1. Trials--continuance to obtain counsel--denied--no abuse of
discretion
The trial court did not abuse its discretion by refusing to
grant defendants an additional continuance to obtain counsel
where the court had granted defense counsel's motion to withdraw
four months before trial was scheduled to begin and had given
defendants a thirty-day stay and a one day continuance on the day
of trial.
2. Trade Secrets--breadth of injunction--attempt to evade more
specific order
An order granting injunctive relief against defendant Gould
was not overly broad where the order permanently enjoined the
manufacture or sale of all inorganic or oregano-metallic chemical
compounds in an action arising from defendant's use of a prior
employer's information. It is apparent that the trial court felt
it necessary to broaden the injunctive relief from an earlier,
more specific order, given a history of bad faith and
underhanded dealing which indicated that defendants would
continue to try to evade the court's order. Moreover, defendants
had no skills in this area apart from the trade secrets
misappropriated from plaintiff.
3. Trade Secrets--misappropriation_damages
The trial court did not err in the amount of compensatory
damages it awarded in a trade secret misappropriation action
where defendants complained that the court's figures did not take
into account defendants' costs but presented no evidence as to
those costs.
4. Trade secrets_attorney fees--findings as to calculation
The trial court erred in an award of attorney fees in a
trade secret misappropriation action by not making findings as to
how the award was calculated. N.C.G.S. § 66-154(d).
CAMPBELL, Judge.
Defendants appeal from two orders of the trial court: (1)
order dated 30 November 1999, enjoining defendant Robin O. Gould
(“Gould”) and his company, defendant Gould Industries, Inc. (“Gould
Industries”), from all operations, ordering that the business be
permanently closed, and awarding both compensatory and punitive
damages, and (2) order dated 26 January 2000, denying defendants'
motions for new trial, amendment of judgment, relief from judgment,
and stay of enforcement of judgment.
Plaintiff Barker Industries, Inc., owned by Marc and Robert
Settin, is a manufacturer of high grade, inorganic and organo-
metallic chemical compounds. Plaintiff supplies its customers with
high quality, high purity compounds which it has successfully
researched and manufactured over the past twenty-five years.
Plaintiff has also established close relationships with its
suppliers to ensure quality raw materials, and has built a solid
customer base, even sometimes working with its customers to tailor
its products to the customers' specific needs.
In 1993, plaintiff hired defendant Gould to perform clerical
work for the company. Gould's duties included recording customer
orders and placing orders for the needed supplies and raw
materials. Gould was not engaged in actually manufacturing
chemicals, and had no background or training in this area. Sometime before his termination in October of 1997, Gould began
making copies of plaintiff's customer, supplier, and pricing lists;
compiling this information in what became known as the “Address
Book.” Gould also made copies of plaintiff's “prep sheets,” which
contained the precise product formulations for the chemicals
plaintiff manufactured. These “prep sheets” were the result of
refinements made over the years that allowed for the high purity of
the products, and could only be found on Robert Settin's password-
protected computer.
After his termination, Gould began manufacturing inorganic and
organo-metallic compounds in direct competition with plaintiff,
using the information Gould had taken from plaintiff. Gould
Industries obtained raw materials from plaintiff's suppliers, and
attempted to sell its products to plaintiff's customers. Plaintiff
sought to enjoin defendants' activities, and brought suit for
injunctive relief and damages.
[1]Defendants' first contention is that the trial court erred
by not allowing defendants a second continuance in order to obtain
counsel for the 11 November 1999 proceeding. We disagree.
The decision to grant or deny a continuance is subject to the
trial court's discretion, and will not be overturned absent an
abuse of that discretion. State v. Call, 353 N.C. 400, 415, 545
S.E.2d 190, 200 (2001). Despite defendants' contention, it is
apparent from the record before us that defendants were fully
aware their counsel had filed a motion to withdraw, that this
motion had been granted by the trial court a full four months
before the trial was scheduled to begin, and that the trial courthad given defendants ample opportunity to obtain counsel--
including a thirty day stay of the proceedings to enable
defendants to retain counsel, and a one day continuance on the day
of trial when defendants announced that their attorney was not
able to attend court on that day. Therefore, we conclude the
trial court did not abuse its discretion by refusing to grant
defendants an additional continuance in order to obtain counsel.
[2]Defendants' next set of contentions involve the 30
November 1999 order. First, defendants argue that the injunctive
relief ordered by the court against defendant Gould, permanently
enjoining him from the manufacture or sale of inorganic or organo-
metallic chemical compounds is over broad. In support of this
argument, defendants state several factors that should be
considered in tailoring injunctive relief. We review each of
these factors under an abuse of discretion standard. Roberts v.
Madison County Realtors Ass'n, Inc., 344 N.C. 394, 399, 474 S.E.2d
783, 787 (1996) (“When equitable relief is sought, courts claim
the power to grant, deny, limit, or shape that relief as a matter
of discretion.”).
To begin, defendants assert that our courts are wary of
prohibiting “an employee from working in his field of training
even if the employee's general skills and knowledge were acquired
in the course of his employment,” citing Engineering Associates,
Inc. v. Pankow, 268 N.C. 137, 139, 150 S.E.2d 56, 58 (1966), for
this proposition. Gould, however, was hired by plaintiff to do
clerical work. He was studying to be a certified publicaccountant. His “field of training” at no time included
manufacturing chemicals. Gould never received any sort of
training in this field, held no chemistry degrees, and was never
taught these skills by plaintiff during his employment.
Accordingly, we hold the trial court did not prevent defendant
Gould from working in his “field of training,” and therefore did
not abuse its discretion.
Next, defendants assert that the injunctive relief granted by
the trial court was too broad, and that instead, the relief should
be “limited to specific items or information and not be a widely
encompassing order.” Defendants' apparent objection here, is that
the order permanently enjoined Gould from “the manufacture or sale
of inorganic or organo-metallic chemical compounds” without
listing specific compounds, thereby effectively enjoining
defendants from the manufacture of any such compound. Defendants
contend a much more reasonable approach would have been to enjoin
the manufacture of the twenty-seven compounds listed on the “prep
sheets” obtained by Gould. Again, we find no abuse of discretion
on behalf of the trial court.
Defendants here are solely responsible for their plight by
actively ignoring the terms of the preliminary injunction against
them. In the preliminary injunction, the trial court stated:
“Defendants Robin O. Gould and Gould Industries, Inc. shall not
manufacture or sell any of the specialized chemical compounds
whose formulation information was taken by Gould in the form of
Prep Sheets. Attached as Exhibit A hereto is a list of those
products.” Exhibit A goes on to list the twenty-seven specificchemicals that defendants were prohibited from manufacturing.
Then the trial court further ordered that: “Defendants Robin O.
Gould and Gould Industries, Inc. shall not sell other products
currently marketed by Barker to Barker's customers whose
identities and purchasing habits are recorded on the address book
compiled by Gould. . . . Attached as Exhibit C hereto is a list
of those customers.”
The trial court took great care in setting out the specific
chemicals, customers, and suppliers to which the preliminary
injunction applied. However, defendants tried to evade the trial
court's order by adding trace amounts of chemicals to the
compounds (which would not affect the compound's performance),
then claiming that they were not the same chemicals covered by the
preliminary injunction, and by selling to affiliates of
plaintiff's customers instead of selling directly to the customers
themselves. This is evidenced by the trial court's findings of
fact in its supplemental preliminary injunction, where it found
defendants had sold chemicals that were “either identical or
insubstantially distinct” from chemicals it had been enjoined from
manufacturing in the preliminary injunction, and that defendants
sold its products to a customer that was affiliated with a prior
Barker customer. In fact, the Barker customer and its affiliate
shared the same telephone number, and the chemicals sold to the
affiliate were sold at the same price, and in the same amount, as
the chemical defendants had been enjoined from selling to the
original Barker customer. The trial court also found that
defendants were operating a website listing for sale many of thechemicals defendants were enjoined from manufacturing. We
therefore find no abuse of discretion on the part of the trial
court in enjoining Gould from the manufacture or sale of inorganic
and organo-metallic compounds.
Defendants' last argument against the injunction is that
defendants cannot be enjoined from the manufacture of products
that differ from those that plaintiff manufactures. Defendants
assert that the chemicals they produced were of an “industrial
grade,” and that plaintiff sold only the highest purity chemicals,
and would not produce lower quality products. Nevertheless, we
conclude the trial court was within its discretion to enjoin Gould
as it did.
We note that broad injunctive relief is available where there
has been some showing of bad faith or underhanded dealings on the
part of the party to be enjoined, or where the party plainly lacks
comparable skills so that misappropriation can be inferred. FMC
Corp. v. Cyprus Foote Mineral Co., 899 F.Supp. 1477, 1482
(W.D.N.C. 1995). It is also “'well settled that an injunction
will issue to prevent unauthorized disclosure and use of trade
secrets and confidential information.'” Barr-Mullin, Inc. v.
Browning, 108 N.C. App. 590, 594, 424 S.E.2d 226, 229 (1993)
(quoting Travenol Laboratories, Inc. v. Turner, 30 N.C. App. 686,
692, 228 S.E.2d 478, 483 (1976)).
It is apparent that the trial court felt it necessary to
broaden the injunctive relief, given the defendants' past history.
As noted above, after the preliminary injunction was filed,defendants added trace amounts of chemicals to their products and
sold them to affiliates of plaintiff's customers in an attempt to
evade the trial court's order. In fact, the trial court expressly
stated in the supplemental preliminary injunction, that “[u]nless
more expansively restrained, Gould and Gould Industries will
continue to use Barker's own trade secrets to its irreparable
injury,” whereupon it added additional restraints to the
preliminary injunction.
Nonetheless, even with full knowledge of the preliminary
injunction and the more restrictive supplemental preliminary
injunction, defendants continued to avail themselves of
plaintiff's trade secrets by manufacturing and selling the
enjoined products to plaintiff's customers from whom defendants
had been expressly banned. Not only does this show bad faith and
underhanded dealings, but it shows that defendants would very
likely continue to try to evade the trial court's order. Further,
as defendants had no skills in this area apart from the trade
secrets Gould misappropriated from plaintiff, the trial court's
broad injunctive relief was well within its discretion to award,
and did not constitute an abuse of that discretion.
[3]Defendants next find fault with the amount of
compensatory damages awarded by the trial court in its 30 November
1999 order. The trial court awarded plaintiff $72,666.30 in
compensatory damages due to unjust enrichment. Under North
Carolina's Trade Secrets Protection Act, N.C. Gen. Stat. §§ 66-152
to 66-157 (1999), in addition to injunctive relief, a party may
recover actual damages “measured by the economic loss or theunjust enrichment caused by misappropriation of a trade secret,
whichever is greater.” N.C. Gen. Stat. § 66-154(b) (1999).
Defendants contend that the evidence introduced by plaintiff to
show unjust enrichment was “factually flawed” because plaintiff
did not prove a causal link between the wrong committed and the
damages incurred.
To the contrary, our review of the evidence reveals plaintiff
provided ample proof that defendants were unjustly enriched due to
sales of Barker products to Barker's customers. Plaintiff's
exhibit forty-two lists the dates, quantities, prices, and
products sold by defendants to plaintiff's customers. The net
result of those sales was income to defendants in the amount of
$72,666.30, and it is evident that these sales were a direct
result of Gould's misappropriation of plaintiff's trade secrets.
Although defendants complain that the unjust enrichment figures
did not take into account defendants' manufacturing, sales, and
shipping costs, defendants presented no evidence as to these
costs. Therefore, we conclude the trial court did not err in
awarding compensatory damages in the amount of $72,666.30.
[4]Defendants' last assignment of error regarding the 30
November 1999 order, is that the trial court erred in its
additional award of $19,000.00 in attorneys' fees to plaintiff.
Although N.C. Gen. Stat. § 66-154(d) (1999) does authorize the
trial court to award reasonable attorneys' fees if a “willful and
malicious misappropriation exists,” the trial court must still
make sufficient findings of fact regarding how the award was
calculated. “[I]n order for the appellate court to determine ifthe statutory award of attorneys' fees is reasonable, the record
must contain findings of fact as to the time and labor expended,
the skill required, the customary fee for like work, and the
experience or ability of the attorney.” United Laboratories, Inc.
v. Kuykendall, 102 N.C. App. 484, 494, 403 S.E.2d 104, 111 (1991).
In the case sub judice, however, it is unclear from the record how
the trial court arrived at this figure. It is therefore necessary
to remand this issue to the trial court for proper findings.
Defendants' final assignments of error involve the 26 January
2000 order of the trial court, denying defendants' motions for new
trial, amendment of judgment, relief from judgment, and stay of
enforcement of judgment. These motions were based on the same
issues as the preceding assignments of error. Having found no
error at the trial level, and having remanded the issue of counsel
fees for further findings by the trial court, we find these
assignments of error to be without merit.
Affirmed in part and remanded in part.
Judges BIGGS and SMITH concur.
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