Court Opinion

ID: 3016897
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:16:16.84736+00
Date Added: 2024-06-11T12:46:31.972122
License: Public Domain

___________

                                  No. 95-2640
                                   ___________

Sip-Top, Inc., a Minnesota         *
corporation,                       *
                                   *
           Appellant,              *
                                   * Appeal from the United States
      v.                           * District Court for the
                                   * District of Minnesota.
Ekco Group, Inc., a Delaware       *
corporation; Ekco Housewares,      *
Inc., a Delaware corporation,      *
                                   *
           Appellees.              *
                              ___________

                   Submitted:      December 14, 1995

                         Filed:   June 21, 1996
                                  ___________

Before McMILLIAN, and BEAM, Circuit Judges, and PERRY,* District Judge.
                               ___________

BEAM, Circuit Judge.

     Sip-Top, Inc. (Sip-Top) appeals the district court's1 order entering
judgment as a matter of law for Ekco Group, Inc. and Ekco Housewares, Inc.
(collectively Ekco).   Because Sip-Top relies on unreasonable inferences and
speculation in attempting to prove each of its various theories of
recovery, we affirm.

     *The HONORABLE CATHERINE D. PERRY, United States District
     Judge for the Eastern District of Missouri, sitting by
     designation.
     1
     The Honorable Michael J. Davis, United States District Judge
for the District of Minnesota.
I.   BACKGROUND

     In 1989, Sip-Top began producing and marketing a consumer product,
under the trademark name SIP-TOP, designed to hold a straw and fit over the
top of a beverage can.   This product consisted of four components, namely
a plastic lid, a straw, a plastic cap for the end of the straw, and a paper
card used for packaging.   According to Sip-Top, it sold in excess of 3.5
million units of this product between 1989 and the time of trial in 1995.
Sip-Top's customers included large retail stores, such as Target, K-Mart,
and Osco Drug.    K-Mart purchased 1.8 million of the total units sold,
making it Sip-Top's largest single customer.

      In 1992, Ekco was negotiating with K-Mart over a kitchen tool and
gadget planogram (a pegboard display of a variety of products) to be
located in the housewares department of K-Mart stores.     Ekco intended to
include a beverage top as one of the products in the planogram.      In the
spring of the same year, Sip-Top contacted Ekco in an effort to obtain
marketing assistance with its SIP-TOP product.   Shortly thereafter, Sip-Top
and Ekco began discussing the possibility of Ekco acquiring Sip-Top.     To
protect any confidential marketing and manufacturing information provided
to Ekco during the course of the negotiations, Sip-Top required Ekco to
sign a confidentiality agreement.   Ekco drafted an agreement, executed it
and sent a copy to Sip-Top.

     The Confidential Information Agreement (Confidentiality Agreement),
entered into on May 29, 1992, provided that Ekco would not use or divulge
any confidential information provided to it by Sip-Top, except to evaluate
the desirability of acquiring Sip-Top.    The Confidentiality Agreement's
prohibition against using or divulging confidential information did not
apply to public information, information already known to Ekco, information
obtained from a third party, or independently developed information.

                                    -2-
       In 1992, Ekco's Vice President of Operations, Ron Fox, visited Sip-
Top representatives in Minnesota and toured the facilities of the companies
that     produced   the   SIP-TOP    components.     In    addition    to   touring   the
manufacturing facilities, Sip-Top provided Fox with design, production, and
marketing information.      Fox also visited the site where the four components
were combined and packaged.         After this trip, no further negotiations took
place until the fall of 1992.              In the meantime, Ekco explored the
possibility of other manufacturers providing the beverage top for its
planogram.      One of these companies, Maverick Ventures, Inc. (Maverick), had
been manufacturing a can top called the "Soda Sipper."              Maverick sent Ekco
a letter, dated August 31, 1992, in which Maverick included its price list
and attached a Sip-Top price list.

       In the fall of 1992, Jeff Weinstein of Ekco called Jeff Dress of Sip-
Top and offered to buy the entire Sip-Top company for $75,000.               On the same
day, K-Mart indicated to Sip-Top that it intended to purchase 425,000 SIP-
TOP units.       Later in the year, K-Mart indicated that it would order an
additional 425,000 units, making its projected 1993 total over 800,000
units.    Sip-Top rejected Ekco's offer, anticipating that it would make more
than $75,000 in annual sales.          No further discussions took place between
Sip-Top and Ekco.

       In late 1992, Ekco made an agreement with K-Mart to place a planogram
in K-Mart stores throughout the country.           In early 1993, Sip-Top contacted
K-Mart to inquire about its product needs for 1993.                 The K-Mart buyer in
charge     of   Sip-Top's   account,    Bill    Tubbs,    told    Sip-Top   that   Ekco's
housewares planogram included a product, the "Soda Sipper," similar to SIP-
TOP.   Ekco did not manufacture the "Soda Sipper."               Rather, Ekco purchased
the product from Maverick.           K-Mart never actually placed the order for
425,000 units of SIP-TOP discussed in the fall of 1992, or any other order.
Sip-Top ceased its business activities after losing the K-Mart account.

                                          -3-
      Sip-Top filed this lawsuit in federal court based on diversity
jurisdiction,      asserting     six     claims     for    relief:       breach    of    the
Confidentiality      Agreement;        interference       with    prospective     business
advantage;    tortious    interference      with     contract;       unfair   competition;
misappropriation of trade secrets; and conversion.                     At trial, Sip-Top
presented testimony, before a jury, for over three days.                 At the close of
Sip-Top's case, Ekco moved for judgment as a matter of law pursuant to Rule
50(a) of the Federal Rules of Civil Procedure.              The district court granted
the motion and dismissed Sip-Top's complaint with prejudice.                       Sip-Top
appeals, asserting that it presented enough evidence to get some of its
claims to the jury.       Sip-Top has not, however, appealed the dismissal of
its trade secret and conversion claims.

II.   DISCUSSION

      This case requires us to determine whether the district court erred
in granting judgment as a matter of law to Ekco over Sip-Top's contention
that it presented enough evidence for a jury to infer that Ekco acted
improperly toward Sip-Top.             We review a district court's grant of a
judgment as a matter of law de novo and apply the same standards as the
district court.      Keenan v. Computer Assocs. Int'l, Inc., 13 F.3d 1266,
1268-69 (8th Cir. 1994).       Judgment as a matter of law may be granted when
"a party has been fully heard on an issue and there is no legally
sufficient evidentiary basis for a reasonable jury to find for that party."
Fed. R. Civ. P. 50(a)(1).         Affirming a judgment as a matter of law "is
appropriate    where   the     evidence    is     such    that,   without     weighing   the
credibility of the witnesses, there can be but one reasonable conclusion
as to the verdict."      Caudill v. Farmland Indus., Inc., 919 F.2d 83, 86 (8th
Cir. 1990).     We view the evidence in the light most favorable to the
nonmoving party.    See, e.g., Larson v. Miller, 76 F.3d 1446, 1452 (8th Cir.
1996).   In applying this standard we must:

                                           -4-
       "(1) resolve direct factual conflicts in favor of the
       nonmovant, (2) assume as true all facts supporting the
       nonmovant which the evidence tended to prove, (3) give the
       nonmovant the benefit of all reasonable inferences, and (4)
       deny the motion if the evidence so viewed would allow
       reasonable jurors to differ as to the conclusions that could be
       drawn."

Pumps & Power Co. v. Southern States Indus., Inc., 787 F.2d 1252, 1258 (8th
Cir. 1986) (quoting Jones v. Edwards, 770 F.2d 739, 740 (8th Cir. 1985)).
Ultimately, "[a] motion for judgment as a matter of law presents a legal
question to the district court and this court on review:     `whether there
is sufficient evidence to support a jury verdict.'"      Keenan, 13 F.3d at
1268 (quoting White v. Pence, 961 F.2d 776, 779 (8th Cir. 1992)).

       Sip-Top contends it presented sufficient evidence under this standard
to permit each of its claims to be considered by the jury.   Sip-Top asserts
that   the district court improperly resolved factual issues, weighed
evidence, and construed all inferences against Sip-Top.         We disagree.
Although we must give Sip-Top the benefit of all reasonable inferences, we
may not accord a party "the benefit of unreasonable inferences or those `at
war with the undisputed facts.'"     Marcoux v. Van Wyk, 572 F.2d 651, 653
(8th Cir. 1978) (quoting Schneider v. Chrysler Motors Corp., 401 F.2d 549,
555 (8th Cir. 1968), cert. dismissed by 439 U.S. 801 (1978)).   A reasonable
inference is one "which may be drawn from the evidence without resort to
speculation."   Hauser v. Equifax, Inc., 602 F.2d 811, 814 (8th Cir. 1979));
see also Caudill, 919 F.2d at 86.   When the record contains no proof beyond
speculation to support the verdict, judgment as a matter of law is
appropriate.    Pumps & Power Co., 787 F.2d at 1258.   After analyzing each
of Sip-Top's four causes of action, we conclude that Sip-Top failed to
establish sufficient evidence to support a jury verdict and thus the
district court did not err in granting Ekco judgment as a matter of law.

                                    -5-
        A.     Breach of Contract (Confidentiality Agreement)

        Turning first to Sip-Top's breach of contract claim,                     Sip-Top must
prove the existence of a valid contract and that Ekco failed, without legal
justification, to perform as obligated under the contract.                         See, e.g.,
Associated Cinemas of Am., Inc. v. World Amusement Co., 276 N.W. 7, 10
(Minn. 1937).       We assume the validity of the Confidentiality Agreement and
focus     on    whether   Sip-Top       presented     evidence     of   a    breach.         The
Confidentiality        Agreement       prohibits     Ekco   from     divulging      or     using
confidential        information    provided     by   Sip-Top.        The    Confidentiality
Agreement does not apply to public information, information already known
to   Ekco,     information      obtained      from   a   third    party,    or     information
independently developed.               Therefore, to prove that Ekco breached the
contract, Sip-Top must demonstrate that Ekco either used or divulged
confidential information and that it was the type of information covered
by the Confidentiality Agreement.

        Sip-Top contends that Ekco used confidential information to evaluate
Maverick, another manufacturer of a similar beverage cap.                    Sip-Top showed
that Ekco received various information from Sip-Top regarding its product.
Sip-Top      also   demonstrated       that   Ekco   eventually     purchased      Maverick's
product.       Assuming that the information provided to Ekco by Sip-Top was
confidential, we nevertheless conclude that Sip-Top failed to provide
sufficient evidence to support a jury verdict that Ekco used, or divulged,
any confidential information when it negotiated with Maverick.                           Sip-Top
even concedes that it did not offer any direct evidence on how Ekco used
or divulged confidential information.                Rather, Sip-Top asserts that the
jury should have been able to infer that in negotiating with Maverick, Ekco
used or divulged confidential information provided by Sip-Top.                       This type
of   inference,      however,     is    unreasonable     and     nothing    more    than    mere
speculation.        And as such, it is insufficient to survive a motion for
judgment as a matter of law.

                                              -6-
       In a case factually similar to the one before us, the Fifth Circuit
reached the same result.      See Omnitech Int'l, Inc. v. Clorox Co., 11 F.3d
1316, 1324 (5th Cir.) (concluding that the plaintiff company "simply failed
to demonstrate that [the defendant company] misused the information it
transferred pursuant to the non-disclosure agreement" and granting the
plaintiff company judgment as a matter of law), cert. denied, 115 S. Ct.
71 (1994).     In both the Omnitech case and the present case, the contract
did not prohibit the parties from negotiating, or entering into agreements,
with other companies.      Thus, evidence of Ekco's interaction with Maverick
does not tend to prove that Ekco breached the Confidentiality Agreement,
unless   the   evidence    shows    that   Ekco    used    or    divulged    confidential
information provided by Sip-Top.         Moreover, the Confidentiality Agreement
expressly authorized Ekco to use the information provided by Sip-Top to
evaluate the desirability of acquiring Sip-Top.                  Therefore, even if we
assume Sip-Top's assertions are true, no inference arises that Ekco used
or divulged confidential information.              The fact that the information
provided by Sip-Top might have made Ekco more informed in evaluating
whether to acquire Sip-Top or purchase Maverick's product does not support
an inference that Ekco violated the Confidentiality Agreement.                 See id. at
1327   (referring   back     to    the   court's   conclusion       that     such   use   of
confidential information also did not constitute misappropriation of a
trade secret).

       To accept Sip-Top's argument we would need to make the unreasonable
inference that every time a company receives confidential information it
uses that information if it negotiates with another entity.                  As recognized
in   Omnitech,   Sip-Top's    position     would    lead    to    one   of    two   equally
unacceptable results:

       (i) every time a company entered into preliminary negotiations
       for a possible purchase of another company's assets in which
       the acquiring company was given limited access to the target's
       trade secrets, the acquiring party would effectively be
       precluded from evaluating other

                                           -7-
     potential targets; or (ii) the acquiring company would, as a
     practical matter, be forced to make a purchase decision without
     the benefit of examination of the target company's most
     important assets--its trade secrets.

Id. at 1325.    Thus, the district court properly disposed of Sip-Top's
breach of contract claim by entering judgment as a matter of law for Ekco.

     B.     Interference with Prospective Business Relationship

     Sip-Top next contends that Ekco interfered with Sip-Top's business
relationship with K-Mart.   To prevail on an interference with prospective
business relationship claim under Minnesota law, Sip-Top must prove that
Ekco intentionally committed a wrongful act that improperly interfered with
Sip-Top's prospective business relationship with K-Mart.    See, e.g., Hunt
v. University of Minnesota, 465 N.W.2d 88, 95 (Minn. Ct. App. 1991) (citing
United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628, 633 (Minn. 1982)).

     Sip-Top did not submit any evidence by a K-Mart employee as to why
K-Mart decided to cease its business relationship with Sip-Top.    Although
this failure would not alone be fatal to its claim, Sip-Top also failed to
present evidence that Ekco acted wrongfully.    Rather, Sip-Top admittedly
relies, once again, solely on inference.   Sip-Top presented evidence that
it had a prior business relationship with K-Mart.        Sip-Top employees
testified that in the fall of 1992, K-Mart expressed its intention of
purchasing additional SIP-TOP units.   And it is undisputed that K-Mart in
fact did not purchase any additional SIP-TOP units.   Rather, K-Mart entered
into an agreement with Ekco and Ekco purchased its beverage tops from
another   company, Maverick.    Even assuming the veracity of all this
evidence, and other evidence, Sip-Top failed to provide anything more than
speculation as to how Ekco wrongfully interfered with Sip-Top's future
business relationship with K-Mart.     The evidence reflects that various
companies were competing to sell

                                    -8-
their own products but does not support an inference that Ekco wrongfully
interfered with Sip-Top's business relationship with K-Mart.          Nor does such
evidence support an inference that Ekco's conduct caused Sip-Top to lose
its K-Mart account.    Therefore, this claim also fails as a matter of law.

     C.      Tortious Interference with Contract

     We next turn to Sip-Top's tortious interference with contract claim.
Under Minnesota law, Sip-Top must prove the following five elements to
prevail:    (1) a contract existed between Sip-Top and K-Mart; (2) Ekco knew
about the contract; (3) Ekco intentionally interfered with the contract;
(4) Ekco's actions were not justified; and (5) Sip-Top suffered damages as
a result.      See, e.g., Furlev Sales & Assocs., Inc. v. North American
Automotive Warehouse, Inc., 325 N.W.2d 20, 25 (Minn. 1982).          Assuming that
the testimony provided by Sip-Top's employees established that K-Mart made
an oral commitment in the fall of 1992 to order a significant number of
SIP-TOP    units,2   Sip-Top   failed    to    provide   any   evidence    that   Ekco
intentionally interfered with that contract.              Sip-Top cannot rely on
unreasonable    inferences     and   speculation    to   establish   the   necessary
evidentiary basis required to support a finding that Ekco intentionally
interfered with Sip-Top's contract.       See City Nat'l Bank of Fort Smith v.
Unique Structures, Inc., 929 F.2d 1308, 1315-16 (8th Cir. 1991) (upholding
judgment as a matter of law when the plaintiff relied on inference to
support the required proof of intent under Arkansas law).            Moreover, the
evidence does not support an inference that Ekco's actions caused Sip-Top
to lose a contract with K-Mart.         Thus, this claim also fails as a matter
of law.

      2
       We doubt that Sip-Top could establish the existence of an
oral contract for over 400,000 units of SIP-TOP. As a matter of
law, Sip-Top and K-Mart could not have a valid oral contract for a
sale of goods worth over $500 dollars. Minn. Stat. § 336.2-201.

                                         -9-
        D.     Unfair Competition

        Finally, we analyze Sip-Top's unfair competition claim, which is not
an independent tort, but rather encompasses several causes of action that
have    been    recognized   in     order   to   protect   commercial   interests.
Rehabilitation Specialists, Inc. v. Koering, 404 N.W.2d 301, 305 (Minn. Ct.
App. 1987).     Under Minnesota law, an unfair competition claim may be based
on either:     (1) tortious interference with contract; or (2) improper use
of a trade secret.     Id. at 305-06 (citing United Wild Rice, 313 N.W.2d at
632).    As discussed above, Sip-Top failed to provide the minimum amount of
evidence required to send a tortious interference with contract claim to
the jury and thus Sip-Top cannot base its unfair competition claim on that
premise.     Moreover, improper use of a trade secret obviously would require
Sip-Top to prove that Ekco used secret information without Sip-Top's
consent.     See Minn. Stat. § 325C.01, subd. 3 (defining misappropriation of
a trade secret as either:     (1) improper acquisition of a trade secret; or
(2) disclosure or use of a trade secret without consent); Electro-Craft
Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 897 (Minn. 1983).           Just
as in its breach of contract claim, Sip-Top cannot rely on unreasonable
inferences and speculation to establish a sufficient evidentiary basis for
a reasonable jury to find that Ekco used a trade secret provided to it by
Sip-Top.     See, e.g., Omnitech, 11 F.3d at 1325-26.        Therefore, Sip-Top's
fourth and final claim fails as a matter of law.

III. CONCLUSION

        Sip-Top failed to provide evidence essential to its claims, relying
instead on unreasonable inferences and mere speculation.          Accordingly, we
affirm the district court's order granting Ekco's motion for judgment as
a matter of law and dismissing Sip-Top's complaint with prejudice.

                                        -10-
A true copy.

     Attest:

           CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

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