Opinion ID: 715659
Heading Depth: 2
Heading Rank: 4

Heading: The Trade Secret Misappropriation Claim

Text: 43 Although Counts I and II are clearly intertwined, Count VI, a pendent state law trade secret claim, is separate and distinct from Counts I and II, and thus we must fully discuss the issues relevant to it on appeal. PAC contends that the district court erred in denying its motions for directed verdict and JNOV on the trade secret claim. Bateman and Fricker, in their sole issue on cross-appeal, contend that the district court abused its discretion in refusing to award exemplary damages on their trade secret claim pursuant to Fla.Stat. § 688.004(2), given the evidence that supported the jury verdict in Bateman and Fricker's favor on this count. 44 Our review of the district court's disposition of motions for a directed verdict and JNOV is de novo. Colvin v. Housing Auth. of Sarasota, 71 F.3d 864, 866 (11th Cir.1996) (per curiam). The appellate court employs the same standard utilized by the district court in determining whether to grant the motions--[w]e review all of the evidence in the light most favorable to, and with all reasonable inferences drawn in favor of, the nonmoving party, and [i]f the facts and inferences are so strong and overwhelmingly in favor of one party that the court believes that reasonable persons could not arrive at a contrary verdict, the grant of a directed verdict is proper. Walker v. NationsBank of Florida, N.A., 53 F.3d 1548, 1555 (11th Cir.1995) (citation omitted). What is required in order for the motion to be denied is substantial evidence of such quality and weight that reasonable and fair-minded persons in the exercise of impartial judgment might reach different conclusions. Id. As this court has stated before, however, a jury question does not exist because of a 'mere scintilla of evidence'; rather, '[t]here must be a conflict in substantial evidence to create a jury question.'  Id. (quoting Verbraeken v. Westinghouse Elec. Corp., 881 F.2d 1041, 1045 (11th Cir.1989) (quoting Boeing Co. v. Shipman, 411 F.2d 365, 374-75 (5th Cir.1969)), cert. dismissed, 493 U.S. 1064, 110 S.Ct. 884, 107 L.Ed.2d 1012 (1990). 45 In the case at bar, Bateman and Fricker's state law trade secret claim is predicated upon the existence of an implied confidential relationship. Given the backdrop of federal preemption pursuant to section 301 of the Copyright Act, we must carefully review this state law claim to ascertain whether it requires an extra element for recovery, for [a] state law claim is not preempted if the 'extra element' changes 'the nature of the action so that it is qualitatively different from a copyright infringement claim.'  Altai, 982 F.2d at 716 (quoting Mayer v. Josiah Wedgwood & Sons, Ltd., 601 F.Supp. 1523, 1535 (S.D.N.Y.1985)). As a general matter, state law trade secret statutes have been deemed not to be preempted because the plaintiff must prove the existence and breach of a confidential relationship in order to prevail. As the court in Altai stated, [t]he defendant's breach of duty is the gravamen of such trade secret claims, and supplies the 'extra element' that qualitatively distinguishes such trade secret causes of action from claims for copyright infringement that are based solely upon copying. Id. at 717. 46 We have no doubt that the Florida trade secret statute at issue satisfies the extra element test generally employed by courts in performing copyright preemption analysis. However, we find that the evidence presented by Bateman and Fricker, even viewed in the light most favorable to them, fails to establish the existence of a confidential relationship sufficient to trigger liability. We are wary of any trade secret claim predicated on the existence of an implied confidential relationship, because we are aware that artful pleading and presentation of evidence seemingly may create a pendent state law claim that in actuality is nothing more than a dressed up version of a copyright infringement claim. Bateman and Fricker are correct in asserting that Florida law recognizes implied confidential relationships sufficient to trigger trade secret liability. See Dotolo v. Schouten, 426 So.2d 1013, 1015 (Fla.Dist.Ct.App.), petition for review denied, 434 So.2d 888 (Fla.1983). However, the Florida cases, as well as those in other jurisdictions recognizing such an implied confidential relationship, all involve situations in which the party claiming trade secret misappropriation made it clear to the parties involved that there was an expectation and obligation of confidentiality. In the case at bar, it is not the lack of a written confidentiality agreement that is fatal to the trade secret claim; rather, it is the lack of any substantial evidence that PAC was ever made aware of any obligation of confidentiality to Bateman and Fricker regarding the engineering materials at issue. 35 Absent such a showing, all that remains of Bateman and Fricker's trade secret claim is their unilateral assertion that they had an implied confidential relationship with PAC. We find that, based on the record before us, Bateman and Fricker failed to produce sufficient evidence as to the existence of the implied confidential relationship, and thus PAC was entitled to judgment as a matter of law on this count. Therefore, the district court erred in failing to grant PAC's motions for directed verdict and JNOV, and the judgment of the district court on the trade secret misappropriation claim is reversed. 36