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Burbank Grease Services, LLC v. Sokolowski

Wisconsin Supreme Court
294 Wis. 2d 274, 2006 WI 103, 717 N.W.2d 781 (2006)
ELI5:

Sections

Rule of Law:

The Wisconsin Uniform Trade Secrets Act (UTSA) does not preempt common law tort claims regarding the misappropriation of confidential information that does not meet the statutory definition of a trade secret. Additionally, the computer crimes statute regarding 'restricted access information' does not apply to employees who are authorized to access the data at the time they obtain it.


Facts:

  • Burbank Grease Services employed Sokolowski as a territory manager, where he oversaw sales and customer relations.
  • Sokolowski signed a code of conduct acknowledging that he should not disclose confidential or privileged information to outside parties.
  • While preparing to resign, Sokolowski accessed Burbank's computer system and obtained hard copies of customer lists, pricing spreadsheets, and driver route data.
  • Sokolowski resigned from Burbank and immediately began working for a competitor, United Liquid Waste Recycling.
  • Sokolowski and his new employer formed United Grease and had Burbank's confidential customer data entered into their computer system.
  • Using this information, Sokolowski solicited Burbank's customers, successfully acquiring approximately 80 fry grease customers and 157 grease trap customers for the new company.
  • Burbank lost profits and business relationships due to Sokolowski's use of the taken information.

Procedural Posture:

  • Burbank sued Sokolowski, United Liquid, and United Grease in the Circuit Court for Dane County.
  • The defendants filed a motion for summary judgment.
  • The Circuit Court granted summary judgment for the defendants and dismissed the complaint.
  • Burbank appealed the dismissal to the Court of Appeals.
  • The Court of Appeals affirmed the Circuit Court's dismissal.

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Issue:

Does the Wisconsin trade secret statute preclude all other civil law remedies for the misappropriation of confidential information when that information does not meet the statutory definition of a trade secret?


Opinions:

Majority - Patience Drake Roggensack

No, the statute does not displace civil remedies for the misappropriation of information that falls outside the statutory definition of a trade secret. The Court analyzed the plain language of Wis. Stat. § 134.90(6), specifically the provision stating the act does not affect 'any civil remedy not based upon misappropriation of a trade secret.' The Court reasoned that because the information taken by Sokolowski was determined not to be a 'trade secret' under the statute, any claim regarding that information is, by definition, 'not based upon misappropriation of a trade secret.' Therefore, common law claims such as breach of the duty of loyalty remain available to the plaintiff. The Court rejected the argument that the legislature intended to eliminate all tort protections for confidential business information that fails to meet the strict 'trade secret' standard. Regarding the computer crimes claim, the Court held that the statute applies only when access is 'without authorization,' and Sokolowski had authorization to access the data while employed.


Dissent - Ann Walsh Bradley

Yes, the statute should preclude these common law claims to ensure uniformity with other states utilizing the Uniform Trade Secrets Act (UTSA). The dissent argued that the majority ignored the legislative directive to construe the statute to make the law uniform among states. The dissent emphasized that the prevailing view in other UTSA jurisdictions is that the Act is intended to replace all tort claims based on the unauthorized use of secret information, dividing information solely into protected 'trade secrets' and unprotected 'general skill and knowledge.' By allowing common law claims for 'confidential information,' the majority undermines the uniformity goal of the UTSA and renders the preemption provision meaningless.



Analysis:

This decision is significant because it establishes a 'dual track' for intellectual property litigation in Wisconsin. It confirms that the Uniform Trade Secrets Act is not the exclusive remedy for information theft; rather, it only preempts claims regarding information that meets the specific statutory definition of a trade secret. This implies that employers can still sue former employees for taking confidential lists or data under common law theories like breach of duty of loyalty, even if that data is not technically a 'trade secret.' It lowers the bar for plaintiffs to survive dismissal, as they can plead alternative common law theories for 'confidential information' that fails the rigorous trade secret test.

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