Opinion ID: 2818115
Heading Depth: 1
Heading Rank: 3

Heading: Lexar’s Claims on Summary Judgment

Text: On cross-appeal, Lexar argues that the district court erred in granting summary judgment to Macquarie on Lexar’s claims of unlawful interference with business and misappropriation of trade secrets. Lexar first argues that the district court’s grant of summary judgment to Macquarie was procedurally improper. In 2009, Macquarie filed a motion for summary judgment, arguing that Lexar Group’s claim of unlawful interference failed because Lexar Group had failed to identify a business relationship or expectancy with which Macquarie had interfered. Macquarie did not distinguish Lexar from LexMac and Novus, and the district court did not analyze Lexar’s claims separately from LexMac and Novus’s when it denied the motion. Macquarie argued for the first time in its mid-October 2012 pretrial memorandum that Lexar’s claims should be analyzed separately from LexMac and Novus’s claims because Lexar was not a party to the Mortgage or Credit Agreement and it did not own the trade secrets. At its October 16, 2012, pretrial conference, the district court told Lexar that it did not think “Lexar should . . . be part of the entities that ha[ve] a claim for misappropriation” and asked Lexar how much time it needed to find support for the position that “Lexar does, indeed, have a valid claim for misappropriation of a trade secret in light of the fact that they’re not anywhere on any loan documents, credit agreements, mortgages or anything else.” Lexar responded that it would file something within a few days. Trial was delayed, and Lexar did not file a response. A month later, the district court granted summary judgment to Macquarie on Lexar’s unlawful-interference and misappropriation claims. With regard to the claim of unlawful interference, the district court found that Lexar had not identified a business relationship or expectancy with which Macquarie had interfered, an issue that Macquarie had raised in its 2009 motion. -13- Lexar argues that the district court granted summary judgment sua sponte, in violation of Federal Rule of Civil Procedure 56. “After giving notice and a reasonable time to respond, the court may . . . consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute.” Fed. R. Civ. P. 56(f)(3); see also Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986) (“[D]istrict courts are widely acknowledged to possess the power to enter summary judgments sua sponte, so long as the losing party was on notice that she had to come forward with all of her evidence.”). The district court placed Lexar on notice during the pretrial conference that it might dismiss Lexar’s misappropriation claim, see Hubbard v. Parker, 994 F.2d 529, 531 (8th Cir. 1993), and thus it did not err in proceeding as it did. Lexar also argues that the district court failed to provide notice that it would reconsider Macquarie’s 2009 motion for summary judgment on the claim of unlawful interference. Rule 56, however, did not require the district court to do so, because Macquarie’s 2009 motion for summary judgment addressed the precise issue ruled on by the district court, and Lexar had an opportunity to respond to the motion. Although the district court initially denied summary judgment, it was free to reconsider its ruling, see Mosley v. City of Northwoods, Mo., 415 F.3d 908, 911 (8th Cir. 2005), and thus it did not err in granting summary judgment to Macquarie on Lexar’s claims. We turn, then, to the merits of Lexar’s claims of misappropriation and unlawful interference.
The district court granted summary judgment to Macquarie on Lexar’s misappropriation claim because it found that Lexar did not own or have any interest in the trade secrets when the misappropriation occurred. On appeal, Lexar does not -14- contest the district court’s characterization of the facts. It instead contends that its misappropriation claim should have been allowed to proceed to trial because it initially provided some of the trade-secret information to Macquarie Bank and had a business plan with LexMac and Novus to use the information to develop Lexar’s leases. We decline to decide whether ownership is an element of a misappropriation claim under the North Dakota Uniform Trade Secrets Act, as Macquarie argues. Compare DTM Research, L.L.C. v. AT & T Corp., 245 F.3d 327, 332 (4th Cir. 2001) (holding that under the Maryland Uniform Trade Secrets Act, “fee simple” ownership is not an element of a misappropriation claim), with Sargent Fletcher, Inc. v. Able Corp., 3 Cal. Rptr. 3d 279, 283 (Cal. Ct. App. 2008) (stating that under the California Uniform Trade Secrets Act, an element of a misappropriation claim is that “the plaintiff owned a trade secret”). We hold instead that Lexar’s misappropriation claim fails because “[w]henever more than one person is entitled to trade secret protection with respect to the same information, only that one from whom misappropriation occurred is entitled to a remedy.” Uniform Trade Secrets Act § 3 cmt. (2005). That Lexar had a business plan with LexMac and Novus to develop the leases using the trade secrets has no bearing on whether Macquarie misappropriated the trade secrets from Lexar. Shortly after providing some of the trade secrets to Macquarie Bank, Lexar assigned all of its interest in the trade secrets to LexMac and Novus. In turn, LexMac and Novus granted Macquarie Bank the nonexclusive right to use the trade secrets, including the information originally provided by Lexar, for certain purposes under the Credit Agreement and the Mortgage. Macquarie Bank used and disclosed the trade secrets in a way that exceeded the scope of LexMac and Novus’s consent, as discussed more fully below. This constituted misappropriation, the definition of which includes “[d]isclosure or use of a trade secret of another without express or implied consent by a person who” knew or had reason to know, at the time of the disclosure or use, that the trade secret was “[a]cquired under circumstances giving rise to a duty to maintain its secrecy or limit its use.” N.D. Cent. Code § 47-25.1-01(2). The -15- misappropriation occurred only from LexMac and Novus, not Lexar. Accordingly, the district court properly granted summary judgment to Macquarie on Lexar’s misappropriation claim.
Under North Dakota law, a claim for unlawful interference with business requires proof of “an independently tortious or otherwise unlawful act of interference by the interferer” that “caused the harm sustained.” Trade ’N Post, L.L.C. v. World Duty Free Ams., Inc., 628 N.W.2d 707, 717 (N.D. 2001). Lexar argues that it had a business plan to develop its leases using LexMac and Novus’s trade secrets, but was prevented from doing so by Macquarie’s misappropriation. Even if Macquarie’s misappropriation constituted an “unlawful interference,” however, the North Dakota Uniform Trade Secrets Act “displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret.” N.D. Cent. Code § 47-25.1-07(1). Lexar’s claim is based solely on Macquarie’s misappropriation. Essentially, Lexar’s unlawful-interference claim constitutes an attempt to circumvent the North Dakota Trade Secrets Act’s preclusion of a misappropriation claim and is consequently displaced.