Opinion handed down February 25, 2014
I.
Facts and Holding
Troy
Kennedy was a director and executive officer for Springfield Trust &
Investment Company (“STC”) until Central Trust and Investment Company (“Central
Trust”) purchased STC on November 20, 2009.[2] When Central Trust purchased
STC, Kennedy left his job and formed his own corporation, ITI Financial
Management, LLC (ITI).[3] While the sale was still being negotiated, Kennedy
placed a list of clients and client information in a safety deposit
box.[4] Kennedy started soliciting
Central Trust’s clients, and, as of six months later, 85 of ITI’s 90 customers
were former customers of Central Trust.[5]
In
February of 2010, Kennedy signed an agreement with SignalPoint Asset
Management, LLC (SignalPoint) to be an Independent Advisor Representative.[6]
All of Kennedy’s emails go through SignalPoint, and Kennedy tells his clients
he is affiliated with SignalPoint.[7] The agreement states that Kennedy is an
independent contractor of SignalPoint and has no right to bind SignalPoint.[8]
Central
Trust filed a petition against Kennedy, ITI, and SignalPoint alleging three
claims: (1) misappropriation of trade secrets, (2) tortious interference with
business relations, and (3) civil conspiracy.[9] SignalPoint filed for summary
judgment for all three claims.[10] The
circuit court sustained SignalPoint’s motion, finding there was no genuine
issue of material fact and that SignalPoint was entitled to judgment as a
matter of law as to all three claims asserted against it.[11] Central Trust appealed, and while the appeal was
pending, dismissed the claims against Kennedy and ITI.[12]
The
Court found there was no misappropriation by Signal Point and thus did not
consider whether Central Trust’s client list was a trade secret.[13] The Court
considered two different arguments.[14]
First, the Court considered whether SignalPoint itself misappropriated
the client list.[15] SignalPoint denied ever receiving a copy of Central
Trust’s client list from Kennedy and supported this assertion with an
affidavit.[16] Central Trust’s only
support for a denial of this fact was Kennedy’s affidavit.[17] However, Kennedy’s affidavit stated nothing
about whether SignalPoint had ever been given the client list.[18] Since SignalPoint did not have access to the
client list, it could not have acquired, disclosed, or used it.[19]
The second
argument the Court considered was whether SignalPoint was vicarious liable for
Kennedy’s misappropriation.[20] However,
Central Trust did not plead the existence of a principal-agent or
employer-employee relationship between Kennedy and SignalPoint.[21] While
Kennedy signed an agreement with SignalPoint, the agreement specifically stated
that Kennedy was an independent contract, disclaimed the existence of an
employer-employee relationship, and stated the Kennedy had no right to bind
SignalPoint by his actions.[22] Thus, the Court concluded that Kennedy’s actions
could not be imputed to SignalPoint.[23]
The
Court next considered Central Trust’s tortious interference with a business
relation claim.[24] Central Trust
conceded in its appellate brief that SignalPoint had a legitimate economic
interest in Central Trust’s clients because the two companies were
competitors.[25] Central Trust alleged
SignalPoint used improper means to further its own interest.[26] The alleged improper means was the misappropriation
of the client list.[27] However, since
the Court found no genuine issue of material fact as to Central Trust’s
misappropriation claim against SignalPoint, Central Trust could not prove
improper means.[28] Thus the Court
upheld the circuit court’s granting of summary judgment.[29]
Finally
the Court considered Central Trust’s civil conspiracy claim.[30] The Court found that since Central Trust
voluntarily dismissed its claims against Kennedy and ITI, the civil conspiracy
claim was moot.[31] Therefore, the Supreme Court upheld the circuit court’s
findings.[32]
II. Legal
Background
a.
Misappropriation
A
claim for misappropriate of trade secrets under the Missouri Uniform Trade
Secrets Act (MUTSA) has three elements: (1) a trade secret exists, (2) the defendant
misappropriated the trade secret, and (3) the plaintiff is entitled to either
damages or injunctive relief.[33]
Misappropriation is defined as:
(a) Acquisition
of a trade secret of a person by another person who knows or has reason to
know that the trade secret was acquired by improper means; or
(b) Disclosure
or use of a trade secret of a person without express or implied consent by
another person who:
a. Used
improper means to acquire knowledge of the trade secret; or
b. Before a
material change of position, knew or had reason to know that it was a trade
secret and that knowledge of it had been acquired by accident or mistake; or
c. At the time
of disclosure or use, knew or had reason to know that knowledge of the trade
secret was:
i. Derived from
or through a person who had utilized improper means to acquire it;
ii. Acquired
under circumstances giving rise to a duty to maintain its secrecy or limit its
use; or
iii. Derived
from or through a person who owed a duty to the person seeking relief to maintain
its secrecy or limit its use;…
[34] Thus by definition, misappropriation occurs only in
three scenarios: “(1) when a person
acquires a trade secret while knowing or having reason to know that he or she
is doing so by improper means; (2) when a person who has acquired or derived
knowledge of the trade secret discloses it without the owner’s consent; or (3)
when a person who has acquired or derived knowledge of the trade secret uses it
without the owner’s consent.”[35]
b.
Agency
Liability
Under
Missouri law, the wrongful acts of an agent can be imputed to the principal
where an agency relationship exists.[36]
Agency is a “fiduciary relationship [that results] from the
manifestation of consent by an agent to a principal that the agent will act on
the principal’s behalf and subject to his or her control.” [37] When an
employer-employee relationship exists, the doctrine of respondeat superior allows
the employer to be found vicariously liable for the injury-causing conduct of
an employee done within the course and scope of employment. [38]
However,
an employer is not held vicariously liable, generally, for the acts of its
independent contractors. [39] Independent contracts are not considered
employees for purposes of respondeat superior.
[40] “For a principal-agent or employer-employee relationship to exist,
the principal or employer must have the ‘right to control’ the agent or
employee.” [41]
c.
Tortious
Interference with Business Relations
Under
Missouri Law, to prove a claim for tortious interference with a contract or a
business expectancy, the plaintiff must prove the following: “(1) a contract or
a valid business expectancy; (2) defendant’s knowledge of the contract or
relationship; (3) intentional interference by the defendant inducing or causing
a breach of the contract or relationship; (4) absence of justification; and (5)
damages resulting from defendant’s conduct.”[42] The fourth element cannot be
proven if the defendant has a legitimate economic interest in the business
expectancy, “unless the plaintiff proves the defendant employed ‘improper
means.’” [43] “Improper means” are any independently wrongful act recognized by
statute or the common law. [44]
III.
Comment
The
Supreme Court did not make any changes to the law with this opinion. It simply restated well-established law
across various topics. However, the
Supreme Court did seem to emphasize one point: the plaintiff must show the
defendant had some type of knowledge as to the “trade secret” in question.
- Kaci Peterson
[1] 2014 WL 712970 (Mo. 2014) (en banc).
[2] Id. at *1.
[3] Id.
[4] Id.
[5] Id. at *1.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] Id. at *4.
[14] Id. at *4-6.
[15] Id. at *4.
[16] Id. The
affidavit was of an officer of SignalPoint. Id.
[17] Id. at *5.
[18] Id.
[19] Id.
[20] Id.
[21] Id.
[22] Id. at *6.
[23] Id.
[24] Id.
[25] Id.
[26] Id.
[27] Id.
[28] Id.
[29] Id.
[30] Id. at *7.
[31] Id. The court also considered Central Trust’s
motion for reconsideration and for a new trial.
Id. at *8. However, the Court concluded that the newly
discovered evidence by Central Trust would not have produced a different
outcome, and thus the denial was proper.
Id.
[32] Id. at *8.
[33] V.A.M.S. §§ 417.453; 417.455; 417.457
[34] V.A.M.S. § 417.453(2)
[35] Central Trust,
2014 WL 712970 at *4 (citing V.A.M.S. § 417.453(2))
[36] See Bach v.
Winfield-Foley Fire Protection Dist., 257 S.W.3d 605, 608 (Mo. 2008) (en
banc).
[37] Id.
[38] Cluck v. Union Pac. R.R. Co., 367 S.W.3d 25, 29 (Mo.
2012) (en banc).
[39] Kaplan v. U.S. Bank, N.A., 166 S.W.3d 60, 66 (Mo. Ct.
App. 2003).
[40] Id.
[41] Bach, 257
S.W.3d at 608; Kaplan, 166 S.W.3d at
66.
[42] Western Blue Print Co. v. Roberts, 367
S.W.3d 7, 19 (Mo. 2012) (en banc).
[43] Id.
at 20.
[44]
Id.
