Court Opinion

ID: 9352956
Source: CourtListenerOpinion
Date Created: 2023-01-10 16:07:44.818913+00
Date Added: 2024-06-11T17:06:07.732311
License: Public Domain

January 10, 2023

                                                         Supreme Court
                                                         No. 2021-129-Appeal.
                                                         (PC 15-1561)

Wild Horse Concepts, LLC, et al.     :

                   v.                :

            Hasbro, Inc.             :

           NOTICE: This opinion is subject to formal revision
           before publication in the Rhode Island Reporter. Readers
           are requested to notify the Opinion Analyst, Supreme
           Court of Rhode Island, 250 Benefit Street, Providence,
           Rhode Island 02903, at Telephone 222-3258 or Email
           opinionanalyst@courts.ri.gov of any typographical or
           other formal errors in order that corrections may be made
           before the opinion is published.
                                                        Supreme Court
                                                        No. 2021-129-Appeal.
                                                        (PC 15-1561)

   Wild Horse Concepts, LLC, et al.      :

                   v.                    :

             Hasbro, Inc.                :

            Present: Suttell, C.J., Goldberg, Lynch Prata, and Long, JJ.

                                   OPINION

      Justice Lynch Prata, for the Court. This case came before the Supreme

Court on October 27, 2022, pursuant to an order directing the parties to show cause

why the issues raised in this appeal should not be summarily decided. The plaintiffs,

Wild Horse Concepts, LLC, Steven R. D’Aguanno, Alfred G. Vuono, and H. Kirk

Bozigian (plaintiffs or Wild Horse), appeal from the Superior Court’s entry of

summary judgment in favor of the defendant, Hasbro, Inc. (defendant or Hasbro).

After considering the parties’ written and oral submissions and thoroughly reviewing

the record, we are satisfied that cause has not been shown. For the reasons set forth

herein, we affirm the judgment of the Superior Court.

                                 Facts and Travel

      The plaintiffs are former Hasbro employees who now develop toy concepts,

which they present to various toy companies for consideration. According to

                                        -1-
plaintiffs, “[s]uch presentations are a universally accepted practice in the toy

business which are routinely utilized by both the inventors/concept developers and

the manufacturers and marketers of toy products, including Defendant Hasbro, to

conceive and develop new toy product lines for the market.” Prior to plaintiffs’

presentation of their MolecuLords concept to Hasbro, the parties executed an

“Agreement to Hold Confidential” (Agreement) that governs the sharing of

proprietary and confidential information between the parties for two years from the

date of the disclosure of the information. 1 The Agreement states that Hasbro was

prohibited from using any such proprietary information for commercial purposes

during the prescribed timeframe.

      MolecuLords, as referred to by plaintiffs, is an action figure concept and play

pattern that incorporates interchangeability of parts between different species of

action figures to create new figures. The plaintiffs presented this concept as a

standalone product and “as a concept to be utilized to create a new pattern of play in

conjunction with numerous existing product lines being manufactured and/or

marketed by Hasbro.” During the presentation, plaintiffs did not mention or refer to

any licensing of the concepts. At the conclusion of the presentation, Hasbro asked

that it be permitted to retain the materials utilized during the presentation for further

1
 According to plaintiffs, product development usually takes about two years from
concept to marketing and sales.

                                          -2-
evaluation. The plaintiffs agreed and provided the materials, which did not include

anything in writing.    Approximately two years later, Hasbro introduced its line of

Marvel Super Hero Mashers and, shortly thereafter, Jurassic Mashers, Star Wars

Mashers, and Transformers Mashers (Mashers). The Mashers product/concept is at

the center of this dispute.

      The plaintiffs profess that the changes incorporated by Hasbro to this

preexisting product line are virtually identical to the MolecuLords concept presented

by Wild Horse to Hasbro at the aforementioned presentation. Specifically, the

complaint filed by plaintiffs alleges breach of an implied contract, fraud, theft of

intellectual property, unjust enrichment, deliberate bad faith, and wanton, willful

bordering on criminal conduct. After extensive discovery, Hasbro filed its motion

for summary judgment.

      The hearing justice granted the motion for summary judgment, making

various findings in a written decision. First, the hearing justice found that the Rhode

Island Uniform Trade Secrets Act (RIUTSA) bars the count of theft of intellectual

property because Rhode Island law does not recognize common law

misappropriation of trade secret claims, and plaintiffs failed to adequately allege that

MolecuLords are a protected trade secret. Second, the RIUTSA bars the counts of

fraud, theft of intellectual property, unjust enrichment, deliberate bad faith, and

wanton, willful, and bordering on criminal conduct, which call for punitive damages,

                                         -3-
because it “displaces conflicting tort, restitutionary, and other law of this state

providing civil remedies for misappropriation of a trade secret[,]” G.L. 1956 § 6-41-

7(a), and because the purpose of the RIUTSA was to codify those tort claims. The

hearing justice also granted the motion for summary judgment on the claim for

breach of an implied contract in light of the fact that the Agreement was an express,

written contract that governs the same subject matter as the alleged implied contract.

      The hearing justice determined that each of the claims set forth by plaintiffs

would fail even absent the RIUTSA. Specifically, the hearing justice found that the

fraud count was barred because plaintiffs failed to show any false representation by

defendant supporting such a claim. Next, he determined that the count of theft of

intellectual property could not be sustained because the unique elements of the

product were readily ascertainable in the toy market prior to the presentation by

plaintiffs. Third, the hearing justice found that summary judgment was appropriate

as to the unjust enrichment count because the Agreement was an express written

contract that governed the presentation and, therefore, a claim in equity regarding

the same subject matter could not apply as a matter of law. Finally, the hearing

justice found that the counts of deliberate bad faith and wanton, willful bordering on

criminal conduct calling for punitive damages were barred because punitive

damages are a form of relief, not a substantive cause of action.

      Thereafter, judgment entered for defendant and plaintiffs timely appealed.

                                        -4-
                                Standard of Review

      “This Court reviews a decision granting a party’s motion for summary

judgment de novo.” Citizens Bank, N.A. v. Palermo, 247 A.3d 131, 133 (R.I. 2021)

(quoting Boudreau v. Automatic Temperature Controls, Inc., 212 A.3d 594, 598

(R.I. 2019)). We assess the matter “from the vantage point of the trial justice[,] * *

* view[ing] the evidence in the light most favorable to the nonmoving party, and if

we conclude that there are no genuine issues of material fact and that the moving

party is entitled to judgment as a matter of law, we will affirm[.]” Id. (quoting

Boudreau, 212 A.3d at 598). “Although summary judgment is recognized as an

extreme remedy, * * * to avoid summary judgment the burden is on the nonmoving

party to produce competent evidence that proves the existence of a disputed issue of

material fact.” Id. (quoting Boudreau, 212 A.3d at 598).

                                     Discussion

      On appeal, plaintiffs assert that the hearing justice erred in granting summary

judgment in favor of Hasbro because genuine issues of material fact exist. The

plaintiffs maintain that Hasbro’s defense that the MolecuLords concept was known

generally to the public turns on questions of fact, and that the concept does not

consist solely of the interchangeability of parts. The plaintiffs further contend that

Hasbro breached an implied contract because the Agreement did not cover all of the

                                        -5-
conduct between the parties and the implied contract is not preempted by the

RIUTSA.

      Hasbro asserts that it is entitled to summary judgment on the counts of fraud,

theft of intellectual property, unjust enrichment, deliberate bad faith, and wanton,

willful, and bordering on criminal behavior, which call for punitive damages because

the RIUTSA bars these claims. Hasbro argues on appeal that plaintiffs could not

sustain their claims because they failed to provide the trial court with any

documentation or proof that their concept was a trade secret, or that the concept was

not generally known or readily available to the market. Hasbro contends that

because the Agreement governed the submission and use of confidential

information, plaintiffs’ claim for breach of an implied contract must also fail.

      Section 6-41-7 of the RIUTSA states:

             “(a) Except as provided in subsection (b) of this section,
             this chapter displaces conflicting tort, restitutionary, and
             other law of this state providing civil remedies for
             misappropriation of a trade secret.

             “(b) This chapter does not affect:

             “(1) Contractual remedies, whether or not based upon
             misappropriation of a trade secret;

             “(2) Other civil remedies that are not based upon
             misappropriation of a trade secret; or

             “(3) Criminal remedies, whether or not based upon
             misappropriation of a trade secret.”

                                         -6-
The plain and ordinary language of the statute undeniably displaces plaintiffs’

common law claims of fraud, unjust enrichment, deliberate bad faith and wanton,

willful bordering on criminal conduct. See, e.g., State v. Marsich, 10 A.3d 435, 440

(R.I. 2010) (brackets omitted) (“When the statute expresses a clear and unambiguous

meaning, the task of interpretation is at an end and this Court will apply the plain

and ordinary meaning of the words set forth in the statute.”) (quoting State v. Smith,

766 A.2d 913, 924 (R.I. 2001)); Webster v. Perrotta, 774 A.2d 68, 75 (R.I. 2001)

(“In matters of statutory interpretation our ultimate goal is to give effect to the

purpose of the act as intended by the Legislature.”). In an attempt to breathe life into

their claims, plaintiffs argue that they have alleged theft of intellectual property, not

a violation of the RIUTSA, thereby asserting a common law cause of action.2

Notably, under the RIUTSA, a trade secret

             “means information, including a formula, pattern,
             compilation, program, device, method, technique, or
             process, that:

             “(i) 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
 In their submissions, plaintiffs contend that New York law applies to the instant
case and the RIUTSA does not apply because the Uniform Trade Secrets Act was
not adopted by New York. The plaintiffs did not raise this issue before the Superior
Court; therefore, it is waived. See Ryan v. Roman Catholic Bishop of Providence,
941 A.2d 174, 184-85 (R.I. 2008).
                                        -7-
             “(ii) Is the subject of efforts that are reasonable under the
             circumstances to maintain its secrecy.” Section 6-41-1(4).

The plaintiffs’ complaint is focused on the contention that Hasbro improperly took

their concept for MolecuLords and used it for profit. Although plaintiffs claim issues

of fact exist, it is undisputed that in a deposition a member of Wild Horse admitted

that MolecuLords is not a trade secret. “[T]here is no common law claim under

Rhode Island law for misappropriation of trade secrets”; misappropriation of trade

secrets “is only a statutory cause of action in Rhode Island.” Magnum Defense, Inc.

v. Harbour Group Ltd., 248 F. Supp. 2d 64, 71 (D.R.I. 2003). The information

plaintiffs allege was misappropriated clearly falls under the definition of trade secret.

The plaintiffs cannot sidestep the RIUTSA by claiming the information they are

seeking to protect is intellectual property and not a trade secret.

      Finally, with respect to the plaintiffs’ remaining claim for breach of implied

contract, the law in Rhode Island is clear. When “there is an express contract

between the parties referring to a subject matter, there can be no implied contract

arising by implication of law governing the same subject matter.”              Marshall

Contractors, Inc. v. Brown University, 692 A.2d 665, 669 n.3 (R.I. 1997) (quoting

Mehan v. Gershkoff, 102 R.I. 404, 409, 230 A.2d 867, 869-70 (1967)). Paragraph

two of the Agreement expressly states that “[a]ll information intended by the

disclosing party to be protected under this Agreement shall be in writing and clearly

identified in writing as confidential at the time of disclosure or within thirty (30)
                                          -8-
days thereafter ***.” Here, the only document regarding disclosures between the

parties was the Agreement governing the presentation; no other information was

specified. The proper method to hold information confidential pursuant to the

Agreement was to specify such information; failing to do so does not open the door

to a claim for breach of an implied contract. Therefore, this claim must fail as a

matter of law.

                                    Conclusion

      For the reasons stated herein, we affirm the judgment of the Superior Court.

The papers in this case shall be returned to the Superior Court.

      Justice Robinson did not participate.

                                        -9-
                                              STATE OF RHODE ISLAND
                                         SUPREME COURT – CLERK’S OFFICE
                                               Licht Judicial Complex
                                                 250 Benefit Street
                                               Providence, RI 02903

                                     OPINION COVER SHEET

Title of Case                            Wild Horse Concepts, LLC, et al. v. Hasbro, Inc.

                                         No. 2021-129-Appeal.
Case Number
                                         (PC 15-1561)

Date Opinion Filed                       January 10, 2023

Justices                                 Suttell, C.J., Goldberg, Lynch Prata, and Long, JJ.

Written By                               Associate Justice Erin Lynch Prata

Source of Appeal                         Providence County Superior Court

Judicial Officer from Lower Court        Associate Justice Brian P. Stern

                                         For Plaintiffs:

                                         Thomas M. Dickinson, Esq.
Attorney(s) on Appeal
                                         For Defendant:

                                         Leslie D. Parker, Esq.

SU-CMS-02A (revised November 2022)