Cases from Shephard

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.

Eighth Circuit
8th Circuit Questions Award of Attorney’s Fees in Mayo Clinic Case

The Eighth Circuit affirmed a district court judgment against Dr. Peter Elkin (Elkin) a clinician and researcher formerly employed by the Mayo Clinic (Mayo), while calling into question the district court’s award of attorneys’ fees. Mayo originally brought ten causes of action against Elkin relating to Elkin’s misappropriation of natural language processing software that Elkin developed during his employment with Mayo.

While overruling a number of Elkin’s objections and affirming the judgment against Elkin, the unanimous Eighth Circuit panel took issue with the district court’s award of $1,900,139.90 in attorneys’ fees. Only one of the ten claims brought against Elkin, the Minnesota trade secret claim, provided a statutory basis for recovering attorneys’ fees. Despite this, Mayo asserted and the district court agreed that $1,900,139.90 of $2,447,058.36 (78%) in total attorneys’ fees were attributable to the trade secret claim.

The Eighth Circuit found that Mayo’s broad monthly summaries of litigation expense did not provide a sufficiently detailed basis for the district court’s award, and found that rather than performing a proper Lodestar analysis, the district court had spent its time “lambasting Elkin for his employment of time-consuming litigation strategies.” The panel remanded the case for a new determination of attorneys’ fees, and ordered Mayo to “strike an appropriate balance between the 4,000 pages [of total documentation] and the 5-page chart provided” in its original request.