Court Opinion

ID: 4172716
Source: CourtListenerOpinion
Date Created: 2017-05-30 20:04:33.233236+00
Date Added: 2024-06-11T14:38:27.971959
License: Public Domain

UNPUBLISHED

                      UNITED STATES COURT OF APPEALS
                          FOR THE FOURTH CIRCUIT

                                     No. 16-1032

INTEGRATED DIRECT MARKETING, LLC,

                   Plaintiff – Appellant,

             v.

DREW MAY; MERKLE, INC.,

                   Defendants – Appellees.

Appeal from the United States District Court for the Eastern District of Virginia, at
Alexandria. Leonie M. Brinkema, District Judge. (1:14-cv-01183-LMB-IDD)

Argued: May 9, 2017                                          Decided: May 30, 2017

Before MOTZ, SHEDD, and DUNCAN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Charlie Lee, MOORE & LEE, LLP, McLean, Virginia, for Appellant.
Declan C. Leonard, BERENZWEIG LEONARD, LLP, McLean, Virginia; James Bennett
Kinsel, PROTORAE LAW PLLC, Tysons Corner, Virginia, for Appellees. ON BRIEF:
Kristen A. Bennett, MOORE & LEE, LLP, McLean, Virginia; Mark Pedroli, PEDROLI
LAW, LLC, St. Louis, Missouri, for Appellant. Nicholas R. Johnson, BERENZWEIG
LEONARD, LLP, McLean, Virginia, for Appellee Merkle, Inc. Rebecca B. Segal,
Jennifer A. Lucey, PROTORAE LAW PLLC, Tysons Corner, Virginia, for Appellee
Drew May.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

      Integrated Direct Marketing, LLC (“IDM”) appeals the district court’s grant of

summary judgment to Drew May and Merkle, Inc. (“Merkle,” collectively,

“Defendants”), whom it accused of misappropriating trade secrets and breaching a

confidentiality agreement. IDM also appeals the court’s denial of its request for an

adverse inference based on Defendants’ alleged spoliation of evidence. For the following

reasons, we affirm.

                                            I.

      IDM and Merkle are direct competitors in the data-driven marketing business,

wherein companies source, manipulate, and maintain information on potential consumers

and provide strategic marketing advice to their clients. IDM formerly employed May as

Executive Vice President for Data Integration, and as a condition of employment, May

executed a confidentiality agreement prohibiting his disclosure or unauthorized retention

and use of IDM’s confidential and proprietary information. IDM terminated May’s

employment, but immediately prior to his termination, May saved large quantities of

IDM’s electronic files to his personal hard drive. Subsequently, Merkle hired May to

serve as a Vice President and Client Partner, engaging in duties similar to those he

performed for IDM for some of the same clients. Based on an examination of the hard

drive by IDM’s forensic computer expert, IDM determined that May retained possession

of many IDM files after his termination and that he later attempted to delete those files

from his hard drive on four separate occasions.

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      In its complaint, IDM raised seven claims for relief. Relevant to this appeal are

three claims: (1) breach of contract against May; (2) violations of the Arkansas Trade

Secrets Act (“ATSA”), Ark. Stat. Ann. §§ 4-75-601 to -607, against May; and (3)

violations of the ATSA and the North Carolina Trade Secrets Protection Act, N.C. Gen.

Stat. §§ 66-152 to -162, against Merkle. With respect to the breach of contract claim,

IDM alleged that May violated the confidentiality agreement by failing to return all of

IDM’s property upon his termination. Regarding the trade secret claims, IDM alleged that

the Defendants misappropriated IDM trade secrets by using IDM’s pricing information in

connection with a proposal Merkle was preparing for Google, and by extracting

knowledge from an IDM employee relating to techniques for using Alteryx, a

commercially available software package.

      After contentious discovery, May and Merkle moved for summary judgment. IDM

opposed summary judgment and filed a Motion in Limine for an Adverse Inference for

Defendants’ Spoliation of Evidence and Other Relief. In this motion, IDM requested that

the district court draw the inference that both May and Merkle misappropriated IDM

trade secrets based on May’s deletions of certain IDM files from his hard drive.

       Ruling from the bench at the hearing on Defendants’ summary judgment motions,

the district court dismissed IDM’s breach of contract claim against May for violation of

the confidentiality agreement. As noted by the court, the confidentiality agreement’s

definition of “confidential information” was unlimited in scope, and it purported to

restrict May in perpetuity, as it contained no time restrictions. Accordingly, because the

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confidentiality provision was not narrowly tailored to protect IDM’s legitimate business

interests, the court ruled that it was unenforceable under the applicable law.

       Subsequently, in a detailed opinion granting Defendants’ motions for summary

judgment, the district court addressed in turn each trade secret IDM identified as being

misappropriated. First, the court considered IDM’s claim that Merkle was able to

underbid IDM for Google work because May disclosed IDM’s pricing information to

Merkle. See J.A. 3617–24. According to IDM, May’s disclosure of its pricing

information resulted in Google selecting Merkle for the work before IDM was able to

submit its final proposal. The court found that IDM failed to present sufficient evidence

as to what pricing it was considering using in its never-finalized proposal, and Merkle put

forth substantial evidence that it did not obtain or use IDM pricing information in

formulating its bid. Thus, the court dismissed IDM’s trade secret misappropriation claims

relating to the alleged disclosure of pricing information.

       The district court next addressed IDM’s claim that May orchestrated a telephone

conference between Brian Wiedower, who was then IDM’s Director of Data Integration,

and a representative of Merkle, during which Wiedower allegedly disclosed IDM trade

secrets relating to matching techniques used on the Alteryx platform. See J.A. 3624–27.

IDM’s main evidence in support of this claim was a declaration from Wiedower

conclusively stating that he disclosed “IDM confidential and proprietary information” on

the conference call. J.A. 3625–26. However, IDM did not produce the specific trade

secret information that was allegedly misappropriated. Acknowledging that information

relating to Alteryx is publicly available, the court concluded that IDM failed to proffer

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enough evidence from which a reasonable jury could determine that the disclosed

information meets the definition of a trade secret under the applicable law. Additionally,

the court noted that IDM failed to cite any authority supporting its position that May

should be liable for Wiedower’s disclosure of trade secrets merely because he organized

the telephone conference. Accordingly, the court dismissed IDM’s trade secret

misappropriation claims relating to Wiedower’s telephone conference with Merkle.

       Finally, the district court refused to adopt an adverse inference that Defendants

misappropriated IDM trade secret information. During an evidentiary hearing, the district

court judge personally questioned May under oath, and after evaluating May’s in-person

testimony, the court determined that there was insufficient evidence to support a finding

of spoliation. Notably, the court did impose monetary sanctions for May’s actions during

the course of this litigation and specifically for his “lack of candor regarding his retention

of IDM files.” J.A. 3661.

                                             II.

       IDM contends that the district court erred in granting summary judgment in favor

of May and Merkle and in declining to impose a spoliation inference. We review the

grant of summary judgment de novo, Wilkins v. Montgomery, 751 F.3d 214, 220 (4th Cir.

2014), and “the refusal to apply a spoliation inference must stand unless it was an abuse

of the . . . court’s broad discretion.” Hodge v. Wal-Mart Stores, Inc., 360 F.3d 446, 450

(4th Cir. 2004) (citation and internal quotation marks omitted).

       Having reviewed the record and the applicable law, and having had the benefit of

oral argument, we find that the district court committed no abuse of discretion in refusing

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to impose a spoliation inference. Therefore, we affirm the grant of summary judgment

based substantially on the reasoning of the district court.

                                                                        AFFIRMED

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