Opinion ID: 4525695
Heading Depth: 3
Heading Rank: 3

Heading: Breach of the CNDA

Text: EPAC argues the district court erred in granting Thomas Nelson’s Rule 50(a) motion for judgment as a matter of law on EPAC’s claim for breach of the confidentiality agreement. For that claim, EPAC argues that Thomas Nelson breached the CNDA by disclosing pricing and other terms to Lightning Source. The district court found, however, that EPAC’s claim failed because the relevant one-year provision in the CNDA expired by the time any alleged disclosure occurred. - 16 - Case Nos. 19-5836/5838, EPAC Technologies, Inc. v. HarperCollins Christian Publishing, Inc. On the other hand, EPAC argues the CNDA is ambiguous and could be read to prohibit Thomas Nelson from disclosing information for up to five years, not just one year. We review de novo the district court’s grant of a Rule 50(a) motion for judgment as a matter of law. Watts v. United Parcel Service, Inc., 701 F.3d 188, 190 (6th Cir. 2012). And, as the district court correctly found, the CNDA’s one-year term applies, and Thomas Nelson did not breach within one year of the CNDA (if Thomas Nelson even breached at all). All parties agree Tennessee law governs, as the CNDA provides. And under Tennessee law, courts look first to the “usual, natural, and ordinary meaning of the contractual language.” Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn. 1999). Further, “[a]ll provisions in the contract should be construed in harmony with each other, if possible, to promote consistency and to avoid repugnancy between the various provisions of a single contract.” Id. There are two sections of the CNDA that prohibit Thomas Nelson from disclosing certain information. Section 3 of the CNDA, which contains a five-year term, protects “Confidential Information,” which is “defined as that Information which a Party hereto desires to protect against disclosure or competitive use and which is designed as such in the manner provided by this Agreement.” “Confidential Information” includes “[a]ll non-public information concerning the business, Technology, internal structure and strategies of EPAC or Nelson.” Section 6, which contains a one-year term, provides that “the Parties agree not to disclose to any person either the fact that discussions are taking place concerning the Project or any of the terms, conditions or other facts with respect to such Project, including the status thereof . . . for a period of one (1) year from the date hereof.” The “Project” is the “potential business transaction.” If Section 6 applies, then it’s clear Thomas Nelson did not commit any breach within the one-year governing term of Section 6. - 17 - Case Nos. 19-5836/5838, EPAC Technologies, Inc. v. HarperCollins Christian Publishing, Inc. In Guiliano, the Tennessee Supreme Court said that a contract should be construed to avoid repugnancy between the various provisions. Guiliano, 995 S.W.2d at 95. So Section 3 and Section 6 should be read to avoid protecting overlapping information. And a plain reading of the two sections shows those sections protect different information. Section 3 protects the proprietary technology and business information, along with the internal structures of EPAC. Section 6 protects any party from disclosing the fact that “discussions are taking place concerning the Project” (the potential business transaction). The main question is, do all of Thomas Nelson’s alleged disclosures fall under discussions concerning the parties’ potential business transaction. The answer is yes. EPAC maintains Thomas Nelson disclosed the following: • the pricing terms • “We have to turn orders in by 2:00 pm to receive next day”; • “They also have a four- and seven-day turnaround”; • “The orders range from 1 to 1,500 units”; • “The freight is included in cost”; • “They will ship to us or any location.” These are terms concerning their potential business transaction. This is not information concerning EPAC’s business, technology, internal structure, or strategies. Therefore, only the oneyear term applies and EPAC cannot show Thomas Nelson breached within one year.