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Wal-Mart Stores, Inc. v. Cuker Interactive, LLC

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

July 28, 2017




         On April 10, 2017, a 2-week jury trial commenced on Plaintiff Wal-Mart Stores, Inc.'s ("Walmart") claim for breach of contract against Defendant Cuker Interactive, LLC ("Cuker"), and on Cuker's counter-claims against Walmart for breach of contract, unjust enrichment, and misappropriation of trade secrets. On April 21, the jury returned a verdict against Walmart and in favor of Cuker on each count, see Doc. 445, awarding damages to Cuker on its contract claim in the amount of $30, 629, id. at 5, on its unjust enrichment claim in the amount of $400, 000, id. at 7, and on its trade-secret misappropriation claim in the amount of $12, 008, 036, see Id. at 9-12. The jury specifically found that Walmart's misappropriation of Cuker's trade secrets was "willful and malicious, " except with respect to a trade secret known as the "CMS Tweak Development Tool." See Id. On April 24, this Court entered an Order requiring briefing on, inter alia, what impact the underlying contract's limitation-of-liability clause would have on the damages award with respect to the CMS Tweak Development Tool, and what permanent injunctive relief, if any, Cuker should be awarded in light of the jury's verdict. See Doc. 450, pp. 5-6. The parties filed a joint stipulation regarding the limitation-of-liability issue on May 5, see Doc. 454, but they were unable to reach an agreement on the matter of injunctive relief. They have provided adversarial briefing on the latter issue, see Docs. 462, 463, 468, 470, which is now ripe for decision.

         I. DISCUSSION

         A. Contractual Injunctive Relief

         Cuker contends that the jury's verdicts entitle it to permanent injunctive relief under Section 4 of its Consulting Agreement with Walmart, see Doc. 124-7, pp. 3-4 ("the Confidentiality Clause"), as well as under the Arkansas Trade Secrets Act ("ATSA") at Ark. Code Ann. § 4-75-604. The decision whether to grant permanent injunctive relief is committed to this Court's equitable discretion. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). A claimant seeking a permanent injunction must demonstrate four things:

(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

Id. The proper interpretation of the parties' contract and the scope of injunctive relief available under the ATSA are both questions of Arkansas state law. See Doc. 124-7, p. 7 ("This Agreement is governed in all respects by the laws of Arkansas . . . ."); Sigma Chem. Co. v. Harris, 794 F.2d 371, 374 n.4 (8th Cir. 1986) (". . . trade secret law is state law . . .") (quoting Am. Can Co. v. Mansukhani, 742 F.2d 314, 334 n.24 (7th Cir. 1984)).

         Cuker argues that the Consulting Agreement's Confidentiality Clause protects a universe of "Confidential Information" that extends beyond the trade secrets that the jury found Walmart to have misappropriated, and it asks the Court to enter "a forward-looking injunction restricting Walmart's use of the broader universe of Confidential Information." (Doc. 463, pp. 3-4). Walmart counters that the Consulting Agreement does not authorize injunctive relief for Cuker, because Section 12 of the Consulting Agreement (which is helpfully entitled "Injunctive Relief) only explicitly discusses circumstances under which Walmart may be entitled to injunctive relief. See Doc. 124-7, p. 6; Doc. 468, p. 2 n.1. However, the Court believes there is no need to decide whether the Consulting Agreement authorizes injunctive relief for Cuker, because even if it does authorize such relief, the Court lacks sufficient information to craft an injunction enforcing it with any specificity beyond generic language that simply instructs Walmart to comply with the Confidentiality Clause.

         The Federal Rules of Civil Procedure require that every injunction this Court enters must "describe in reasonable detail-and not by referring to the complaint or other document-the act or acts restrained or required." Fed.R.Civ.P. 65(d)(1)(C) (emphasis added). Cuker's proposed injunctive language does not specifically identify any particular Confidential Information under the contract that Walmart should be enjoined from misusing. See Doc. 470-1, pp. 2-3. Given the enormous amount of information that the parties exchanged during their performance of the Consulting Agreement and during the litigation of this case, the Court believes far greater detail than this is necessary to put Walmart on reasonable notice of what conduct is being enjoined. Cf. United States v. Articles of Drug, 825 F.2d 1238, 1247 (8th Cir. 1987) ("The injunction fails to identify the specific drug products that Midwest is prohibited from selling or marketing and fails to specify the marketing techniques that Midwest may not employ. On remand the district court should revise the injunction so that the specific acts which are prohibited are clearly defined within the order as required by Fed.R.Civ.P. 65(d)."); Calvin Klein Cosmetics Corp. v. Parfums de Coeur, Ltd., 824 F.2d 665, 669 (8th Cir. 1987) ("Broad language in an injunction that essentially requires a party to obey the law in the future is not encouraged and may be struck from an order for injunctive relief, for it is basic to the intent of Rule 65(d) that those against whom an injunction is issued should receive fair and precisely drawn notice of what the injunction actually prohibits.").

         B. Statutory Injunctive Relief

         The Court turns now to the issue of injunctive relief under the ATSA, which authorizes enjoinment of "[a]ctual or threatened misappropriation" of trade secrets. Ark. Code Ann. § 4-75-604(a). At trial, Cuker put on proof that Walmart saved itself roughly six months of development time by misappropriating Cuker's trade secrets, and argued that Cuker was entitled to disgorge the amount of money by which this six-month head start unjustly enriched Walmart. See Ark. Code Ann. § 4-75-606(b). The jury agreed, and returned a verdict finding that Cuker was entitled to recover the full amount of damages for trade-secret misappropriation that it requested under this theory. Cuker recognizes that "[t]he jury's award of damages compensated Cuker for Walmart's past" trade-secret misappropriation, but Cuker also seeks entry of a permanent injunction prohibiting Walmart from further future misappropriation of those same trade secrets. See Doc. 463, pp. 1-2.

         The Court finds, as a threshold matter, that Cuker has shown all four things it must demonstrate in order to be entitled to injunctive relief. First, Cuker has shown irreparable harm by Walmart's actual or threatened misappropriation of its trade secrets, because the theory of misappropriation on which Cuker prevailed at trial included disclosure of Cuker's trade secrets to third parties. Cf. Sys. Spray-Cooled, Inc. v. FCH Tech, LLC, 2017 WL 2124469, at *13 (W.D. Ark. May 16, 2017) (Hickey, J.) ("Without evidence that Defendants disseminated, disclosed or otherwise irreparably diminished Systems' trade secrets, the Court cannot presume that Systems has been irreparably harmed."). Second, and consequentially, Cuker has shown that remedies available at law, such as monetary damages, are inadequate to fully compensate it for prospective injury. See General Motors Corp. v. Harry Brown's, LLC, 563 F.3d 312, 319 (8th Cir. 2009) ("Irreparable harm occurs when a party has no adequate remedy at law, typically because its injuries cannot be fully compensated through an award of damages."); see also Oglala Sioux Tribe v. C & WEnters., Inc., 542 F.3d 224, 229 (8th Cir. 2008) (implicitly subsuming the factor of inadequate legal remedies within the factor of irreparable harm). Third, Cuker has shown that the balance of hardships between it and Walmart weighs in favor of an injunction; not only is Walmart many times larger than Cuker, but per the jury's verdict, Walmart has only itself to blame for whatever hardships an injunction may cause it.[1] And fourth, the public obviously has an interest in seeing the law enforced; at any rate, there is nothing in the record showing that the public would be harmed by entry of a permanent injunction.

         Nevertheless, Walmart opposes the entry of a trade-secrets injunction, contending that any such injunctive relief would be duplicative, given the theory of damages on which Cuker prevailed at trial. Specifically, Walmart argues that "[t]he situation here is directly analogous" to the case of 3M v. Pribyl, 259 F.3d 587 (7th Cir. 2001), in which the Seventh Circuit explained:

In this instance, the district court made a factual determination that Accu-Tech would have been able to independently develop 3M's trade secret in a period of less than two years-a conclusion which 3M does not dispute. ... As such, by the time the district court was faced with determining whether to enjoin Accu-Tech's use of 3M's trade secret, the court believed that Accu-Tech would have discovered 3M's trade secret. Hence, the district court properly determined that once payment to 3M had been made to alleviate any commercial ...

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