2017 WI 75
SUPREME COURT OF WISCONSIN
CASE NO.: 2015AP643
COMPLETE TITLE: North Highland Inc.,
Plaintiff-Appellant-Petitioner,
v.
Jefferson Machine & Tool Inc. and Steven M.
Homann,
Defendants,
Frederick A. Wells,
Defendant-Respondent.
REVIEW OF A DECISION OF THE COURT OF APPEALS
Reported at 369 Wis. 2d 223, 880 N.W.2d 182
(2016 – Unpublished)
OPINION FILED: July 6, 2017
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: January 17, 2017
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Jefferson
JUDGE: William F. Hue
JUSTICES:
CONCURRED:
DISSENTED: ROGGENSACK, C.J. dissents (opinion filed).
R.G. BRADLEY J. dissents, joined by KELLY, J.
(opinion filed).
NOT PARTICIPATING:
ATTORNEYS:
For the plaintiff-appellant-petitioner, there was a brief
by Kyle B. Hanson and Hanson Law Group, LLP, Barrington, and
oral argument by Kyle B. Hanson.
For the defendant-respondent, there was a brief by Bruce A.
Schultz, Vincent J. Scipior, and Coyne, Schultz, Becker & Bauer,
S.C., Madison, and oral argument by Bruce A. Schultz.
2017 WI 75
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2015AP643
(L.C. No. 2012CV125)
STATE OF WISCONSIN : IN SUPREME COURT
North Highland Inc.,
Plaintiff-Appellant-Petitioner,
v.
FILED
Jefferson Machine & Tool Inc. and Steven M.
Homann, JUL 6, 2017
Defendants, Diane M. Fremgen
Clerk of Supreme Court
Frederick A. Wells,
Defendant-Respondent.
REVIEW of a decision of the Court of Appeals. Affirmed.
¶1 ANN WALSH BRADLEY, J. Petitioner, North Highland,
Inc., seeks review of an unpublished per curiam opinion of the
court of appeals affirming a circuit court grant of summary
judgment in favor of Frederick A. Wells ("Wells").1 The court of
1
N. Highland Inc. v. Jefferson Mach. & Tool Inc., No.
2015AP643, unpublished slip op. (Wis. Ct. App. Apr. 28, 2016)
(affirming judgment and order entered by the circuit court for
Jefferson County, William F. Hue, J., presiding).
(continued)
No. 2015AP643
appeals determined that the circuit court properly entered
summary judgment in favor of Wells. It concluded that North
Highland failed to present evidence sufficient to support either
its claim of conspiracy to breach a fiduciary duty or its claim
of misappropriation of a trade secret. N. Highland Inc. v.
Jefferson Mach. & Tool Inc., No. 2015AP643, unpublished slip
op., ¶¶11, 26 (Wis. Ct. App. Apr. 28, 2016).
¶2 North Highland contends that the court of appeals
erred and that it is entitled to summary judgment in its favor.
It alleges that Wells conspired to breach a fiduciary duty that
Dwain Trewyn ("Trewyn"), a former North Highland employee, owed
to the company. North Highland further contends that Wells
misappropriated a trade secret in violation of Wis. Stat.
§ 134.90 (2013-14) (Uniform trade secrets act).2
¶3 In this review of a grant of summary judgment, we
examine the conspiracy and misappropriation claims through the
lens of sufficiency of evidence. We determine that North
Highland has not met its burden to show that there exists a
genuine issue of material fact as to either claim.
Consequently, due to insufficiency of evidence, both of North
Because the court of appeals opinion is an unpublished per
curium, it provides neither precedential nor persuasive value.
Wis. Stat. (Rule) § 809.23(3)(b).
2
All subsequent references to the Wisconsin Statutes are to
the 2013-14 version unless otherwise indicated.
2
No. 2015AP643
Highland's claims fail to survive Well's summary judgment
motion.3
¶4 Accordingly, we affirm the decision of the court of
appeals affirming the circuit court's grant of summary judgment
in favor of Frederick Wells.4
3
In its petition for review, North Highland framed the
issues as a question of whether it could maintain suit against
Wells for any of the following: (a) conspiracy with Trewyn to
violate Trewyn's breach of fiduciary duties to North Highland,
(b) aiding and abetting Trewyn's breach of fiduciary duties to
North Highland, (c) interference with Trewyn's contractual or
fiduciary obligations to North Highland, or (d) for interference
with North Highland's prospective contract with another person.
In its brief, it asserts that the circuit court incorrectly
dismissed these claims on the basis of claim preclusion.
We observe, as did the court of appeals, that the
evidentiary record in this case is incomplete. North Highland
asks this court to reverse the circuit court's decision
dismissing its claims against Wells, yet the hearing transcripts
setting forth the circuit court's oral ruling are not in the
record before us. Additionally, the only claim set forth above
that North Highland has briefed or argued before this court is
its conspiracy claim against Wells. Without evidence or
argument, we do not address the circuit court's grant of summary
judgment on the aiding and abetting or interference claims.
4
Although we affirm the court of appeals determination that
North Highland's claim for misappropriation of a trade secret
fails for lack of evidence, we do so with a different focus on
the inquiry. The court of appeals focused on whether there was
sufficient evidence to demonstrate that a bid amount constitutes
a trade secret. See N. Highland Inc. v. Jefferson Mach. & Tool
Inc., No. 2015AP643, ¶¶25 (Wis. Ct. App. Apr. 28, 2016)
(determining that North Highland "fails to explain to this court
why its bid amount constitutes 'information' as that term is
used in Wis. Stat. § 134.90(1)(c).).
(continued)
3
No. 2015AP643
I
¶5 This review originates from a lawsuit North Highland
brought against Frederick Wells, Dwain Trewyn, Bay Plastics,
Inc., and Jefferson Machine & Tool Inc. ("Jefferson Machine").
¶6 Wells is the owner of Bay Plastics, a distributer of
customized plastic parts that it purchased from vendors. One of
its vendors was North Highland, a small manufacturing company.
Trewyn was an employee of North Highland with job duties that
included submitting quotes and obtaining business for the
company.5
¶7 When Wells decided that he wanted to form a company to
manufacture the parts Bay Plastics sold, he asked Trewyn to be
his partner in the new business. While Trewyn was still
employed at North Highland, he and Wells formed their new
In contrast, the focus of our inquiry addresses whether
there is sufficient evidence to show misappropriation. Because
our determination that there is insufficient evidence to show
misappropriation is dispositive, we need not further address the
court of appeals' per curium disposition of this claim.
Likewise, because our determination that there is
insufficient evidence to support a claim for conspiracy to
breach a fiduciary duty is dispositive, we need not reach North
Highland's argument that the circuit court erred in determining
that its civil conspiracy claim is barred under the doctrine of
claim preclusion.
5
As set forth more fully below, Trewyn filed a Chapter 7
bankruptcy petition, which ultimately led to a settlement
agreement dismissing North Highland's claims against Trewyn with
prejudice. See infra ¶17.
4
No. 2015AP643
manufacturing company, Jefferson Machine.6 Wells owned 75
percent of Jefferson Machine and Trewyn owned 25 percent.
¶8 The underlying dispute arose when both North Highland
and Jefferson Machine submitted confidential bids on a
manufacturing project for Tyson Foods Inc. ("Tyson").7 North
Highland alleges that while Trewyn was still its employee, he
formulated confidential bids for both North Highland and
Jefferson Machine, the company he co-owned with Wells.
¶9 Jefferson Machine was awarded the Tyson project, but
its contract was cancelled after North Highland threatened to
seek an injunction, blocking the performance of the contract.
Ultimately, neither Jefferson Machine nor North Highland was
awarded the Tyson contract.
¶10 North Highland subsequently filed a lawsuit against
Trewyn, Jefferson Machine, Wells, and Bay Plastics. In its
amended complaint, North Highland alleged that: (1) the
defendants misappropriated trade secrets; (2) Trewyn breached
his fiduciary duties to North Highland and that the other
defendants conspired with Trewyn in the breach of those duties;
(3) Trewyn breached his contract with North Highland; and (4)
the defendants interfered with Trewyn's contract with North
Highland.
6
Trewyn did not have a non-compete agreement with North
Highland.
7
The Tyson project was for the manufacture of 3,000
stainless steel trolley assemblies for use in food production.
5
No. 2015AP643
¶11 The affidavits on file demonstrate that during
litigation, both Wells and Trewyn repeatedly testified at their
depositions that Wells had no knowledge that Trewyn was bidding
on behalf of North Highland. For example, Wells testified:
Q: Did you know that [Trewyn] was doing bidding on
behalf of North Highland to some customers——
A: No.
Q: ——from September to December of 2011?
A: No.
¶12 Wells also repeatedly testified that he had no
knowledge that Trewyn was bidding specifically on the Tyson
project for North Highland. For example, he testified:
Q: Did you know that [Trewyn] submitted a bid for
trolleys to Tyson?
A: No, I did not.
Q: Did you know that [Trewyn] submitted any other
bids to Tyson for trolleys?
A: Any other bids?
Q: On North Highland's behalf.
A: No.
¶13 Trewyn similarly testified that Wells had no knowledge
Trewyn was bidding on the Tyson project for North Highland:
Q: And [Wells] knew about your work with Tyson, for
example?
A: I didn't discuss Tyson stuff with him, no.
. . .
Q: Did you tell [Wells] that you had submitted the
bid [for North Highland] in Exhibit 1?
6
No. 2015AP643
A: No.
Q: Why not?
A: Because there was really no reason to discuss that
with him.
. . .
Q: Is there any reason why you didn't mention your
work on the trolleys at North Highland to [Wells]?
A: There was no reason to.
Q: You didn't think it was important?
A: No.
¶14 In addition, Wells repeatedly denied that he formed
Jefferson Machine to compete against North Highland:
Q: Did you understand that Jefferson Machine & Tool
was a competing business of North Highland?
A: No, no, not necessarily.
. . .
Q: But you knew when you started Jefferson Machine &
Tool that it would be a competing business to North
Highland?
A: I did not know that, no.8
¶15 Wells further testified that he left the bidding at
Jefferson Machine up to Trewyn:
Q: When [Trewyn] was doing bids for you at Jefferson
Machine & Tool, did you leave quoting entirely up to
him?
A: Yes.
8
As set forth above, Wells asserts that he formed Jefferson
Machine in order to manufacture the parts that Bay Plastics
sold. See supra ¶7.
7
No. 2015AP643
Q: And you didn't have any oversight over his
bidding, right?
A: No.
Q: Did you ever ask him about how he formulated bids?
A: No, I did not.
Q: So you just left quoting at Jefferson Machine &
Tool up to [Trewyn]?
A: Yes.
¶16 The circuit court granted in part and denied in part
the defendants' motion for summary judgment. Pursuant to the
circuit court order, Bay Plastics was dismissed as a party from
the lawsuit and the trade secret and contract claims were
dismissed with prejudice. The breach of fiduciary duty and
conspiracy to breach a fiduciary duty claims remained.
¶17 Two days before trial on the fiduciary duty claims,
Trewyn filed a Chapter 7 bankruptcy petition. In response,
North Highland filed an adversary claim against Trewyn arguing
that its state law claims were non-dischargeable in bankruptcy.
Ultimately, North Highland and Trewyn entered into a settlement
agreement that dismissed North Highland's claims against Trewyn
with prejudice. The settlement allowed North Highland to
maintain its state law claims against Wells and Jefferson
Machine.
¶18 Wells moved to dismiss the remaining claims against
both him and Jefferson Machine, arguing that a litigant may not
maintain a derivative conspiracy claim when it has settled and
dismissed all claims against the actual tortfeasor. The circuit
8
No. 2015AP643
court granted Wells' motion to dismiss. North Highland appealed
the circuit court's decision, naming Wells as the only
respondent.9
¶19 The court of appeals issued a per curium opinion
affirming the circuit court order. It determined that the
circuit court properly entered summary judgment in favor of
Wells because North Highland failed to set forth any facts
establishing there was a conspiracy. N. Highland, No.
2015AP643, unpublished slip op., ¶¶16-17. Likewise, it
determined that North Highland did not meet its burden of
establishing that the amount of its bid for the Tyson project
constituted a trade secret. Id., ¶26.
II
¶20 In this case we are asked to review the court of
appeals' decision affirming the circuit court's grant of summary
judgment in favor of Wells. We review a decision granting
summary judgment independently of the determinations rendered by
the circuit court and the court of appeals. Lambrecht v. Estate
of Kaczmarczyk, 2001 WI 25, ¶21, 241 Wis. 2d 804, 623
N.W.2d 751.
¶21 On review, we apply the same two-step analysis the
circuit court applies pursuant to Wis. Stat. § 802.08(2). It
provides that the "judgment sought shall be rendered if the
9
Given that the claims against Jefferson Machine were
dismissed and not raised on appeal, we are not reviewing any
claims that may apply to Jefferson Machine.
9
No. 2015AP643
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Wis. Stat. § 802.08(2). We examine the record in the light most
favorable to the non-moving party. Lambrecht, 241 Wis. 2d 804,
¶3 (citation omitted).
¶22 "The mere allegation of a factual dispute will not
defeat an otherwise properly supported motion for summary
judgment." Helland v. Kurtis A. Froedert Mem'l Lutheran Hosp.,
229 Wis. 2d 751, 756, 601 N.W.2d 318 (Ct. App. 1999). A party
opposing a motion for summary judgment must demonstrate that
there exists a genuine issue of material fact. Id. "It is not
enough to rely upon unsubstantiated conclusory remarks,
speculation, or testimony that is not based upon personal
knowledge." Id. (citation omitted).10
10
The reliance Chief Justice Roggensack's dissent places
on Leske v. Leske, 197 Wis. 2d 92, 97-98, 539 N.W.2d 719
(Ct. App. 1995), is misguided. Leske is distinguishable
from the facts of this case because the moving party
apparently submitted no material in support of its motion
beyond a statement that the plaintiff lacked evidence.
The dissent further misreads Leske, stating that "[if] a
movant's submissions do not establish by undisputed facts
that the nonmoving party has no claim or defense, the
movant has failed to meet its burden. Roggensack, C.J.,
dissent, ¶94 (citing Leske, 197 Wis. 2d at 96-97). Quite
the contrary, Leske instructs that "the moving party need
not support its motion with affidavits that specifically
negate the opponent's claim." 197 Wis. 2d at 97 (quotation
and citations omitted).
10
No. 2015AP643
¶23 Finally, a claim for conspiracy to breach a fiduciary
duty requires a more stringent test than whether a reasonable
inference may be drawn from the facts. Maleki v. Fine-Lando
Clinic Chartered, S.C., 162 Wis. 2d 73, 84, 469 N.W.2d 629
(1991). To prove a conspiracy, a plaintiff "must show more than
a mere suspicion or conjecture that there was a conspiracy or
that there was evidence of the elements of a conspiracy." Id.
In order to sustain a jury verdict of conspiracy, there "must be
a quantum of evidence that the trial judge can conclude leads to
a reasonable inference of conspiracy." Id. at 85. If
circumstantial evidence supports equal inferences of lawful or
unlawful action, then the conspiracy is not proven and the case
should not be submitted to the jury. Id.
III
¶24 We address first North Highland's claim that Wells and
Trewyn conspired to breach a fiduciary duty that Trewyn owed to
North Highland.
¶25 Civil conspiracy involves "a combination of two or
more persons by some concerted action to accomplish some
unlawful purpose or to accomplish by unlawful means some purpose
not in itself unlawful." City of Milwaukee v. NL Indus., Inc.,
2005 WI App 7, ¶25, 278 Wis. 2d 313, 691 N.W.2d 888 (citation
omitted). A civil conspiracy claim has three elements: (1) the
formation and operation of a conspiracy; (2) a wrongful act or
acts done pursuant to the conspiracy; and (3) damage resulting
11
No. 2015AP643
from the act or acts. Onderdonk v. Lamb, 79 Wis. 2d 241, 247,
255 N.W.2d 507 (1977).11
¶26 North Highland, therefore, has the burden to "set
forth specific evidentiary facts that are admissible in evidence
showing that there is a genuine issue for trial" of such overt
acts taken in furtherance of the conspiracy. Buckett v. Jante,
2009 WI App 55, ¶29, 316 Wis. 2d 804, 767 N.W.2d 376 (citations
omitted). To survive summary judgment, "there must be facts
that show some agreement, explicit or otherwise, between the
alleged conspirators on the common end sought and some
cooperation toward the attainment of that end." Augustine v.
Anti-Defamation League of B'Nai B'Rith, 75 Wis. 2d 207, 216, 249
N.W.2d 547 (1977).
¶27 Additionally, "[t]o prove a conspiracy, a plaintiff
must show more than a mere suspicion or conjecture that there
was a conspiracy or there was evidence of the elements of a
conspiracy." Maleki, 162 Wis. 2d at 84. "[I]f circumstantial
evidence supports equal inferences of lawful action and unlawful
action, then the claim of conspiracy is not proven." Allen &
11
"[T]here is no such thing as a civil action for
conspiracy." Singer v. Singer, 245 Wis. 191, 195, 14 N.W.2d 43
(1944). Instead, there is only an action for damages caused by
acts pursuant to a conspiracy, but none for the conspiracy
alone. Id. Thus, "[i]n a civil action for damages for an
executed conspiracy, the gist of the action is the damages."
Id. "It is only the existence of overt acts which is critical,
in order that damages occur, not the actionability of overt acts
themselves." Radue v. Dill, 74 Wis. 2d 239, 244, 246 N.W.2d 507
(1976).
12
No. 2015AP643
O'Hara, Inc. v. Barrett Wrecking, Inc., 898 F.2d 512, 516 (7th
Cir. 1990) (applying Wisconsin law).
¶28 North Highland cannot sustain this burden because it
points to no evidence that Wells was aware that Trewyn
formulated both Jefferson Machine's and North Highland's bid on
the Tyson project. If Wells was not aware that Trewyn had
allegedly breached his fiduciary duty to North Highland, Wells
could not take overt acts in furtherance of the conspiracy.
See, e.g., Bruner v. Heritage Companies, 225 Wis. 2d 728, 736,
593 N.W.2d 814 (Ct. App. 1999) ("In short, a civil conspiracy
entails two or more persons knowingly committing wrongful
acts.").
¶29 However, North Highland contends that the evidence
submitted to the circuit court on summary judgment is sufficient
to allow a reasonable inference that Wells conspired with
Trewyn. It asserts that the evidence demonstrates that there
was a conspiracy because: (1) Wells and Trewyn combined to form
Jefferson Machine and compete against North Highland; (2) Wells
purchased the manufacturing space and equipment and materials
necessary for the Tyson project; (3) Wells incorporated
Jefferson Machine; and (4) Wells told Trewyn that he should bid
on the Tyson project.
¶30 Based on this evidence of Wells and Trewyn's working
relationship at Jefferson Machine, an inference may be drawn
that Trewyn shared his knowledge of the Tyson bid with Wells.
However, the unrebutted deposition testimony supports the
opposite conclusion. There is no evidence of the formation and
13
No. 2015AP643
operation of a conspiracy. In his deposition, Wells repeatedly
denied that he formed Jefferson Machine to compete against North
Highland:
Q: Did you understand that Jefferson Machine & Tool
was a competing business of North Highland?
A: No, no, not necessarily.
. . .
Q: But you knew when you started Jefferson Machine &
Tool that it would be a competing business to North
Highland?
A: I did not know that, no.
¶31 Wells also repeatedly testified that he had no
knowledge that Trewyn was bidding specifically on the Tyson
project for North Highland. For example, he testified:
Q: Did you know that [Trewyn] submitted a bid for
trolleys to Tyson?
A: No, I did not.
Q: Did you know that [Trewyn] submitted any other
bids to Tyson for trolleys?
A: Any other bids?
Q: On North Highland's behalf.
A: No.
¶32 As set forth more fully above, Trewyn similarly
testified that Wells had no knowledge Trewyn was bidding on the
Tyson project for North Highland. He stated that he did not
discuss his work on the Tyson project with Wells and that he did
not tell Wells that he submitted a bid for North Highland. When
14
No. 2015AP643
asked "why not?," Trewyn responded that "there was really no
reason to discuss it." See supra, ¶13.
¶33 Not only is the first element of a conspiracy not met,
there is no evidence that Wells told Trewyn to bid on the
Jefferson Machine project. Indeed, Wells testified to the
contrary during his deposition:
Q: When [Trewyn] was doing bids for you at Jefferson
Machine & Tool, did you leave quoting entirely up to
him?
A: Yes.
Q: And you didn't have any oversight over his
bidding, right?
A: No.
Q: Did you ever ask him about how he formulated bids?
A: No, I did not.
Q: So you just left quoting at Jefferson Machine &
Tool up to [Trewyn]?
A: Yes.
¶34 Without any contradictory evidence in the record,
North's Highland's allegation that Wells and Trewyn conspired to
breach a fiduciary duty claim is speculative at best. However,
speculation is insufficient to create a genuine issue of
material fact on summary judgment. Helland, 229 Wis. 2d at 756.
Additionally, on a claim for conspiracy, a reasonable inference
must be supported by a quantum of the evidence. Maleki, 162
Wis. 2d at 85.
¶35 North Highland has produced no evidence that Wells and
Trewyn entered into an agreement, explicit or otherwise, to
15
No. 2015AP643
conspire to breach Trewyn's fiduciary duty to North Highland.
There is no evidence that Wells knowingly intended to compete
with North Highland for the Tyson project, let alone by improper
means. North Highland makes arguments aplenty in support of its
position, but arguments are not facts.
¶36 Accordingly, we determine that North Highland has
failed to provide sufficient evidence to support its conspiracy
to breach a fiduciary duty claim.
IV
¶37 For the same reasons that North Highland's conspiracy
to breach a fiduciary duty claim fails, it also cannot succeed
on its claim that Wells misappropriated a trade secret in
violation of Wis. Stat. § 134.90.
¶38 According to North Highland, its confidential bid
amount on the Tyson project constitutes "information" under Wis.
Stat. § 134.90(1)(c)(1)-(2). Pursuant to Wis. Stat.
§ 134.90(1)(c), a trade secret is defined as a specific type of
information:
"Trade secret" means information, including a formula,
pattern, compilation, program, device, method,
technique or process to which all of the following
apply:
1. The information 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. The information is the subject of efforts to
maintain its secrecy that are reasonable under
the circumstances.
16
No. 2015AP643
¶39 The court of appeals observed that as the party
seeking trade secret protection, North Highland has the burden
of establishing that its bid amount for the Tyson project
constitutes a trade secret. N. Highland Inc. v. Jefferson Mach.
& Tool Inc., No. 2015AP643, unpublished slip op. (Wis. Ct. App.
Apr. 28, 2016) (citing Wis. Elec. Power Co. v. Pub. Serv. Comm'n
of Wis., 106 Wis. 2d 142, 146, 316 N.W.2d 120 (Ct. App. 1981),
aff'd, 110 Wis. 2d 530, 329 N.W.2d 178 (1983)). However, we
need not wade into the discussion addressing whether a bid
amount constitutes a trade secret, and, if so, under what
circumstances. Even if North Highland could present evidence
that its bid amount constitutes "information" as that term is
used in Wis. Stat. § 134.90(1)(c), it has not provided
sufficient evidence demonstrating misappropriation.
¶40 Wisconsin Stat. § 134.90(2) provides that a person may
not use or disclose a trade secret when it was acquired through
improper means:
Misappropriation. No person, including the state, may
misappropriate or threaten to misappropriate a trade
secret by doing any of the following:
(a) Acquiring the trade secret of another by
means which the person knows or has reason to
know constitute improper means.
(b) Disclosing or using without express or
implied consent a trade secret of another if the
person did any of the following:
1. Used improper means to acquire knowledge
of the trade secret.
2. At the time of disclosure or use, knew or
had reason to know that he or she obtained
17
No. 2015AP643
knowledge of the trade secret through any of
the following means:
a. Deriving it from or through a person
who utilized improper means to acquire
it.
b. Acquiring it under circumstances
giving rise to a duty to maintain its
secrecy or limit its use.
c. Deriving it from or through a person
who owed a duty to the person seeking
relief to maintain its secrecy or limit
its use.
d. Acquiring it by accident or mistake.
¶41 It is apparently undisputed that Trewyn formulated the
confidential bids for the Tyson project on behalf of both North
Highland and Jefferson Machine. However, the parties dispute
whether Wells was aware that Trewyn had access to North
Highland's confidential bid amount at the same time he was
formulating Jefferson Machine's bid. See Wis. Stat.
§ 134.90(2)(b)2. According to North Highland, it is reasonable
to infer from Trewyn's testimony that he told Wells he was
bidding on the Tyson contract and that Wells aided Trewyn in
breaching his fiduciary duty to North Highland.
¶42 Contrary to North Highland's assertions, the evidence
in the record fails to establish that Wells had knowledge of,
let alone "acquired," "disclosed," or "used" the bid amount.12
12
Chief Justice Roggesack's dissent maintains that the
circuit court improperly granted summary judgment because Wells
"failed to make a prima facie showing of sufficient undisputed,
material facts . . . ." Roggensack, C.J., dissent, ¶48.
(continued)
18
No. 2015AP643
Indeed, North Highland has not alleged in its amended complaint
that Wells personally acquired, disclosed or used North
Highland's bid amount in any way. There are simply no facts or
reasonable inferences derived from the facts to support such an
allegation.
Rather than offering disputed facts, however, the dissent
creates its own facts that are unsupported by the evidentiary
record.
For example, the dissent asserts that Wells "knew that the
company he and Trewyn owned were making use of North Highland's
bid information, but he thought North Highland had no right to
object to this." Id., ¶109. To the contrary, Wells denied any
knowledge of North Highland's bid information:
Q: This is Exhibit 3. It is a quote from Dwain
Trewyn on North Highland's behalf to Tyson for
trolleys, right?
A: Yes.
. . .
Q: And you didn't know about either Exhibit 1 or
Exhibit 3?
A: Yes, I did not know about these.
Q: And just like for Exhibit 1, you didn't think to
ask?
A: No, I did not ask.
Again, the dissent tells the reader only part of the story,
leaving the reader not merely ill-informed, but misinformed.
Resting its analysis and conclusion on only a cherry-picked
portion of the testimony about whether Trewyn had a non-compete
agreement with North Highland, together with unsupported
inferences, the dissent asserts that "Wells knew that the
company he and Trewyn owned were making use of North Highland's
bid information." C.J. Roggensack, Dissent, ¶109.
19
No. 2015AP643
¶43 As set forth above, both Wells and Trewyn repeatedly
testified that Wells had no knowledge that Trewyn was also
bidding on behalf of North Highland. There is also no evidence
in the record that Trewyn disclosed the bid amount to Wells.
Given the unrebutted testimony that Wells was unaware that
Trewyn formulated North Highland's bid on the Tyson project, we
determine that North Highland has failed to meet its burden of
providing sufficient evidence of misappropriation.
V
¶44 In sum, we determine that North Highland has not met
its burden to show that there exists a genuine issue of material
fact as to whether Wells and Trewyn conspired to breach a
fiduciary duty. The evidence of record is insufficient to
support a conspiracy claim.
¶45 We likewise conclude that North Highland has not met
its burden of demonstrating that there exists a genuine issue of
material fact regarding its claim that Wells misappropriated a
trade secret. Again, the evidence of record fails to support
such a claim. Consequently, both of North Highland's claims
fail to survive Well's summary judgment motion.
¶46 Accordingly, we affirm the decision of the court of
appeals affirming the circuit court's grant of summary judgment
in favor of Frederick Wells.
By the Court.—The decision of the court of appeals is
affirmed.
20
No. 2015AP643.pdr
¶47 PATIENCE DRAKE ROGGENSACK, C.J. (dissenting). The
review before us arises from summary judgment. I conclude that
defendants,1 as the moving party to whom summary judgment was
granted, failed to make a prima facie showing of sufficient
undisputed, material facts that North Highland Inc.'s bid to
construct and supply Tyson Foods, Inc. with 3,000 trolleys, (the
Trolley Contract) did not meet the definition of a trade secret
as set out in Wis. Stat. § 134.90(1)(c), which Fredrick A. Wells
(Wells) and Jefferson Machine & Tool, Inc. (Jefferson Machine)
misappropriated. Leske v. Leske, 197 Wis. 2d 92, 96-97, 539
N.W.2d 719 (1995).
¶48 Defendants also failed to make a prima facie showing
of sufficient undisputed, material facts that Wells, Jefferson
Machine and Dwain D. Trewyn (Trewyn) did not obtain or use North
Highland's Trolley Contract bid information contrary to Wis.
Stat. § 134.90(2). Id. Accordingly, I conclude that summary
judgement was improperly granted dismissing North Highland's
claim for trade secret misappropriation against Wells and
Jefferson Machine.
¶49 And finally, I conclude that claim preclusion cannot
be applied against North Highland based on the Stipulation and
Order that dismissed Trewyn from this lawsuit. Therefore, I
would reverse the decision of the court of appeals and remand
1
Initially Dwain D. Trewyn, Frederick A. Wells and
Jefferson Machine & Tool, Inc. were defendants. On this review,
only Wells and Jefferson Machine remain.
1
No. 2015AP643.pdr
for a jury trial of North Highland's claim against Wells and
Jefferson Machine for misappropriation of a trade secret.2
I. BACKGROUND
1. Parties
¶50 The Trolley Contract to fabricate and deliver 3,000
stainless steel twin trolley assemblies for Tyson's Council
Bluff, Iowa facility is central to this dispute.
¶51 Trewyn worked for North Highland as a salesman until
the end of December 2011. As part of his job, he bid, sometimes
referred to as "quoted," on potential contracts for work that
North Highland hoped to obtain.
¶52 Trewyn agreed to be subject to the confidentiality
restrictions contained in North Highland's Associate Handbook.
It provided in relevant part:
[D]o not discuss confidential business with anyone who
does not work for North Highland Inc. Such
confidential information includes, but is not limited
to . . . pending projects and proposals, pricing or
costing information . . . . Anyone who discloses
trade secrets or confidential business information
will be subject to disciplinary action, up to and
including termination of employment and legal action,
even if he/she does not actually benefit from the
disclosed information.[3]
2
Although I do not address North Highland's breach of
fiduciary duty claim, a reversal by this court would abrogate
the court of appeals' decision in full. Blum v. 1st Auto & Cas.
Ins. Co., 2010 WI 78, ¶46, 326 Wis. 2d 729, 786 N.W.2d 78
("Unless this court explicitly states otherwise, a court of
appeals opinion overruled by this court no longer retain[s] any
precedential value."). Therefore, all North Highland's claims
against Wells would be available for trial upon remand. Id.
3
R. at 187:6.
2
No. 2015AP643.pdr
¶53 In September of 2011, Wells incorporated Jefferson
Machine. Trewyn and Wells were the sole shareholders, with
Wells owning 75% and Trewyn owning 25%. Wells and Trewyn also
were the sole employees of Jefferson Machine.
¶54 This lawsuit arose out of actions of Trewyn, while he
was employed by North Highland, and of Wells, who knew that
Trewyn was a salesman for North Highland at the time Trewyn and
Wells prepared the Trolley Contract bid for Jefferson Machine
that competed with North Highland's bid. A lengthy deposition
was taken of Wells by an attorney for North Highland. The
quotes below are from that deposition, Record 47, unless
indicated otherwise.4
2. Bidding process
¶55 On November 11, 2011, Tyson sent a RFQ (request for
quotes) on the Trolley Contract to a number of businesses.
North Highland was on the RFQ list. Jefferson Machine was not.5
Bids ("quotes") were not accepted by Tyson Foods unless the
bidder was on Tyson's list of authorized bidders.
¶56 However, on December 1, 2011, Trewyn faxed Jefferson
Machine's bid on the Trolley Contract to Tyson. On the cover
sheet of the bid Trewyn said, "I received permission to quote
4
Affidavit of Vincent J. Scipior, made in Support of
Defendants Frederick A. Wells, Bay Plastics Inc., and Jefferson
Machine & Tool Inc.'s Motion for Summary Judgment. Vincent
Scipior is an attorney for the defendants.
5
R. at 76:4.
3
No. 2015AP643.pdr
the trolley assy's from Ray R. I hope that is not a problem."6
Wells was aware of this. At his deposition, Wells testified:
Q And Dwain was the one who got the opportunity for
Jefferson Machine & Tool to bid on the trolley
contract?
A Yes.[7]
¶57 Trewyn and Wells8 developed Jefferson Machine's bid on
the Trolley Contract. Wells testified:
Q That's Exhibit 5. That is Dwain's quote on
Jefferson Machine & Tool's behalf for the
trolleys.
A Okay.
Q Do you remember that?
A Yes, Dwain put this together.
Q And Dwain told you about it?
A Yes.[9]
¶58 It is undisputed that Trewyn was an employee of North
Highland when he and Wells submitted Jefferson Machine's bid.10
Wells knew that Trewyn was employed at North Highland at that
time. He testified:
6
R. at 65:6.
7
R. at 47:15-16.
8
Wells had a sample trolley made at Tyson's request, and he
purchased the equipment necessary to perform the Trolley
Contract.
9
R. at 47:20.
10
Jefferson Machine's bid, R. at 65:7.
4
No. 2015AP643.pdr
Q Do you remember when you got the trolley
contract?
A I don't recall the date.
Q It was in December of 2011, right?
A I believe so.
Q Do you know when Dwain quit his job at North
Highland?
A In December, end of December.
Q The end of December?
A Yes.
Q After Jefferson Machine & Tool got the trolley
contract?
A Yes.[11]
¶59 Wells also acknowledged that he knew that Jefferson
Machine was a competing business of North Highland. He
testified:
Q So Jefferson Machine & Tool was a competing
business of North Highland?
A It's the American way. You can compete. There's
competitors all up and down the highway here for
machine houses, injection molders, vacuum
formers, fabricators. Look in the phone book.
Q So you'd like to change your answer, yes, they
are competing businesses?
A They could be.[12]
¶60 However, we can infer from Wells' testimony that he
believed he and Trewyn could use North Highland's bid
11
R. at 47:11.
12
R. at 47:9.
5
No. 2015AP643.pdr
information because Trewyn did not have a non-compete agreement
with North Highland. He testified:
Q Did you think that North Highland had any right
to have its employees not compete with them at
the same time as they were employed at North
Highland?
A Say that again.
Q Did you think that North Highland had any right
to have its employees not compete against them
while they were still employed at North Highland?
A There was no non-compete form with them.
. . . .
Q And the reason why you think they don't have that
right is because they didn't have an express non-
compete clause in their employment contract?
A Yes.13
¶61 Wells was actively involved in bidding on the Trolley
Contract. He testified:
Q This is Exhibit 2. I'm going to show you email
6. That is an email from Gordon Slothower to you
and Dwain, right?
A Yes.
Q And the email right on the top, it starts,
"Attached is the revised," do you see where I'm
pointing to?
A Yes.
Q Why was he giving you a revised trolley drawing?
A I don't know. He copied me on whatever he sent
to Dwain.
13
R. at 47:12.
6
No. 2015AP643.pdr
. . . .
Q Well, when you're putting together the quote, the
number, how much you would bid on the trolley
contract, how would you formulate the number?
A By the quotes on the raw material and the
machining time and the assembly time to put the
part together.
. . . .
Q For the trolley contract at Jefferson Machine &
Tool, were you aware that Tyson asked for samples
of the trolleys to be created?
A Yes.14
¶62 Jefferson Machine underbid North Highland and was
awarded the Trolley Contract. This lawsuit followed. North
Highland claimed for misappropriation of trade secrets, alleging
that Trewyn took its Trolley Contract bid and Wells, who had
reason to know that it was improper for Trewyn to disclose and
use North Highland's bid, aided and abetted Trewyn and Jefferson
Machine in the misappropriation of North Highland's trade
secret. A jury trial was demanded in the complaint.
¶63 The circuit court granted summary judgment to
defendants, dismissing the complaint. The court of appeals
affirmed, based on its conclusion that North Highland had not
proved that a bid was the type of information set forth in Wis.
Stat. § 134.90(1)(c). North Highland Inc. v. Jefferson Mach. &
Tool Inc., No. 2015AP643, unpublished slip op. (Wis. Ct. App.
April 28, 2016). The court of appeals opined, "As the party
seeking trade secret protection, it is North Highland’s burden
14
R. at 47:19-27.
7
No. 2015AP643.pdr
to establish that the amount of its bid for the Tyson project
constitutes a trade secret." Id., ¶26 (citing Wisconsin Elec.
Power Co. v. PSC, 106 Wis. 2d 142, 146, 316 N.W.2d 120 (1981),
which interpreted Wis. Stat. § 943.205(2)(1975) and not
§ 134.90).
II. DISCUSSION
A. Standard of Review
¶64 Whether a bid is a trade secret because it is a
compilation of costs, labor and profit that has independent
economic value from not being generally known to or readily
ascertainable by proper means by competitors, and for which
reasonable efforts to maintain its secrecy were taken, presents
questions of fact. Minuteman, Inc. v. Alexander, 147 Wis. 2d
842, 849, 434 N.W.2d 773 (1989).
¶65 Wisconsin Stat. § 134.90 is Wisconsin's enactment of
the Uniform Trade Secrets Act. Id. at 851. Sub section (7)
provides:
UNIFORMITY OF APPLICATION AND CONSTRUCTION.
This section shall
be applied and construed to make uniform the law
relating to misappropriation of trade secrets among
states enacting substantially identical laws.
We have recognized and followed the statutory directive for
Wisconsin's enactments of uniform laws in other decisions. For
example in Estate of Matteson, we said,
The purpose of uniform laws is to establish both
uniformity of statutory law and uniformity of case law
construing the statutes, ensuring certainty and
guidance to litigants who rely on courts to interpret
uniform statutes in a predictable and consistent
manner.
8
No. 2015AP643.pdr
Estate of Matteson v. Matteson, 2008 WI 48, ¶42, 309 Wis. 2d
311, 749 N.W.2d 557.
¶66 It is the majority view of those courts that have
considered the standard of review that whether a trade secret
exists is a question of fact. See, e.g., All West Pet Supply v.
Hill's Pet Products, 840 F. Supp. 1433, 1437-38 (D. Kan. 1993);
Network Telecommunications, Inc. v. Boor-Crepeau, 790 P.2d 901,
902 (Colo. App. 1990); Defiance Button Mach. Co. v. C&C Metal
Products Corp., 759 F.2d 1053, 1063 (2d Cir. 1985).
¶67 In order to provide the benefits of the Uniform Trade
Secrets Act to Wisconsin litigants, Wisconsin courts should
employ the majority interpretation for the standard of review
accorded to trade secret claims. Accordingly, I conclude that
whether a trade secret exists under Wis. Stat. § 134.90 is a
question of fact to be determined by the trier of fact.
¶68 We independently review whether North Highland's
complaint was properly dismissed on summary judgment. Burbank
Grease Services, LLC v. Sokolowski, 2006 WI 103, ¶6, 294 Wis. 2d
274, 717 N.W.2d 781. In order to affirm summary judgment
dismissing North Highland's trade secret claim, we would be
required to conclude that the defendants made a prima facie
showing of sufficient, undisputed material facts that North
Highland's bid for the Trolley Contract was not a trade secret,
which Wells, Jefferson Machine and Trewyn did not
misappropriate. Leske, 197 Wis. 2d at 97-98. "A statement that
the plaintiff lacks evidence is insufficient" to meet the moving
party's burden at summary judgment. Id. at 97.
9
No. 2015AP643.pdr
¶69 Here, the interpretation of Wis. Stat. § 134.90 is
intertwined with summary judgment. The interpretation and
application of a statute present questions of law that we review
independent of the decisions of the court of appeals and circuit
court, but benefitting from their discussions. State v. Duchow,
2008 WI 57, ¶11, 310 Wis. 2d 1, 749 N.W.2d 913 (citing Marder v.
Bd. of Regents of the Univ. of Wis. Sys., 2005 WI 159, ¶19, 286
Wis. 2d 252, 706 N.W.2d 110).
¶70 And finally, whether claim preclusion was correctly
applied by the circuit court is a question of law for our
independent review. Lindas v. Cady, 183 Wis. 2d 547, 552, 515
N.W. 458 (1994).
B. Trade Secret
1. General principles
¶71 Trade secret law in Wisconsin is established by Wis.
Stat. § 134.90. Section 134.90 made significant changes in
trade secret law from that which was formerly set out in Wis.
Stat. § 943.205(2) (1975). For example, Wisconsin courts
interpreted § 943.205(2) (1975) by following Restatement (First)
Torts § 757, cmt. b (1939). See, e.g., Abbott Laboratories v.
Norse Chemical Corp., 33 Wis. 2d 445, 147 N.W.2d 527 (1967) and
Gary Van Zeeland Talent, Inc. v. Sandas, 84 Wis. 2d 202, 267
N.W.2d 242 (1978).
¶72 The Restatement (First) of Torts § 757, cmt. b (1939)
engrafted a "continuous use requirement" onto the statutory
definition of trade secret, as did Wisconsin's appellate courts.
For example, Wisconsin Elec. Power Co., 106 Wis. 2d at 147-48,
10
No. 2015AP643.pdr
directed that in order to find protection under Wisconsin's
trade secret law a party must show that the information does not
relate "to single or ephemeral events in the conduct of the
business, as, for example, the amount or other terms of a secret
bid for a contract," but rather the information must be
"continually used in the operation of the business." Id. at
147-48 (quoting Restatement of Torts (First) § 757, cmt. b
(1939)).
¶73 In Corroon v. Hosch, 109 Wis. 2d 290, 295, 325 N.W.2d
883 (1982), we affirmed that Wisconsin's former trade secret
statute, Wis. Stat. § 943.205(2) (1975), incorporated the
definition of Restatement (First) Torts § 757, cmt. b (1939).
Many other states did the same before the Uniform Trade Secret
Act was promulgated by the Uniform Law Commission. See Richard
F. Dole, Jr., The Contours of American Trade Secret Law: What
Is and What Isn't Protectable as a Trade Secret, 19 (SMU Sci. &
Tech. L. Rev. 89) (2016).
¶74 However, the continuous use doctrine no longer affects
trade secret law in Wisconsin. This is so because in 1986,
Wisconsin enacted the Uniform Trade Secret Act. Wis. Stat.
§ 134.90 (1986). Section 134.90 created a new definition of
trade secret that changed the Restatement's definition in part
because § 134.90 eliminated the continuous use requirement from
trade secret law. Minuteman, 147 Wis. 2d at 852-53 (citing
Uniform Trade Secrets Act, sec. I, comment, 14 U.L.A. 543
(1985)).
11
No. 2015AP643.pdr
¶75 In Minuteman, we carefully examined the Uniform Trade
Secret Act as set out in Wis. Stat. § 134.90, and explained that
by enacting § 134.90, Wisconsin "created a new definition of
trade secret." Id. We addressed specific provisions of Wis.
Stat. § 134.90 in order to emphasize that in addition to
adopting a new definition of trade secret, legal principles that
may have affected trade secret law in the past were no longer
applicable in Wisconsin. We identified § 134.90(6) as we
explained that trade secret law had been changed significantly.
Subsection (6) provides:
(6) Effect on other laws. . . (a) Except as provided
in par. (b), this section displaces conflicting tort
law, restitutionary law and any other law of this
state providing a civil remedy for misappropriation of
a trade secret.
Id. at 852 (footnote omitted).
¶76 Because we had employed Restatement (First) of Torts'
definition of trade secret in Corroon and Wis. Stat. § 134.90
changed the definition of trade secret, we directed that "[t]he
test established in Corroon [] is [] no longer the legal
standard" for determining what may qualify as a trade secret.
Id. at 852. We explicitly provided that the definition of trade
secret no longer has a continuous use requirement. Id. at 852-
53.
2. Bid as a trade secret
¶77 We have not considered whether a bid may be found to
be a trade secret since Wisconsin enacted the Uniform Trade
Secrets Act. Other states that have enacted the Uniform Trade
Secrets Act have litigated whether bids for prospective work
12
No. 2015AP643.pdr
qualify as trade secrets. And, numerous courts have concluded
that a confidential bid is a trade secret. USA Power, LLC v.
PacifiCorp, 372 P.3d 629 (Utah 2016) is a recent example. In
USA Power, a region served by the utility, PacifiCorp, was in
need of additional power generation. USA Power was aware of the
opportunity to design and construct an additional facility, and
it spent two years and nearly $1 million studying, purchasing
consultant's advice and formulating how and where to construct
such a facility. Id. at 638.
¶78 USA Power disclosed its development plans to
PacifiCorp under a confidentiality agreement when PacifiCorp was
a potential purchaser of USA Power's development plan for the
power generation facility. Id. After USA Power's disclosure,
PacifiCorp terminated its negotiations to purchase USA Power's
development plan and issued a Request for Proposal (RFP) for
development of a power generation facility sufficient to serve
the region's need. Id.
¶79 USA Power bid in response to the RFP, but PacifiCorp
submitted its own competing bid. PacifiCorp's proposal was very
similar to the bid for development of a power generation
facility that USA Power had disclosed to PacifiCorp earlier.
Id. When PacifiCorp selected its own bid, USA Power sued,
claiming its bid was a trade secret created through its years of
study, which PacifiCorp misappropriated. Id.
¶80 The jury agreed with USA Power. On motions after
verdict, the court concluded that because PacifiCorp knew all
the components of USA Power's development plan it could
13
No. 2015AP643.pdr
anticipate its bid and make that bid a "price to beat." Id. at
654-55. As the court explained, "It can hardly be argued that,
in a bidding contest, for one competitor to have access to
another competitor's internal financial calculations—
calculations that will certainly bear upon that competitor's
ultimate bid—would have obvious value. Such financial
information is a paradigmatic example of a trade secret." Id.
at 655. In upholding the jury's finding that USA Power's bid
was a trade secret, the court held "there was sufficient
evidence in the record from which the jury could infer that a
trade secret existed." Id.
¶81 In Ovation Plumbing, Inv. v. Furton, 33 P.3d 1221
(Colo. Ct. App. 2001), a jury found that a plumbing
subcontractor's bid was a trade secret. Furton appealed
claiming that a bid does not qualify as a trade secret. Id. at
1223. The appellate court relied on the definition of trade
secret under the Colorado statute, Colorado's enactment of the
Uniform Trade Secrets Act. Id.
¶82 The court began by pointing out that "[w]hat
constitutes a trade secret is a question of fact." Id. at 1224.
Therefore, it considered whether sufficient evidence had been
presented to the jury from which it could have found that the
bid was a trade secret. Id.
¶83 There was testimony, "both direct and circumstantial"
that the bid had value to Ovation because it was not known by
Ovation's competitors. Id. at 1225. Although it was not "clear
from the record whether Furton copied Ovation's bid documents or
14
No. 2015AP643.pdr
merely used information that he took from the
documents[,] . . . it [was] clear from the record that Furton
did not have permission to access [Ovation's bid documents]."
Id. After so concluding, the court affirmed the jury's verdict.
Id. at 1225-26.
¶84 In CDC Restoration & Const., LC v. Tradesmen
Contractors, LLC, 369 P.3d 452 (Utah Ct. App. 2016), a concrete
contractor sued Tradesmen, the employer of a former employee,
Paul Carsey. It also sued Carsey, and Keith Allen, all for
misappropriation of trade secret under Utah's enactment of the
Uniform Trade Secrets Act. The suit claimed misappropriation of
CDC Restoration's bid for a Kennecott project for repair and
restoration work. Id. at 455.
¶85 CDC Restoration did business with Kennecott under a
Preferred Provider Agreement (PPA), a confidential document that
set forth CDC Restoration's rates for work, pricing information
for hourly employees and hourly rates for use of various types
of equipment. Id. Carsey had been a CDC Restoration foreman
for a number of years. Id. He regularly delivered confidential
information to Kennecott for CDC Restoration, but he never
signed a confidentiality agreement. Id.
¶86 In mid-2005, Keith Allen, who was then a subcontractor
at Kennecott, met with Carsey to discuss forming a company to do
work at Kennecott. Later in 2005, while he was employed by CDC
Restoration, Carsey and Allen became co-owners of a new company,
Tradesmen. Id. At that time, Allen was a subcontractor for
Kennecott who supervised CDC Restoration's work there. Id. As
15
No. 2015AP643.pdr
part of Allen's work for Kennecott, he had access to CDC
Restoration's pricing information for its ongoing projects at
Kennecott. Id.
¶87 In late 2005, Kennecott opened a competitive bidding
process on a project known as E-Bay. Id. Carsey and another
CDC Restoration employee, Ralph Midgley, developed CDC
Restoration's bid for E-Bay. Shortly before the bid was
submitted to Kennecott, Carsey told Midgley to increase the bid
price because more hours of labor were needed than had been
calculated initially. Midgley did so. Id.
¶88 In the meantime, Carsey and Allen put together a bid
on Kennecott's E-Bay project for Tradesmen, which they submitted
after CDC Restoration submitted its bid. Id. at 456. Tradesmen
underbid CDC Restoration and got the contract. Id.
¶89 CDC Restoration sued Tradesmen, Carsey and Allen,
alleging "misappropriation of trade secrets for improper use of
its labor and equipment rates and bid information." Id. The
trial court granted summary judgment for the defendants on all
claims. Id. The court of appeals concluded that the record
contained "enough evidence to create a genuine issue of material
fact to preclude summary judgment regarding CDC's claim for
misappropriation of bid information." Id.
¶90 A jury trial was held, and CDC Restoration prevailed.
Id. Again, review was sought. The court of appeals reasoned
that misappropriation of trade secrets had two elements: a
finding that the bid was a trade secret and a finding that the
bid had been misappropriated. Id.
16
No. 2015AP643.pdr
¶91 In order to satisfy the first element, the court held
that there must have been proof from which the jury could have
found: (1) the bid had independent economic value that was
"attributable to the independent efforts of the one claiming to
have conceived it," and was not readily ascertainable by others,
id. at 457-58; and (2) reasonable efforts had been taken to
maintain the bid's secrecy. Id. at 458. The court affirmed the
jury's finding that the bid was a trade secret, as that term is
defined in the Uniform Trade Secrets Act. Id. The court also
affirmed the jury's finding that the bid had been
misappropriated within the definitions in the Uniform Trade
Secrets Act. Id. at 460.
¶92 In sum, each of these courts reasoned that whether a
confidential bid is a trade secret is a question of fact.
However, each court also concluded that sufficient evidence had
been presented to prove that the confidential bid at issue was a
trade secret under the Uniform Trade Secrets Act.
3. North Highland's claim
¶93 In this review of the court of appeals' decision that
affirmed the dismissal of North Highland's claim, it is
important to remember that we are at the summary judgment stage,
not after a trial, because the analyses are very different at
those two different stages.
¶94 Upon review of summary judgment, we begin by testing
the legal sufficiency of the complaint. As we have explained,
"Every decision on a motion for summary judgment begins with a
review of the complaint to determine whether, on its face, it
17
No. 2015AP643.pdr
states a claim for relief." Hoida, Inc. v. M & I Midstate Bank,
2006 WI 69, ¶16, 291 Wis. 2d 283, 717 N.W.2d 17 (citing Westphal
v. Farmers Ins. Exch., 2003 WI App 170, ¶9, 266 Wis. 2d 569, 669
N.W.2d 166). "If it does, we examine the answer to see if
issues of fact or law have been joined." Id. Next, we consider
"the moving party's affidavits [or other submissions] to
determine whether they establish a prima facie case for summary
judgment." Id. If a movant's submissions do not establish by
undisputed facts that the nonmoving party has no claim or
defense, the movant has failed to meet its burden. Leske, 197
Wis. 2d at 96-97.
¶95 Therefore, when defendants move for summary judgment
dismissing plaintiff's claims, the burden of proof is on the
defendants to have proved sufficient undisputed, material facts
in the submissions in support of their motion that establish a
prima facie showing from which the circuit court is required to
conclude that plaintiff's claims must be dismissed. Id. at 97-
98.
¶96 Although the movant is not required to submit
affidavits, the movant must make submissions sufficient to
"demonstrate the absence of a genuine issue of material fact."
Id. at 97. Stated otherwise, the movant has the burden to
demonstrate a basis in the record that shows the plaintiff lacks
evidence to support the claim made. Id. at 97-98. It is only
after the movant has made a prima facie showing for dismissal of
the nonmoving party's claim, that the burden shifts to the
18
No. 2015AP643.pdr
nonmoving party to provide submissions opposing the submissions
of the movant. Hoida, 291 Wis. 2d 283, ¶16.
¶97 Leske involved a claim of misappropriation of a
"'program designed to establish a business to manufacture,
distribute, and sell ice for commercial use in Dane County and
the surrounding area,'" which Leske claimed was a trade secret
that defendants misappropriated. Leske, 197 Wis. 2d at 95. Id.
at 96. The issue presented on appeal was whether the circuit
court properly granted summary judgment dismissing the trade
secret misappropriation claim. Id. at 96.15
¶98 The court of appeals began by examining the complaint.
The court concluded the complaint stated a claim for violation
of Wis. Stat. § 134.90, Wisconsin's trade secret law, which the
answer denied. Id. at 96. The court then examined the
submissions by defendants in support of their motion for summary
judgment. Id. at 96-97. The court explained that defendants'
understanding of their burden as the movants for summary
judgment was not correct because defendants asserted that "we
should immediately review the plaintiff's material to determine
whether he produced evidence in support of his claims." Id. at
97. In reversing the circuit court's grant of summary judgment
to defendants, the court explained, "[t]he defendants must
demonstrate that the claimed trade secrets do not meet the
definition of trade secret." Id. at 98. Although the
15
This is the same issue, at the same stage of the
proceedings, as has been presented by North Highland in the case
now before the court.
19
No. 2015AP643.pdr
defendants did make submissions in support of their motion,
those submissions were insufficient to make a prima facie
showing that plaintiff's claimed trade secret did not meet the
definition of a trade secret. Therefore, the court of appeals
reversed the circuit court's grant of summary judgment. Id. at
99.
¶99 Given the required summary judgment methodology, I
begin by examining the complaint.16 North Highland asserted a
claim for trade secret misappropriation.17 In support of its
claim, North Highland asserted that one of Trewyn's duties at
North Highland was to formulate North Highland's bid for the
Tyson Foods Trolley project.18 North Highland alleged that
Trewyn and Wells "aided and abetted each other" in illegal acts
that damaged North Highland.19 North Highland's bid on the
Trolley project was secret.20 Knowing the amount and/or the
terms of North Highland's bid "would allow one to bid slightly
below the known bid."21 The bidding process on the Trolley
project was secretive.22
16
I refer to the complaint, even though there is an amended
complaint in the record because the two documents do not differ
in regard to the allegations relating to North Highland's trade
secret claim.
17
Complaint, see pp. 6-7.
18
Complaint, ¶¶7-9.
19
Complaint, ¶6.
20
Complaint, ¶¶16, 17.
21
Complaint, ¶18.
22
Complaint, ¶19.
20
No. 2015AP643.pdr
¶100 North Highland had a confidentiality policy that was
expressly set out in its Associate Handbook.23 Trewyn agreed to
comply with the confidentiality policy of the Associate
Handbook.24 Trewyn disclosed North Highland's trade secrets to
defendants.25 That disclosure permitted defendants to bid
slightly more favorable terms on the Trolley project and were
thereby awarded the project.26 The defendants had reason to know
that Trewyn's disclosing North Highland's bid and their
subsequent use of it to North Highland's disadvantage was
improper.27
¶101 I conclude that the allegations in the complaint are
sufficient to state a claim for trade secret misappropriation.
¶102 My review of the answer of Wells and Jefferson Machine
shows they denied the allegations in the complaint, generally
based on insufficient knowledge to admit or deny.28 Therefore,
the answer is sufficient to join issues of fact and law in
regard to North Highland's claim for trade secret
misappropriation.
23
Complaint, ¶11.
24
Complaint, ¶21.
25
Complaint, ¶20.
26
Complaint, ¶20.
27
Complaint, ¶¶22, 23.
28
Answer, ¶¶1-19. Although Trewyn is no longer a party,
his Answer, too, was sufficient to join issues of law and fact.
21
No. 2015AP643.pdr
¶103 I next review Wells and Jefferson Machine's
submissions in support of their motion for summary judgment that
requested dismissal of North Highland's trade secret
misappropriation claim to determine if they established a prima
facie defense. Id. at 98. Wells and Jefferson Machine
submitted the affidavit of one of their attorneys, Vincent J.
Scipior.29 He attached copies of depositions of Fred Wells and
Dwain Trewyn. He also attached North Highland's answers to
Wells' and Jefferson Machine's First Set of Interrogatories and
Request for Production, Tyson Foods' original specifications and
drawings for the trolleys, and page 6 of North Highland's
Associate Handbook.
¶104 The defendants' brief before us is based on the
attachments to the Scipior affidavit. Defendants argue in their
brief that North Highland's bid on the Trolley Contract was not
a trade secret under Wisconsin law.30 They assert that a bid is
not similar to the types of information listed in Wis. Stat.
§ 134.90(1)(c). They also argue because the bid was not for
continuous or repeated use, it cannot fall within the statutory
definition of trade secret. They assert, "One of the
fundamental tenets of trade secret law is that information
relating to a single event in the conduct of business is not
29
R. at 47.
30
Resp. Br. 39-45.
22
No. 2015AP643.pdr
protected," for which proposition they cite Wisconsin Elec.
Power Co.31
¶105 Wisconsin Elec. Power was issued by the court of
appeals in 1981; it interprets Wis. Stat. § 943.205(2) (1975).
It was issued before Wisconsin adopted the Uniform Trade Secrets
Act, Wis. Stat. § 134.90.
¶106 Furthermore, the continuous use requirement relied on
in defendants' brief was specifically removed from Wisconsin's
trade secret law by Minuteman, a 1989 decision grounded in
Wisconsin's enactment of the Uniform Trade Secrets Act.
Minuteman, 147 Wis. 2d at 852-53.
¶107 There is no citation to Minuteman in defendants'
brief. Furthermore, and much more troubling, there is no
citation to Minuteman in the majority opinion even though North
Highland clearly makes a claim for misappropriation of trade
secret.
¶108 Minuteman is our thorough explanation of the changes
brought about by Wisconsin's enactment of the Uniform Trade
Secrets Act. Instead of citing Minuteman, the defendants cite
cases from other jurisdictions, many of which were issued by
jurisdictions that had not enacted the Uniform Trade Secrets
Act.32
¶109 Wells also argues that "North Highland has not
presented sufficient evidence to support a trade secret
31
Resp. Br. 42.
32
Resp. Br. 43.
23
No. 2015AP643.pdr
misappropriation claim against [him.]"33 Wells asserts that he
did not "use" North Highland's bid information, so he could not
have misappropriated it.34 Evidence of misappropriation of trade
secret information does not have to be direct evidence.
Circumstantial evidence must also be considered in determining
whether Wells has established a prima facie defense. See
Gagliano & Co. v. Openfirst, 2014 WI 65, ¶32, 355 Wis. 2d 258,
850 N.W.2d 845. Here, Wells' own deposition testimony of record
defeats his ability to establish a prima facie defense. For
example, Wells was actively involved in bidding on the Trolley
Contract:
Q This is Exhibit 2. I'm going to show you email
6. That is an email from Gordon Slothower to you
and Dwain, right?
A Yes.
Q And the email right on the top, it starts,
"Attached is the revised," do you see where I'm
pointing to?
A Yes.
Q Why was he giving you a revised trolley drawing?
A I don't know. He copied me on whatever he sent
to Dwain.[35]
Wells' involvement in the bidding is further demonstrated; for
example, he testified:
33
Resp. Br. 45.
34
Resp. Br. 45-46.
35
R. at 47:19.
24
No. 2015AP643.pdr
Q What did you know about the trolley contract in
November of 2011?
A We had an opportunity to quote on it.
Q And you were in conversation with Tyson personnel
about that quoting?
A Yes.
Q And in December of 2011 you were also still
communicating with Tyson and with Dwain about the
trolley contract?
A Dwain was talking with Tyson on the trolley
contract.
Q And you were talking with Dwain?
A About the trolley contract?
Q Yes.
A Yes.[36]
Furthermore, Wells knew that the company he and Trewyn owned
were making use of North Highland's bid information, but he
thought North Highland had no right to object to this. He
explained:
Q Did you think that North Highland had any right
to have its employees not compete with them at
the same time as they were employed at North
Highland?
A Say that again.
Q Did you think that North Highland had any right
to have its employees not compete against them
while they were still employed at North Highland?
A There was no non-compete form with them.
. . . .
36
R. at 47:10-11.
25
No. 2015AP643.pdr
Q And the reason why you think they don't have that
right is because they didn't have an express non-
compete clause in their employment contract?
A Yes.[37]
¶110 When considering the entirety of defendants'
submissions, I conclude that they do not provide sufficient
undisputed, material facts to preclude the bid from meeting the
definition of a trade secret pursuant to Wis. Stat.
§ 134.90(1)(c) or to preclude the finding that Wells had "reason
to know"38 that he used North Highland's bid without the consent
of North Highland after obtaining it through improper means,
contrary to § 134.90(2).
¶111 My conclusion is required by Wis. Stat.
§ 134.90(1)(c), which provides:
"Trade secret" means information, including a formula,
pattern, compilation, program, device, method,
technique or process to which all of the following
apply:
1. The information 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. The information is the subject of efforts to
maintain its secrecy that are reasonable under the
circumstances.
37
R. at 47:12.
38
"Reason to know" is the Wis. Stat. § 134.90(2) standard
that Wells' submissions must be sufficient to set aside in
regard to misappropriation. As the quotes above show, he has
not done so.
26
No. 2015AP643.pdr
¶112 In order to satisfy Wis. Stat. § 134.90(1)(c)'s
criteria and be found to be a trade secret, the bid: (1) must
be information that is a compilation; (2) must derive
independent economic value from not being generally known by
competitors; (3) amount presented to Tyson must not be generally
known or readily ascertainable by proper means; (4) must have
been subject to reasonable efforts under the circumstances to
protect its secrecy.
¶113 It is undisputed, as explained by Wells, that the bid
is information assembled as a compilation39 of "quotes on raw
material and the machining time and the assembly time to put the
part together."40 And as Wells further acknowledged, the amount
of a bid is not shared with others:
Q. The only person you would disclose how much you
were bidding was the customer?
A. Correct.41
The reason for not sharing bid information is self-apparent: if
competitors knew the amount of North Highland's bid, that amount
becomes the "price to beat." USA Power, 373 P.3d at 654-55.
However, whether North Highland took reasonable efforts under
the circumstances to protect the bid's secrecy, is a question of
fact. Minuteman, 147 Wis. 2d at 849.
39
A compilation is an assemblage or gathering.
Compilation, Roget's Thesaurus, 51 St. Martin's Press (1965).
40
R. at 47:19.
41
R. at 47:28.
27
No. 2015AP643.pdr
¶114 The court of appeals assigned the burden of proof to
North Highland in response to defendants' motion for summary
judgment. North Highland, No. 2015AP643, ¶11 ("[W]e agree with
Wells that summary judgment is appropriate because North
Highland has failed to establish that there is sufficient
evidence to support the claim."). While North Highland has the
burden of proof at trial, it was error to assign the burden to
North Highland on defendants' summary judgment motion when the
defendants did not meet their obligation to make a prima facie
showing that North Highland's bid did not meet the statutory
definition of trade secret or that defendants did not have
reason to know they obtained or used North Highland's bid
information improperly. Leske, 197 Wis. 2d at 97-99 ("The
defendants mistakenly assert that it is Thomas's burden to
establish that he took reasonable precautions [to maintain
secrecy]. While this would be true at trial, on summary
judgment the moving defendants must establish that Thomas did
not take reasonable steps.").
¶115 The court of appeals also erred when it relied on
Wisconsin Elec. Power, which provides an interpretation of Wis.
Stat. § 943.205(2) (1976). That statute no longer has any
relevance to trade secret law. Minuteman, 147 Wis. 2d at 852-
53.42
¶116 Furthermore, the court of appeals appeared not to
recognize that the determination of whether a bid is a trade
42
Minuteman v. Alexander, 147 Wis. 2d 842, 434 N.W.2d 773
(1989), is not addressed by the court of appeals.
28
No. 2015AP643.pdr
secret as set out in Wis. Stat. § 134.90(1)(c) is a question of
fact. Id. at 849, 854; Ovation, 33 P.3d at 1224; USA Power, 372
P.3d at 655. Similarly, if the jury determines that the bid is
a trade secret, it also will be required to determine whether
defendants misappropriated it. Minuteman, 147 Wis. 2d at 854-
55. Both are factual findings under the Uniform Trade Secrets
Act, and as we implied in Minuteman, they are factual findings
under § 134.90(1).
C. Claim Preclusion
¶117 The court of appeals chose not to address claim
preclusion. North Highland, No. 2015AP643, ¶11. However,
defendants continue to argue that North Highland's claim for
misappropriation of trade secret is barred by claim preclusion
because of the Stipulation and Order that dismissed Trewyn from
this lawsuit. They assert that the circuit court correctly held
that claim preclusion bars North Highland's claims.43
¶118 "Claim preclusion prevents relitigation of the same
claim when: (1) there is an identity of parties or their
privies in a prior lawsuit; (2) there is an identity of claims
for relief that were brought, or should have been brought; and
(3) a final judgment on the merits in a court of competent
jurisdiction resolved the first lawsuit." Mrozek v. Intra
Financial Corp., 2005 WI 73, ¶28, 281 Wis. 2d 448, 699 N.W.2d 54
(citing Kruckenberg v. Harvey, 2005 WI 43, ¶21, 279 Wis. 2d 520,
43
Resp. Br. 17-26.
29
No. 2015AP643.pdr
694 N.W.2d 879; Northern States Power Co. v. Bugher, 189 Wis. 2d
541, 551, 525 N.W.2d 723 (1995)).
¶119 Wells and Jefferson Machine create a bootstrap
argument under which they assert that North Highland's
misappropriation of trade secret claim is precluded. First,
they contend that due to its Stipulation with Trewyn, North
Highland cannot proceed on its conspiracy claim against them.
They cite numerous cases on which I do not comment because I
address only the misappropriation of trade secret claim. Then
defendants bootstrap North Highland's trade secret claim as a
"matter[] arising out of the same facts and occurrences,"
concluding that all claims against them are precluded.44
Although the language "arising out of the same facts and
occurrences" is claim preclusion language, Wells and Jefferson
cannot meet the three necessary elements to support dismissal of
all claims under claim preclusion.
¶120 First, neither Wells nor Jefferson Machine was a party
to Trewyn's Stipulation, which was entered into during Trewyn's
bankruptcy action. To the contrary, the Stipulation provides:
"All rights are reserved by North Highland, Inc. to any claims
made against joint or several tortfeasors, including Frederick
Wells and Jefferson Machine & Tool Inc. North Highland, Inc.'s
cause of action remains against all non settling tortfeasors."
¶121 Second, the defendants are not privies of Trewyn. As
we have explained, "[p]rivity exists when a person is so
44
Resp. Br. 23.
30
No. 2015AP643.pdr
identified in interest with a party to former litigation that he
or she represents precisely the same legal right in respect to
the subject matter involved." Pasko v. City of Milwaukee, 2002
WI 33, ¶16, 252 Wis. 2d 1, 643 N.W.2d 72. The burden of proving
the elements of claim preclusion is on the party asserting
dismissal of claims based on claim preclusion. Id.
¶122 Although Trewyn was obligated to make certain payments
to North Highland under the Stipulation, Wells and Jefferson
Machine were not similarly obligated. For example, if Trewyn
defaulted on the payments due under the Stipulation, the
obligation for payment could not be enforced against Wells or
Jefferson Machine. Wells and Jefferson are not privies of
Trewyn.
¶123 Here, Trewyn, Wells and Jefferson Machine are alleged
to be joint tortfeasors. North Highland sued each of them
individually for misappropriation of trade secrets. The
Stipulation and release entered with Trewyn is similar to
releases that often are used when there is a settlement with one
tortfeasor and the lawsuit continues against the remaining
tortfeasors.45
¶124 Third, there was no final judgment on the merits of
the trade secret action against Wells and Jefferson Machine at
the time that the circuit court dismissed all claims against
them based on claim preclusion. Accordingly, claim preclusion
45
See, e.g., Pierringer v. Hoger, 21 Wis. 2d 182, 124
N.W.2d 106 (1963).
31
No. 2015AP643.pdr
has no application to North Highland's trade secret
misappropriation claim against Wells or Jefferson Machine.
III. CONCLUSION
¶125 I conclude that defendants, as the moving party to
whom summary judgment was granted, failed to make a prima facie
showing of sufficient undisputed, material facts that North
Highland's bid to construct and supply Tyson with 3,000
trolleys, did not meet the definition of a trade secret as set
out in Wis. Stat. § 134.90(1)(c), which Wells and Jefferson
Machine misappropriated. Leske, 197 Wis. 2d at 96-97.
¶126 Defendants also failed to make a prima facie showing
of sufficient undisputed, material facts that Wells, Jefferson
Machine and Trewyn did not obtain or use North Highland's
Trolley Contract bid information contrary to Wis. Stat.
§ 134.90(2). Id. Accordingly, I conclude that summary judgment
was improperly granted dismissing North Highland's claim for
trade secret misappropriation against Wells and Jefferson
Machine.
¶127 And finally, I conclude that claim preclusion cannot
be applied against North Highland based on the Stipulation and
Order that dismissed Trewyn from this lawsuit. Therefore, I
would reverse the decision of the court of appeals and remand
for a jury trial of North Highland's claim against Wells and
Jefferson Machine for misappropriation of a trade secret.
32
No. 2015AP643.rgb
¶128 REBECCA GRASSL BRADLEY, J. (dissenting). The
circuit court's dismissal of North Highland, Inc.'s complaint
against Frederick Wells reflects an improperly narrow conception
of what constitutes a "trade secret" as well as a misapplication
of the doctrine of claim preclusion.1 Because I conclude that a
confidential bid can be a trade secret and that an adversary
action in Dwain Trewyn's federal bankruptcy proceedings does not
necessarily preclude North Highland's claims against Wells in
state court, I would reverse the decision of the court of
appeals and therefore respectfully dissent. Additionally, I
would remand to the circuit court for a jury trial; material
1
Unfortunately, the court conducts its review of this case
without the benefit of the circuit court's reasoning on the
dispositive decisions. Although the record includes the circuit
court's orders resolving the relevant motions for summary
judgment and dismissal, those orders merely state the court's
conclusions with a note that the orders were entered "[f]or the
reasons stated on the record." But the transcripts of the
relevant hearings are absent from the record on appeal.
The appellant has the initial responsibility to request
transcripts for the record, Wis. Stat. § (Rule) 809.11(4)(a),
and any other party also has the opportunity to request that
transcripts be included in the record, Wis. Stat.
§ (Rule) 809.11(5). Appellate counsel for each party have a
responsibility to identify all transcripts necessary for
appellate review.
When the record on appeal lacks transcripts relevant to the
circuit court's orders under review and the circuit court has
not issued a written order explaining the reasons for its
decision, appellate courts do not receive sufficient information
to review the case in its entirety. Although I conduct my
review in this opinion because the case raises questions of law
and we do have the circuit court's conclusions, a future
appellate court may not have sufficient information to proceed
if appellate counsel fail to satisfy their responsibilities
under the Wisconsin Rules of Appellate Procedure.
1
No. 2015AP643.rgb
factual disputes remain on North Highland's trade secret
misappropriation claim,2 and the circuit court should restore its
earlier ruling that North Highland's claims against Wells for
civil conspiracy to breach a fiduciary duty, aiding and abetting
breach of fiduciary duty, and interference with contract survive
a motion for summary judgment.
I
A
¶129 Historically, Wisconsin has held that "[w]hether a
trade secret exists is a mixed question of fact and law. Once
the historical facts are found by the circuit court, whether
those facts meet the legal standard is a question of law which
we review without deference to the circuit court's decision."
B.C. Ziegler & Co. v. Ehren, 141 Wis. 2d 19, 26, 414 N.W.2d 48
(Ct. App. 1987) (citation omitted) (citing Corroon & Black-
Rutters & Roberts, Inc. v. Hosch, 109 Wis. 2d 290, 294, 325
N.W.2d 883 (1982)). Notwithstanding Wisconsin's adoption of a
version of the Uniform Trade Secrets Act (UTSA), I would not
cast this standard aside.
¶130 In Minuteman, Inc. v. Alexander, 147 Wis. 2d 842, 434
N.W.2d 773 (1989), this court properly acknowledged that when
the legislature adopted the UTSA, it replaced the common law
definition of "trade secret" with the statutory definition in
2
Chief Justice Roggensack's dissent comprehensively sets
forth facts from the record, which, viewed in the light most
favorable to the party opposing summary judgment (here, North
Highland), show genuine issues of material fact properly
resolved at trial.
2
No. 2015AP643.rgb
Wis. Stat § 134.90(1)(c). Minuteman, 147 Wis. 2d at 851-52.
Accordingly, the six-factor test from Corroon & Black-Rutters &
Roberts, Inc. v. Hosch, 109 Wis. 2d 290, 325 N.W.2d 883 (1982),
no longer set the standard for determining the existence of a
trade secret, although the test continues to offer "helpful
guidance in deciding whether certain materials are trade
secrets" under the statute. Minuteman, 147 Wis. 2d at 851-53.
¶131 The Minuteman court, however, did not discuss whether
the statutory abrogation of the common law definition of "trade
secret" had a similar impact on the standard of review in trade
secret cases. Instead, the Minuteman court set forth a standard
of review before discussing Wis. Stat. § 134.90:
The construction of a statute or the application
of a statute to a particular set of facts is a
question of law. Bucyrus–Erie Co. v. ILHR Dept., 90
Wis. 2d 408, 417, 280 N.W.2d 142 (1979). This court
decides questions of law without deference to the
circuit court's determination. Ball v. Dist. No. 4,
Area Bd. of Vocational, Technical & Adult Education,
117 Wis. 2d 529, 537, 345 N.W.2d 389 (1984). This
court, however, accepts the circuit court's findings
of fact unless they are clearly erroneous. Section
805.17(2), Stats.
Minuteman, 147 Wis. 2d at 853. Although the Minuteman court did
not specifically identify the "mixed" standard of review derived
from Corroon & Black, its statement of separate standards for
statutory interpretation, on the one hand, and circuit court
findings of fact, on the other, suggests an implicit
acknowledgement of the mixed nature of the questions raised in
trade secret cases.
¶132 Among state and federal courts interpreting various
enactments of the UTSA, the majority of jurisdictions
3
No. 2015AP643.rgb
characterize the existence of a trade secret as a "question of
fact." See, e.g., Learning Curve Toys, Inc. v. PlayWood Toys,
Inc., 342 F.3d 714, 723 (7th Cir. 2003) ("The existence of a
trade secret ordinarily is a question of fact."); Ovation
Plumbing, Inc. v. Furton, 33 P.3d 1221, 1224 (Colo. App. 2001)
("What constitutes a trade secret is a question of fact."); see
also 1 Melvin F. Jager, Trade Secrets Law § 5.2, at 5-4 (2016)
("In the view of the majority, the existence of a trade secret
is considered to be a 'question of fact.'"). But the reasons
for treating the existence of a trade secret as purely a
question of fact are not clear. The Fifth Circuit has suggested
that because "[t]he term 'trade secret' is one of the most
elusive and difficult concepts in the law to define" the
question therefore "is of the type normally resolved by a fact
finder after full presentation of evidence from each side."
Lear Siegler, Inc. v. Ark-Ell Springs, Inc., 569 F.2d 286, 288-
89 (5th Cir. 1978). Other jurisdictions seem to repeat the
standard with a quotation or citation but no analysis, and
following those citations to the principle's source reveals
nothing more than an ostensible truism——also devoid of analysis.3
3
For example, working backward from Ovation Plumbing, Inc.
v. Furton, 33 P.3d 1221, 1224 (Colo. App. 2001), the Colorado
Court of Appeals successively cited the following cases for the
principle that "[w]hat constitutes a trade secret is a question
of fact": Gold Messenger, Inc. v. McGuay, 937 P.2d 907, 911
(Colo. App. 1997); Network Telecomms., Inc. v. Boor-Crepeau, 790
P.2d 901, 902 (Colo. App. 1990); Mulei v. Jet Courier Serv.,
Inc., 739 P.2d 889, 893 (Colo. App. 1987), rev'd on other
grounds 771 P.2d 486 (Colo. 1989) (en banc); Porter Indus., Inc.
v. Higgins, 680 P.2d 1339, 1341 (Colo. App. 1984); Telex Corp.
v. Int'l Bus. Machines Corp., 510 F.2d 894, 928 (10th Cir.
(continued)
4
No. 2015AP643.rgb
¶133 Wisconsin's mixed standard of review in trade secret
cases therefore represents the minority approach. 1 Jager,
supra, § 5.2, at 5-6 to 5-7. Nevertheless, the legislature's
1986 adoption of the UTSA in no way necessitates rejection of
our standard of review in the same way it required us to
acknowledge the abrogation of the common law definition of
"trade secret." Indeed, the existence of a statutory definition
of "trade secret" suggests that Wisconsin should retain its more
nuanced standard. As the Minuteman court recognized when it
first interpreted Wis. Stat. § 134.90, the construction of a
statute and its application to historical facts presents a
question of law for appellate courts to review independently.
Minuteman, 147 Wis. 2d at 853; see also World Wide Prosthetic
Supply, Inc. v. Mikulsky, 2001 WI App 133, ¶10, 246 Wis. 2d 461,
631 N.W.2d 253 ("Resolution of this appeal requires
interpretation of Wis. Stat. § 134.90(4), a question of law we
review de novo."). Trade secret cases no doubt turn on subtle
questions of fact, such as, "Did the information derive
independent economic value from its nondisclosure? Was the
information subject to reasonable efforts to maintain its
secrecy?" But no less than any other statute, it is the court's
1975). The Tenth Circuit's opinion in Telex Corp. merely states
that "what constitutes a trade secret . . . is a question of
fact for the trial court." 510 F.2d at 928. In turn Telex
Corp. refers to Kodekey Electronics, Inc. v. Mechanex Corp., 486
F.2d 449 (10th Cir. 1973), which offers no more justification
for the standard than the fact that trade secrets are a
"nebulous concept," id. at 453-55 & n.3, the same unsatisfying
reasoning articulated in Lear Siegler, Inc. v. Ark-Ell Springs,
Inc., 569 F.2d 286 (5th Cir. 1978).
5
No. 2015AP643.rgb
responsibility to say what § 134.90 means——as the question
raised by North Highland in this case illustrates.4
B
¶134 North Highland argues that the circuit court and court
of appeals erred by failing to conclude that a confidential bid
may satisfy the definition of "trade secret" in Wis. Stat.
§ 134.90. Because the plain language of § 134.90 supports North
Highland's broad interpretation of "trade secret," I would
reverse the decision of the court of appeals and remand for the
circuit court to consider North Highland's trade secret
misappropriation claim under the proper standard of law.
¶135 Assessment of Wis. Stat. § 134.90 begins with its
text. State ex rel. Kalal v. Cir. Ct. for Dane Cty., 2004 WI
58, ¶¶44-51, 271 Wis. 2d 633, 681 N.W.2d 110. Section 134.90(1)
defines "trade secret" as follows:
(c) "Trade secret" means information, including
a formula, pattern, compilation, program, device,
4
This court's fundamental responsibility to interpret a
Wisconsin statute also means Wis. Stat. § 134.90(7) does not
mandate the jettisoning of our uniquely descriptive phrasing of
the standard of review. Subsection (7) dictates that Wis. Stat.
§ 134.90 "shall be applied and construed to make uniform the law
relating to misappropriation of trade secrets among states
enacting substantially identical laws." In articulating the
standard of review, however, we do not "apply" or "construe" any
of the statute's language. Instead, the standard of review
implicates the perspective from which the court approaches the
statute before even considering its text. Joining other
jurisdictions in repeating by rote that "the existence of a
trade secret is a question of fact" risks putting before the
finder of fact matters of statutory interpretation——questions of
law——properly reserved for the court.
6
No. 2015AP643.rgb
method, technique or process to which all of the
following apply:
1. The information 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. The information is the subject of efforts to
maintain its secrecy that are reasonable under the
circumstances.
North Highland's claim therefore turns on whether a confidential
bid constitutes "information" within the meaning of this
section. To answer that question, I consider the plain meaning
of the word "information," as well as the effect, if any, of the
"including" clause that follows it in paragraph (c).
¶136 Dictionary definitions of "information" suggest that
the term encompasses a broad class of knowledge. See
Information, The American Heritage Dictionary of the English
Language 901 (5th ed. 2011) ("Knowledge or facts learned,
especially about a certain subject or event."); Information,
Webster's Third New International Dictionary 1160 (1986)
("knowledge of a particular event or situation"; "facts or
figures ready for communication or use"). These definitions
indicate that "information" consists of facts, figures, or
general knowledge regarding a particular subject matter and
capable of practical application or use. Given the breadth of
the term's scope, a business might possess any number of pieces
of "information" that it wishes to protect, and a confidential
bid price certainly consists of a figure that a business
develops and communicates for the practical purpose of securing
a contract.
7
No. 2015AP643.rgb
¶137 Despite the broad reach of the term "information,"
Wells points to the remainder of the definition of "trade
secret": "information, including a formula, pattern,
compilation, program, device, method, technique or process."
Wis. Stat. § 134.90(1)(c) (emphasis added). Wells argues that
State v. Popenhagen, 2008 WI 55, 309 Wis. 2d 601, 749
N.W.2d 611, and Village of Hobart v. Oneida Tribe of Indians of
Wisconsin, 2007 WI App 180, 303 Wis. 2d 761, 736 N.W.2d 896,
hold that when a list introduced by "including" follows a
general term, the list limits the scope of the general term to
items similar in nature to those listed. Popenhagen, 309
Wis. 2d 601, ¶¶46-48; Oneida Tribe, 303 Wis. 2d 761, ¶9. The
ejusdem generis canon of statutory construction discussed in
those cases, however, does not invert the plain meaning of the
term "including" in Wis. Stat. § 134.90 because the canon "has
traditionally required the broad catchall language to follow the
list of specifics." Antonin Scalia & Bryan A. Garner, Reading
Law 202 (2012). Rather, "[f]ollowing the general term with
specifics . . . mak[es] doubly sure that the broad (and
intended-to-be-broad) general term . . . include[s] the
specifics," meaning the "including" phrase serves a "belt-and-
suspenders function" in the statutory text. Id. at 204. This
construction of "including" also comports with the canon that
presumes the use of "including" does not create an exhaustive
list but merely an exemplary one. Id. at 132-33. Accordingly,
formulas, patterns, compilations, programs, devices, methods,
techniques, and processes are not the only types of
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"information" that may satisfy the definition of "trade secret"
in Wis. Stat. § 134.90(1).
¶138 The plain language of Wis. Stat. § 134.90(1) also
defeats Wells's argument that the definition of "trade secret"
includes a "continuous use" requirement. Wisconsin courts
defining "trade secret" at common law held that "[a] trade
secret is a process or device which is continually used in the
operation of the business and thereby differs from secret
information which may refer only to an isolated transaction."
Wis. Elec. Power Co. v. Pub. Serv. Comm'n, 106 Wis. 2d 142, 148,
316 N.W.2d 120 (Ct. App. 1981) (internal quotation mark omitted)
(quoting Future Plastics, Inc. v. Ware Shoals Plastics, Inc.,
340 F. Supp. 1376, 1383 (D.S.C. 1972)). The court of appeals
even went so far as to observe that a trade secret "differs from
other secret information in a business . . . in that it is not
simply information as to single or ephemeral events in the
conduct of the business, as, for example, the amount or other
terms of a secret bid for a contract." Id. (alteration in
original) (quoting Restatement (First) of Torts § 757 cmt. b
(1939)). As already noted, the 1986 adoption of the UTSA
abrogated the more restrictive common law definition of "trade
secret." Minuteman, 147 Wis. 2d at 851-52. Because the
language in Wis. Stat. § 134.90(1) does not include a continuous
use requirement in the definition of "trade secret," it should
not be judicially imposed here.5
5
Confirming this plain meaning, an explanatory note
accompanying the enactment of Wis. Stat. § 134.90(1) quotes from
(continued)
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¶139 Wisconsin Stat. § 134.90(7) also commands courts to
apply and interpret § 134.90 in a manner that will "make uniform
the law relating to misappropriation of trade secrets among
states enacting substantially identical laws." Refusing to
graft a renewed "continuous use" requirement onto the definition
of "trade secret" aligns with other jurisdictions, which already
protect some types of business information as trade secrets,
even if used only for a short period of time——or just once, in
the case of a confidential bid. See, e.g., Economy Roofing &
Insulating Co. v. Zumaris, 538 N.W.2d 641, 646-47 (Iowa 1995)
(holding that complaint alleging misappropriation of "bid
information" and "bid estimates" properly stated claim because
"information" included "such [business] matters as maintenance
of data on customer lists and needs, source of supplies,
confidential costs, price data and figures" (emphasis omitted)
(quoting US West Commc'ns, Inc. v. Office of Consumer Advocate,
498 N.W.2d 711, 714 (Iowa 1993))); B & G Crane Serv., L.L.C. v.
Duvic, 2005-1798, p. 7-8 (La. App. 1 Cir. 5/5/06), 935
So. 2d 164, 168-69 ("[W]hile under the employ of [plaintiff],
[defendant] . . . wrongfully misappropriated [plaintiff's]
confidential pricing and bid/quote information . . . ,
terminated his employment with [plaintiff] and
a report by the national conference of commissioners on uniform
state laws, which observed that the UTSA's recommended
definition of "trade secret" "contains a reasonable departure
from the Restatement of Torts (first) definition which required
that a trade secret be 'continuously used in one's business.'"
1985 Wis. Act. 236, § 6 note.
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immediately . . . began unlawfully using that information to
compete with [plaintiff] in attempt to win bids."); USA Power,
LLC v. PacifiCorp, 2016 UT 20, ¶69, 372 P.3d 629 ("It can hardly
be argued that, in a bidding contest, for one competitor to have
access to another competitor's internal financial calculations——
calculations that will certainly bear upon that competitor's
ultimate bid——would have obvious value. Such financial
information is a paradigmatic example of a trade secret."); cf.
Ovation Plumbing, 33 P.3d at 1224 ("declin[ing] to adopt a per
se rule that a bid on a contract cannot be a trade secret as a
matter of law").
¶140 Categorically excluding confidential bids from trade
secret protection contradicts the legislature's decision to
bring all "information" within the definition of "trade secret,"
provided the other statutory parameters are met:
Almost any subject matter may be a trade secret,
including a secret formula or process, computer
software, digital databases, the passcode for a
website, biotechnology, mechanical configurations,
information relating to the finding and extraction of
oil and gas, plans, layouts and design drawings,
recipes, boat hull molds, customer lists,
instructional materials, internal business practices,
manufacturing cost data, sales histories and
forecasts, materials and plans for advertising,
marketing, and distribution, and membership and
employee information. Even religious material is
eligible for trade secret protection.
3 Louis Altman & Malla Pollack, Callmann on Unfair Competition,
Trademarks and Monopolies § 14:14, at 160 (4th ed. 2016)
(footnotes omitted). Applying "information" to a broad spectrum
of facts, figures, and knowledge, does not, however, infinitely
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expand the scope of trade secret protection. After all, any
individual piece of "information" satisfies the definition of
"trade secret" only if it also meets the independent economic
value and secrecy requirements in Wis. Stat. § 134.90(1)(c)1 and
2.
¶141 In this case, the parties focused their arguments on
the threshold question of whether a confidential bid can be
"information." Because I conclude, as a matter of law, that a
confidential bid certainly constitutes "information" within the
meaning of Wis. Stat. § 134.90, I would reverse the decision
granting summary judgment to Wells on North Highland's trade
secret misappropriation claim, and I would remand the matter to
the circuit court for a jury trial on the remaining factual
issues, including whether North Highland took reasonable
measures to maintain the bid's secrecy and whether Wells
misappropriated North Highland's bid.
II
¶142 The circuit court also ruled that claim preclusion
barred North Highland's claims against Wells. I disagree.
Courts apply the doctrine of claim preclusion to prevent
"vexatious, repetitious and needless claim[s]" between the same
parties on the same causes of action when another court has
previously entered a final judgment on the merits. See N.
States Power Co. v. Bugher, 189 Wis. 2d 541, 550, 525 N.W.2d 723
(1995) (quoting Purter v. Heckler, 771 F.2d 682, 690 (3d Cir.
1985)). Claim preclusion promotes finality in litigation and
prevents a party from repeatedly filing the same cause of action
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against the same defendant where that lawsuit has already
resulted in "a final judgment on the merits in a court of
competent jurisdiction." Id. at 551. "Key objectives of the
doctrine of claim preclusion are to promote judicial economy and
to 'conserve the resources the parties would expend in repeated
and needless litigation of issues that were, or that might have
been resolved in a single prior action.'" Mrozek v. Intra Fin.
Corp., 2005 WI 73, ¶28, 281 Wis. 2d 448, 699 N.W.2d 54 (quoting
Hanlon v. Town of Milton, 2000 WI 61, ¶20, 235 Wis. 2d 597, 612
N.W.2d 44). "The question of whether claim preclusion applies
under a given factual scenario is a question of law that this
court reviews de novo." Wis. Pub. Serv. Corp. v. Arby Constr.,
Inc., 2012 WI 87, ¶30, 342 Wis. 2d 544, 818 N.W.2d 863 (quoting
N. States Power Co., 189 Wis. 2d at 551).
¶143 The factual scenario presented here involves not only
North Highland's state court claims against Trewyn, Jefferson
Machine & Tool Inc., and Wells but also a separate adversary
proceeding by North Highland against Trewyn in federal
bankruptcy court challenging the dischargeability of Trewyn's
debt to North Highland. Ultimately, North Highland settled the
dischargeability issue in bankruptcy court on its merits.
Shortly after the settlement in that adversary proceeding, North
Highland and Trewyn entered a stipulation in the state court
case dismissing Trewyn alone but reserving North Highland's
claims against Wells. Pursuant to this stipulation, the circuit
court dismissed Trewyn from the case, ordering that the "matter
shall proceed as between all remaining parties." None of the
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stipulations or orders dismissing Trewyn from the state or
federal court proceedings affected claims against Wells; rather,
those claims were expressly reserved. None of the stipulations
or orders adjudicated the merits of North Highland’s claims——
against any party——for trade secret misappropriation, civil
conspiracy to breach fiduciary duties, aiding and abetting
breach of fiduciary duties, or interference with contractual
obligations.
¶144 Claim preclusion applies where there is "(1) an
identity between the parties or their privies in the prior and
present suits; (2) an identity between the causes of action in
the two suits; and, (3) a final judgment on the merits in a
court of competent jurisdiction." Id., ¶35 (quoting N. States
Power Co., 189 Wis. 2d at 551). The absence of any element
renders the doctrine inapplicable. See N. States Power Co., 189
Wis. 2d at 551. Under the circumstances presented in this case,
there is clearly no identity of parties or final judgment on the
merits.
¶145 There is no identity of parties because Wells was not
a party to the bankruptcy proceeding involving Trewyn, which
precipitated the settlement between North Highland and Trewyn
leading to the dismissal of Trewyn alone as a party in this
case. It remains uncontroverted that Trewyn and Wells are not
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privies.6 Wisconsin has long held that claim preclusion is
unavailable if the parties are not the same. See Bentson v.
Brown, 191 Wis. 460, 461-62, 211 N.W. 132 (1926). Here, North
Highland wishes to proceed against Wells, not Trewyn; absent
privity between the two defendants, Trewyn's dismissal from the
case presents no bar to North Highland proceeding against Wells,
an entirely distinct party.
¶146 Furthermore, there is no final judgment on the merits.
Instead, Trewyn and North Highland settled the issue of whether
any debt Trewyn may owe North Highland was dischargeable in
bankruptcy, and this settlement included North Highland's
agreement not to maintain suit against Trewyn. The settlement
agreement dismissing the adversary proceeding in bankruptcy
court, which led to the stipulated dismissal of Trewyn in the
state court proceedings, does not even come close to an
"adjudication on the merits by a court of competent
jurisdiction." As this court explained in Mrozek v. Intra
Financial Corp., 2005 WI 73, 281 Wis. 2d 448, 699 N.W.2d 54, a
bankruptcy judgment may be a "final judgment on the merits"
6
A "privy" refers to "[a] person having a legal interest of
privity in any action, matter, or property; a person who is in
privity with another." Privy, Black's Law Dictionary 1394 (10th
ed. 2014). Privity can arise from various relationships. Id.
(listing six types of privity). "The term also appears in the
context of litigation. In this sense, it includes someone who
controls a lawsuit though not a party to it; someone whose
interests are represented by a party to the lawsuit; and a
successor in interest to anyone having a derivate claim." Id.
There is no indication that Trewyn and Wells maintain any
relationship of this sort relative to the present litigation.
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sufficient to satisfy the third prong under the claim preclusion
doctrine, but only when the subject of the pending lawsuit was a
"core proceeding" resolved by the bankruptcy court. Id., ¶¶29-
31.7 Regardless of the core versus non-core distinction, the
bankruptcy court involved here did not litigate the subject of
North Highland's lawsuit against Wells. Nor does it appear from
this record that the bankruptcy court litigated the subject of
North Highland's trade secret case against Trewyn. There was no
bankruptcy court judgment on the merits of the pending lawsuit
or on the facts underlying North Highland's civil suit. Rather,
Trewyn and North Highland reached a settlement agreement,
entered into a covenant not to sue, and stipulated to the
dismissal of North Highland's adversary bankruptcy claim and
distinct state court claims against Trewyn. Like the entry of a
guilty plea disposing of a criminal case, which this court held
did not satisfy the "actually litigated" requirement for issue
preclusion to apply,8 the settlement agreement does not satisfy
the "judgment on the merits" requirement of claim preclusion
because the settlement effected compromise without a judgment on
the merits.
7
But see Matrix IV, Inc. v. American Nat'l Bank and Trust
Co. of Chi., 649 F.3d 539, 549-52 (7th Cir. 2011) (noting a
split of authority on the core versus non-core reasoning).
8
See Mrozek v. Intra Fin. Corp., 2005 WI 73, ¶21, 281
Wis. 2d 448, 699 N.W.2d 54 (observing that the guilty plea
"inquiry is not the same as a fully litigated trial between
adversarial parties resulting in the fact-finder determining
that the facts prove" the allegations).
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¶147 Of course, litigation in bankruptcy courts can
preclude claims in subsequently filed lawsuits. See, e.g.,
Matrix IV, Inc. v. American Nat'l Bank and Trust Co. of Chi.,
649 F.3d 539, 542, 547-52 (7th Cir. 2011) (holding that claim
preclusion barred plaintiff's subsequent RICO and common law
fraud action against same defendants involved in bankruptcy case
where plaintiff fully "litigated and lost the very same fraud
claims"). But the settlement here was unlike the cases applying
claim preclusion following bankruptcy litigation. Indeed, some
courts adopt a unique approach for determining whether claim
preclusion should bar an action when the previous claim occurred
in a bankruptcy court. One court explained why:
"Because a 'bankruptcy case' is fundamentally
different from the typical civil action, however,
comparison of a bankruptcy proceeding with another
proceeding is not susceptible to the standard [claim
preclusion] analysis." Rather, a court must
"scrutinize the totality of the circumstances in each
action and then determine whether the primary test
of . . . essential similarity in the underlying
events[] has been satisfied." Also, the court must
"properly tailor[]" the claim preclusion doctrine to
the "unique circumstances that arise when the previous
litigation took place in the context of a bankruptcy
case." Ultimately, "a claim should not be barred
unless the factual underpinnings, theory of the case,
and relief sought against the parties to the
proceeding are so close to a claim actually litigated
in the bankruptcy that it would be unreasonable not to
have brought them both at the same time in the
bankruptcy forum."
Haskell v. Goldman, Sachs & Co., 355 B.R. 438, 449 (Bankr. D.
Del. 2006) (citations and quoted sources omitted; fourth
alteration in original).
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¶148 Here, the claims North Highland pursues against Wells
were not "actually litigated" in the bankruptcy case——Wells was
not even involved in the bankruptcy proceeding. Nor would it
have been reasonable or possible for North Highland to litigate
its claims against Wells within Trewyn's bankruptcy proceeding.
North Highland's agreement to forgo its state court lawsuit
against a bankruptcy debtor whose obligations were dischargeable
does not bar it from pointing the finger at Trewyn to establish
a conspiracy with Wells, even though Trewyn cannot be held
legally liable should the jury find in North Highland's favor.
¶149 The absence of a judgment on the merits also defeats
Wells's argument that dismissal of North Highland's underlying
claims against Trewyn precludes North Highland from proving that
Wells is liable under a "derivative" theory such as conspiracy
or aiding and abetting. Although Wells cites several cases from
other jurisdictions for the proposition that dismissal of a
tortfeasor precludes further proceedings against other
defendants on derivative liability theories, those cases
featured actual resolution of the underlying cases on the
merits, unlike the settlement at issue here.9 Wisconsin has long
9
See Discon Inc. v. NYNEX Corp., 86 F. Supp. 2d 154, 165-66
(W.D.N.Y. 2000) (district court previously dismissed underlying
alleged violation of Sherman Act); Barrios v. Paco Pharm.
Servs., Inc., 816 F. Supp. 243, 252 (S.D.N.Y. 1993) (noting
conspiracy claim precluded after considering and rejecting
merits of claim against alleged co-conspirator); Richard B.
LeVine, Inc. v. Higashi, 32 Cal. Rptr. 3d 244, 253-54 (Ct. App.
2005) (holding that derivative liability precluded "where
plaintiff has already arbitrated or litigated against the direct
tortfeasor and lost" (emphasis added)).
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recognized a plaintiff's ability to settle a claim with one
joint tortfeasor while continuing to pursue a claim against
another. See Imark Indus., Inc. v. Arthur Young & Co., 148
Wis. 2d 605, 621-22, 436 N.W.2d 311 (1989) (citing Pierringer v.
Hoger, 21 Wis. 2d 182, 124 N.W.2d 106 (1963); Loy v. Bunderson,
107 Wis. 2d 400, 320 N.W.2d 175 (1982)). Because Wisconsin law
contemplates continued proceedings after a plaintiff settles
with an alleged joint tortfeasor, Trewyn's dismissal does not
preclude a full hearing on the merits of North Highland's
conspiracy, aiding and abetting, and interference claims against
Wells.10
¶150 Trewyn's settlement with North Highland as part of
bankruptcy proceedings in federal court and the subsequent
dismissal of North Highland's state-court claims against Trewyn
10
North Highland also directs our attention to Muchow v.
Goding, 198 Wis. 2d 609, 623, 544 N.W.2d 218 (Ct. App. 1995), to
argue that a settlement does not give rise to claim preclusion.
But the cited portion of Muchow discusses the doctrine of
collateral estoppel, now known as issue preclusion. See Paige
K.B. ex rel. Peterson v. Steven G.B., 226 Wis. 2d 210, 219, 594
N.W.2d 370 (1999). "Issue preclusion addresses the effect of a
prior judgment on the ability to re-litigate an identical issue
of law or fact in a subsequent action." Mrozek, 281
Wis. 2d 448, ¶17. The doctrine precludes subsequent litigation
only on questions of fact or law actually litigated in previous
proceedings. Id.
Since Wells has focused his argument for dismissal on a
theory of claim preclusion, I will not discuss issue preclusion
in great detail. I do note, however, that the doctrine likely
would not bar North Highland's claim against Wells because the
extent of Wells's alleged liability to North Highland was never
actually litigated during the federal dischargeability
proceedings or as part of Trewyn's stipulated dismissal from
this state-court action.
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do not extinguish North Highland's previously-filed lawsuit
against Wells in state court. These circumstances satisfy
neither the elements of claim preclusion nor the objectives
underlying the doctrine. Holding that the settlement of North
Highland's adversary claim in Trewyn's bankruptcy proceeding
precludes North Highland's claim against Wells could
unnecessarily relieve jointly responsible tortfeasors from their
legal obligations based on a dismissed defendant's fortuitous
bankruptcy filing.
III
¶151 In sum, I conclude that a confidential bid can be a
trade secret. I would reverse the court of appeals'
determination otherwise and remand to the circuit court because
the record contains material disputed issues of fact for a jury
to resolve on whether Wells violated trade secret law. Further,
the circuit court erred in concluding that North Highland's
action against Wells was barred under claim preclusion based on
the compromise reached between North Highland and Trewyn
resolving the adversary claim North Highland asserted in
Trewyn's bankruptcy proceeding, which ultimately led to the
dismissal of Trewyn alone from the state court case. I would
reverse the circuit court's dismissal of this case and remand
for a jury trial on North Highland's conspiracy, aiding and
abetting, and interference with contract claims against Wells
because the circuit court previously determined that material
issues of disputed facts exist with respect to those claims.
¶152 For these reasons, I respectfully dissent.
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¶153 I am authorized to state that Justice DANIEL KELLY
joins this dissent.
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1