McKesson Medical-Surgical v. Micro Bio-Medics

266 F.Supp.2d 590

McKESSON MEDICAL—SURGICAL, INC., a Virginia Corporation, Plaintiff, v. MICRO BIO-MEDICS, INC., d/b/a Caligor Great Lakes, a New York Corporation, David Bowman, and Ruth Bowman, Defendants.

No. 02-CV-72626-DT.

United States District Court, E.D. Michigan, Southern Division.

May 16, 2003.

Leland D. Barringer, Richard A. Gaffin, Jonathon W. Fountain, Miller Canfield, Detroit, for plaintiff.

William D. Sargent, Cameron J. Evans, Robert J. Muchnick, Honigman Miller, Detroit, for defendant.

OPINION

DUGGAN, District Judge.

Plaintiff, McKesson Medical-Surgical, Inc., (McKesson), filed its Complaint in this Court on June 24, 2002, and its First Amended Complaint (Complaint), on January 14, 2003. McKesson's claims arise out of David and Ruth Bowman (collectively the Bowmans) leaving McKesson's employ as sales representatives and joining Micro Bio-Medics, Inc., d/b/a/ Caligor Great Lakes (Caligor), one of McKesson's competitors in the field of medical supplies, as sales representatives. In its Complaint, McKesson asserts the following claims: 1) Action for Misappropriation of Trade Secrets Against the Bowmans, 2) Action for Misappropriation of Trade Secrets against Caligor, 3) Action for Interference with Business Relationships Against the Bowmans, 4) Action for Interference with Business Relationships Against Caligor, 5) Action for Lanham Act Violations Against the Bowmans, 6) Action for Lanham Act Violations against Caligor, 7) Action for Breach of the Duty of Loyalty Against the Bowmans, and 8) Action for Civil Conspiracy Against all Defendants.

The matter is currently before the Court on Defendants' Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment on Damages. McKesson has filed a response to this Motion. A hearing was held on the matter on April 17, 2003.

STANDARD

Summary judgment is proper only if there is no genuine issue as to any material fact, thereby entitling the moving party to judgment as a matter of law. Hunter v. Caliber Sys., Inc., 220 F.3d 702, 709 (6th Cir.2000); see also F ED. R. C IV. P. 56(c). There is no genuine issue of material fact for trial unless, by viewing the evidence in a light most favorable to the nonmoving party, a reasonable jury could "return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). On a motion for summary judgment, the moving party bears the initial responsibility of informing the Court of the basis for its motion and identifying those portions of the record that establish the absence of a material issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986).

Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and come forward with specific facts to show that there is a genuine issue for trial. F ED. R. Crv. P. 56(e); Celotex, 106 S.Ct. at 2552-53. The nonmoving party must do more than show that there is some metaphysical doubt as to the material facts. Pierce v. Commonwealth Life Ins. Co., 40 F.3d 796, 800 (6th Cir.1994). The nonmoving party must present significant probative evidence in support of its opposition to the motion for summary judgment. Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 339-40 (6th Cir.1993).

BACKGROUND

McKesson is in the business of distributing medical supplies to physicians. McKesson operates by employing sales representatives who solicit sales from physicians. David and Ruth Bowman were employed as sales representatives by McKesson until May, 2002. In May, 2002, David and Ruth Bowman resigned as sales representatives for McKesson and joined Caligor, a McKesson competitor, as sales representatives.

As Caligor sales representatives, David and Ruth Bowman solicited sales in the same general geographic area as they had for McKesson. Neither David nor Ruth Bowman had signed any "non-compete" agreements with McKesson. A short time before leaving McKesson, David Bowman, with help from his son-in-law, prepared a list of his and Ruth Bowman's customers at McKesson. This, list was then sent to Walter Jachimek, David and Ruth's eventual boss at Caligor. Caligor then sent letters out to physicians on that list introducing David and Ruth Bowman as Caligor sales representatives. Both David and Ruth Bowman have since had some success selling Caligor products to their former McKesson customers and other McKesson customers.

The dispute in this case arises from David and Ruth Bowman's alleged use of information received during their employment with McKesson in their current employment with Caligor. The facts pertinent to the information at issue is discussed below in discussion of Defendants' Motion.

DISCUSSION

Defendants move for summary judgment on all of McKesson's claims. In the alternative, Defendants seeks partial summary judgment on the damages issue relating to McKesson's Interference with Business Relationships claim. Defendants' Motion regarding each separate claim is discussed below.

I. Misappropriation of Trade Secrets:

McKesson asserts Misappropriation of Trade Secrets claims against David and Ruth Bowman as well as Caligor, pursuant to the Michigan Uniform Trade Secrets Act (MUTSA or the MUTSA), M.C.L. § 445.1901, et seq. Under the MUTSA, a claim for misappropriation of trade secrets entails the following:

(i) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means.

(ii) Disclosure or use of a trade secret of another without express or implied consent by a person who did 1 or more of the following:

(A) Used improper means to acquire knowledge of the trade secret.

(B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it, acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, or derived from or through a person who owed a duty to the person to maintain its secrecy or limit its use.

(C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

M.C.L. § 445.1902(b). A trade secret, under the MUTSA, is defined as

information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following:

(i) 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.

(ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

M.C.L. § 445.1902(d).

In its brief in opposition to Defendants' Motion for Summary Judgment, Plaintiff "identifies" its claim that Plaintiff misappropriated trade secrets as:

This case is about much more than pricing. It is about protecting the substantial investment McKesson has made over the years in identifying the customers willing to buy its products from the hundreds of prospective customers who purchase medical and surgical supplies. It is also about protecting McKesson's investment in developing and maintaining customer relationships through its sales representatives. The identity of these customers and the maintenance of these relationships are the backbone of McKesson's business. These relationships are based on the highly specialized knowledge that each McKesson sales representative develops about each customer's business and peculiar needs.

(Pl.'s Resp. Br. at 1). In this Court's opinion, this is the essence of Plaintiffs claim, i.e., the identity of customers and the "knowledge that each McKesson sales representative develops about each customer's business and peculiar needs." (Id.). In this case, the names of these customers, i.e., their identity, was developed by the Bowmans and the "needs" of the customer were, as McKesson states, also "developed by the representative." For the reasons set forth herein, this type of information is not protectable as a trade secret.

Defendants contend this case is not about trade secrets, but rather about McKesson challenging "sales representatives' right to work for an employer of their own choosing when they do not have non-competition or non-solicitation agreements." (Defs.' Br. at 9). First, Defendants contend the Bowmans have a right to change jobs, citing, in support, Hayes-Albion v. Kuberski 421 Mich. 170, 364 N.W.2d 609 (1984).

In Hayes-Albion, the Court stated, "[i]n general, there is nothing improper in an employee establishing his own business and communicating with customers for whom he had formerly done work in his previous employment." Id. at 183, 364 N.W.2d 609. Furthermore, the court found customers had a right to choose with whom to deal, and that a former employee's use of information regarding a client's needs is actionable for money damages when such action is "in violation of an agreement respecting the employee providing services to the customer after termination of employment ...." Id. at 184, 364 N.W.2d 609.

Even though no such agreement exists in the case at bar, McKesson seeks to protect information regarding the Bowmans' customers which the Bowmans obtained while they were at McKesson. In this Court's opinion, such protection may only be available to the extent the information McKesson seeks to protect is trade secret information.

Defendants further contend that McKesson's claim fails because "there is no evidence that the Bowmans have used any information relating to McKesson other than that which, consistent with industry standard and McKesson's own business practices, they received from the customers after their employment with McKesson ended." (Defs.' Br. at 18).

In response, McKesson points to a list of customers compiled by David...