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Pawelko v. Hasbro, Inc.

United States District Court, D. Rhode Island

November 19, 2018

MARISA PAWELKO
v.
HASBRO, INC.

          REPORT AND RECOMMENDATION

          LINCOLN D. ALMOND United States Magistrate Judge

         Pending before me for a report and recommendation (28 U.S.C. § 636(b)(1)(B)) is Defendant Hasbro's Motion for Summary Judgment. (ECF Doc. No. 113). Plaintiff Marisa Pawelko objects to the Motion. (ECF Doc. No. 163). For the following reasons, I recommend that Hasbro's Motion for Summary Judgment be GRANTED in part and DENIED in part as specified herein.

         Background

         In her Third Amended Complaint, Plaintiff claims to be the inventor of an “original, innovative [crafting] product and idea” known as “Liquid Mosaic.” (ECF Doc. No. 41 at p. 1). She describes the invention as “a one of a kind arts and crafts play system…that made it easy and fun for children to create art projects and decorate by using a unique craft gun, with interchangeable extrusion tips to draw different line patterns and create textures, and prefilled removable cartridges containing a compound that sticks to multiple surfaces….” (ECF Doc. No. 163 at p. 1). On November 15, 2010, Plaintiff executed Hasbro's standard Non-disclosure Agreement and thereafter pitched the idea to Hasbro.[1] Her presentation included participation in a conference call, a five-page slide deck sent by email (ECF Doc. No. 41-2), and three sample craft projects (a hat, a purse and a light switch cover) made with a prototype compound made of caulk. (ECF Doc. No. 163 at pp. 1-2). Hasbro passed on the idea in December 2010 but told Plaintiff that “Liquid Mosaic” was “a great concept that we'll keep in mind for the future but the disposition now is a pass.” (ECF Doc. No. 41 at ¶ 12). In May 2011, Hasbro returned the “Liquid Mosaic” samples to Plaintiff. Id. at ¶ 13.

         Plaintiff contends that Hasbro misappropriated her “Liquid Mosaic Submission” and used it to develop Play Doh Plus and DohVinci, two new product lines that incorporate the elements and features of “Liquid Mosaic.” (ECF Doc. Nos. 41 at p. 1 and 163 at p. 2). Hasbro denies such misappropriation and disputes that the “Liquid Mosaic Submission” qualifies as a legally protectable trade secret.

         Plaintiff's Third Amended Complaint contains seven claims against Hasbro based on this alleged conduct: breach of the Non-disclosure Agreement, breach of the covenant of good faith and fair dealing, breach of an implied-in-fact contract, breach of the Rhode Island Uniform Trade Secrets Act (R.I. Gen. Laws § 6-41-1, et seq.), common law unfair competition, breach of the federal Defend Trade Secrets Act (18 U.S.C. § 1836, et seq.), and unjust enrichment.

         Plaintiff concedes that Count V (Unfair Competition) may be dismissed. (ECF Doc. No. 163 at p. 66). Plaintiff also “acknowledges” that Rhode Island does not recognize a claim for unjust enrichment (Count VII) when an express contract exists between the parties such as in this case. Id. at p. 67.[2] As to Count III (Breach of Implied-in-fact Contract), Hasbro persuasively argues that it fails as a matter of law because the parties executed an express contract (the Nondisclosure Agreement) that governs the same subject matter. (See ECF Doc. No. 187 at pp. 62-65). The premise of Count III is that Hasbro used Plaintiff's confidential information without her consent and without remuneration. This is the exact same conduct underlying Plaintiff's claim in Count I that Hasbro breached the Non-disclosure Agreement. (See, e.g., ECF Doc. No. 41 at ¶¶ 41, 42). Thus, Count III should be dismissed. Finally, as to Count II (Breach of Implied Covenant of Good Faith and Fair Dealing), Hasbro again persuasively argues that dismissal is warranted because the allegations in Count II are redundant of Plaintiff's Count I breach of contract claim. (ECF Doc. Nos. 113 at pp. 58-59 and 187 at pp. 63-65). Plaintiff effectively concedes this in her brief. (See ECF Doc. No. 163 at p. 60).[3] There is no substantive difference between the alleged misconduct underlying Counts I and II. Both are necessarily premised on the use of Plaintiff's confidential information without her consent and without remuneration. Thus, Count II is duplicative and subsumed within Count I as a matter of law and must be dismissed. See Sauer v. Xerox Corp., 95 F.Supp.2d 125, 132 (W.D.N.Y. 2000).

         After separating the wheat from the chaff, only Count I (Breach of the Non-disclosure Agreement) and Counts IV and VI (State and Federal Trade Secret Misappropriation) should remain standing. Hasbro's Motion does not raise the issue of whether or not Plaintiff has presented a trialworthy claim of misappropriation. Rather, Hasbro narrowly focuses on the legal status of the information allegedly misappropriated and argues that the “Liquid Mosaic Submission” does not qualify as a trade secret subject to the protections of either state or federal law. In addition, Hasbro argues that it had no contractual confidentiality obligations under Sections 6.1(A), (B) and (E) of the Non-disclosure Agreement because the information in issue was demonstrably known to Hasbro prior to the submission from Plaintiff, was known or generally available to the public prior to the submission from Plaintiff and was disclosed by Plaintiff to a third party without confidentiality required. These arguments are considered below in the context of the applicable Rule 56 standard of review.

         Discussion

         A. Summary Judgment Standard

         A party shall be entitled to summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). When deciding a motion for summary judgment, the Court must review the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in the nonmoving party's favor. Cadle Co. v. Hayes, 116 F.3d 957, 959 (1st Cir. 1997).

         Summary judgment involves shifting burdens between the moving and the nonmoving parties. Initially, the burden requires the moving party to aver “an absence of evidence to support the nonmoving party's case.” Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). Once the moving party meets this burden, the burden falls upon the nonmoving party, who must oppose the motion by presenting facts that show a genuine “trialworthy issue remains.” Cadle, 116 F.3d at 960 (citing Nat'l Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir. 1995); Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994)). An issue of fact is “genuine” if it “may reasonably be resolved in favor of either party.” Id. (citing Maldonado-Denis, 23 F.3d at 581).

         To oppose the motion successfully, the nonmoving party must present affirmative evidence to rebut the motion. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-257 (1986). “Even in cases where elusive concepts such as motive or intent are at issue, summary judgment may be appropriate if the nonmoving party rests merely upon conclusory allegations, improbable inferences, [or] unsupported speculation.” Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990). Moreover, the “evidence illustrating the factual controversy cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve.” Id. (quoting Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 181 (1st Cir. 1989)). Therefore, to defeat a properly supported motion for summary judgment, the nonmoving party must establish a trial-worthy issue by presenting “enough competent evidence to enable a finding favorable to the nonmoving party.” Goldman v. First Nat'l Bank of Boston, 985 F.2d 1113, 1116 (1st Cir. 1993) (citing Anderson, 477 U.S. at 249).

         B. Trade Secret Status

         Hasbro argues for summary judgment on Counts IV and VI because Plaintiff's “Liquid Mosaic Submission” does not constitute a legally-protectable trade secret under either state or federal law. Relatedly, it argues for summary judgment on Count I because Plaintiff's submission was not contractually entitled to confidentiality protection under the Non-disclosure Agreement. Plaintiff counters that summary judgment is improper because a reasonable jury could conclude that the “Liquid Mosaic Submission” was a trade secret, was misappropriated by Hasbro and was exploited by it for commercial gain. It is undisputed that, to constitute a trade secret, the “Liquid Mosaic Submission” must (1) not be generally known to others who could obtain economic value from its use; (2) not be readily ascertainable to others who could obtain economic value from its use; (3) derive independent economic value from remaining secret; and (4) be subject to reasonable efforts to maintain its secrecy. (ECF Doc. Nos. 113 at pp. 23-25 and 163 at pp. 23-24).

         The first task for the Court is to define the applicable lens through which the parties' respective submissions must be viewed.[4] Hasbro understandably prefers a narrower lens that focuses on the trade secret status of the “Liquid Mosaic Submission” and excludes evidence regarding Plaintiffs claims of misappropriation and commercial exploitation. In its Reply Memorandum, Hasbro faults Plaintiffs attempt to tell a “tale of misappropriation” in her opposition brief which serves only to “distract” from the trade secret issue. (ECF Doc. No. 187 at pp. 4-5). Plaintiff, on the other hand, suggests a broader lens which captures more of the evidence regarding Hasbro's alleged misappropriation and later product development activities. Plaintiff posits that such evidence supports a reasonable inference that her product idea was novel and valuable and thus entitled to trade-secret protection. In view of the Rule 56 requirements that the evidence be liberally construed in the light most favorable to Plaintiff and that all reasonable inferences be drawn in her favor, the Court leans towards a broader lens. See Carlson v. FedEx Ground Package Sys., Inc., 787 F.3d 1313, 1318 (11th ...


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