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Berge v. Republic National Inc.

United States District Court, N.D. Texas, Dallas Division

May 17, 2018

DANEECE BERGE, Plaintiff,
v.
REPUBLIC NATIONAL INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER JUDGE

In this lawsuit by plaintiff Daneece Berge (“Berge”) alleging claims for breach of contract, misappropriation of trade secrets, theft liability under the Texas Theft Liability Act (“TTLA”), Tex. Penal Code Ann. § 31.03, fraud, and fraudulent inducement, defendants Republic National Inc. (“Republic”), Mike Solitro (“Mike”), and Joseph Solitro (“Joseph”) move for summary judgment. Defendants also move to strike Berge's summary judgement response, or, in the alternative, object and move to strike Berge's summary judgment evidence. For the reasons that follow, the court grants defendants' motion for summary judgment, denies defendants' motion to strike as moot, and dismisses this action with prejudice by judgment filed today.

         I

         This lawsuit arises out of Berge's decision to leave her job and work for a competing company. Berge was employed as First Vice President, Operations Manager of Specialized Commercial Services for Old Republic National Title Insurance Company (“Old Republic”).

         She managed title insurance, land surveys, environmental studies, zoning reports, and property condition assessments. During her employment at Old Republic, Berge met Mike, the President of Republic, a land surveying company that was one of Old Republic's preferred vendors. In August 2016 Berge contacted Mike asking about potential employment opportunities. Sometime in October 2016, before Berge left Old Republic, Berge and Republic executed a mutual Non-Disclosure Agreement (“NDA”). The NDA was executed by “Republic National Inc./Mike Solitro” and included an additional signatory, Lynette Skorka (“Skorka”), who was Berge's former secretary. Berge later shared a variety of information, including salary information, gross revenue, sales for 2015 and 2016 year to date, house accounts, vendor costs, income before operating expense, net income, and another employee's sales numbers. Mike and Joseph offered Berge a position, which she initially declined but later accepted after negotiation.

         On February 15, 2017 Berge resigned from Old Republic. On March 13, 2017 Berge began working for Republic as the President of the Republic National Due Diligence Service. Berge provided a preliminary and then final customer list, and Skorka provided the vendor list to defendants. Both lists originated during Berge's and Skorka's time at Old Republic. These lists represented 900 clients and 2, 500 vendors. Berge also provided proprietary procedures and information that belonged solely to Berge.

         Twenty five days after Berge began working at Republic, defendants terminated her employment because they could no longer afford keep her as an employee. As of the time of this lawsuit, Skorka remains employed by Republic.

         Berge was unemployed for seven months, until she accepted a job at Fidelity National Title Insurance, which paid a lower salary than what Berge made at Old Republic. Berge brought this lawsuit against defendants Republic, Mike, and Joseph for breach of contract based on defendants' use of, and failure to return, Berge's proprietary information, misappropriation of trade secrets, theft liability, fraud, and fraudulent inducement. Defendants now move for summary judgment dismissing all of Berge's claims and move to strike Berge's response to summary judgment, or, in the alternative, object and move to strike Berge's summary judgment evidence. Berge opposes both motions.

         II

         Defendants move for summary judgment on claims for which Berge will have the burden of proof at trial. Because Berge will have the burden of proof, defendants' burden at the summary judgment stage is to point the court to the absence of evidence of any essential element of Berge's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once they does so, Berge must go beyond her pleadings and designate specific facts demonstrating that there is a genuine issue for trial. See Id. at 324; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). An issue is genuine if the evidence is such that a reasonable jury could return a verdict in Berge's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Berge's failure to produce proof as to any essential element of a claim renders all other facts immaterial. TruGreen Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary judgment is mandatory where Berge fails to meet this burden. Little, 37 F.3d at 1077.

         III

         The court first addresses Berge's misappropriation of trade secrets claim.

         A

         To establish a trade secret misappropriation claim under Texas law, Berge must demonstrate (1) the existence of a trade secret, (2) the trade secret was acquired through a breach of a confidential relationship or discovered by improper means, (3) use of the trade secret without authorization from the plaintiff, and (4) damages. Taco Cabana Int'l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir. 1991), aff'd, 505 U.S. 763 (1992); H.E. Butt Grocery Co. v. Moody's Quality Meats, Inc., 951 S.W.2d 33, 34 (Tex. App. 1997, writ denied). Because Berge cannot establish the use of a trade secret, the court need not address the other elements.

         A trade secret is defined as any formula, pattern, device, or compilation of information used in a business, that gives the owner an opportunity to obtain an advantage over competitors who do not know or use it. Phillips v. Frey, 20 F.3d 623, 628 (5th Cir. 1994); Taco Cabana, 932 F.2d at 1123. “It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.” Chandler v. Mastercraft Dental Corp. of Tex. Inc., 739 S.W.2d 460, 468 (Tex. App. 1987, writ denied). It is a process or device for continuous use in the operation of a business. Id. Generally, a trade secret relates to the production of goods. Id. To be protected, a trade secret must give the owner a competitive advantage. Phillips, 20 F.3d at 628. It “must possess at least that modicum of originality which will separate it from everyday knowledge.” Id. (quoting Cataphote Corp. v. Hudson, 444 F.2d 1313, 1315 (5th Cir. 1971)).

         Texas law requires that a trade secret be a “secret.” Zoecon Indus. v. American Stockman Tag Co., 713 F.2d 1174, 1179 (5th Cir. 1983). The purported trade secret can neither be generally known by others in the same business nor readily ascertainable by an independent investigation. Id. A process or device may be a trade secret, however, even when others can gain knowledge of the process from studying the manufacturer's marketed product. Phillips, 20 F.3d at 629.

[T]he mere fact that such lawful acquisition is available does not mean that [the one accused of trade secret misappropriation] may, through a breach of confidence, gain the information in usable form and escape the efforts of inspection and analysis. The fact that a trade secret is of such a nature that it can be discovered by experimentation or other fair and lawful means does not deprive its owner of the right to protection from those who would secure possession of it by unfair means.

K & G Oil Tool & Serv. Co. v. G & G Fishing Tool Serv., 314 S.W.2d 782, 788 (Tex. 1958) (internal quotations omitted); see Phillips, 20 F.3d at 629 (citing Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 475 (1974) (stating that trade secret law does not offer protection against discovery by fair and honest means such as independent invention, accidental disclosure, or reverse engineering; however, protection will be awarded to trade secret holder against disclosure or unauthorized use by those to whom secret has been confided, either under express or implied restriction of non-disclosure or by one who has gained knowledge by improper means)). Trade secret protection is based on a policy of protecting business from breaches of faith and reprehensible means of learning another's secret. FMC Corp. v. Varco Int'l, Inc., 677 F.2d 500, 503 (5th Cir. 1982).

         B

         Defendants maintain that Berge has no evidence that they actually used confidential information without her consent. Berge responds by pointing to her own affidavit and Mike's deposition, in which he states that Skorka may have ...


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