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Inc. v. United Industries, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

March 15, 2017

3A COMPOSITES USA, INC., a Missouri Corporation PLAINTIFF



         Currently before the Court are Defendants United Industries, Inc.'s ("United") and Wesley Paulin's Motion for Partial Summary Judgment (Doc. 34), Brief in Support (Doc. 35), and Statement of Material Facts Not In Dispute (Doc. 36); Plaintiff 3A Composites USA, Inc.'s ("3A") Brief in Opposition (Doc. 46) and Statement of Disputed Material Facts (Doc. 47); and the Defendants' Reply (Doc. 51). For the reasons given below, the Defendants' Motion is GRANTED.

         I. BACKGROUND

         This is the second lawsuit in this Court between these parties. As this Court recounted in the previous lawsuit:

3A[1] and United are competing manufacturers of graphic arts polystyrene display board ("Board"). 3A is headquartered in Statesville, North Carolina, and employs roughly 2, 700 people. United is headquartered in Bentonville, Arkansas, and employs roughly 100 people.
One of the raw components of Board is something called "thick foam." Until nearly 2007, both 3A and United purchased thick foam from outside suppliers. However, at some point around a decade and a half ago, 3A began exploring the feasibility of producing thick foam in-house.
In 2005, 3A formally launched a project to develop its own thick foam production line. 3A retained an outside consultant named Ed LeDucto help with the project. The parties disagree somewhat on the scope of Mr. LeDuc's oversight, but there is no doubt that he played a critical role in the line's development and had a significant amount of responsibility. The project development team also had members who were 3A employees- one of whom was Mr. Paulin: 3A's Product Development Manager. Mr. Paulin was the "startup manager" of this particular project.
In December 2006, 3A successfully produced its desired quality of thick foam and began selling thick foam to United. From then until 2013, 3A was United's primary supplier of thick foam. During this period, Mr. LeDuc continued providing ad hoc assistance to 3A with refinement or troubleshooting of its thick foam line. Mr. Paulin remained employed at 3A until his resignation in December 2008.
In 2011, United began exploring the possibility of developing its own thick foam line. United's President, John Ferm, met with Mr. LeDuc several times that year and ultimately decided to retain Mr. LeDuc as a consultant for that project. Mr. LeDuc played essentially the same role in the development of United's thick foam line as he had played in the development of 3A's thick foam line, and the two foam lines were essentially identical, albeit with minor differences. In June 2012, after learning that United was developing a thick foam line, 3A issued notice to United that it was cancelling their thick foam supply agreement. In late 2012, United hired Mr. Paulin on Mr. LeDuc's recommendation for the position of extrusion manager. Upon his hiring, Mr. Paulin began assisting Mr. LeDuc in the development of United's thick foam line.
On February 1, 2013, United received a cease-and-desist letter from 3A, in which 3A informed United that Mr. Paulin owed a duty of confidentiality to 3A pursuant to a contract he had signed while employed there ("Confidentiality Agreement"). This was the first time that United learned of the existence of Mr. Paulin's Confidentiality Agreement. 3A also asserted that Mr. LeDuc owed 3A a duty of confidentiality. 3A contended that the technology and processes associated with its thick foam line were trade secrets, and demanded that United, Mr. LeDuc, and Mr. Paulin cease their efforts at copying its thick foam line. United countered that the information at issue was neither confidential nor a trade secret, that no one was violating any legal duties, and that it would not stop developing its own thick foam line. Mr. Paulin remains employed in the same role at United today.

3A Composites USA, Inc. v. United Indus., Inc. ("3A Composites /"), 2015 WL 5437119, at *1-*2 (W.D. Ark. Sep. 15, 2015).

         3A filed the first lawsuit against United and Mr. Paulin on May 31, 2013, in the United States District Court for the Western District of North Carolina. Id. at *2. In that lawsuit, 3A brought claims for breach of contract against Mr. Paulin, tortious interference with contract against United, misappropriation of trade secrets against both Defendants, and deceptive trade practices against both Defendants. Id. Venue was transferred to this Court on May 15, 2014. Id.

         On September 15, 2015, this Court entered an Order in 3A Composites I, granting the Defendants summary judgment on 3A's claims for tortious business interference and deceptive trade practices, but permitting 3A's contract and trade secrets claims to proceed to trial. See Id. at *8. Then on November 12 of that year-four days before trial was set to begin-3A moved to dismiss its remaining claims without prejudice. 3A Composites I, Case No. 5:14-cv-5147, Doc. 136. The reason 3A gave for filing that motion at such a late date was that 3A's executives had only recently learned of new allegedly actionable activities by the Defendants. See Id. at Doc. 132, ¶ 2. 3A maintained that its executives were prevented from learning this information earlier, because the Defendants had produced it in discovery subject to an "Attorneys' Eyes Only" designation. See Id. at Doc. 133, p. 1. The Court granted 3A's motion pursuant to the Defendants' stipulation, with certain conditions. See Id. at Doc. 136. The general thrust of the conditions was that the new case must be filed in this Court, and that while there would necessarily be a great deal of overlap in the two cases' claims, great care should be taken to avoid duplicative discovery and motion practice. See id.

         3A opened this new case by filing its Complaint (Doc. 1) on January 27, 2016. 3A's new Complaint reasserted its old claims for breach of contract, tortious interference with contract, and misappropriation of trade secrets, but in addition to 3A's old factual predicate regarding thick foam, it contained additional allegations regarding a 3A product called "Gatorfoam, " which 3A contends is "the industry's leading heavy-duty foam board, " and is "comprised of Graphic Arts Thick Foam bonded between two resin-impregnated paper facers." See Doc. 1, ΒΆ 25. As with its older allegations regarding thick foam, 3A alleges that United induced ...

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