Source: http://nc.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20171204_0004016.WNC.htm/qx
Timestamp: 2019-03-19 20:55:38
Document Index: 296859717

Matched Legal Cases: ['§ 9', '§ 66', '§ 66', '§ 66', '§ 66', '§ 66', '§ 66', '§ 66']

THIS MATTER is before the Court upon the filing of several post-trial motions by Plaintiff and Defendant. Plaintiff has filed a Motion for Attorneys' Fees (Doc. No. 108), a Motion to Amend Judgment (Doc. No. 120), and a Motion for a Permanent Injunction (Doc. No. 123). Defendant has moved under Rule 59(a) for a new trial (Doc. No. 126), and in the alternative, moves under Rule 49(b) and 50(b) (Doc. No. 124). Defendant also seeks an amendment to the Judgment under Rule 59(e) (Doc. No. 126). All parties have responded to the pending motions, and they are now ripe for resolution. The Court addresses each motion but not necessarily in the order filed.
In the interests of judicial economy, the Court provides a general overview of the case here but summarizes the specific background relevant to the issues raised by the parties' motions in the analysis. This litigation stems from William Jesse Rowland's resignation and departure from his position with Plaintiff and the acceptance and commencement of work for Defendant. After a six day trial, the jury found Defendant liable for (i) wrongfully interfering with the non-disclosure and non-competition provisions of the Employment, Non-Disclosure, Non-Solicitation, and NonCompetition Agreement (the “Agreement”) between Rowland and Plaintiff; (2) misappropriation of trade secrets; (3) unfair or deceptive trade practices, and (4) punitive damages. The jury found that Defendant was not liable for wrongfully interfering with prospective contracts between Plaintiff and Ascension Health, Greenville Health System, El Camino, and Eskenazi. The jury awarded Plaintiff (1) $1 for wrongful interference with the non-disclosure and non-competition provisions of the Agreement; (2) $600, 000 in damages for misappropriation of trade secret(s); and (3) $1 for unfair or deceptive trade practices. The jury also awarded Plaintiff $100, 000 in punitive damages.
A. Defendant's Post-Trial Motion under Rule 59(a) and Alternative Motion under Rule 50(b)
Defendant moves for a new trial under Rule 59(a) on Plaintiff's claim for misappropriation of trade secrets and for punitive damages. “The grant or denial of a motion for new trial is entrusted to the sound discretion of the district court and will be reversed on appeal only upon a showing of abuse of discretion.” Cline v. Wal-Mart Stores, 144 F.3d 294, 305 (4th Cir. 1998) (citing Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 435 (1996)). A court may grant a new trial on some or all of the issues “for any reason which a new trial has heretofore been granted in an action at law in federal court[.]” Fed.R.Civ.P. 59(a)(1)(A). Acceptable reasons include: “(1) the verdict is against the clear weight of the evidence, or (2) is based upon evidence which is false, or (3) will result in a miscarriage of justice, even though there may be substantial evidence which would prevent the direction of a verdict.” Cline, 144 F.3d at 301 (quoting Atlas Food Sys. & Servs., Inc. v. Crain Nat'l Vendors, Inc., 99 F.3d 587, 594 (4th Cir. 1996)). When making this determination, the court may weigh the evidence and consider the credibility of witnesses. Wilhelm v. Blue Bell, Inc., 773 F.2d 1429, 1433 (4th Cir. 1985) (citing Wyatt v. Interstate & Ocean Transport Co., 623 F.2d 888, 891-92 (4th Cir. 1980)).
Defendant also renewed its motion under Rule 50 of the Federal Rules of Civil Procedure and moves for judgment as a matter of law on many of the same issues raised in its post-trial motion under Rule 59(a). Accordingly, the Court considers each of these alleged errors under Rule 59(a) and Rule 50(b). A motion under Rule 50(b) “assesses whether the claim should succeed or fail because the evidence developed at trial was insufficient as a matter of law to sustain the claim.” Belk, Inc. v. Meyer Corp., 679 F.3d 146, 155 (4th Cir. 2012). Upon a Rule 50 motion, the court cannot reweigh the evidence or consider the credibility of the witness and must view “all the evidence in the light most favorable to the prevailing party and draw all reasonable inferences in [the prevailing party's] favor.” Konkel v. Bob Evans Farms, Inc., 165 F.3d 275, 279 (4th Cir. 1999). A jury's verdict will withstand a motion under Rule 50 unless the Court “determines that the only conclusion a reasonable trier of fact could draw from the evidence is in favor of the moving party.” Tools USA and Equip. Co. v. Champ. Frame Straightening Equip., Inc., 87 F.3d 654, 656-57 (4th Cir. 1996) (quoting Winant v. Bostic, 5 F.3d 767, 774 (4th Cir. 1993)); see also Konkel, 165 F.3d at 279.
Defendant first argues that several of the Court's evidentiary rulings are grounds for a new trial. Errors in admitting or excluding evidence are not grounds for a new trial “[u]nless justice requires[.]” Fed.R.Civ.P. 61. An error is harmless and does not require a new trial if the court can “say ‘with fair assurance, after pondering all that happened without stripping the erroneous action from the whole, that the judgment was not substantially swayed by the errors.'” Taylor v. Virginia Union Univ., 193 F.3d 219, 235 (4th Cir. 1999) (citations omitted). By focusing on “whether the error itself had substantial influence[, ]” this analysis allows the court to distinguish between harmless errors and those impacting a substantial right. Id. As discussed herein, the Court concludes that the judgment was not substantially swayed by errors.
Defendant contends it was unfairly prejudiced by the admission of evidence at trial on trade secrets that were not identified in Plaintiff's response and supplementary responses to Defendant's interrogatories. However, Plaintiff disclosed in its response to interrogatory three its contention that Rowland, Defendant's employee, possessed Plaintiff's trade secrets and in response to interrogatory two in an attached exhibit listed the alleged trade secrets. This list enabled Defendant to know what it was accused of misappropriating. See e.g., Washburn v. Yadkin Valley Bank and Trust Co., 190 N.C.App. 315, 326, 660 S.E.2d 577, 585 (2008) (“To plead misappropriation of trade secrets, ‘a plaintiff must identify a trade secret with sufficient particularity so as to enable a defendant to delineate that which he is accused of misappropriating and a court to determine whether misappropriation has or is threatened to occur.'”). Further, the answers of James Yuhas at his depositions reiterated that the trade secrets and proprietary information at issue was not just the MsToPg tool but included multiple categories of information believed to be on the S.D. card possessed by Defendant's employee Rowland. Therefore, any purported inadequacy of the identification of the trade secrets was not for lack of Plaintiff's disclosure. Admission of this evidence was not unfair. See Fed.R.Evid. 403.
b. Testimony of Ankit Oza and James Yuhas
Defendant also contends the Court erred by not excluding, on account of Plaintiff's alleged non-disclosure, testimony on damages sustained for misappropriation and testimony on damages from James Yuhas and Ankit Oza.[1] However, Plaintiff disclosed in its interrogatory six the categories of damages it sought and identified Yuhas and Oza as potential witnesses with knowledge that could be contacted. Defendant served interrogatories and deposed individuals about their personal knowledge of damages, but Defendant did not seek identification of a deponent to address damages under Federal Rule of Civil Procedure 30(b)(6). Plaintiff contends that interrogatories to an entity are the functional equivalent of a Rule 30(b)(6) deposition, but a Fed.R.Civ.P. 30(b)(6) designee “must testify about information known or reasonably available to the organization” rather than merely answering an interrogatory furnishing “information available to the party[, ]” Fed.R.Civ.P. 33(b)(1)(B). (Emphasis added). The burden on a Rule 30(b)(6) designee is therefore greater than an agent answering an interrogatory on behalf of an entity. See Wilson v. Lakner, 228 F.R.D. 524, 528 (D. Md. 2005) (“The designee must be prepared to the extent that matters are reasonably available, whether from documents, present or past employees, or other sources.” (emphasis added)); United States v. Taylor, 166 F.R.D. 356, 361 (M.D. N.C. 1996) (“[T]he designee must not only testify about facts within the corporation's knowledge, but also its subjective beliefs and opinions. The corporation must provide its interpretation of documents and events.” (internal citations omitted)). Thus, Defendant's decision not to employ Federal Rule of Civil Procedure 30(b)(6) created any purported disadvantage suffered by Defendant.
Further, Defendant's Motion in Limine only sought exclusion of testimony and evidence of Plaintiff's alleged lost profits (Doc. No. 71) and as clarified at trial the objection was limited to “the three or four or five million that their expert said they lost in profits because they lost customers.” (Rough Trial Tr., July 17, 2017, 6:4-6).[2] At trial, the jury found in favor of Defendant on all claims of wrongful interference with prospective contracts with customers. Therefore, even if the admission was wrongful, most if not all of the error was harmless.
c. Georgia Court Order
Before this litigation began, Plaintiff sued Rowland in the Superior Court of Cobb County, Georgia. In that litigation, a superior court judge entered an Order denying Plaintiff's Emergency Motion for Temporary Restraining Order against Rowland (the “Georgia Order”). (Doc. No. 34-7). Defendant contends this Order supports its proposition that “Defendant acted reasonably when it continued to employ Rowland and cover his legal expenses” and argues the Court erred by excluding it. (Doc. No. 127 at 9). However, temporary restraining orders and preliminary injunctions are not intended to resolve the case on the merits, Eastman Kodak Co. v. Fotomat Corp., 317 F.Supp. 304, 325 (N.D.Ga. 1969) (“It is not the function of a preliminary injunction to decide a case on the merits . . . .” (citations omitted)), and they can denied on grounds unrelated to the merits of the claim. See Ga. Code Ann. § 9-11-65(b)(1) (“A temporary restraining order may be granted without written or oral notice to the adverse party or his attorney only if: (1) It clearly appears from specific facts shown by affidavit or by the verified complaint that immediate and irreparable injury, loss, or damage will result to the applicant before the adverse party or his attorney can be heard in opposition; and (2) The applicant's attorney certifies to the court, in writing, the efforts, if any, which have been made to give the notice and the reasons supporting the party's claim that notice should not be required); Holland Ins. Group v. Senior Life Ins. Co., 329 Ga.App. 834, 841, 766 S.E.2d 187, 194 (2014) (“When determining whether to issue an interlocutory injunction, the trial court must consider whether (1) there is a substantial threat that the moving party will suffer irreparable injury if the injunction is not granted; (2) the threatened injury to the moving party outweighs the threatened harm that the injunction may do to the party being enjoined; (3) there is a substantial likelihood that the moving party will prevail on the merits of her claims at trial; and (4) granting an interlocutory injunction will not disserve the public interest.”). Here, the superior court judge entered a one-page order finding that Plaintiff's case did not meet the burden required for a temporary restraining order and reserving ruling on all issues. The superior court judge did not elaborate. Thus, the Georgia Order cannot be interpreted to address the merits of Plaintiff's complaint against Rowland or support the reasonableness of Defendant's continued employment and payment of legal expenses for Rowland as Defendant contends. The Georgia Order is not relevant to this litigation; it does not consider, touch on, or contemplate the disputes between Plaintiff and Defendant in this case. Even if relevant, any alleged probative value would be outweighed by its tendency to mislead the jury by suggesting that another court has previously addressed the merits of the dispute between Plaintiff and Defendant.[3] Fed.R.Evid. 403. Therefore, the Court finds no error.
d. Clark Walton Testimony
Defendant argues the Court improperly allowed Clark Walton to testify as a lay witness about his examination of Rowland's Secure Digital Card (“SD Card”) when the Court struck Walton's expert report addressing this examination on October 26, 2016 as untimely. Plaintiff, however, contends this was proper because Walton had to examine the S.D. card in order to determine if this information was transferred to Rowland's computer or any other device, which was allowed by the Court's Order on March 14, 2017. (Doc. No. 79). The Court agrees. The Order allowed Plaintiff's examiner to “review the image of Rowland's Computer” to among other things, “determine if any information related to LDA files and the S.D. card was transferred from Rowland's Computer to any other person or device.” (Doc. No. 79 at 3). As a result, the Order impliedly authorized an examination by Plaintiff's expert of the S.D. card to the extent necessary to determine if information from the S.D. card was transferred from Rowland's computer. The Order did not preclude Walton from being Plaintiff's expert, and Defendant did not seek such limitation or file any objection to the Order. Thus, Defendant was on notice that the contents of the S.D. card as compared to Rowland's computer and other devices would fall within the scope of permissible discovery and would be included in the expert report. Defendant also knew that under the Order it was permitted to depose the examining expert and serve a rebuttal expert report. Therefore, Defendant was not prejudiced by the admission of testimony from Walton about the contents of the S.D. card; Defendant had the opportunity to depose Walton and assess his testimony. See Quality Built Homes, Inc. v. Village of Pinehurst, No. 1:06cv1028, 2008 WL 3503149, at *4-5 (M.D. N.C. Aug. 11, 2008) (striking engineer's affidavit where untimeliness of offering party precluded adverse party from deposing engineer). Further, the Court limited Walton's testimony on the contents of the S.D. card to lay testimony-things the average person with a computer could observe. As a result, the sanction imposed on Plaintiff on October 26, 2016 still impacted the scope of Walton's testimony. Thus, the Court finds no error.
e. Brad Shipe Testimony
Defendant argues the exclusion of the testimony of Brad Shipe, Rowland's attorney in the litigation in Georgia, was an error and prejudicial. The Court excluded the testimony as untimely as Defendant did not supplement their initial disclosures or discovery responses to identify him as a witness even though the issue of spoliation had been raised previously. Fed.R.Civ.P. 37(c)(1). Defendant argues the delay was justified because it believed spoliation was no longer an issue in the case after the Court struck Plaintiff's designation of Walton as Plaintiff's proposed expert witness as untimely. However, Defendant overlooks the fact that in March, the Court allowed the examination of Rowland's computer by Plaintiff's expert. The authorized examination and resulting order, to which no objection was filed, allowed “searches for evidence of possible destruction of data or attempts to destroy data.” (Doc. No. 79 at 3). Hence, Defendant was clearly on notice that attempts to destroy or the destruction of data, and consequentially spoliation, was an issue in this case. Thus, waiting until July, after the selection of the jury, to identify Shipe as a witness was not justified. Additionally, the deposition of Shipe, which occurred after the Court suspended trial to allow the deposition, identified for the first time a discussion with an attorney associated with Plaintiff that had not been identified or involved with this litigation. Given that this deposition occurred in the midst of the trial, Plaintiff had no opportunity to prepare for Shipe's testimony, including but not limited to deposing the attorney identified by Shipe. Therefore, Defendant's delay was not harmless. The Court, accordingly, finds no error.
2. Jury Instructions under Rule 59(a) and Related Arguments under Rule 50(b)
Defendant also argues that the instructions to the jury and verdict form prejudiced Defendant, entitling Defendant to a new trial. An error in jury instructions is not reversible and not prejudicial if as a whole, the instructions adequately state the controlling law. See e.g., Eberhardt v. Integrated Design & Constr., Inc., 167 F.3d 861, 870 (4th Cir. 1999). Here, Defendant argues that the Court erred by (1) allowing the jury to consider Plaintiff's claim for wrongful interference with the non-disclosure provision; (2) not giving a special instruction on each tortious interference with contract claim that “[a]s to this claim, actual damages means damages in excess of one dollar”; (3) allowing the jury to consider whether information besides the MsToPg tool is a trade secret; (4) allowing the jury to find Defendant liable for misappropriation of trade secrets under an agency theory; and (5) giving a spoliation instruction. (Doc. No. 127 at 14-15). Defendant makes related arguments under Federal Rule of Civil Procedure 50(b), which the Court also addresses herein.
a. Wrongful Interference with Non-Disclosure Provision
Defendant argues that an instruction on wrongful interference with the Agreement's non-disclosure provision was improper because Plaintiff did not present substantial evidence to support that Defendant induced Rowland to breach the non-disclosure provision of the Agreement. (Doc. No. 127 at 14; Doc. No. 125 at 9). Defendant contends the lack of substantial evidence for this effect is grounds for a new trial, and in the alternative for judgment as a matter of law under Rule 50(b). Regardless of whether the Court considers this error under Rule 59(a) or 50(b), Defendant is not entitled to a new trial or judgment as a matter of law. No miscarriage of justice has occurred, and Plaintiff submitted substantial circumstantial evidence and testimony, as summarized below, to support the claim. To establish the tort of interference with contract, the plaintiff must show “(1) a valid contract between the plaintiff and a third person which confers upon the plaintiff a contractual right against a third person; (2) the defendant knows of the contract; (3) the defendant intentionally induces the third person not to perform the contract; (4) and in doing so acts without justification; (5) resulting in actual damage to plaintiff.” United Labs., Inc. v. Kuykendall, 322 N.C. 643, 661-62, 370 S.E.2d 375, 387 (1988) (citing Childress v. Abeles, 240 N.C. 667, 674, 84 S.E.2d 176, 181 (1954)). Here, Plaintiff presented evidence of the Agreement which contained a non-disclosure provision and that Defendant was informed of the Agreement a couple months after hiring Rowland. Defendant gave Rowland an oral job offer, and soon thereafter, Rowland submitted his two week notice and backed up his data from his work computer on a S.D. card. Rowland had not backed up his data on these devices in eight months and he backed up data that he did not use in the performance of his work for Plaintiff. Testimony was also presented that Plaintiff's data was automatically backed up, and Plaintiff had a policy against employees' unilaterally backing up their data. On his last day of work, Rowland did not return the S.D. card and remained in possession of the S.D. card when he commenced work for Defendant. Further, Defendant did not want Plaintiff to learn of Rowland's employment and discussed steps to prevent Plaintiff from learning of this. Defendant knew that many of Plaintiff's former employers were subject to non-disclosure and non-competition provisions. Evidence was also presented that Defendant permitted Rowland, unlike most of Defendant's employees in similar positions, to work remotely full time from his home in Georgia, instead of its corporate office. On top of that, evidence was presented that Rowland and his attorney destroyed data on Rowland's personal computer and on the S.D. card in close proximity to relevant events in the litigation brought by Plaintiff. Nevertheless, Defendant continued to employ Rowland, an at-will employee, despite learning about the Agreement and his possession of the S.D. card. Testimony that Defendant paid and continues to pay Rowland's attorneys' fees and had only paid the attorneys' fees for one other employee was also presented. Given this evidence, the verdict was not contrary to the clear weight of evidence, and the Court cannot conclude that the evidence was insufficient as a matter of law to sustain the claim for tortious interference with the non-disclosure provision.
Defendant argues it is entitled to a new trial because the Court erred by not giving the special instruction requested by Defendant on each tortious interference with contract claim that “[a]s to this claim, actual damages means damages in excess of one dollar.” In the alternative, Defendant argues that it is entitled to judgment as a matter of law because Plaintiff did not produce sufficient evidence to support a jury verdict of $1 in actual damages. Defendant also contends Plaintiff did not produce sufficient evidence to support any damages award.
However, as to Defendant's first request, Defendant has not shown that this proposed jury instruction, which the Court declined to give, “(1) was correct; (2) was not substantially covered by the court's charge to the jury; and (3) dealt with some point in the trial so important, that failure to give the requested instruction seriously impaired that party's ability to make its case.” United States v. Duygu Kivanc, 714 F.3d 782, 794 (4th Cir. 2013) (quoting Noel v. Artson, 641 F.3d 580, 586 (4th Cir. 2011)). Defendant has not cited any North Carolina case or law to support its first contention that “[a]s to [a claim for wrongful interference with contract], actual damages means damages in excess of one dollar.” Contra Godwin v. Vinson, 254 N.C. 582, 587, 119 S.E.2d 616, 620 (1961) (defining actual damages as “compensation for injuries and losses which are the direct and proximate result” of the wrong); Black's Law Dictionary (10th ed. 2014) (defining actual damages as “[a]n amount awarded to complainant to compensate for a proven injury or loss; damages that repay actual losses”). Although it may be atypical for a jury to find actual damages of one dollar, the law in North Carolina does not preclude such an award merely because the amount is one dollar. Therefore, the Court did not err or prejudice Defendant by declining to give the proposed jury instruction.
Thus, the next inquiry is whether viewing the evidence in the light most favorable to Plaintiff and drawing inferences in favor of Plaintiff, “the only conclusion a reasonable trier of fact could draw from the evidence is in favor of the moving party.” Winant v. Bostic, 5 F.3d 767, 774 (4th Cir. 1993). Here, Defendant argues that the evidence produced by Plaintiff cannot support a jury verdict of one dollar, and in the alternative, argues that Plaintiff failed to produce evidence to support its claim of actual damages from Defendant's tortious interference with Plaintiff's Agreement with Rowland. The argument as to the verdict of one dollar, however, was not asserted by Plaintiff as grounds for judgment in its favor under Rule 50(a). See generally Price v. City of Charlotte, 93 F.3d 1241, 1249 (4th Cir. 1996) (“[A] Rule 50(a) motion is a prerequisite to a Rule 50(b) motion because the [party] must apprise the district court of the alleged insufficiency of [the non-moving party's] suit before the case is submitted to the jury.”). Defendant's failure to assert there was insufficient evidence to support a jury verdict of one dollar under Rule 50(a) is clearly because such an argument cannot be made under Rule 50(a) or (b). A motion for judgment as a matter of law is appropriate when there is an absence of evidence on an issue essential to the non-moving party's cause of action or defense, Fed.R.Civ.P. 50(a)(1), or where there are discrete legal issues that can be resolved as a matter of law, Chesapeake Paper Prods. Co. v. Stone & Webster Eng'g Corp., 51 F.3d 1229, 1236 (4th Cir. 1995). The fact that damages are not equal to a specific amount is not an essential element of a tortious interference with contract claim, see Embree Constr. Grp., Inc. v. Rafcor, Inc., 330 N.C. 487, 498, 411 S.E.2d 916, 924 (1992) (listing the elements of tortious interference with contract), and is not a discrete legal issue relevant to the claim, Chesapeake Paper Prods., 51 F.3d at 1236 (noting that whether the contract governed the rights and liabilities of the parties could have been addressed by a Rule 50 motion). Therefore, a party is not entitled to judgment as a matter of law on a claim for tortious interference with contract if the non-moving party cannot show damages are equal to one dollar. As a result, the Court denies Defendant's request for judgment as a matter of law on this basis.[4]
Next, the Court assesses whether Plaintiff produced sufficient evidence to support the element of actual damages for the tortious interference with contract claim. In a claim for tortious inference with contract, plaintiff has the burden of proving actual damages, Olivetti Corp. v. Ames Bus. Sys., Inc., 319 N.C. 534, 547, 356 S.E.2d 578, 586 (1987), but how plaintiff shows and determines the resulting actual damages varies based on the facts of the case, Static Control Components, Inc., 200 F.Supp.2d at 549 (citing Byrd's Lawn & Landscaping v. Smith, 142 N.C.App. 371, 378, 542 S.E.2d 689, 693 (2001)). The North Carolina Court of Appeals has recognized that “breach of non-competition agreements . . . necessarily involves damages which are difficult to calculate with absolute precision” and the “indefiniteness consequent upon this difficulty does not, however, by itself preclude relief[.]” Keith v. Day, 81 N.C.App. 185, 196, 343 S.E.2d 562, 569 (1986) (citation omitted). Therefore, “[w]hat the law does require in cases of this character is that the evidence shall with a fair degree of probability establish a basis for the assessment of damages.” Id. (citations omitted); see also Southern Bldg. Maint., Inc., v. Osborne, 127 N.C.App. 327, 332, 489 S.E.2d 892, 896 (1997) (“While the reasonable certainty standard requires something more than ‘hypothetical or speculative forecasts, ' it does not require absolute certainty.”). Here, Plaintiff produced evidence of costs associated with retaining new employees to fulfill the obligations and duties previously performed by Rowland and of costs associated with litigation against Rowland to enforce the Agreement. This evidence provided a basis for the assessment of damages with a sufficient degree or probability from which a reasonable jury could conclude the existence of actual damages and determine the amount of actual damages. Accordingly, the Court denies Defendant's motion for judgment as a matter of law on Plaintiff's claim for tortious interference with the Agreement.
As discuss previously, supra § II (A)(1)(a), this Court has already concluded that Plaintiff disclosed the trade secrets at issue in this case. Defendant has not argued that there was false evidence or insufficient evidence for the jury to consider whether Plaintiff's customer lists and contact information, customer functional requirement documents, process manuals, interface screens, interface files, customer health information, or back-end of Deathstar, were trade secrets, and if so, if any of them were misappropriated. The records also does not support such an argument. Accordingly, the Court did not err in instructing the jury to consider such.
d. North Carolina Trade Secrets Protection Act
Defendant argues that the Court erred by instructing the jury that it could find Defendant liable under the North Carolina Trade Secrets Protection Act (“NCTSPA”) under an agency theory because NCTSPA does not permit liability under an agency theory. Even if the agency theory applies, Defendant argues judgment should be entered in its favor because no substantial evidence supports a finding that Rowland acted as Defendant's agent as to the misappropriation.[5] On these grounds, Defendant seeks a new trial or judgment as a matter of law it its favor.
i. Liability of Principal under the NCTSPA
As the NCTSPA contains no clause preempting the application of other law, [6] the question before the Court is: does the prima facie requirement of substantial evidence that Defendant-the person relief is sought against-“[k]nows or should have known of the trade secret” preclude Defendant's liability under agency theory for the acts-the misappropriation-of its agent Rowland. To address this question, the Court first analyzes the NCTSPA and then the law on agency, as espoused by North Carolina appellate courts. See generally Askew v. HRFC, LLC, 810 F.3d 263, 266 (4th Cir. 2016) (holding that when the case involves solely state-law matters, the court's “role is to apply the governing state law, or, if necessary, predict how the state's highest court would rule on an unsettled issue” (internal citations omitted)).
The NCTSPA states that “[t]he owner of a trade secret shall have remedy by civil action for misappropriation of his trade secret.” N.C. Gen. Stat. § 66-153. To obtain this remedy, the owner of the trade secret must set forth a prima facie case through:
1the introduction of substantial evidence that the person against whom relief is sought both:
N.C. Gen. Stat. § 66-155. Person is defined as “an individual, corporation, government, governmental subdivision or agency, business trust, estate, trust, partnership, association, joint venture, or any other legal or commercial entity.” N.C. Gen. Stat. § 66-152(2). Upon a finding of misappropriation, which is defined as the “acquisition, disclosure, or use of a trade secret of another without express or implied authority or consent[, ]” N.C. Gen. Stat. § 66-152(1), the owner may be entitled to a permanent injunction, actual damages, punitive damages, and reasonable attorneys' fees. N.C. Gen. Stat. § 66-154. However, even after a judgment finding misappropriation is entered,
a person who in good faith derives knowledge of a trade secret from or through misappropriation or by mistake, or any other person subsequently acquiring the trade secret therefrom or thereby, shall be enjoined from disclosing the trade secret, but no damages shall be awarded against any person for any misappropriation prior to the time the person knows or has reason to know that it was a trade secret.
N.C. Gen. Stat. § 66-154(a)(2).
Under North Carolina law, “[t]he two essential elements of an agency relationship are: (1) the authority of the agent to act on behalf of the principal, and (2) the principal's control over the agent.” State v. Weaver, 359 N.C. 246, 258, 607 S.E.2d 599, 606 (2005) (citing Holcomb v.Colonial Assocs., 358 N.C. 501, 509, 597 S.E.2d 710, 716 (2004)). Both parties, the agent and principal, must “consent that the agent will act on behalf of the principal in a particular capacity.” Id. (citing Ellison v. Hunsinger, 237 N.C. 619, 628, 75 S.E.2d 884, 891 (1953)). “Whether a principle-agent relationship exists is a question of fact for the jury when there is evidence tending to prove it; it is a question of law for the court if only one inference can be drawn from the facts.” Smock v. Brantley, 76 N.C.App. 73, 75, 331 S.E.2d 714, 716 (1985) (citation omitted).
A principal is liable for the torts of his agent (1) “when expressly authorized, ” (2) “when ratified by the principal, ” or (3) “when committed within the scope of his employment and in furtherance of his master's business.” See e.g., Snow v. De Butts, 212 N.C. 120, 122, 193 S.E. 224, 226 (1937). “In the first two of these three situations, liability is based upon traditional agency principles; in the third of these three situations, liability is based upon the doctrine of respondeat superior.” Creel v. North Carolina Dept. of Health, 152 N.C.App. 200, 202-03, 566 S.E.2d 832, 833 (2002) (citations omitted).
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because corporations, and other legal entities, only have knowledge through its agents and can only act through its agents, the NCTSPA cannot be construed to disallow liability under agency principals. &ldquo;[A] corporation is liable civiliter for torts committed by its servants or agents precisely as a natural person. Though it may have no mind with which to plot a wrong or hands capable of doing an injury, yet it may employ the minds and hands of others.&rdquo; Dickerson v. Atl. Refining Co., 201 N.C. 90, 99, 159 S.E. 446, 452 (1931); see Woodson v. Rowland, 329 N.C. 330, 344, 407 S.E.2d 222, 231 (1991) (&ldquo;A corporation can act only through its agents . . . .&rdquo;); Sledge Lumber Corp. v. S. Builders Equip. Co., 257 N.C. 435, 439, 126 S.E.2d 97, 100 (1962) (holding that executives&#39; position &ldquo;was such that his acts and knowledge would be the acts and knowledge of the corporation which can act only through its agents&rdquo;); see also St. Paul Mercury Ins. Co. v. Am. Bank Holdings, Inc., 819 F.3d 728, 734 (4th Cir. 2016) (&ldquo;Because a corporation is a fiction that can have knowledge only through its agents, knowledge of an agent acquired within the scope of the agency relationship is imputable to the corporation.&rdquo; (applying Maryland law)). Construing NCTSPA to preclude the application of agency theory would shield legal entities such as limited liability companies and corporations from liability under the NCTSPA.[7] This is inconsistent with the language of the NCTSPA, which defines person to include a “corporation . . . or any other legal or commercial entity.” N.C. Gen. Stat. § 66-152(2). North Carolina appellate courts have also affirmed rulings holding corporations and limited liability companies liable under NCTSPA for the acts of their employee agents. For example, the North Carolina Court of Appeals affirmed a claim against a limited liability company where the trial court sitting as fact finder found that defendant's ...