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New Phase Development, LLC v. Cook

United States District Court, D. Idaho

July 27, 2015

NEW PHASE DEVELOPMENT, LLC., and WAYNE JONES, Plaintiffs,
v.
JEFF COOK and NICOR, INC., Defendant.

MEMORANDUM DECISION AND ORDER

EDWARD J. LODGE, District Judge.

Pending before the Court is Defendants' Motion for Summary Judgment (Dkt. 27). The parties have submitted briefing on the motion and the matter is now ripe for the Court's review. Having fully reviewed the record herein, the Court finds the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, the motion shall be decided on the record before this Court without oral argument.

For the reasons stated below, Defendants' Motion for Summary Judgment is granted in part and denied in part.

FACTUAL BACKROUND[1]

Plaintiff New Phase Development LLC ("New Phase") is an Idaho plastics/tooling company, and Plaintiff Wayne Jones ("Jones") is its founder and sole member (collectively referred to hereinafter as "Plaintiffs"). Defendant Nicor Inc. ("Nicor") is a distributor of, among other things, plastic lids for water meters, and defendant Jeff Cook ("Cook") is the Vice President of Nicor (collectively referred to hereinafter as "Defendants").

Due to a general conversion of conventional water metering equipment in the utility and water works industries, Nicor developed polymer lids that would enable water meters to transmit data and information wirelessly, rather than being read manually.[2] However, due to inefficiencies in the process Nicor used to mass-produce its lids, Cook contacted New Phase in early 2013 to seek help with the problems inherent in manufacturing and deploying mass-produced polymer meter lids. Cook contacted New Phase due to Jones' significant experience in the plastics and molding industry.

In order to facilitate discussions about possible business opportunities, including a potential joint venture, the parties negotiated and entered into a "Mutual Non-Disclosure Agreement" on February 28, 2013 ("February NDA"). The February NDA provides:

1. Each party hereto desires to furnish to the other party certain information that the party furnishing such information regards as proprietary. Such information may include, but is not limited to, information of the disclosing party relating to products and product demonstrations, product configurations, technology, design, specifications, manufacturing processes, business strategies and plans, customer lists, business partners and research and development programs.
2. ("Confidential Information") Confidential information may be furnished in any tangible or intangible form including, but not limited to, writings, drawings, presentations, computer tapes and other electronic media, samples, demonstrations, video and verbal communications.
3. All Confidential Information furnished pursuant to this NDA is done so solely for the purposes of evaluation of each party's potential interest in mutual business development. No other right, license or authorization, express or implied, to use is granted and each party agrees to be so limited with respect to all Confidential Information hereby received. All right, title, and interest in the Confidential Information shall remain that of the disclosing party.
4. Each party agrees not to disclose Confidential Information received from the disclosing party to any third party nor use such Confidential Information for any purpose other than to evaluate its interest in the mutual business described above. The receiving party shall use the same degree of care in maintaining the confidentiality of the Confidential Information as it uses with respect to its own information that is regarded confidential and/or proprietary by such party, but in any case shall at least use reasonable care. Each party agrees that it will restrict the access of all Confidential Information to only those of its employees and consultants who have need to be informed of the Confidential Information for the purposes for which the Confidential Information is provided, which persons will be bound to the receiving party by an agreement or confidentiality that contains substantially the same obligations contained in this NDA.

(Dkt. 12-1.)

The parties subsequently entered into a second mutual Non-Disclosure Agreement on August 6, 2013 ("August NDA"). The August NDA was entered into by Jones, New Phase, Cook, Nicor, and an additional entity, Bingham & Taylor.[3] The August NDA contained substantially the same terms as the February NDA, but also provided:

Upon violation or threatened violation of the terms of this Agreement, the aggrieved party shall be entitled to seek injunctive and/or other equitable relief on the grounds that such conduct, if not restrained and/or other equitable relief not granted, would result in irreparable and serious harm to that party for which damages would be an inadequate remedy.

(Dkt. 11-1, ΒΆ 13.)

Pursuant to the NDAs, Plaintiffs disclosed the specifics of their proprietary processes, methodologies and plastics mold designs to Defendants. Plaintiffs allege their processes, methodologies and plastics mold designs were projected to increase the number of meter lids produced per hour by three to seven times Defendants' prior production rate. However, the business negotiations between the parties ultimately fell through. After negotiations ceased, Cook allegedly told Jones that he intended to use Plaintiffs' processes, methodologies, and plastics mold designs for Defendants' own purpose and without Plaintiffs' involvement or consent. After unsuccessfully attempting to obtain Defendants' assurance that Plaintiffs' confidential information would not be utilized, Plaintiffs ultimately filed the instant suit.[4]

SUMMARY JUDGMENT STANDARD

Summary judgment allows courts to avoid unnecessary trials where no material factual disputes exist. Northwest Motorcycle Ass'n v. United States Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). The court grants summary judgment if no genuine issues of material fact remain in dispute and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party bears the burden of informing the court of the basis for its motion and demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

On summary judgment, all disputed facts and reasonable inferences must be construed in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). However, to raise a fact issue for trial, the nonmoving party must present more than a mere scintilla of evidence, and must come forward with evidence sufficient to show that a reasonable jury could return a verdict in its favor. Id. at 248. Further, Federal Rule of Civil Procedure 56(c) "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. If the nonmoving party cannot make a showing on elements essential to his claims, there can be no genuine issue of material fact "since a complete failure of proof concerning an essential element on the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323.

ANALYSIS

1. Breach of Contract


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