In Sanimax, LLC v. Blue Honey Bio -Fuels, 945 N.W.2d 366 (Wisc. Ct. App. 2020), the Wisconsin Court of Appeals affirmed a circuit court’s decision to award attorney’s fees in the amount of $50,102.09 to the defendant, Blue Honey Bio-Fuels (“Blue Honey”) pursuant to Wis. Stat. § 134.90(4)(c) because it determined that the plaintiff, Sanimax, had asserted a claim for misappropriation of trade secrets “objectively and subjectively in bad faith.” The two companies were competitors in the business of collecting and processing used cooking oil. An employee of Sanimax, Myers, who did not have a non-compete, quit and went to work for Blue Honey. Sanimax alleged that Myers took a customer list with him. The Court of Appeals noted that a customer list is “a type of information which may, under certain circumstances constitute a trade secret within the meaning of Wis. Stat. § 134.90(1)(c).”
The primary criticism of Sanimax’s trade secret claim, by both the circuit court and the court of appeals, was that Sanimax never produced any “direct evidence” that Myers had taken a customer list. Second, Sanimax was faced with unusually specific precedent in another case also involving the “grease industry” in which the customer list was held not to be a trade secret. Third, both the lower court and appellate courts took notice of the nature and perceived motivation for the lawsuit, including the trade secrets claim. The lower court stated:
“All we have is a company that’s pretty ticked off at somebody who was a very good employee at one time leaving and hurting their share in the market, and I think it was basically retribution; and they were ticked, and they figured maybe they could drive the little guy out of business because [Blue Honey wasn’t] going to be able to defend against the claim because it’s very difficult to do all those discoveries, as you know, to go through all the litigation. It becomes very costly just to try those issues…”
Similarly, the Court of Appeals, stated that the record on appeal:
“Provide[d] ample support for the circuit court’s finding that Sanimax’s purpose in pursing its bad faith claim “was basically retribution. . . Further, the record show[ed] that Myers was a top salesperson for Sanimax, the company that commanded the lion’s share of the used cooking oil market in Wisconsin. Then, after he left Sanimax to a work for its much smaller competitor, he was successful enough at persuading previous customers to switch their accounts that Sanimax management directed its sales representatives to impugn his character to former clients.”
The Sanimax case serves as an unusual example of the Courts opining as to the motive of a party in a wrongful competition case and a reminder that a bad-faith allegation of misappropriation of trade secrets can lead to an award of attorneys’ fees.
If you have questions about trade secrets, contact the trade secrets attorneys at Trepanier MacGillis Battina P.A.
About the Author:
Gregory M. Miller practices in the areas of litigation, real estate and business law. He is admitted to all state and federal courts in Wisconsin and Minnesota. He can be reached at 612.455.0501 or at firstname.lastname@example.org.