Court Opinion

ID: 6103661
Source: CourtListenerOpinion
Date Created: 2022-01-14 17:10:36.754985+00
Date Added: 2024-06-11T08:53:39.440134
License: Public Domain

J-S35034-21

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    RICHARD C. BOWMAN, III                     :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                       Appellant               :
                                               :
                                               :
                v.                             :
                                               :
                                               :
    R.C. BOWMAN, INC.                          :   No. 415 MDA 2021

               Appeal from the Judgment Entered April 12, 2021
     In the Court of Common Pleas of Clinton County Civil Division at No(s):
                                 1576-2019

    R.C. BOWMAN, INC.                          :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    RICHARD C. BOWMAN, III                     :
                                               :
                       Appellant               :   No. 416 MDA 2021

               Appeal from the Order Entered December 4, 2020
     In the Court of Common Pleas of Clinton County Civil Division at No(s):
                                 2019-01690

BEFORE: OLSON, J., KUNSELMAN, J., and PELLEGRINI, J.*

MEMORANDUM BY PELLEGRINI, J.:                  FILED: JANUARY 14, 2022

        Richard C. Bowman, III (Bowman III) appeals from the order entered in

the Court of Common Pleas of Clinton County (trial court) after a non-jury trial

at the above docket numbers.           This dispute, one of many, flows from his

removal as president, his separation from R.C. Bowman, Inc. (R.C. Bowman)

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.
J-S35034-21

and his conducting of a new business, Bowman Excavating, while he still

owned one-third of the shares in R.C. Bowman.

       In this dispute, he argues that the court erred (1) in permanently

enjoining him under Section 5303 of the Trade Secrets Act1 from contacting

any customers on the customer list of R.C. Bowman identified as Exhibit 11;

and (2) in finding that he, as a shareholder, was not entitled to inspect the

books and records of R.C. Bowman where it found that he provided a proper

purpose for the inspection. After our careful review, we reverse.

       We take the following pertinent factual background and procedural

history from the trial court’s December 4, 2020 opinion and our independent

review of the record.

                                               I.

                                               A.

       The trial court summarized the following “unfortunate history between

the parties.” (Trial Court Opinion, 12/04/20, at 3).

       R.C. Bowman, Inc. was incorporated on April 19, 1999 with
       Richard C. Bowman, Jr., Robert K. Bowman, and Richard C.
       Bowman III each having a one-third (1/3) interest in said
       corporation. Richard C. Bowman, Jr. is the father of Richard C.
       Bowman III and Robert K. Bowman. Robert K. Bowman and
____________________________________________

1  Section 5503 provides, in pertinent part:          “Actual or threatened
misappropriation may be enjoined.       Upon application to the court, an
injunction shall be terminated when the trade secret has ceased to exist, but
the injunction may be continued for an additional reasonable period of time in
order to eliminate commercial advantage that otherwise would be derived
from the misappropriation.” 12 Pa.C.S. § 5503(a).

                                           -2-
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      Richard C. Bowman III are twin brothers. Richard C. Bowman III
      had been president of the Corporation since its founding in 1999.
      An annual shareholders’ meeting was held on February 8, 2019.
      Richard C. Bowman, III did not attend that shareholders’ meeting.
      At the shareholders’ meeting on February 8, 2019, Richard C.
      Bowman III was removed as president of the Corporation and as
      a Board [] Director. Richard C. Bowman, III remained as an
      employee of the Corporation until Monday, March 23, 2019 when
      said employment was terminated. During the time period from
      February 8, 2019 through Friday, March 22, 2019, the parties
      were involved in negotiations regarding the sale of Richard C.
      Bowman, III’s interest of said Corporation.

               On Friday, March 22, 2019, Richard C. Bowman, III
      notified Robert K. Bowman, through counsel, that Richard C.
      Bowman, III no longer desired to continue with any negotiation
      concerning the sale of Richard C. Bowman, III’s one-third (1/3)
      ownership in the Corporation. As noted above, the Corporation
      terminated Richard C. Bowman, III’s employment the next
      business day, Monday, March 25, 2019. On April 8, 2019, Richard
      C. Bowman, III established a new Corporation, named Richard C.
      Bowman, III, Inc., and on May 13, 2019, Richard C. Bowman, III,
      Inc. registered the fictitious name of Bowman Excavating, Paving
      and Concrete. Since May 13, 2019, Richard C. Bowman, III, Inc.,
      trading as Bowman Excavating, Paving and Concrete has
      conducted a business in direct competition with R.C. Bowman, Inc.
      Richard C. Bowman, III, Inc. has hired individuals who formerly
      worked for R.C. Bowman, Inc.; those employees being William
      Weaver, Vince Watson, Russell Mark, and Craig Boob. Richard C.
      Bowman, III had also solicited Leslie Stewart, a current employee
      of R.C. Bowman, Inc., to work for the new Corporation. The new
      Corporation has also performed work for clients of R.C. Bowman,
      Inc,; those clients being Central Pennsylvania Auto Auction, city
      of Lock Haven, Deb O’Connor, Grant Miller, and Joseph Hazel. The
      new Corporation offices are located at a building occupied by
      Maxwell Trucking Excavating, Inc., which is a direct competitor of
      R.C. Bowman, Inc.

(Trial Ct. Op., at 3-4).

                                    -3-
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                                               B.

        Shortly after being removed from the corporation, due to his concern

that the corporation was paying the personal expenses of the current

president, Rob Bowman, as well as concerns about significant changes in the

corporation, including numerous people in management positions leaving,

sizeable raises being given and lack of current business, Bowman III, as a

shareholder, sent Rob Bowman a series of letters seeking to inspect R.C.

Bowman’s records He sought to inspect the corporation’s “monthly accounts

receivable, monthly accounts payable, work backlog report, copies of all

checks written from Bowman, Inc.’s accounts, sales agreements for all assets

sold and proof of payment for same, all cash receipts and deposits, all credit

card statements, complete payroll reports and a detailed Verizon Phone Bill.”

Rob Bowman denied the requests on behalf of R.C. Bowman and on November

18, 2019, Bowman III commenced litigation at docket number 1579-2019

(Corporate Records Action) seeking to have the court compel R.C. Bowman to

produce the records for inspection.

        On December 12, 2019, R.C. Bowman filed a complaint against Bowman

III setting forth five counts (Trade Secrets Action):   Count I:   violation of

Pennsylvania’s Uniform Trade Secrets Act (PUTSA);2 Count II:        Breach of

fiduciary duty; Count III: Equitable relief; Count IV: Conversion; and Count

____________________________________________

2   12 Pa.C.S. §§ 5301-5308.

                                           -4-
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V: Replevin. As part of the Trade Secrets Action, R.C. Bowman filed a petition

seeking entry of preliminary injunction (Petition) requesting that Bowman III

be enjoined from “soliciting [R.C. Bowman’s] customers” and “from operating

his business through the use of [R.C. Bowman’s] trade secrets,” which

included the corporation’s customer list. After a hearing, the court denied the

Petition because there was not “sufficient proof of a threat of immediate and

irreparable harm.”

       The trial court consolidated the parties’ actions for trial. A two-day non-

jury trial commenced on October 15, 2020.3

                                               C.

       At trial, relevant to the Trade Secrets Action, it was established that

Bowman III previously had access to R.C. Bowman’s information, including its

customers, which was maintained on the accounting software program,

ComputerEase, but that R.C. Bowman did not maintain a specific customer

list. However, Bowman III had no access to ComputerEase after February 8,

2019, when he was removed as president.             The only list to which he had

access after February 8, 2019, was a 2016-2017 snow removal customer list

____________________________________________

3 We provide only those trial facts pertinent to our review of Bowman III’s
issues in this appeal: (1) whether the trial court erred in enjoining him from
contacting any entity listed on the customer list admitted by R.C. Bowman as
Exhibit 11; and (2) whether the trial court erred in denying his action to
compel R.C. Bowman to allow inspection of corporate records where the court
found he established a proper purpose.

                                           -5-
J-S35034-21

that was on a R.C. Bowman computer he had removed upon his termination.

This snow removal list was not entered as an exhibit or examined at trial.

      In anticipation of litigation, R.C. Bowman created a spreadsheet

containing a customer list of its larger repeat customers and entered it as

Exhibit 11 at the preliminary injunction hearing and at trial. It did not seek a

protective order from the trial court. Bowman III did not see Exhibit 11 prior

to litigation since it did not exist prior to that time.

      Testimony established that 90 percent of R.C. Bowman’s jobs, including

100 percent of its large jobs, are obtained through a competitive bidding

process in which its competitors are made aware of the corporation’s bid and

which work it is awarded. The names of successful bidders are often made

public in those projects.

      R.C. Bowman does not provide training to its employees related to

confidentiality, and its employee handbook contains only boilerplate terms and

does not identify what it deems to be confidential. Andrea Kleckner, the office

manager in charge of the day-to-day operations of R.C. Bowman, including

accounts receivable, accounts payable and the corporation’s financials,

testified that she was never informed that customer names were to be kept

secret, and that she only became aware of the confidentiality provision in her

contract after this litigation began. Although Rob Bowman testified that Ms.

Kleckner created Exhibit 11, she stated that she did not recall seeing it until

her September 23, 2020 deposition.

                                        -6-
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      Other former R.C. Bowman employees who are employed by the

corporation’s competitors testified that they are not subject to confidentiality

agreements. For example, Jeff Wert testified that he had access to the R.C.

Bowman computer network, including ComputerEase, that he was aware of

hundreds of R.C. Bowman’s customer names, that he was never told that they

are secret, and that he commonly shared the names of customers with other

people while he was employed at R.C. Bowman.

      R.C. Bowman’s current estimator and project manager, Don Stauffer,

testified that he is employed by DLS Services Corp. and his contract with R.C.

Bowman does not contain confidentiality or non-compete provisions.         R.C.

Bowman’s equipment contains its name and logo for advertising purposes and

is regularly on customers’ work sites.

      Rob Bowman, R.C. Bowman’s current president, does not have a

contract preventing him from disclosing information about R.C. Bowman, and

the names of R.C. Bowman customers are regularly shared with third parties.

He admitted that he wants Bowman III to stay away from R.C. Bowman’s

customers despite Bowman III not being subject to a non-compete

agreement.    He testified that R.C. Bowman protects its trade secrets by

limiting access to information, password protection and ensuring that

employees only are trained in their operations division.

      Ms. Kleckner testified about measures taken by the company to protect

trade secrets, including limiting which employees have access to specified

                                     -7-
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sections of the file server and password protections. Employees are required

to review and sign that they have read the employee handbook confidentiality

policy that unauthorized disclosures constitute employee misconduct.

       Rob Bowman stated that he reviewed documents produced by Bowman

III’s counsel from the desktop computer Bowman III had removed from his

R.C. Bowman office. The documents included employee contracts, the snow

removal customer list, financial documents, material price lists, an equipment

list, employee profit sharing data and computer passwords, all which Rob

Bowman regarded as confidential trade secrets. He testified that he had no

knowledge that Bowman III actually disclosed proprietary information related

to R.C. Bowman to anyone.

       Bowman III testified he knew everything about the operation of R.C.

Bowman, including that it has three separate divisions, because of his previous

role as president.     He stated that R.C. Bowman installed ComputerEase

accounting software and HeavyBid bidding software under his leadership, and

that R.C. Bowman engaged in bidding for construction contracts in a

competitive market.

       Bowman III admitted he removed many items from his R.C. Bowman

office, including the desktop computer connected to the R.C. Bowman file

server that he used as president, which still was in his possession at the time

of trial.   He stated that his new corporation is a direct competitor of R.C.

Bowman, seeking the same work, with the same three divisions and bidding

                                     -8-
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on the same contracts. He identified R.C. Bowman’s Exhibit 11 as a list of

R.C. Bowman customers printed out from the ComputerEase accounting

software, that his new company had completed work for some of the

customers on the list, and that he intended to continue to provide work to the

customers but only if they reached out to him. He admitted that some former

employees of R.C. Bowman had been hired by his new corporation.

                                      D.

      Relevant to the Corporate Records Action, Bowman III testified that he

filed his complaint to secure the same financial information to which he had

access when he was president. He admitted that as a shareholder, he already

was receiving monthly financial reports and identified R.C. Bowman Exhibit 24

as 193 pages of those reports. These statements are not audited monthly by

R.C. Bowman’s accountant and Rob Bowman testified that he did not know if

a financial audit for R.C. Bowman was performed in 2019. Although Bowman

III testified at trial that the information he seeks to access will not provide

him with a competitive advantage for his new corporation, at his deposition,

he stated, “there is a possibility” that he could use R.C. Bowman’s financial

data to gain a competitive advantage.

      Rob Bowman testified that the information that R.C. Bowman provides

to Bowman III monthly is the same as what it provides to its bank.         Ms.

Kleckner stated that in the eight years of her employment, confidential

financial information has only been disclosed for banking, accounting and

                                     -9-
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bonding purposes.      According to Rob Bowman, R.C. Bowman’s financial

condition is stronger than ever and shareholders’ equity between December

31, 2018, and August 2020 increased by over $1.1 million. He stated that if

Bowman III had complete access to the financial records that he sought in his

complaint, he would drive R.C. Bowman out of business since its advantage in

the marketplace is due to its careful control of costs.       According to Don

Stauffer, who prepares R.C. Bowman’s bids, if a competitor had knowledge of

the cost structure of R.C. Bowman, it could use the information to match R.C.

Bowman’s bid.

      As to Bowman III’s claims that R.C. Bowman pays for the cell phones of

Rob Bowman’s family and for Rob Bowman’s personal vehicle, the trial court

explained:

      Robert K. Bowman has admitted [that R.C. Bowman is paying for
      his wife and daughter’s cell phones], but has also indicated that
      [his] wife manages the website, R.C. Bowman, Inc. and that the
      payment for the cell phone is compensation for said management
      …. Robert K. Bowman also admitted that a cell phone is provided
      to [his] daughter … but [he] indicates that this is also in lieu of
      payment for [her] mowing the grass at the office building of R.C.
      Bowman, Inc. Richard C. Bowman, III also alleges that Robert K.
      Bowman utilizes Corporate funds to provide Robert K. Bowman
      with a personal vehicle. Richard C. Bowman, III alleges that
      Robert K. Bowman has a vehicle that [he] utilizes as a personal
      vehicle and this vehicle is the only vehicle that is not decaled with
      the R.C. Bowman, Inc. label. The purpose of decaling all vehicles
      with the R.C. Bowman, Inc. label is to provide advertising for the
      Corporation. This [c]ourt finds that Richard C. Bowman, III has
      established a proper purpose for requesting access to the
      corporate records.

(Trial Ct. Op., at 6-7).

                                     - 10 -
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                                        E.

      On December 4, 2020, after a thorough briefing by the parties, the trial

court entered a verdict in favor of R.C. Bowman in both the Corporate Records

Action and Trade Secrets Action.       In the Corporate Records Action (1579-

2019), the court found that Bowman III did not offer credible evidence that

R.C. Bowman “is floundering or experiencing financial or managerial

difficulties.” (Trial Ct. Op., at 8). Although it found that Bowman III’s claim

that R.C. Bowman is paying the personal expenses of Rob Bowman set forth

a proper purpose for requesting access to the corporate records, the court

then shifted the burden to R.C. Bowman to offer evidence of an improper

purpose and concluded that R.C. Bowman did so.            (See Trial Ct. Op.,

12/04/20, at 6-9).

      In the Trade Secrets Action (1690-2019), the trial court entered the

verdict based on the customer list at Exhibit 11 being a trade secret. It found,

in pertinent part, that:

              Obviously, … most of the customers of R.C. Bowman, Inc.
      … are known outside the business. …

                                   *     *      *

               This [c]ourt finds … that the customers of R.C. Bowman,
      Inc. are [] known by employees and others involved in the
      company’s business. This [c]ourt would note that R.C. Bowman,
      Inc. has advertisement placed on all corporation equipment which
      may be located at a customer’s site.

                                   *     *      *

                                       - 11 -
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            … R.C. Bowman did not require               a   confidentiality
     agreement with Richard C. Bowman, III ….

                                   *     *      *

              Some testimony was received concerning the effort by
     R.C. Bowman, Inc. in developing and implementing the software
     known as “ComputerEase” … but the extent of the effort and the
     financial resources spent on this endeavor were not provided to
     this [c]ourt.

              R.C. Bowman, Inc. [] requests that Richard C. Bowman,
     III be prohibited from contacting customers … of R.C. Bowman,
     Inc. A customer list is included in the statutory definition of “trade
     secret[.]” … This [c]ourt acknowledges that an argument [] could
     be made that customers of R.C. Bowman, Inc. are not attempted
     to be maintained as a secret of R.C. Bowman, Inc. R.C. Bowman,
     Inc. personnel and equipment when onsite at a customer’s
     property are easily identified due to labeling/decaling of the
     equipment of R.C. Bowman, Inc. However, if the customer’s situs
     is located in a remote area, this may somewhat conceal this
     information from public view due to natural … or manmade …
     barriers preventing the sighting of R.C. Bowman, Inc. identifiers.

              Given the factors discussed above, this [c]ourt will issue
     a verdict enjoining Richard C. Bowman, III from contacting any
     customer contained on the customer list that was on the computer
     that Richard C. Bowman, III removed from the offices of R.C.
     Bowman, Inc. …

(Trial Ct. Op., at 15-16).   The trial court phrased the order in this matter

slightly differently, directing that Bowman III “may not contact any entity

listed on the ‘customer list’ admitted by R.C. Bowman[’s] ‘Exhibit 11’ for the

purposes of soliciting business for Richard C. Bowman, III, Inc. t/a Bowman

Excavating, Paving and Concrete.”). (Order, 12/04/20, at 2). It made no

specific finding that Bowman III misappropriated Exhibit 11.

                                       - 12 -
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        The court denied all other claims by R.C. Bowman under the PUTSA,

finding that “various employees know certain parts of all aspects of the

business of R.C. Bowman,” that employee lists, Bowman III’s knowledge

acquired at R.C. Bowman, and the cost of materials and bidding methods are

not trade secrets. The court denied R.C. Bowman’s request that Bowman III

be enjoined from conducting a similar business. (See Trial Ct. Op., at 14-

15).4

____________________________________________

4 It also found in favor of R.C. Bowman on Counts IV-Conversion and V-
Replevin, ordering Bowman III to return the personal property he took from
R.C. Bowman. The court entered a verdict in favor of Bowman III on R.C.
Bowman’s actions for breach of fiduciary duty (Count II) and equitable relief
(Count III) on the basis that the claims were preempted by the PUTSA. (See
Trial Ct. Op. at 19-20); (Order, 12/04/20, at 2). It denied R.C. Bowman’s
request for attorney fees and monetary, compensatory and exemplary
damages. (Order, 12/04/20, at 3).

                                          - 13 -
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       On December 17, 2020,5 Bowman III filed post-trial motions that the

court denied on March 2, 2021. He timely appealed and complied with Rule

1925(b).6 See Pa.R.A.P. 1925.

       Bowman III raises six issues for our review that can be broadly classified

as challenges to the court’s finding that he violated the PUTSA by

misappropriating the Exhibit 11 client list and its denial of his Corporate

Records Action to inspect R.C. Bowman’s books and records.

                                               II.

                                               A.

       Generally, to establish a claim of misappropriation of trade secrets, a

plaintiff employer must prove:

____________________________________________

5 On May 11, 2021, this Court directed Bowman III to show cause why this
appeal should not be dismissed for his failure to preserve any issues for
appellate review where his post-trial motions were filed more than ten days
after the verdict was entered in violation of Rule 227.1. See Chalkey v.
Roush, 805 A.2d 491 (Pa. 2002) (stating that pursuant to Pa.R.C.P. 227.1,
post-trial motions must be filed within ten days of verdict to preserve claims
for appeal). However, the ten-day period for filing post-trial motions does not
begin to run until the opinion and order are mailed. See U.S. Bank, N.A. v.
Pautenis, 118 A.3d 386 (Pa. Super. 2015). Here, Bowman III attached an
envelope to his response to the rule to show cause indicating that the
December 4, 2020 opinion and order were mailed on December 7, 2020.
Hence, we will treat the post-trial motions as timely filed on December 17,
2020, thus preserving Bowman III’s issues on appeal.

6 R.C. Bowman also filed a post-trial motion for contempt for Bowman III’s
failure to return the personal property as ordered by the trial court. The court
granted that motion, which is the subject of an appeal filed at docket number
417 MDA 2021.

                                          - 14 -
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      (1) that there was a trade secret ...; (2) that it was of value to
      employer [owner] and important in the conduct of his business;
      (3) that by reason of discovery or ownership the employer had the
      right to the use and enjoyment of the secret; and (4) that the
      secret was communicated to the employee while he was in a
      position of trust and confidence under such circumstances as to
      make it inequitable and unjust for him to disclose it to others, or
      to make use of it himself, to the prejudice of his employer.

Gruenwald v. Advanced Computer Applications, Inc., 730 A.2d 1004,

1012–13 (Pa. Super. 1999) (citation omitted, emphasis added).

      Bowman III argues that the customer list introduced as Exhibit 11 was

not a trade secret. (See Bowman III’s Brief, at 35-40). He maintains that he

was not subject to a confidentiality agreement, and that the evidence

established that R.C Bowman made little attempt to keep the identity of its

customers secret and failed to establish any independent economic value to

the list. Finally, he maintains that by entering Exhibit 11 into evidence at both

the preliminary injunction hearing and at trial, R.C. Bowman made the

customer list available to all its competitors. (See id.).

      Pursuant to the PUTSA, “trade secrets” are defined as:

      Information, including a … customer list … that:

            (1) 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.

            (2) Is the subject of efforts that are reasonable under the
      circumstances to maintain its secrecy.

12 Pa.C.S. § 5302. The very concept of a “trade secret” is itself “somewhat

nebulous.” Den–Tal–Ez, Inc. v. Siemens Capital Corporation, 566 A.2d

                                     - 15 -
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1214, 1228 (Pa. Super. 1989).              “Therefore, the decision of whether a

particular compilation of customer data deserves protection as a trade secret

necessarily must be made on a case-by-case basis.”           Iron Age Corp. v.

Dvorak, 880 A.2d 657, 664 (Pa. Super. 2005) (internal citations omitted).

       To determine whether information is protected as a trade secret,

Pennsylvania courts consider:

       (1) the extent to which the information is known outside of the
       company’s business; (2) the extent to which the information is
       known by employees and others involved in the company’s
       business; (3) the extent of the measures taken by the company
       to guard the secrecy of the information; (4) the value of the
       information to the company and its competitors; (5) the amount
       of effort or money the company spent in developing the
       information; and (6) the ease or difficulty with which the
       information could be acquired or duplicated legitimately by others.

Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102, 109 (3d Cir. 2010).7

       Noting “the dim view that Pennsylvania precedent takes concerning

extending trade secret protections to mere client lists[,]” we have observed:

             [O]ur Supreme Court has held that, under certain
       circumstances, customer lists and customer data may be entitled
       to protection as trade secrets. Furthermore, a trade secret may
       include compiled information which gives one business an
       opportunity to obtain an advantage over competitors.
       Nevertheless, customer lists are at the very periphery of the law
       of unfair competition. There is no legal incentive to protect the
       compilation of such lists because they are developed in the normal
       course of business anyway.

____________________________________________

7 “We are not bound by decisions of the federal courts, but we may rely on
them for persuasive authority.” McEwing v. Lititz Mut. Ins. Co., 77 A.3d
639, 648 (Pa. Super. 2013) (citation omitted).

                                          - 16 -
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Allied Envtl. Serv., Inc. v. Roth, 222 A.3d 422, 429–30 (Pa. Super. 2019)

(citations and quotation marks omitted).

      Based on the foregoing, although a customer list may be considered a

trade secret entitling an employer to injunctive relief,

      the Pennsylvania Supreme Court has opined that such protections
      are appropriate in businesses that lead to the establishment of
      “permanent and exclusive relationships” between “customers and
      salesmen.” In that context, such customer lists “represent a
      material investment of employers’ time and money” and “is highly
      confidential and constitutes a valuable asset” such that it is
      deserving of protection as a trade secret.

Id. at 430 (citing Martucci’s Home Equipment Corp. v. Martucci, 136 A.2d

838, 842 (Pa. 1957)).

      In this case, the trial court found that “most of the customers of R.C.

Bowman, Inc. … are known outside the business” and that “the customers of

R.C. Bowman, Inc. are [] known by employees and others involved in the

company’s business.”     (Trial Ct. Op., at 14, 15); (See also N.T. Trial,

10/15/20, at 135-36, 140);(N.T. Trial, 10/16/20, at 95-96, 136). It noted

that R.C. Bowman has advertisements on its equipment that would identify it

if it were on a customer’s property unless “the customer’s situs is located in a

remote area.” (Trial Ct. Op., at 16); (See N.T. Trial, 10/15/20, at 39-40).

The trial court found that “no evidence was presented” about the value of any

customer list or any other trade secret. (Trial Ct. Op., at 15). The “extent of

the effort and financial resources spent” by R.C. Bowman on developing any

trade secrets “were not provided” to the court. (Id.).

                                     - 17 -
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       In addition to the foregoing, testimony established that R.C. Bowman

did not maintain a specific customer list and Bowman III did not see the

customer list entered as Exhibit 11, which identified R.C. Bowman’s largest

repeat customers and was prepared in anticipation of litigation until this legal

action. (See N.T. Trial, 10/15/20, at 138-40); (N.T. Trial, 10/16/20, at 139).

The only list Bowman III possessed after his employment was the snow

removal customer list from 2016-2017, which R.C. Bowman did not enter into

evidence and is not mentioned in the trial court’s order.      (See N.T. Trial,

10/15/20, at 31); N.T. Trial, 10/16/20, at 68-69); (Order, 12/04/20, at 2).

As agreed by Rob Bowman, R.C. Bowman did not require Bowman III to

execute a contract containing a covenant about confidentiality terms or not to

compete. (See Joint Statement of Uncontested Facts, at Paragraph 25). The

employee handbook confidentiality provision contains boilerplate terms that

do not identify what information is deemed confidential, and the other

employees of R.C. Bowman were not subject to contracts with confidentiality

provisions.   (See N.T. Trial, 10/15/20, at 61-62, 140-42); (N.T. Trial,

10/16/20, at 23-24, 151-52).     R.C. Bowman itself entered Exhibit 11 into

evidence without seeking any protective orders from the trial court, making

the list publicly available to the public, including its competitors. (See N.T.

Preliminary Hearing, 1/15/20, at 25-26, 32-33); (N.T. Trial, 10/15/20, 42-

43).

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       Against this factual backdrop as found by the trial court and our review

of the record, we are constrained to conclude that the trial court erred in

finding that R.C. Bowman met its burden to prove that the customers

identified in Exhibit 11 were a trade secret as a matter of law where it was

prepared in anticipation of litigation, did not represent permanent and

exclusive relationships between the customers and R.C. Bowman, the

corporation took few if any efforts to keep any of its customers confidential,

and failed to provide proof of the list’s value.8 See Roth, supra at 429–30;

Advanced Computer Applications, Inc., supra at 1012–13.

____________________________________________

8 We note that R.C. Bowman does not address Exhibit 11 or explain why the
court properly found it was a trade secret, other than offering two case
citations where customer lists were found to be trade secrets under the
specific circumstances. Its argument primarily hinges on a theory that all the
information on the computer constitutes a trade secret despite the court’s
finding to the contrary and cases that are factually distinguishable. (See R.C.
Bowman’s Brief, at 13-16).

Furthermore, although we agree with R.C. Bowman that an officer has a
fiduciary duty to a corporation, the trial court denied the fiduciary duty claim
on the basis that it was preempted by the Trade Secrets Act, and R.C. Bowman
did not appeal that denial. Moreover, an argument about duty does not go to
whether the customer list was a trade secret, but whether Bowman III
misappropriated it. See 23 Pa.C.S. § 5302 (misappropriation defined in part,
as “disclosure or use of a trade secret of another without express or implied
consent by a person who … at the time of disclosure or use, knew or had
reason to know that his knowledge of the trade secret … was acquired under
circumstances giving rise to a duty to maintain its secrecy or limit its use[.]”).
Since we conclude that legally, the Exhibit 11 customer list and the
corporation’s customers could not be a trade secret under the circumstances
of this case, they could not be misappropriated in violation of the PUTSA. See
Advanced Computer Applications, Inc., supra at 1012–13.

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                                           B.

        Bowman III next argues that “the trial court erred in finding that [he],

a shareholder of R.C. Bowman, was not entitled to inspect R.C. Bowman’s

books and records despite providing a proper purpose under 15 [Pa.]C.S.

§ 1508.”        (Bowman III’s Brief, at 40) (unnecessary capitalization and

emphasis omitted). R.C. Bowman responds that as a shareholder, Bowman

III already receives significant financial information and R.C. Bowman is

entitled   to     protect   its   confidential     financial   information   under   the

circumstances of this case. (See R.C. Bowman’s Brief, at 20-24).

        Section 1508 of the Business Corporation Law provides, in pertinent

part:

        (b) Right of inspection by a shareholder.—Every shareholder
        shall, upon written verified demand stating the purpose thereof,
        have a right to examine, in person or by agent or attorney, during
        the usual hours for business for any proper purpose, the share
        register, books and records of account, and records of the
        proceedings of the incorporators, shareholders and directors and
        to make copies or extracts therefrom. A proper purpose shall
        mean a purpose reasonably related to the interest of the person
        as a shareholder. … The demand shall be directed to the
        corporation:

                (1) at its registered office in this Commonwealth;

                (2) at its principal place of business wherever situated; or

               (3) in care of the person in charge of an actual business
        office of the corporation.

        (c) Proceedings for the enforcement of inspection by a
        shareholder.—If the corporation, or an officer or agent thereof,
        refuses to permit an inspection sought by a shareholder …
        pursuant to subsection (b) …, the shareholder may apply to the

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      court for an order to compel the inspection. The court shall
      determine whether or not the person seeking inspection is entitled
      to the inspection sought. … Where the shareholder seeks to
      inspect the books and records of the corporation, other than its
      share register or list of shareholders, he shall first establish:

            (1) That he has complied with the provisions of this section
      respecting the form and manner of making demand for inspection
      of the document.

           (2) That the inspection he seeks is for a proper
      purpose.

      Where the shareholder seeks to inspect the share register
      or list of shareholders of the corporation and he has complied
      with the provisions of this section respecting the form and manner
      of making demand for inspection of the documents, the burden
      of proof shall be upon the corporation to establish that the
      inspection he seeks is for an improper purpose.

15 Pa.C.S. § 1508(b), (c) (emphases added).

      “[W]hether a stockholder has set forth a ‘proper purpose’ to inspect

corporate records is a determination which must be made on a case-by-case

basis following a careful consideration of the surrounding circumstances of the

document inspection request.” Zerbey v. Z.H. Zerbey Newspapers, Inc.,

560 A.2d 191, 198 (Pa. Super. 1989).

      In this case, Bowman III, as a shareholder of R.C. Bowman, sent a series

of letters to R.C. Bowman requesting access to the corporation’s records.

(See Corporate Records Complaint, at Exhibits C, E, G). When R.C. Bowman

denied these requests after Bowman III provided further information

explaining why he believed he was entitled to inspection, he filed his action in

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J-S35034-21

the trial court to compel the corporation to allow inspection.9 See 15 Pa.C.S.

§ 1508(b), (c).

       Bowman III sought to inspect the corporation’s monthly accounts

receivable, monthly accounts payable, work backlog report, copies of all

checks written from Bowman, Inc.’s accounts, sales agreements for all assets

sold and proof of payment for same, all cash receipts and deposits, all credit

card statements, complete payroll reports and a detailed Verizon phone bill.

(See Corporate Records Complaint, at 6, Exhibits C, E, G). He demanded he

be allowed to inspect the above financial records because he was concerned

about individuals in management positions leaving, sizeable raises being

given, a lack of current business, and Rob Bowman paying his personal

expenses through the corporation. (See id.).

       The trial court found that “Bowman III has not offered credible evidence

that R.C. Bowman, Inc. is floundering or experiencing managerial difficulties.”

However, it did conclude that Bowman III’s claim that Rob Bowman is paying

his personal expenses through the corporation established a proper purpose.

(Trial Ct. Op., 8); (see id. at 6-7). However, just because expenditures are

____________________________________________

9 The trial court commented that it is reluctant to grant Bowman III access to
the records because he did not make a formal request for them at a
shareholders’ meeting. (See Trial Ct. Op., at 8-9). However, Section 1508(b)
only requires that he direct his request to the corporation, not to the
shareholders at a meeting. See 15 Pa.C.S. § 1508(b). Accordingly, he
satisfied the demand requirement of Section 1508(b).

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J-S35034-21

not being used for improper purposes, that is not the proper standard for

determining denying access to the corporate records.

       Bowman III met his prima facie burden pursuant to Section 1508(c) that

he was entitled to see the records by making a written demand of the

corporation and then establishing a proper purpose, in this case, improper

expenditures. Because he did not seek access to the share register or list of

shareholders of the corporation, this is where the inquiry should have ended,

and the court improperly shifted the burden to R.C. Bowman to then establish

an improper purpose.        See 15 Pa.C.S. § 1508(b), (c); see also Shaw v.

Hurst, 582 A.2d 87, 89 (Pa. Cmwlth. 1990)10 (trial court erred in denying

access to corporate records where it concluded requestor had proper

purpose); (Trial Ct. Op., at 7) (“[A] shareholder’s right to inspect corporate

books cannot be denied on the ground that it might supply knowledge of

corporate business to competitor.”)11 (citing Stuart v. Sterling Lumber Co.,

78 Pa. D.&C. 86 (Delaware Cty. CCP 1952)); see also Hodder v. George

____________________________________________

10 “This Court is not bound by decisions of the Commonwealth Court.
However, such decisions provide persuasive authority, and we may turn to
our colleagues on the Commonwealth Court for guidance when appropriate.”
Petow v. Warehime, 996 A.2d 1083, 1089 n.1 (Pa. Super. 2010), appeal
denied, 12 A.3d 371 (Pa. 2010).

11 Although Hurst applied Section 5508 of the Business Corporation Law,
which applies to non-profit corporations and requests by members to inspect
corporate records, the pertinent language is identical, and we find its
reasoning pertinent.

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J-S35034-21

Hogg Co., 72 A. 553, 554 (Pa. 1909) (shareholder wishing to ascertain if

business properly conducted has right to inspect books even if there is

competitor interest). Hence, we are constrained to reverse the Judgment on

the Corporate Records Action.12

       However, the trial court only found that a proper purpose was

established by Bowman III’s concern that the corporation improperly paid Rob

Bowman’s personal expenses, not to the remainder of the claims that went to

the alleged mismanagement of the corporation.        Which of the requested

records are reasonably related to that narrow proper purpose is a fact question

for the trial court. Accordingly, on remand, we direct the court to conduct

whatever proceedings it deems necessary for it to determine which of the

requested documents go to this narrow issue and should be produced for

inspection.    Furthermore, we are aware of the contentious nature of this

litigation and R.C. Bowman’s concerns about the production of confidential

financial materials to an individual with a competitive interest.   Hence, to

protect the interest of all shareholders, we also direct the court to determine

____________________________________________

12 Although the court declined to compel R.C. Bowman to allow inspection
because Rob Bowman “sufficiently answered the allegations,” Bowman III is
“not bound to accept the statements and opinions of the officers of [R.C.
Bowman], made under oath or otherwise. [He has] a right to make a personal
inspection of the records and form [his own opinion.]” (Trial Ct. Op., at 8);
Zerbey v. J.H. Zerbey Newspapers, Inc., 560 A.2d 191, 199 (Pa. Super.
1989).

                                          - 24 -
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whether the order should include a directive that such documents be provided

only after Bowman III has signed a non-disclosure and non-use agreement.

      In summary, we conclude that the trial court erred in entering judgment

in favor of R.C. Bowman, Inc. in the Trade Secrets Action and Corporate

Records Action. We reverse the judgment at case numbers 1576-2019 and

1690-2019 and direct the court, on remand, to conduct proceedings consistent

with this decision.

      Judgments reversed.    Case remanded with instructions.    Jurisdiction

relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 1/14/2022

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