United States District Court, D. Colorado
JOHNS MANVILLE CORPORATION, a Delaware corporation, and JOHNS MANVUXE, a Delaware corporation, Plaintiffs,
KNAUF INSULATION, LLC, a Delaware corporation and KHAUF INSULATION GMBH, a German corporation, Defendants.
BROOKE JACKSON, UNITED STATES DISTRICT JUDGE
R. Brooke Jackson This matter is before the Court on
defendants Knauf Insulation, LLC's and Knauf Insulation
GMBH's ("Knauf) four pending motions: (1) motion for
summary judgment, ECF No. 161; (2) motion for partial summary
judgment, ECF No. 163; (3) motion for partial summary
judgment, ECF No. 164; and (4) motion for summary judgment,
ECF No. 165. For the reasons below, the Court DENIES these
Manville Corporation and Johns Manville (collectively
"JM") is an established manufacturer in the
insulation and fiberglass industry. ECF No. 114 at 7. JM
manufactures fiberglass insulation through a process called
rotary fiberization, in which molten glass is propelled
through tiny holes in the walls of metal discs spinning at
high speeds. Id. at 7-8. These discs are known as
"spinner discs." Id. at 8. JM is therefore
"vigorously engaged" in research and development of
fiberization and spinner disc technology. Id. This
research includes the development and acquisition of
longer-lasting and better-performing metal alloys with which
to manufacture spinner discs. Id.
such metal alloys are at issue in these motions. The first,
RM-3, is a publicly-available alloy. The second is referred
to internally at JM as GX-4. ECFNo. 114 at 8. JM developed
and has been using GX-4 since the 1990s. Id. Knauf
uses a materially identical alloy, which it refers to as
RM-4. ECF No. 181-13 at 31:6-32:4. After research and
development, JM has largely replaced GX-4 with a
"unique, nonobvious" alloy it refers to as C05.
Id. at 9; see also ECF No. 181-11 (noting
that 90 percent of JM's spinners are made with C05 today,
while the remainder are made with GX-4).
employed metallurgist Walter Johnson from 1992 to 2007. ECF
No. 114 at 10-12. From 1992 to 2004, Johnson "played a
significant role" in JM's insulation business,
including as "the named inventor of at least four JM
patents related to insulation and spinner discs."
Id. at 11. Johnson was aware of and involved in the
development of confidential and proprietary information
relating to insulation and spinner discs, including trade
secrets related to manufacturing protocols, designs of
spinner discs and testing data for alloys, and refining and
casting specifications used with third-party vendors.
Id. at 11. From 2004 to 2007, Johnson moved from
JM's insulation business to its roofing department, which
involved very little metallurgy. ECF No. 177-1 at 34:14-25;
voluntarily retired from JM in April 2007, informing JM that
he was "going fishing." ECF No. 177-1 at 87:13-18.
Upon retirement, he entered a contract to serve as a
consultant to JM, but never did any consulting work for JM.
Id. at 15:16-22. In May 2007, however, Johnson began
working as the head of the spinner program at Knauf-one of
JM's competitors in the fiberglass insulation market. ECF
No. 165-1 at 1; see also ECF No. 114 at 12. Johnson
worked as a Knauf employee until November 2015, when Knauf
terminated him after allegedly discovering that he possessed
confidential JM materials on Knauf servers and files. ECF No.
114 at 13.
alleges that Knauf did not manufacture spinner discs before
Johnson joined the company, choosing instead to purchase them
from third parties, but that Knauf began manufacturing its
own spinner discs after Johnson joined in 2007. Id.
Knauf contracted with one particular spinner disc vendor,
Owens-Corning, from at least 2005 to 2010. See ECF
No. 181-9 at 10. Knauf decided to start moving away from
Owens-Corning around 2006. ECF No. 181-14 at 47:12-21.
learned that Johnson was working at Knauf at least by June
2007. ECF No. 161-12 at 3. Emails in June 2007 between
JM's intellectual property-counsel and its Vice President
of Research and Development and Chief Technology Officer
reflect discussions about Johnson's working at Knauf.
Id., see also ECF No. 161-14 at 74:13-74:20. JM
alleges that it discovered that Knauf was using JM trade
secrets in 2014, when its employees observed JM's
"C05" designation on Knauf labels. ECF No. 114 at
filed suit against Knauf and Johnson in this Court on March
13, 2015. ECF No. 1. Subsequently, in its First Amended
Complaint, filed on February 23, 2016, JM raised claims for
(1) trade secret misappropriation in violation of the
Colorado Uniform Trade Secrets Act, C.R.S. §
7-74-101-110 (CUTS A) against both Knauf and Johnson; (2)
breach of contract against Johnson; and (3) breach of the
implied covenant of good faith and fair dealing against
Johnson. ECF No. 114 at 1-2. JM subsequently agreed to
dismiss all claims against Johnson in this case without
prejudice; these claims will be dismissed with prejudice
either when Johnson testifies in this matter or if the
remaining claims against Knauf are dismissed or otherwise
resolved without potential for appeal. ECF No. 151-1 at 2.
Knauf now moves for summary judgment and partial summary
judgment on various grounds, as discussed herein.
Court may grant summary judgment if "there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law." Fed.R.Civ.P. 56(a). The
moving party has the burden to show that there is an absence
of evidence to support the nonmoving party's case.
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
The nonmoving party must "designate specific facts
showing that there is a genuine issue for trial."
Id. at 324. A fact is material "if under the
substantive law it is essential to the proper disposition of
the claim." Adler v. Wal-Mart Stores, Inc., 144
F.3d 664, 670 (10th Cir. 1998) (citing Anderson v.
Liberty Lobby, Inc., Ml U.S. 242, 248 (1986)). An issue
of material fact is genuine if "the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party." Anderson, Ml U.S. at 248. The
Court will examine the factual record and make reasonable
inferences therefrom in the light most favorable to the party
opposing summary judgment. Concrete Works of Colo., Inc.
v. City & Cnty. of Denver, 36 F.3d 1513, 1517 (10th Cir.
s motions for summary judgment and partial summary judgment
raise four discrete issues: (1) whether JM's claim for
trade secret misappropriation is barred by the statute of
limitations; (2) whether Knauf is liable for trade secret
misappropriation with respect to (a) testing data and
specifications related to the RM-3 alloy and (b) the specific
formula for the RM-4 alloy; (3) whether Knauf should be
liable for certain money damages; and (4) whether Knauf
should be released from its liability through the theory of
respondeat superior. The Court will address each motion in
Statute of Limitations TECF No. 1611.
Knauf moves for summary judgment on the grounds that JM filed
its action for trade secret misappropriation after the
three-year statute of limitations had run. ECF No. 161 at 1.
According to Knauf, the CUTS A "expressly provides a
three-year statute of limitations for an action of
threatened trade secret misappropriation."
Id. at 7 (citing CUTSA §§ 103, 107). Knauf
argues that JM was aware of the threat of trade secret
misappropriation in 2007, so its 2014 complaint was outside
the three-year statute of limitations. Id. at 8.
cites the CUTSA's statute of limitations, which makes no
mention of threatened misappropriation: "an action for
trade secret misappropriation must be brought within three
years after the misappropriation 'is discovered or by
exercise of reasonable diligence should have been
discovered.'" ECF No. 177 at 1 (quoting C.R.S.
§ 7-74-107). Moreover, because the CUTSA's single
reference to threatened misappropriation occurs in the
context of injunctive relief, JM argues that this reference
is irrelevant here. As a result, JM argues that Knauf s
"threatened misappropriation" statute of
limitations constitutes an improper legal standard, and thus
that its motion for summary judgment should be denied as a
matter of law. I agree.
to Knauf s contentions, the only reference to threatened
misappropriation in the CUTSA arises in the context of
injunctive relief. See C.R.S. § 7-74-103
(providing that temporary and final injunctions may be
granted "to prevent or restrain actual or threatened
misappropriation of a trade secret."). There is no
indication from the statute that threatened misappropriation
is meant to be a trigger to start running the three-year time
period. See C.R.S. § 7-74-107. Knauf argues
that as a matter of statutory construction,
"misappropriation" must refer to both
"actual" and "threatened" in each
instance, since the statute refers to both in the context of
injunctive relief. ECF No. 187 at 1. However, the absence of
such modifiers for the term outside the context of injunctive
relief instead supports an inference that threatened
misappropriation is relevant only for injunctive relief, and
not otherwise. See Dole v. United Steelworkers of
Am., 494 U.S. 26, 35 (1990) (quoting Massachusets v.
Morash, 490 U.S. 107, 115 (1989) (In interpreting a
statute, '"we are not guided by a single sentence or
member of a sentence, but look to the provisions of the whole
Knauf s argument ignores the fact that injunctive relief is
by its nature concerned with preventing prospective harms,
but such concern does not extend to other facets of the
statute, which addresses acts of misappropriation that have
already occurred. Knauf s reliance on Xantrex Tech. Inc.
v. Advanced Energy Indus., No. 07-cv-02324-WYD-MEH, 2008
WL 2185882 (D. Colo. May 23, 2008) to argue to the contrary
is inapposite. In that case, the Court found only that
"the Colorado legislature intended to recognize
something less than actual misappropriation of a trade secret
as appropriate for injunctive
re/ze/-within the framework of the statute."
Xantrex, 2008 WL 2185882 at *19 (emphasis added).
Indeed, an inquiry into the existence of a threatened injury
is essential to a court's decision to grant a preliminary
injunction: such relief is deemed appropriate when, among
other factors, "the threatened injury outweighs
the harm that the preliminary injunction may cause the
opposing party." Id. at *13 (emphasis added). A
court considering whether to grant injunctive relief in a
trade secret misappropriation case would thus naturally
consider the existence of a threatened injury. But there is
no reason to believe such an inquiry would occur in other
short, a cause of action for damages for trade secret
misappropriation does not accrue until the plaintiff knows or
should with reasonable diligence know that the defendant
"used plaintiffs trade secrets, " even
when the plaintiff previously knew that the defendant
possessed and likely would use its trade secrets to develop a
product. See Chasteen v. UNISIA JECS Corp., 216 F.3d
1212, 1219 (10th Cir. 2000) (citing Intermedics, Inc. v.
Ventritex, Inc., 775 F.Supp. 1258, 1265-66 (N.D. Cal.
1991)). The Intermedics court emphasized that
plaintiffs should not be pressured to file suits "based
merely on suspicions and fears" but instead should be
given time to confirm their suspicions of trade secret
misappropriation before being required to file suit.
Intermedics, 775 F.Supp. at 1266.
JM is neither seeking injunctive relief for nor alleging a
claim of threatened misappropriation in this case, and since
the statute does not provide a cause of action for damages
for threatened misappropriation in the first place, Knauf s
reference to threatened misappropriation is inapplicable
here.Thus, as a matter of law, Knauf s first
motion for summary judgment fails.
Trade Secret Liability for RM3 and RM4
Alloys TECF No. 1631.
next moves for partial summary judgment on the basis that it
is not liable for misappropriation related to spinners made
from the RM-3 and RM-4 alloys. ECF No. 163 at 1. Because the
arguments for each alloy are distinct, I will address them
parties concede that the RM-3 alloy is a
'"decades'-old public-domain alloy." ECF
No. 163 at 2; ECF No. 180 at 7. Thus, Knauf argues that JM
cannot show that Knauf would have been unable to make RM-3
spinners "but for" the misappropriation of JM's
trade secrets. Id. (citing Cartel Asset Mgmt. v.
OcwenFin. Corp., 249 F.App'x 63, 74 (10th Cir. 2007)
(unpublished). However, JM's claim for trade secret
misappropriation with respect to the RM-3 alloy is not
related to the alloy's formula, but is instead related to
JM's confidential testing data and "refining and
casting" specifications for the alloy. ECF No. 180 at
14. Moreover, JM argues that the correct standard for
misappropriation is not whether Knauf could have manufactured
its discs "but for" JM's trade secrets, but