Court Opinion

ID: 9632850
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:26:15.868971+00
Date Added: 2024-06-11T13:00:16.560507
License: Public Domain

Robert L. Brown, Justice, concurring in part and dissenting in part. I agree with the majority that the circuit court concluded that it was bound by the Court of Appeals’ decision in Brown v. Ruallam, 73 Ark. App. 296, 44 S.W.3d 740 (2001), a decision that incorrectly interpreted our analysis in Saforo & Assocs., Inc. v. Porocel Corp., 337 Ark. 553, 991 S.W.2d 117 (1999). The Trade Secrets Act specifically allows for an award of damages for unjust enrichment under Ark. Code Ann. § 4-75-606(b) that is in addition to the amount recovered for actual loss under Ark. Code Ann. § 4-75-606(a). The Brown decision improperly conflated the two damage awards. Accordingly, I concur in overturning that portion of Brown which is inconsistent with the statute and our case law. I also agree that this case should be remanded to the circuit court for a determination of damages for unjust enrichment. However, I disagree that the plaintiffs are not also entitled to an award of damages for actual loss under Ark. Code Ann. § 4-75-606(a). For that reason, I dissent in part. In the circuit court’s first order, the court clearly determined that the defendants had misappropriated plaintiffs’ trade secrets and that plaintiffs had been damaged as a result. In that first order, the court said: (Emphasis added.) Under the plain language in the circuit court’s first order, the damages for the misappropriation of trade secrets would have been the amount of Nationwide’s profits, which was $229,228.32. Plaintiffs^] Exhibits #54 and #56 are the profit and loss statements for Nationwide Nurses from May 2001 through April 2002. They reflect total sales of $1,226,202.58, payroll expenses totaling $652,797.97, total nurse travel expenses of $202,123.43, and a net income for that period of time of $204,889.41. The Court finds that the balance sheet of Nationwide Nurses as of June 30, 2002, shows total accounts receivable of $255,067.00. The Court finds the total equity of Nationwide Nurses to be $229,228.32. The Court finds that these profits and monies were generated in a very short period of time with the help of the information that was taken from TRS. The circuit court also determined in its first order that the defendants were liable for the tort of common law conversion of those trade secrets, for which the court awarded the plaintiffs the fair market value of the converted personal property. The court determined that amount to be $262,312.00.1 Because the plaintiffs elected to recover under the tort theory of conversion, the final judgment entered in their favor was $262,312.00. In R.K. Enter., L.L.C. v. Pro-Comp Mgmt., Inc., 356 Ark. 565, 158 S.W.3d 685 (2004) (R.K. I), this court reversed the damages award for conversion and held that the sole recovery was under the Trade Secrets Act. For that reason, we remanded the case back to the circuit court for a determination of damages under that Act. In our opinion, we said that the “abstract” that was before us did not reflect Nationwide’s gains for misappropriation. While we were certainly correct in making the statement that the income data was not in the abstract, the data reflecting profits was included in the Addendum, as an attachment to the circuit court’s order. Our statement, therefore, was misleading and understandably misled the circuit court. On remand, the circuit court relied on our opinion in finding that the damages for misappropriation of trade secrets could not be determined from the information it had before it despite the fact that the court had already made such a finding. The circuit court, in its second order, found that “[t]here was sufficient evidence to show that Nationwide did avoid at least some of the initial start-up costs of... a travel nurse agency at the considerable expense of another.” However, it also made the following findings: The Court cannot determine, with any specificity, what profits Nationwide earned during the time it possessed the information. The first nurse Nationwide was able to put in the field was in June of 2002 after the information was seized by the Boone County Sheriff s Office via a search warrant based upon [a] criminal complaint. ... The database, computer programs and other items taken from TRS were in custody of law enforcement for many months. . . . Thus, Nationwide logically could have no gain during the period of time it did not have access to the items seized. There is no way for this Court to determine the amount of profits or net gain Nationwide realized from the misappropriation for the time period at issue. It was simply not developed at trial. Clearly, the circuit court could not alter its findings in the second order from the findings made in its first order as our mandate had issued and our remand in R.K. I was solely to determine damages under the Trade Secrets Act. See R.K. I, supra; see also Dolphin v. Wilson, 335 Ark. 113, 983 S.W.2d 113 (1998). The findings in the circuit court’s first order control. In short, it is clear to me that based on the circuit court’s initial order, it had enough evidence before it to make a determination of actual loss for misappropriation of trade secrets under § 4-75-606(a). With clearer direction from this court and without reliance on Brown, the circuit court could make an appropriate finding of damages for actual loss in a second remand of this case for such a determination. Any confusion surrounding this court’s directions and the Brown decision should not preclude the plaintiffs from fully recovering what is rightfully owed to them for actual loss under the Trade Secrets Act. Because of this, I dissent from the majority’s conclusion that the plaintiffs cannot fully recover their damages. I too would reverse the circuit court’s decision, but I would remand the case for the circuit court to make a determination of damages for both actual loss under § 4-75-606(a) and for unjust enrichment under § 4-75-606(b) based on the evidence that was already before the court prior to our first remand. For these reasons, I concur in part and dissent in part. Dickey and Gunter, JJ., join this opinion.   The circuit court said the following regarding the damages awarded for each item converted: For the nurse databases, the Court awards the $68,882.00. For the conversion of the tests developed for verifying the competency of nurses, the Court awards $400.00. For the client/hospital lists, the Court awards $166,489.00. For the Staff Pro computer program, the Court awards $26,532.00.