Think Tank Software Dev. Corp. v. Chester, Inc.

988 N.E.2d 1169

THINK TANK SOFTWARE DEVELOPMENT CORPORATION d/b/a Think Tank Networking Technologies Group and Think Tank Information Systems, Appellant–Plaintiff,

v.CHESTER, INC., Mike Heinhold, John Mario, Joel Parker, Thomas Guelinas, Jon Meyer, Daniel Curry, Eric M. Wojciechowski, Michael Gee, Philip Ryan Turner and Carl Zuhl, Appellees–Defendants.

No. 64A05–1205–PL–270.

Court of Appeals of Indiana.

May 7, 2013.

Peter J. Rusthoven, Barnes & Thornburg LLP, Indianapolis, IN, Brian N. Custy, Merrillville, IN, Attorneys for Appellants.

F. Joseph Jaskowiak, Lauren K. Kroeger, Hoeppner Wagner & Evans LLP, Merrillville, IN, Attorneys for Appellees.

OPINION

SHARPNACK, Senior Judge.

STATEMENT OF THE CASE

In this interlocutory appeal, Think Tank Software Development Corporation d/b/a Think Tank Networking Technologies Group and Think Tank Information Systems (“Think Tank”) seeks review of the trial court's grant of a motion to exclude testimony from its expert witness on economics and business valuation. The motion was filed by Chester, Inc., Mike Heinold, John Mario, Joel Parker, Thomas Guelinas, Jon Meyer, Daniel Curry, Eric M. Wojciechowski, Michael Gee, Philip Ryan Turner, and Carl Zuhl (collectively, “Chester”). We reverse and remand.

ISSUES

Think Tank raises two issues, which we restate as:

I. Whether the trial court abused its discretion by granting Chester's motion to exclude Think Tank's expert witness testimony.

II. Whether this Court's prior decision in this case requires clarification on the subject of damages.¹

FACTS AND PROCEDURAL HISTORY

The relevant facts, as stated in the prior decision in this case, are as follows:

Think Tank is engaged in computer-related business activities, including systems and network engineering, problem solving, systems design, implementation, sales, client training, and computer maintenance. As of April 19, 2001, Think Tank employed defendants Mario, Parker, Guelinas, Meyer, Curry, Wojciechowski, Gee, Turner, and Zuhl (collectively, the former employees).

Think Tank required most, if not all, employees to sign employment agreements containing a covenant not to compete.

....

During a period ranging from April 20, 2001, to April 19, 2002, all of the former employees left Think Tank for various reasons, shrinking Think Tank's staff from sixteen to nine employees. With the exception of Parker, all of the former employees went directly from Think Tank to Chester. [Parker worked for another employer for five months before going to work for Chester.] Chester was informed of the covenant not to compete by Curry, Gee, Guelinas, Wojciechowski, and Zuhl. However, Mario, Parker, Meyer, and Turner did not believe they had signed the covenant when they were hired by Think Tank, and Think Tank could not produce the signed agreements. Think Tank's president asserts that each of these four signed the covenant in his presence.

On April 26, 2002, Think Tank filed its “Verified Complaint For Injunctive And Other Relief” against Chester; Chester's manager, Heinhold; and the former employees. Among other things, Think Tank alleged in its complaint that its former employees were violating the covenant not to compete by contacting Think Tank personnel and customers. Think Tank further alleged that Chester, Heinhold, and the former employees were interfering with Think Tank's business by divulging confidential information and trade secrets. Three days later, after an ex parte emergency hearing, a Lake Superior Court granted a temporary restraining order finding that Think Tank had “a protectable interest in its goodwill (which includes all its customer information and relationships as well as its employees) and reputation....” The court further found that “the provisions of [the covenant] provide reasonable and appropriate restrictions on post-employment conduct of [Think Tank's] employees; and that all defendants in concert with one another have either breached the [covenant] or induced or aided the breach....”

On May 1, 2002, the defendants filed for a change of venue, and the Lake Superior Court transferred the case to the Porter Superior Court on May 6, 2002. After a hearing on the defendants' motion to dissolve the temporary restraining order, the trial court ruled on May 10, 2002, that the temporary restraining order was not properly issued because Think Tank failed to give proper notice pursuant to Indiana Rule of Trial Procedure 65(B)(2) and failed to post bond pursuant to Indiana Rule of Trial Procedure 65(C).

On June 7, 2002, Think Tank filed its “First Amended Verified Complaint For Injunctive And Other Relief.” In this amended complaint, Think Tank asserted breach of contract and tort claims against various defendants.

Think Tank did not pursue injunctive relief, and on August 24, 2004, the defendants moved to dismiss the case due to Think Tank's lack of prosecution. The motion was denied and discovery continued until November 30, 2009. On December 31, 2009, the defendants filed a motion for summary judgment challenging Think Tank's claims. On March 9, 2010, after holding a hearing and reviewingthe designated evidence of all parties, the trial court granted the motion for summary judgment for the defendants on all of the claims raised by Think Tank in its first amended complaint. In doing so, the trial court concluded that the covenant not to compete in the various employment agreements “is overbroad and is therefore unenforceable ... and cannot be reformed.” The court also concluded that “the information alleged to have been misappropriated by [the defendants] does not constitute a ‘trade secret’ under the Indiana Trade Secret Act and therefore [Think Tank's] claim for misappropriation fails as a matter of law.” The court further concluded as a matter of law that Think Tank's claims for interference with a business relationship, unfair competition, and unjust enrichment “do not apply to the fact situation of this case.”

Think Tank Software Dev. Corp. v. Chester, Inc. (Think Tank I), No. 64A03–1003–PL–172 *1–3, 2011 WL 1362527 (Ind.Ct.App. Apr. 11, 2011) (footnotes and record citations omitted).

In concluding our opinion, we stated,

The trial court erred in granting summary judgment on the basis that the covenant not to compete was overbroad. The trial court also erred in granting summary judgment on the propriety of the confidentiality clause, as there are genuine issues of material fact that must be determined. Further, the trial court erred in granting summary judgment on the tortious interference with a contract issue. The trial court did not err in granting summary judgment on any of the remaining issues.

We affirm in part, reverse in part and remand for further proceedings consistent with this opinion. In doing so, we instruct the trial court to be mindful of the restrictions expressed in our discussion of Issues I, III and IV.

Id. at *16.

Implicit in Think Tank I, but not stated in its conclusion, is that the claim for misappropriation of trade secrets was included with the claims for breach of the covenant not to complete, for breach of the confidentiality clause, and for tortious interference with a contract that remained for trial after our review of the summary judgment rendered by the trial court. As we stated in footnote four to the opening of Issue II. Breach of Contract: Confidentiality Clause:

The defendants equate the confidentiality clause issue with the misappropriation of trade secrets issue as raised in the court below and as framed by the parties in their appellate briefs. We agree that the misappropriation of trade secrets issue is subsumed by the confidentiality clause issue. We will examine the validity of the confidentiality clause under the summary judgment standard of review, and our decision on this issue stands as a decision on the claim for misappropriation of trade secrets.

Id. at *7. We concluded, as to the confidentiality clause,

[T]here is a genuine issue of material fact that prevents the grant of summary judgment on this issue. The fact finder must determine whether the items contained in the confidentiality clause are trade secrets that may be protected. If they are not, then Think Tank has not asserted that the covenant to not compete asserts a legitimate interest that may be protected and/or that the former employees have gained a unique competitive advantage or ability to harm Think Tank.Id. at *9. We also necessarily found that the same issue existed as to the claim for misappropriation of trade secrets.

In the course of our opinion, we noted that Think Tank had submitted a report by its economics expert, Benjamin S. Wilner. We stated as follows with respect to Wilner's report:

In an apparent attempt to create a genuine issue of material fact pertaining to customers in addition to the nine referred to above,² Think Tank points to a report prepared by a third party that lists the customers it lost in the years following the former employees' transfer to Chester, and it proposes that some of these losses could be attributable to breach of covenants. The supposed losses that “could be attributable to breach” compose the entire result of seven years of discovery. In an industry where even Think Tank's third party expert documents that Think Tank normally retains customers for an average of only 2.3 years, we cannot view the report as anything but speculative. In short, the report says little more than that even though Think Tank lost almost all of its key employees and it normally loses a percentage of its customers each year, Think Tank guesses that some of the lost customers must be attributable to the defendants' actions. Mere speculation cannot create genuine issues of material fact to defeat summary judgment. See Beatty v. LaFountaine, 896 N.E.2d 16, 20 (Ind.Ct.App.2008) (holding that mere speculation, guesses, supposition, and conjecture “are not sufficient to create a genuine issue of material fact to defeat summary...