Burbank Grease Services, LLC v. Sokolowski

Court of Appeals of Wisconsin
2005 WI App 28, 278 Wis. 2d 698, 693 N.W.2d 89 (2005)

ELI5:

Sections

Rule of Law:

Information that is readily ascertainable by proper means, such as asking customers for pricing or looking up businesses in directories, does not constitute a trade secret. Furthermore, the Uniform Trade Secrets Act preempts common law claims, such as breach of fiduciary duty, when those claims are based solely on the unauthorized use of confidential information.

Facts:

Burbank Grease Services collected used grease from restaurants and industrial clients.
Sokolowski was a manager at Burbank who had authorized access to customer lists, pricing spreadsheets, and other data, which he sometimes took home to work on.
Sokolowski resigned from Burbank and began working for a competitor, United Liquid, which subsequently formed United Grease.
After leaving Burbank, Sokolowski discovered he still possessed a hardcopy list of grease trap customers and a computer disk containing spreadsheets of industrial client data.
Sokolowski entered the customer information from these materials into United Grease's system and used the data to solicit business for his new employer.
United Grease successfully acquired approximately eighty fry grease customers and nearly one hundred grease trap customers who were formerly with Burbank.
The customer names were available in telephone directories, and the pricing information was standard within the industry or could be obtained by asking the customers directly.

Procedural Posture:

Burbank sued Sokolowski, United Grease, and United Liquid in the circuit court (trial court) for misappropriation of trade secrets, breach of fiduciary duty, and computer crimes.
All parties filed motions for summary judgment.
The circuit court granted summary judgment in favor of the defendants, dismissing all of Burbank's claims.
Burbank appealed the dismissal to the Court of Appeals of Wisconsin.

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Issue:

Is customer pricing and contact information a protected trade secret when it can be obtained through public sources or by asking customers, and does the state trade secret statute preempt common law claims for breach of fiduciary duty based on the misuse of such information?

Opinions:

Majority - Judge Vergeront

No, regarding the trade secret status, and Yes, regarding the preemption of common law claims. The court affirmed the lower court's dismissal. First, the court reasoned that the customer lists and pricing did not meet the statutory definition of a trade secret because the information was 'readily ascertainable by proper means.' Any competitor could identify potential customers through phone books and learn Burbank's prices simply by asking the customers, who were under no obligation to keep the prices secret. Second, regarding the fiduciary duty claim, the court held that Wis. Stat. § 134.90(6) was intended to replace conflicting tort laws. Because Burbank's claim for breach of fiduciary duty was based solely on Sokolowski's unauthorized use of information—and not on independent disloyal conduct like competing while still employed—the claim was preempted by the trade secret statute. Finally, the court ruled that Sokolowski did not violate the computer crimes statute regarding disclosing 'access codes' because he only disclosed the data itself, not the passwords or codes used to access the system.

Analysis:

This decision significantly limits the ability of employers to sue former employees for taking customer lists or 'confidential' information that falls short of the rigorous definition of a trade secret. By strictly interpreting the 'readily ascertainable' standard, the court placed the burden on businesses to prove their data is truly unique and secret, rather than just a compilation of publicly available facts. Furthermore, the court's ruling on preemption establishes a bright-line rule: a plaintiff cannot circumvent the strict requirements of the Trade Secrets Act by pleading alternative common law torts like breach of fiduciary duty if the underlying harm is merely the misuse of information. This forces plaintiffs to rely exclusively on the statutory framework for information-theft cases, eliminating a 'fallback' option for information that is confidential but not a trade secret.

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