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CMI Roadbuilding, Inc. v. Iowa Parts, Inc.

United States District Court, N.D. Iowa, Cedar Rapids Division

December 8, 2017

CMI ROADBUILDING, INC. and CMI ROADBUILDING, LTD., Plaintiffs,
v.
IOWA PARTS, INC., Defendant.

          ORDER

          LINDA R. READE, JUDGE.

         TABLE OF CONTENTS

         I. INTRODUCTION .......................................2

         II. RELEVANT PROCEDURAL HISTORY ........................2

         III. SUBJECT MATTER JURISDICTION .........................3

         IV. SUMMARY JUDGMENT STANDARD .........................3

         V. RELEVANT FACTUAL BACKGROUND .......................5

         A. The Parties and Players .............................. 5

         B. CMI's Business Practices ............................. 6

         C. Iowa Parts's Formation .............................. 7

         VI. ANALYSIS .......................................... 11

         A. The DTSA and UTSA ............................... 12

         B. Statute of Limitations ............................... 15

         1. Applicable Law ...............................16

         2. Actual or Inquiry Notice .........................20

         C. Conversion ......................................26

         D. Unjust Enrichment .................................29

         VII. CONCLUSION ....................................... 31

         I. INTRODUCTION

         The matters before the court are Plaintiffs CMI Roadbuilding, Inc. and CMI Roadbuilding, Ltd.'s (collectively, “CMI Roadbuilding”) “Motion for Partial Summary Judgment” (“CMI Motion”) (docket no. 134) and Defendant Iowa Parts, Inc.'s (“Iowa Parts”) “Motion for Summary Judgment” (“Iowa Parts Motion”) (docket no. 139).

         II. RELEVANT PROCEDURAL HISTORY

         On April 11, 2017, CMI Roadbuilding filed a Second Amended Complaint (docket no. 81) against Iowa Parts and Climate Engineers, Inc. (“Climate Engineers”) alleging the following: (1) Iowa Parts and Climate Engineers violated the Defend Trade Secrets Act of 2016 (“DTSA”), 18 U.S.C. § 1836, by converting CMI Roadbuilding's trade secrets; (2) Iowa Parts and Climate Engineers violated the Iowa Uniform Trade Secrets Act (“UTSA”), Iowa Code Ch. 550, through continued use and disclosure of CMI Roadbuilding's trade secrets; (3) Iowa Parts and Climate Engineers converted, under common law, CMI Roadbuilding's trade secrets; and (4) Iowa Parts and Climate Engineers were unjustly enriched, under common law, by their taking of CMI Roadbuilding's trade secrets. On April 25, 2017, Iowa Parts filed an Answer (docket no. 84) generally denying liability and alleging a counterclaim for abuse of process. On April 26, 2017, the parties stipulated to the dismissal of Climate Engineers from the instant action. See Joint Stipulation of Dismissal With Prejudice (docket no. 85). On June 30, 2017, the court dismissed Iowa Parts's counterclaim. See June 30, 2017 Order (docket no. 122) (accepting Chief United States Magistrate Judge C.J. Williams's June 8, 2017 Report and Recommendation (docket no. 116) recommending that the court dismiss Iowa Parts's counterclaim). Accordingly, the four claims asserted in the Second Amended Complaint are the only remaining claims, and they remain pending only against Iowa Parts.

         On September 11, 2017, CMI Roadbuilding filed the CMI Motion. On October 3, 2017, Iowa Parts filed a Resistance (“Iowa Parts Resistance”) (docket no. 146) to the CMI Motion. On October 10, 2017, CMI Roadbuilding filed a Reply (“CMI Reply”) (docket no. 147). On November 20, 2017, Iowa Parts filed a Sur Reply (docket no. 159) with leave of court.

         On September 12, 2017, Iowa Parts filed the Iowa Parts Motion. On October 3, 2017, CMI filed a Resistance (“CMI Resistance”) (docket no. 144) to the Iowa Parts Motion. On October 12, 2017, Iowa Parts filed a Reply (“Iowa Parts Reply”) (docket no. 150). Both parties request oral arguments on the Motions, but the court finds that oral arguments are unnecessary. The matters are fully submitted and ready for decision.

         III. SUBJECT MATTER JURISDICTION

         The court has original jurisdiction over the DTSA claim because it arises under the United States Code. See 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”). The court has supplemental jurisdiction over the UTSA and common law claims because they are so related to the claim within the court's original jurisdiction that they form part of the same case or controversy. See 28 U.S.C. § 1367(a) (“[T]he district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy . . . .”). In other words, “the federal-law claim[] and state-law claims in the case ‘derive from a common nucleus of operative fact' and are ‘such that [a plaintiff] would ordinarily be expected to try them all in one judicial proceeding.'” Kan. Pub. Emps. Ret. Sys. v. Reimer & Koger Assocs., Inc., 77 F.3d 1063, 1067 (8th Cir. 1996) (second alteration in original) (quotation marks omitted) (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 349 (1988)).

         IV. SUMMARY JUDGMENT STANDARD

         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Summary judgment is proper ‘if the pleadings, the discovery and disclosure materials on file, and any affidavits show'” an absence of a genuine dispute as to a material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc) (quoting Fed.R.Civ.P. 56(c)(2)). “A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party; a fact is material if its resolution affects the outcome of the case.” Amini v. City of Minneapolis, 643 F.3d 1068, 1074 (8th Cir. 2011) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 252 (1986)). “The movant ‘bears the initial responsibility of informing the district court of the basis for its motion, ' and must identify ‘those portions of [the record] . . . which it believes demonstrate the absence of a genuine issue of material fact.'” Torgerson, 643 F.3d at 1042 (alterations in original) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Once the movant has done so, “the nonmovant must respond by submitting evidentiary materials that set out ‘specific facts showing that there is a genuine issue for trial.'” Id. (quoting Celotex Corp., 477 U.S. at 324).

         On a motion for summary judgment, the court must view the facts “in the light most favorable to the nonmoving party.” Id. (quoting Ricci v. DeStefano, 557 U.S. 557, 586 (2009)). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial, ” and summary judgment is appropriate. Ricci, 557 U.S. at 586 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). “The nonmovant ‘must do more than simply show that there is some metaphysical doubt as to the material facts' . . . .” Torgerson, 643 F.3d at 1042 (quoting Matsushita, 475 U.S. at 586). Instead, “[t]o survive a motion for summary judgment, the nonmoving party must substantiate his allegations with sufficient probative evidence [that] would permit a finding in [his] favor based on more than mere speculation, conjecture, or fantasy.” Barber v. C1 Truck Driver Training, LLC, 656 F.3d 782, 801 (8th Cir. 2011) (second and third alterations in original) (quoting Putman v. Unity Health Sys., 348 F.3d 732, 733-34 (8th Cir. 2003)). Mere “self-serving allegations and denials are insufficient to create a genuine issue of material fact.” Anuforo v. Comm'r of Internal Revenue, 614 F.3d 799, 807 (8th Cir. 2010).

         V. RELEVANT FACTUAL BACKGROUND

         Viewing the evidence in the light most favorable to the nonmoving parties, and affording them all reasonable inferences, the uncontested material facts are as follows.

         A. The Parties and Players

         CMI Roadbuilding, Inc. and CMI Roadbuilding, Ltd. are the current owners of a series of assets related to the manufacturing of asphalt plants, concrete plants and landfill and dirt compaction equipment. See Second Amended Complaint ¶ 15. CMI Roadbuilding came to own these assets via a series of corporate mergers and acquisitions stemming from a company known as Iowa Manufacturing Company, established in approximately 1929, and which changed its name to Cedarapids, Inc. (“Cedarapids”) in 1985. Id. ¶ 8. In 1989, Cedarapids acquired Standard Havens, Inc. (“Standard Havens”), which manufactured asphalt paving equipment and asphalt plans. Id. ¶ 9. This acquisition included all of Standard Havens's assets, including its intellectual property. Id. In 1999, Terex Corporation (“Terex”) and its related corporations acquired Cedarapids, succeeding in ownership to all of Cedarapids's intellectual property and assets, including those assets that Cedarapids had acquired from Standard Havens ten years prior. Id. ¶ 10. In 2001, the Terex family of corporations acquired CMI Corporation, a company based in Oklahoma City, Oklahoma. Id. ¶¶ 11-12. The resulting wholly owned subsidiary was known as CMI Terex. In 2013, CMI Roadbuilding purchased assets from the Terex family of corporations relating to the asphalt plants, concrete plants and landfill and dirt compaction equipment. Id. ΒΆ 15. These assets included ...


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