Court Opinion

ID: 9632849
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:26:15.8648+00
Date Added: 2024-06-11T13:00:16.554053
License: Public Domain

Jim Hannah, Chief Justice. Pro-Comp Management, Inc., d/b/a The Right Solutions, an Arkansas corporation, The D.L.J. Wright Industry, Inc., d/b/a The Right Solutions, an Oklahoma corporation, and Amedistaf, L.L.C., d/b/a The Right Solutions, a Delaware corporation, (TRS) appeal a decision of the Washington County Circuit Court entering upon remand a judgment in favor of R.K. Enterprises, L.L.C., d/b/a Nationwide Nurses, a Nevada corporation, Katherine Hefly, Mary Burks, Traca Lane, and Raymond Hefly. The appellees cross-appeal, alleging that this court lacked jurisdiction to remand the case for a determination of damages under the Trade Secrets Act.1 The decision on the prior appeal in this case is R.K. Enterprise, L.L.C. v. Pro-Comp Management, Inc., 356 Ark. 565, 158 S.W.3d 685 (2004) (R.K. I). Our jurisdiction is pursuant to Ark. Sup. Ct. R. l-2(a)(7) because this is the second appeal in this case. Jurisdiction Although the issue of jurisdiction is raised by appellees on cross-appeal, we address the issue of jurisdiction first because appellees allege that this court exceeded its jurisdiction in remanding the case for a determination of damages in R.K. I under the Trade Secrets Act. Appellees further allege that because this court lacked jurisdiction to issue the decision in R.K. I, it now lacks jurisdiction to hear any further appeal arising from that decision. Appellees’ argument is that only Katherine Hefly, Mary Burks, and Traca Lane were found to have acquired and removed trade secrets from TRS; therefore, Nationwide and Raymond Hefly could not be liable under the Trade Secrets Act. However, the circuit court also found that Nationwide benefitted from the misappropriation, meaning that Nationwide used the illegally obtained trade secrets. Use of a misappropriated trade secret gives rise to liability under Ark. Code Ann. § 4-75-601 (2) (B) (Repl. 2001). Thus, there is a finding that Nationwide is liable. Raymond Hefly is likewise liable as he ran the business and was the person who used the trade secrets to further Nationwide’s business.  Appellee’s cross-appeal alleges that this court lacked jurisdiction to remand the case in R.K. I for a determination of damages under the Trade Secrets Act because TRS did not cross-appeal in R.K. I. They argue that by making the election of remedies at trial for those offered under conversion and conspiracy, there was a ruling by the circuit court that TRS failed to appeal in R.K. I, and that circuit court ruling now controls under the law of the case doctrine. This, appellees argue, means that this court lacked jurisdiction to reverse this case and remand it for relief benefitting TRS. The principle of the law of the case is that, “[w]hen there is no cross-appeal, the order from which cross-appeal is not taken becomes the law of the case.” Clemmons v. Office of Child Support Enforcement, 345 Ark. 330, 351, 47 S.W.3d 227, 241 (2001). However, what was at issue on appeal in R.K. I was whether the circuit court erred in deciding the case on conversion and conspiracy. This court held that appellees were correct, that the circuit court erred, and we reversed and remanded the case for a determination of damages under the Trade Secrets Act, the other remaining theory of liability argued at trial. Appellees rely on the election of remedies by TRS to serve as the reason law of the case must apply. However, the doctrine of election of remedies applies to remedies, not to causes of action, and bars more than one recovery on inconsistent remedies. Regions Bank v. Griffin, 364 Ark. 193, 217 S.W.3d 829 (2005). Here the remedy sought, recovery under conversion and conspiracy, was a remedy that was not available under this set of facts. Therefore, there could be no election between remedies and upon remand the circuit court was to consider the only available remedy, a determination of damages under the Trade Secrets Act. Violation of the Mandate Rule TRS argues that the circuit court violated the mandate rule as evidenced by reconsideration of the judgment entered in favor of TRS and entry of a judgment in favor of appellees. A lower court is bound by the judgment or decree of a higher court as law of the case and must carry the decision of the higher court into execution pursuant to the mandate issued by that court. Smith v. AJ&K Operating Co., 365 Ark. 229, 227 S.W.3d 899 (2006). The lower court may not vary the decision or judicially examine it for any purpose other than execution. Id. A lower court may not vary the relief granted in the mandate and may not intermeddle even where there is apparent error in the mandate. Id.  TRS argues that in entering judgment in favor of appellees, the circuit court altered its previous factual finding of liability against appellees. The record fails to support this conclusion. The order issued upon remand clearly indicates that what was at issue on remand was “a determination of damages under the statutory provisions of the Arkansas Trade Secrets Act. . . .” Further, the order upon remand reaffirms the earlier finding that appellees misappropriated and used trade secrets in violation of the Trade Secrets Act. Entry of judgment in favor of appellees merely reflected the circuit court’s conclusion that TRS failed to prove its damages. Actual Loss and Unjust Enrichment  TRS argues that the circuit court erred in failing to award damages upon remand. In R.K. I, this court held that “the Trade Secrets Act prescribes an exclusive remedy for misappropriation of trade secrets. . . .” R.K. I, 356 Ark. at 568, 158 S.W.3d at 686. This court also held that “the statutory language of the Trade Secrets Act displaces or preempts the award of damages based upon tort claims for conversion of trade secrets, as well as other tort claims such as conspiracy, that may arise under a claim of misappropriation of trade secrets.” R.K. I, 356 Ark. at 574, 158 S.W.3d at 690. Section 4-75-606 (Repl. 2001) provides: (a) In addition to or in lieu of injunctive relief, a complainant may recover damages for the actual loss caused by misappropriation. (b) A complainant also may recover for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss. In R.K. I, we stated that actual loss noted in the statute is calculated as “the plaintiffs lost profits or the defendant’s gain, ‘whichever affords the greater recovery.’ ” R.K. I, 356 Ark. at 575, 158 S.W.3d at 690 (quoting Saforo & Assocs., Inc. v. Porocel Corp., 337 Ark. 553, 566, 991 S.W.2d 117, 124 (1999)). We then noted that while the circuit court had determined that the market value of the trade secrets was $262,303, “[t]he abstract before us does not establish TRS’s lost profits or Nationwide’s gains resulting from the misappropriation of trade secrets.” R.K. I, 356 Ark. at 575, 158 S.W.3d at 691. We also stated that the “computation of damages did not address the measure of lost profits suffered by TRS or the gain realized by appellants as a result of the misappropriation of trade secrets as required by Ark. Code Ann. § 4-75-606.” Id. We stated in conclusion: The abstract before us does not reflect a determination of the issues relating to disgorgement of profits by Nationwide or the recovery of TRS’s lost profits, whichever affords the greater recovery, as articulated in Ark. Code Ann. § 4-75-606 and Saforo, supra. Accordingly, we reverse and remand for a determination of damages under the statutory provisions of our Trade Secrets Act. R.K. I, 356 Ark. at 576, 158 S.W.3d at 691. This court noted in R.K. I, that “Arkansas Code Annotated § 4-75-606 includes the recovery of actual loss plus any unjust enrichment when the misappropriation of trade secrets is involved.” R.K. I, 356 Ark. at 575, 158 S.W.3d at 690. Upon remand, the circuit court considered damages based on both actual loss as well as unjust enrichment. The circuit court found that although liability for misappropriation of trade secrets had been proven, the evidence presented on both theories of recovery was too speculative to prove damages; therefore, the circuit court entered a judgment for the appellees. We recognized a weakness in the proof on damages in R.K. I with respect to actual loss, when we stated that the abstract presented on appeal did not establish either TRS’s lost profits or Nationwide’s gains. It appears that upon remand, no better evidence was established; therefore, no recovery could be granted on this theory.  With respect to unjust enrichment, the circuit court relied on Brown v. Ruallam, 73 Ark. App. 296, 44 S.W.3d 740 (2001). Brown was on point and declared the law with respect to unjust enrichment under the Trade Secrets Act. Thus, being bound to follow precedent, the circuit court could not look to more general law on unjust enrichment. In Brown, the court of appeals relied on Saforo, supra, and concluded that unjust enrichment in the context of the Arkansas Trade Secrets Act “must mean the benefit conferred upon the defendant by the profit margin earned was a result of the wrongful taking of trade secrets.” Brown, 73 Ark. App. at 302, 44 S.W.3d at 745. In Saforo, we noted that recovery under the Trade Secrets Act included both actual loss and unjust enrichment. While we mentioned unjust enrichment in Saforo, the issue in that case and the matter discussed and decided was the meaning of actual loss. The conclusion in Brown that unjust enrichment must be defined solely through analysis of profits is incorrect. Pursuant to section 4-75-606 (b), a complainant may recover not only for the actual loss as may be shown by profits, but also the unjust enrichment caused by misappropriation where that is not taken into account in computing damages for actual loss. To the extent that Brown is inconsistent with this opinion, it is overruled. The circuit court may look to more general law on unjust enrichment. For example, in Servewell Plumbing v. Summit Contractors, 362 Ark. 598, 612, 210 S.W.3d 101, 112 (2005), we stated that: Unjust enrichment is an equitable doctrine. First Nat’l Bank of DeWitt v. Cruthis, 360 Ark. 528, 203 S.W.3d 88 (2005). It is the principle that one person should not be permitted unjusdy to enrich himself at the expense of another, but should be required to make restitution of or for property or benefits received, retained, or appropriated, where it is just and equitable that such restitution be made, and where such action involves no violation or frustration of law or opposition to public policy, either directly or indirectly. The circuit court found overwhelming evidence that Katherine Hefly, Mary Burks, and Traca Lane misappropriated the trade secrets. The circuit court also found that the trade secrets were used to some extent by Nationwide and Raymond Hefly in setting up the business before the offices of Nationwide were searched and the trade secrets taken by police. Misappropriation of a trade secret includes use of a trade secret taken by another. Ark. Code Ann. § 4-75-601 (2) (B). At trial, damages were awarded under conversion, and the fair market price of the trade secrets was determined to be a total of $262,303. Whether the evidence giving rise to the award of damages on conversion may be relevant on the issue of unjust enrichment has not been decided by the circuit court. Given the required reliance on Brown, supra, the circuit court on remand was not able to fully consider the issue of damages under unjust enrichment.  The decision reached by the circuit court on remand on actual loss under the Trade Secrets Act is affirmed. However, we- reverse and remand for a decision on damages under unjust enrichment.  TRS also argues that the circuit court erred in failing to award attorney’s fees as allowed for willful or malicious misappropriation under Ark. Code Ann. § 4-75-607 (Repl. 2001). The order appealed from contains no reference to attorney’s fees. TRS failed to obtain a ruling on this issue. The failure to obtain a ruling precludes appellate review because there is no order of a lower court on the issue for this court to review on appeal. See Gwin v. Daniels, 357 Ark. 623, 892 S.W.2d 526 (2004). Affirmed in part, reversed and remanded in part. Brown, Dickey and Gunter, JJ., concur in part and dissent in part.   Ark. Code Ann. § 4-75-606 (Repl. 2001).