Talon Indus. v. Rolled Metal Prods.

TALON INDUSTRIES, LLC, d/b/a PROGRESSIVE-RUESCH MACHINE CO., LLC, Plaintiff, v. ROLLED METAL PRODUCTS, INC., Defendant.

Civil Action No. 15-4103 (CCC)

United States District Court, D. New Jersey

August 30, 2022

NOT FOR PUBLICATION

OPINION

CLAIRE C. CECCHI, U.S.D.J.

I. INTRODUCTION

This matter comes before the Court on Defendant Rolled Metal Products, Inc.'s (“Defendant” or “Rolled Metal”) motion for summary judgment. ECF No. 67. Plaintiff Talon Industries, LLC d/b/a Progressive-Ruesch Machine Company, LLC (“Plaintiff” or “Talon”) opposed the motion (ECF No. 69 (“Opp.”)), and Defendant replied (ECF No. 70 (“Reply”)). The Court decides this matter without oral argument pursuant to Federal Rule of Civil Procedure 78(b). For the reasons set forth below Defendant's motion (ECF No. 67) is granted in part and denied in part.

II. BACKGROUND^[1]

Plaintiff, Talon Industries LLC d/b/a Progressive-Ruesch Machine Company, LLC is the purported successor company to Progressive Machine Company (“PMC”) and Progressive-Ruesch Machine Company, Inc. (“PRMC Inc.”). Plaintiff is an engineering firm, which, among other things, is in the business of “manufacturing industrial machinery, including designing, engineering and manufacturing winders, slitters, coilers and tube equipment.” Pl. SMF.Supp. at ¶ 1. Defendant sells various types of metals in coiled form and offers metal processing services. Def. SMF at ¶ 2. In 2005, PMC contracted with Defendant to design and build a six-strand traverse winding machine unit powered by Plaintiff's proprietary software. Pl. SMF.Supp. at ¶ 9. Thereafter, Defendant contracted with a different engineering firm, K&S Machines (“K&S”), to build a second six-strand traverse winder machine unit. Pl. SMF Reply at ¶ 61. Plaintiff contends that during the design and construction of the second six-strand traverse winder machine, Defendant misappropriated Plaintiff's trade secrets and committed various common-law violations for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and unfair competition.

A. Corporate History

PMC, originally founded in 1946, was an engineering firm, which designed and manufactured traverse winders, as well as developed the software necessary for the machines to function. Id. at ¶ 7. The Honczarenko family took control of PMC in the 1980s, and, by the mid-2000s, Stephen Honczarenko (“Honczarenko”), Plaintiff's corporate representative in this matter, was serving as the company's Chief Sales Engineer. Pl. SMF.Supp. at ¶ 5.

Around 2002 or 2003, the Honczarenko family formed a second entity, PRMC Inc. Def. SMF at ¶ 11. The entity was formed as a purchasing vehicle to buy another engineering company, Ruesch Machine Company. Pl. SMF Reply at ¶ 11. Ultimately, PRMC Inc. marketed and sold Ruesch Machine Company equipment as part of the PMC family of companies. Id.

The parties dispute how PMC and PRMC Inc. eventually became Talon. According to Defendant, in 2007, both PMC and PRMC Inc. were merged into a new entity, Progressive-Ruesch Machine Company, LLC (“PRMC LLC”), and that same year also “ceased to exist.” Def. SMF at ¶¶ 9-10, 15. Thereafter, in 2011, PRMC LLC merged into Talon. Id. at ¶ 17. By contrast, Plaintiff asserts that PMC and PRMC Inc. did not cease to exist in 2007 but only halted their day-to-day operations, and were merged directly into Talon in 2011. Pl. SMF Reply at ¶¶ 9, 15. Plaintiff claims that Talon and PRMC LLC are the same entity: Talon, a Delaware company, is registered to do business in New Jersey as a foreign entity under the name PRMC LLC. Id. at ¶ 17.

B. The Machinery

In 2005, PMC provided a proposal (in the form of a quote) to Defendant to design and build a six-strand traverse winder machine unit for Defendant. Id. at ¶ 28. These machines take coiled sheet metal, unwind the metal into flat sheets, cut these sheets in various ribbon patterns, and then re-roll the ribbons into new coils. Id. at ¶¶ 24-26. Traverse winder systems are well-known pieces of machinery among firms in the industrials and metals industry. Id. at ¶ 91. While Defendant reviewed the quote, PMC arranged for Defendant to view a similar machine to the one Plaintiff had proposed to build, which had been purchased and used by another PMC customer. Id. at ¶ 37. Eventually, Defendant accepted PMC's proposal, and after Defendant agreed to PMC's terms of sale, PMC proceeded to design and build the machine. Id. at ¶ 30. PMC delivered the completed unit to Defendant in May 2006. Id. at ¶ 39. The parties contest whether the agreement to build the traverse winder was subject to any confidentiality provision, and they further contest whether the drawings, schematics, and software code associated with the machine were confidential. See, e.g., id. at ¶¶ 29, 33, 47-48, 98-99, 103-104.

Around the time Plaintiff completed work on the six-strand traverse winder unit, Defendant ordered an additional single-strand winder machine from Plaintiff. Id. at ¶ 50. Defendant contends that PMC never finished this machine, and that it was forced to transport a partially completed winder from Plaintiff's facilities to one of Defendant's warehouses, where Defendant finished it. Def. SMF at ¶¶ 51, 56. Plaintiff disagrees, asserting that PMC built the entire machine at one of Defendant's facilities. Pl. SMF Reply at ¶¶ 51, 56. This disagreement notwithstanding, based on Defendant's experience with the construction of the single-strand winder, it believed PMC was going out of business. Accordingly, when Defendant decided to purchase a second six-strand traverse winder unit to match the first machine built by PMC, it contracted with K&S Machines to do the work. Def. SMF at ¶¶ 52-53, 57-59, 61. In turn, K&S subcontracted with EDC Electronics and Jim Delis, a former PMC subcontractor who worked on PMC's traverse winder machines, to handle the electrical and software coding work necessary for Defendant's new machine to function. Pl. SMF Reply ¶¶ 72, 79. The parties dispute whether Defendant provided K&S with confidential information from the first six-strand traverse winder unit, including Plaintiff's drawings, schematics, and software code. See e.g., id. at ¶¶ 66-68, 71. Moreover, the parties dispute whether Defendant was aware of the extent of Jim Delis's previous association with PMC, and whether Defendant knew that Delis would use Plaintiff's purportedly confidential information when working on the second unit's code. Id. at ¶¶ 80, 84

K&S installed the second six-strand traverse winder unit in November 2008. Id. at ¶ 121. Subsequently, in 2010, Plaintiff discovered that K&S had built the traverse winder unit for Defendant after Plaintiff viewed the new winder on Defendant's website. Id. at ¶ 75. Upon viewing Defendant's website, Plaintiff believed that K&S had used its trade secrets to build the machine. Id.

C. Procedural History

Plaintiff initiated this action on June 17, 2015. ECF No. 1. Defendant filed a motion to dismiss on September 4, 2015 (ECF No. 9), which this Court denied on April 12, 2016 (ECF No. 14). Later, on April 13, 2018, Plaintiff filed an amended complaint, alleging claims for: breach of contract (Count 1), breach of the covenant of good faith and fair dealing (Count 2), unjust enrichment (Count 3), common law unfair competition (Count 4), violation of the New Jersey Trade Secrets Act (Count 5), and common law trade secret misappropriation (Count 6). ECF No. 57. Defendant answered on April 27, 2018. ECF No. 58. Thereafter, Defendant moved for summary judgment as to all six counts. ECF No. 67. Plaintiff opposed (ECF No. 69), and Defendant replied (ECF No. 70). Defendant's motion for summary judgment was subsequently administratively terminated pending mediation between the parties. ECF No. 76. Mediation was unsuccessful. The Court now decides Defendant's motion for summary judgment.

III. LEGAL STANDARD

Summary judgment is appropriate if the “depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials,” demonstrate that there is no genuine issue as to any material fact, and, construing all facts and inferences in a light most favorable to the non-moving party, “the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Pollock v. Am. Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir. 1986).

The moving party has the initial burden of proving the absence of any genuine issue of material fact. See Celotex, 477 U.S. at 323. Once the moving party meets this burden, the nonmoving party has the burden of identifying specific facts to show that, to the contrary, a genuine issue of material fact exists for trial. See Matsushita Elec. Indus. Co. v Zenith Radio Corp., 475 U.S. 574, 585-87 (1986). In order to meet its burden, the non-moving party must “go beyond the pleadings and by [its] own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,' designate ‘specific facts showing that there is a genuine issue for trial.'” Celotex, 477 U.S. at 324 (citation omitted); see also Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992) (“To raise a genuine issue of material fact,” the opponent must “exceed[] the ‘mere scintilla' threshold ....”). An issue is “genuine” if it is supported by evidence, such that a reasonable jury could return a verdict in the non-moving party's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if, under the governing substantive law, a dispute about the fact might affect the outcome of the suit. See id. “In considering a motion for summary judgment, a district court may not...