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Gib. Lubricating Services, Inc. v. Pinnacle Resources, Inc.

Court of Appeals of Arkansas, Division II

March 9, 2016

GIBRALTAR LUBRICATING SERVICES, INC., APPELLANT
v.
PINNACLE RESOURCES, INC., APPELLEE

         Counsel Amended March 11, 2016.

          APPEAL FROM THE WHITE COUNTY CIRCUIT COURT. NO. CV-12-233. HONORABLE TOM HUGHES, JUDGE.

         Millar Jiles, LLP, by: Daniel C. Brock, and Edwards & Freeman, P.A., by: Rodney A. Edwards, pro hac vice, for appellant.

         Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: John Keeling Baker and Clayborne S. Stone, for appellee.

         Thomas Morgan Hughes

          OPINION

Page 225

         M. MICHAEL KINARD, Judge.

          In this trade-secrets case, appellant Gibraltar Lubricating Services, Inc. (GLS), appeals from a summary judgment in favor of appellee Pinnacle Resources, Inc. (Pinnacle). Because genuine issues of material fact remain to be decided, we reverse and remand for further proceedings.

         Our standard of review is well established. Summary judgment should be granted only when it is clear that there are no genuine issues of material fact to be litigated, and the moving party is entitled to judgment as a matter of law. Akers v. Butler, 2015 Ark.App. 650, 476 S.W.3d 183. On appeal, we view the evidence in the light most favorable to the party against whom the motion was filed, resolving all doubts and inferences against the moving party. Id. With this standard in mind, we turn to the evidence presented by the parties in their affidavits and other documents filed in connection with the summary-judgment motion.

         II. Facts

         GLS provides lubricants to industrial customers who use large compressors. The lubricants contain a blend of oils and additives that inhibit rust and corrosion and reduce the foaming generated by compressor churning. GLS hires outside contractors to blend its lubricants based on precise formulas.

         The formulas at issue in this case were developed more than thirty-five years ago by a man named Glen Majors, owner of C.E.S. Associates, Inc. In 1991, Mr. Majors formed GLS with James and Linda Bass and purchased C.E.S.'s assets, including its formulas and blending instructions, for $38,500. In 1993, Mr. and Mrs. Bass bought out Majors and became the sole owners of GLS. They operated from an office in Beebe, Arkansas, with one employee, Veronica Craven. The company produced the same lubricants using the same trusted blenders as in the past. Mr. Bass kept the formulas locked in a cabinet or safe, to which Mrs. Bass and Ms. Craven had access.

         In 2008, Pinnacle, a custom blending company, contacted Mr. Bass with hopes of becoming a blender for GLS. During a meeting at the Beebe office, Bass explained to Pinnacle's salesman, John Bethel, that he was nervous about disclosing the lubricant formulas. Bethel assured Bass that Pinnacle would maintain the formulas' secrecy.

         Thereafter, Mr. Bass provided Pinnacle with documents containing a particular lubricant formula. One of the documents bore a stamp prohibiting copying or duplicating of its contents. Bass also sent Bethel an email, asking him to " please keep a tight grip on the formulas," to which Bethel replied, " ...


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