Friday, March 22, 2019
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Ninth Circuit:
Anheuser-Busch’s Suit Against Ex-Employee For Baring Trade Secrets May Proceed
By a MetNews Staff Writer
Anheuser-Busch’s lawsuit against a former employee who disseminated the company’s trade secrets to persons who used that information in mounting a class action against the beer-brewer was not a SLAPP under California law, the Ninth U.S. Circuit Court of Appeals has held.
Wednesday’s memorandum opinion was the second one in the case. On Nov. 13, 2015, the Ninth Circuit reversed the denial by Senior District Court Judge Garland E. Burrell Jr. of the Eastern District of California of an anti-SLAPP by defendant James A. Clark.
Burrell found that Clark failed to show that he was sued based on protected conduct, as required by the first prong of the anti-SLAPP statute, Code of Civil Procedure §425.16. The Ninth Circuit said:
“Anheuser-Busch’s papers make clear that it sued Clark for acquiring and sharing information with putative class counsel to further the class action….Anheuser-Busch has therefore sued Clark for acts taken ‘in furtherance of’ a protected activity.”
Second Prong Satisfied
The opinion filed Wednesday affirms an order by District Court Judge Troy L. Nunley of the Eastern District of California denying the anti-SLAPP motion on the ground that Anheuser-Busch has satisfied the second prong of the statute by showing a probability of prevailing on the merits.
The particular document, describing secret brewing processes, was known internally as “Page 13.” Its content led to the class action in which it was contended that the alcoholic content of some of Anheuser-Busch’s products overstated.
In the diversity action, Anheuser-Busch sued under California’s Uniform Trade Secret Act.
Not Inadmissible Hearsay
Nunley rejected Clark’s contention that a declaration by Anheuser-Busch employee Kristi Skinner that Page 13 constituted a trade secret was inadmissible hearsay. He explained:
“Given her 30-plus years of work experience with Anheuser-Busch, and her specific duty as a ‘Subject Matter Expert’ to exclusively oversee the Page 13 document, Skinner establishes that her statements are supported by more than her mere understanding of the document. The declaration gives a detailed description of Page 13 and how it connects to Skinner’s job duties. As ‘custodian’ of the document, Skinner’s responsibility over Page 13 would require personal knowledge about the document as well. Thus, Skinner’s statements were based on her own personal knowledge of the matters, and do not constitute inadmissible hearsay….Therefore, the Court can consider her declaration to determine whether Page 13 constitutes a trade secret.”
The declaration set forth the care that is taken in protecting the confidentiality of the document.
Lack of Diligence
Clark maintained that Anheuser-Busch did not act to safeguard the secrecy of Page 13 and that, to the contrary, “”the document was readily available and frequently hanging on bulletin boards and employee work stations.”
Nunley responded that in examining whether the second prong of the anti-SLAPP statute is satisfied, “the Court accepts as true all evidence favorable to the plaintiff and assesses the defendant’s evidence only to determine if it defeats the plaintiff’s submission as a matter of law.:
He wrote:
“In the instant case, Defendant’s argument as to the reasonable efforts taken to maintain the secrecy of Page 13 is ultimately immaterial as the Court will not weigh or determine credibility of Defendant’s competing evidence. Therefore, Plaintiffs present enough information that identifies a trade secret with reasonable particularity to separate it from matters of general knowledge.”
In affirming, the Ninth Circuit said:
“The district court correctly found that the declaration describing the contents of Page 13 did not contain inadmissible hearsay for the purpose of establishing the existence of a trade secret….The record also provides adequate support for the conclusion that Anheuser-Busch used reasonable efforts to maintain secrecy, and described potential damages.”
Contractual Duty
Clark had entered into confidentiality agreements with his employer. One provision said:
“Unless the Company consents or directs me otherwise in writing, I will not at any time during or after my employment with the Company use any Confidential Information for my own benefit or disclose any Confidential Information to anyone outside the Company...In addition, for a period of three (3) years following the termination of my employment with the Company and upon its request, I will certify under oath in writing that I have not disclosed or used in any way any Confidential Information.”
Clark declined to provide that certification. A cause of action against him was for breach of contract.
The memorandum opinion says:
“A reasonable factfinder could conclude that Clark’s refusal to certify non-disclosure was a breach of the confidentiality agreements….Anheuser-Busch described sufficient evidence of damages, and the contracts were not unenforceable as against public policy.”
The case is Anheuser-Busch Companies, LLC v. Clark, 17-15591.
Beer-Watering Actions
Actions against Anheuser-Busch for allegedly watering their beer were brought in the U.S. District Court for the Northern District of California and five other districts, and were transferred to the Norther District of Ohio.
Anheuser-Busch moved for a dismissal on the ground that the Alcohol and Tobacco Tax and Trade Bureau has determined that no cause of action may be maintained based on a misstatement of alcoholic content where, as in the present instance, the variation was 0.3 percent range.
The motion was granted June 2, 2014.
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