. They cannot 

simply parrot information provided to them by a party without bringing any expertise to bear on 

the subject,10 Lang v. Kohl’s Food Stores, Inc., 217 F.3d 919, 924 (7th Cir. 2000) (“Relaying the 

plaintiffs’ likely testimony is not an example of expertise.”), but that does not mean that they 

must independently verify every fact or assumption they rely on, as the plaintiffs argue. 

In Tuf Racing, the Seventh Circuit held that expert damages testimony was admissible 

when the expert relied on “financial information furnished by [the plaintiff] and assumptions 

given him by counsel.” Tuf Racing Prods., Inc. v. Am. Suzuki Motor Corp., 223 F.3d 585, 591 

(7th Cir. 2000). As the Seventh Circuit later observed, “[t]hat the expert accountant in Tuf could 

opine on future earnings on the basis of information supplied by counsel should make clear that 

the reliability of the data itself is not the object of the Daubert inquiry.” Manpower, 732 F.3d at 

808; see also Stollings v. Ryobi Techs., Inc., 725 F.3d 753, 765–66 (7th Cir. 2013) (holding that 

questions as to the accuracy of one of the expert’s factual assumptions were grounds for cross-

 

10 The district court case on which the defendants rely involved this problem, but to the extent 

that case suggests that experts must further verify any fact or assumption upon which they rely, it 

is inconsistent with the Seventh Circuit’s holdings.
49 

examination, not exclusion of the expert’s opinion).11 Again, the defendants are free to dispute 

Mr. Johnson’s premises, but that is not a ground to exclude his opinions. U.S. Gypsum Co. v. 

Lafarge N. Am. Inc., 670 F. Supp. 2d 737, 741 (N.D. Ill. 2009) (rejecting a challenge in a similar 

case to expert testimony that took issue not with the expert’s “calculations, but with her initial 

assumptions”). Mr. Johnson utilized his expertise in translating Tuff Rod’s sales of these 

products to his calculation of Hunting’s lost profits, so the Court denies the motion to strike his 

lost-profits opinion. 

The defendants next argue that Mr. Johnson failed to reliably calculate their unjust 

enrichment. As the defendants note, unjust enrichment is measured by the defendant’s net profits 

earned through the misappropriation. Mr. Johnson thus calculated Tuff Rod’s sales, and then 

subtracted its costs of goods sold. Mr. Johnson further considered whether any additional 

amounts should be subtracted, but concluded that the evidence did not support any further 

adjustments. The defendants argue that the opinion is faulty because Mr. Johnson declined to 

make those reductions. The Court finds that this is another quarrel with his conclusions, not his 

methodology. See Daubert, 509 U.S. at 595 (“The focus, of course, must be solely on principles 

and methodology, not on the conclusions that they generate.”). Mr. Johnson identified the proper 

standard and considered the information that the defendants cite; he just decided that the 

information did not support the reduction. [DE 107-1 p. 23; 123-8 p. 4–6]. Perhaps the jury will 

find he was incorrect, but the Court cannot exclude the opinion on that basis. Smith v. Ford 

Motor Co., 215 F.3d 713, 718 (7th Cir. 2000) (“It is not the trial court’s role to decide whether an 

expert’s opinion is correct.”). Moreover, Indiana courts have held that “any doubts and 

 

11 The defendants similarly argue that Mr. Johnson failed to limit his calculation to the timeframe 

in which Tuff Rod could have reverse engineered the products. But Hunting’s theory is that Tuff 

Rod would not have been able to recreate Hunting’s pipe at all absent their misappropriation. 
50 

uncertainties as to proof of the exact measure of damages must be resolved against the 

defendant,” as “[p]ublic policy and justice require that the risk of uncertainty in the computation 

of damages be borne by the wrongdoer.” Weston v. Buckley, 677 N.E.2d 1089, 1093 (Ind. Ct. 

App. 1997). The court in Weston thus sustained a damages award for unjust enrichment even 

where, as here, there was a dispute as to whether the plaintiff had subtracted all relevant costs 

from the defendant’s gross receipts. Id. Thus, the Court declines to strike Mr. Johnson’s unjust 

enrichment opinion. 

The defendants next object to Mr. Johnson’s opinion as to a reasonable royalty as a 

measure of damages for the trade secrets claim. They first argue that the opinion is irrelevant 

because a royalty is only available when “neither damages nor unjust enrichment are provable.” 

Ind. Code § 24-2-3-4(b). They argue that damages and unjust enrichment are provable, so a 

royalty is unavailable. Again, that is an argument for the jury. The Court has not granted 

summary judgment on this issue, and has no basis to prevent Hunting from presenting evidence 

on that issue. The fact that Mr. Johnson has also opined on Hunting’s losses and Tuff Rod’s 

unjust enrichment does not prevent him from offering this opinion, either; offering a fallback 

calculation of damages is not only permissible, it is prudent. The defendants also argue that Mr. 

Johnson failed to cap the royalty at the amount of money it would have taken Tuff Rod to reverse 

engineer the trade secrets. However, Mr. Johnson based his opinion on Hunting’s contention that 

the defendants would not have been able to recreate Hunting’s pipe if not for their 

misappropriation. Again, the defendants can contest that premise at trial, but Mr. Johnson’s 

opinion cannot be excluded on that basis. 

Mr. Kavadas next objects to Mr. Johnson’s opinion as to the breach of contract claim. As 

to this claim, Mr. Johnson adopted his same calculations as the trade secret claim for Hunting’s 
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lost profits, Tuff Rod’s unjust enrichment, and their combination. Mr. Kavadas first objects that 

Mr. Johnson’s calculation was not limited to the customers encompassed in his non-compete 

agreement or the term of that agreement. These objections are moot now that the Court granted 

summary judgment on that aspect of the claim. However, this claim was based equally on Mr. 

Kavadas’ breach of the confidentiality provisions of the contract, which parallels the trade 

secrets claim. Mr. Johnson thus opined that Hunting’s lost profits for the breach of contract claim 

were the same for the trade secret claim. Mr. Kavadas does not offer any additional objection to 

that aspect of this opinion, so the Court overrules the objection as to the lost profits due to the 

breach of contract. 

Mr. Kavadas further objects to Mr. Johnson opining on Tuff Rod’s unjust enrichment as a 

measure of damages for this claim. He argues that unjust enrichment is not a valid measure of 

damages for breach of a written contract. See DiMizio v. Romo, 756 N.E.2d 1018, 1025 (Ind. Ct. 

App. 2001) (“Unjust enrichment operates when there is no governing contract.”); Craftsman 

Chem. Corp. v. IVC Indus. Coatings, Inc., No. 2:15-cv-425, 2017 WL 365815, at *5 (S.D. Ind. 

Jan. 25, 2017) (“If an express contract governs the parties’ relationship, ‘a claim for unjust 

enrichment is not cognizable.” (quoting CoMentis, Inc. v. Purdue Research Found., 765 F. Supp. 

2d 1092, 1102 (N.D. Ind. 2011))). Hunting does not argue to the contrary. Instead, it argues that 

Mr. Johnson’s unjust enrichment calculations will come in anyway relative to the trade secrets 

claim, and that the Court will instruct the jury on the proper measure of damages on the contract 

claim. That argument overlooks, however, that Mr. Johnson expressly offers his unjust 

enrichment calculations as a measure of damages on the contract claim. Since there is no dispute 

that those damages are not recoverable on this claim, that aspect of his opinion is not relevant. 
52 

The Court thus strikes Mr. Johnson’s opinions relative to Tuff Rod’s unjust enrichment as to this 

claim; his opinion on the breach of contract claim will be limited to Hunting’s lost profits. 

Last, Mr. Kavadas objects to the calculation of damages on Hunting’s breach of fiduciary 

duty claim. His objection largely reprises his argument in support of summary judgment, as he 

contends that he did not actually begin breaching his fiduciary duty during his employment, so 

Mr. Johnson should not have calculated damages beginning in January 2013. That is only a 

dispute with Mr. Johnson’s assumptions, which is not a basis for striking his opinion. Manpower, 

732 F.3d at 808 (“The reliability of data and assumptions used in applying a methodology is 

tested by the adversarial process and determined by the jury; the court’s role is generally limited 

to assessing the reliability of the methodology—the framework—of the expert’s analysis.”). The 

Court therefore denies the motion to strike as to this opinion.

VI. CONCLUSION 

As to Hunting’s motion for default judgment [DE 103], the Court DENIES the request 

for a default judgment, but GRANTS the motion in awarding lesser forms of sanctions, as 

outlined above. The defendants’ motion for summary judgment [DE 108] is GRANTED in part 

and DENIED in part; their motion to strike Ms. Romero’s opinions [DE 100] is DENIED; and 

their motion to strike Mr. Johnson’s opinions [DE 105] is GRANTED in part and DENIED in 

part. 

 SO ORDERED. 

 ENTERED: September 20, 2018 

 

 /s/ JON E. DEGUILIO 

 Judge 

 United States District Court