Cases from Gruender

8th Circuit
Distinguishing Between Misappropriation and Breach of Contract

Loftness Specialized Farm Equipment, Inc. (“Loftness”) brought a declaratory judgment action againt three defendants (Terry Twiestmeyer; Steven Hood; and Twiestmeyer & Associates, Inc.) (collectively, "Twiestmeyer"), arguing that it had satisfied an agreement with Twistmeyer regarding grain bagging equipment design secrets. Defendants allege that they shared this confidential information with Loftness in 2007, that these conversations eventually led to Loftness’s decision to enter this market, and that this information was shared with Loftness under the protection of a twenty-year Non-Disclosure Agreement (“NDA”) which the parties signed before their meeting. Thereafter, the parties agreed to an additional agreement in which defendant would be paid a percentage of the revenue generated from the sale of this equipment for two years.

Twiestmeyer received payments for more than two years, but the parties were unable to negotiate a new deal to govern the remaining time covered by the NDA, after which Loftness brought this action. Twiestmeyer subsequently countersued for unjust enrichment and breach of the two contracts.

The district court dismissed the unjust enrichment claim and granted Loftness’s summary judgment motion on the breach of contract.

In the section of the opinion most relevant to trade secret practitioners, the Court of Appeals determined that the district judge had erred in applying the test for the tort of misappropriation and that, instead, the claim was based on a breach of contract. Because the district court had failed to analyze the NDA, the court remanded the case so that the district court could examine the NDA.