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Jacobs Vehicle Systems, Inc. v. Yang

United States District Court, M.D. North Carolina

July 31, 2015

JACOBS VEHICLE SYSTEMS, INC., Plaintiff,
v.
ZHOU YANG, Defendant.

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

JOE L. WEBSTER, Magistrate Judge.

This matter is before the court upon Defendant Zhou Yang's ("Defendant" or "Yang") motion for summary judgment (Docket Entry 46) as to all of Plaintiff Jacobs Vehicle Systems, Inc.'s ("Plaintiff" or "JVS") claims against him. The motion has been fully briefed and is ripe for disposition. For the reasons that follow, the court will recommend that the motion be granted in part and denied in part.

STATEMENT OF THE CASE

Plaintiff filed suit in this court on February 22, 2012. (Docket Entry 1.) A first amended complaint was filed on May 15, 2012. (Docket Entry 9.) Defendant's motion to dismiss the amended complaint was granted in part and dismissed in part by order dated September 10, 2013. (Docket Entry 20.) By consent of the parties, a second amended complaint was filed on March 3, 2015. (Docket Entry 89.) While the motion for summary judgment was already pending at the time the second amended complaint was filed, the court will assume that the motion goes to the latest filed complaint.

Plaintiff asserts six claims for relief based upon Defendant's allegedly improper use of confidential information and trade secrets: (1) breach of contract not to use Plaintiff's proprietary and confidential information, (2) misappropriation of trade secrets, (3) conversion, (4) unfair and deceptive trade practices, (5) civil conspiracy, and (6) unjust enrichment. Plaintiff seeks damages and injunctive relief.

Defendant filed the instant motion for summary judgment on January 19, 2015, asserting that there are no genuine issues of material fact and that he is entitled to judgment as a matter of law. (Docket Entry 46.) At the same time, Defendant filed a motion to seal the exhibits to the motion for summary judgment and brief in support thereof. (Docket Entry 48.)[1]

STATEMENT OF MATERIAL FACTS

Viewing the evidence in the light most favorable to Plaintiff, the material facts may be summarized as follows. Plaintiff JVS is a Delaware corporation with its principal place of business in Connecticut. It is also a wholly-owned subsidiary of Danaher Corporation ("Danaher"), a global conglomerate with its headquarters in Washington, D.C. JVS primarily manufactures engine brakes, engine retarders, and engine retarding systems for use on heavy-duty diesel-powered vehicles.

Defendant Yang, a United States citizen, began working as a senior engineer at JVS in April 1998 in Connecticut.[2] On July 6, 1998, Defendant signed an Employee Confidential and Proprietary Information Agreement with JVS and its entities.[3] This Agreement contained a two-year non-compete clause. (Agreement, § I, Pl.'s Mem. Opp. S.J., Ex. 5, Docket Entry 90-5.) In Section B of the Agreement, Defendant acknowledged that any innovations or inventions conceived by him would "be the exclusive property of the Company or its nominees whether or not patented or copyrighted." ( Id. § B.) Additionally, in Section E of the Agreement, Defendant agreed

not to publish or otherwise disclose (except as [his JVS] duties may require) either during or subsequent to [his] employment, or to use in any manner, any information, knowledge or data of [JVS] or its customers which [he] may receive or develop during the course of [his] employment relating to inventions, discoveries... proprietary information or other[] matters which are of a secret or confidential nature; [th]his included but is not limited to [his] own business enterprises, subsequent to his employment...

( Id. § E.) Another section of the Agreement requires Defendant to keep confidential the proprietary information and trade secrets of JVS. ( Id. § G.)

Defendant was the inventor or co-inventor of twenty-one patents owned by JVS While employed by JVS, Defendant developed several novel engine brake designs which are described in JVS Innovation Disclosure Forms, identified with a "DP" designation and number. ( See Pl.'s Mem., Ex. 6, Yang Dep. 65, Docket Entry 90-6.). Each Innovation Disclosure Form submitted to JVS by Defendant resulted in additional compensation for him, above his salary. ( Id. at 67.) In 2004, Defendant submitted Innovation Disclosure Form DP-564, which described and illustrated a toggle-based engine brake

Defendant worked at JVS as a senior engineer through April 2006. From April 2006 until June 2008, Defendant was employed at Gilbarco, Inc., another wholly-owned subsidiary of Danaher Corporation. On June 10, 2008, Defendant resigned from Gilbarco.

After leaving Gilbarco, Defendant began working for Shanghai Universoon Autoparts, Ltd. ("Universoon"), a direct competitor of JVS' sister company in China. Prior to Defendant's employment at Universoon, that company was not engaged in the manufacture of engine brakes, and indeed, once Defendant began working there, he was the only employee with engine braking experience. (Yang. Dep. 96; 98-99, Docket Entry 90-6.) Soon after Defendant's employment at Universoon, Universoon began manufacturing a toggle-based engine brake which placed the company in direct competition with JVS in the Chinese engine braking market.

JVS brought this action alleging that Defendant filed or caused to be filed sixteen Chinese patents under Universoon's name but which use or are derived from protected JVS trade secret information, a violation of the North Carolina Trade Secrets Protection Act ("NCTSPA"), N.C. Gen. Stat. § 66-152 et seq. JVS also alleges that Defendant's actions breached the agreement between the parties and amounted to unfair and deceptive trade practices in violation of N.C. Gen. Stat. 75-1.1 ("NCUDTPA"). Plaintiff also brings claims for conversion, civil conspiracy and unjust enrichment.

DISCUSSION

A. Motion for Summary Judgment

1. Standard of Review

Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The party seeking summary judgment bears the initial burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its burden, the nonmoving party then affirmatively must demonstrate with specific evidence that there exists a genuine issue of material fact requiring trial. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Only disputes between the parties over facts that might affect the outcome of the case properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

"[A]t the summary judgment stage, the [court's] function is not [itself] to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. Similarly, "[c]redibility determinations... are jury functions, not those of a judge." Id. at 255. In determining whether there is a genuine issue for trial, "evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [non-movant's] favor." Id.; see United States v. Diebold, Inc., 369 U.S. 654, 655 (1962) ("On summary judgment the inferences to be drawn from the ...


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