Opinion
UWYCV106004787S
01-06-2016
Quality Cardiovascular Care, LLC v. Michael Malinics et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO PRECLUDE TRADE SECRETS TESTIMONY #200
Barbara Brazzel-Massaro, J.
INTRODUCTION
The defendants have filed a motion dated November 20, 2015 to preclude testimony or evidence as to claim of a trade secret in the First Count of the Second Revised Complaint and defining the misappropriated materials as trade secrets. The plaintiff filed a memorandum in opposition to the defendants motion dated December 7, 2015.
FACTS
This action involves a business dispute in which the defendant doctors and Anne Casey left the practice of the plaintiff and formed their own practice of Naugatuck Valley Cardiovascular Associates, LLC. All parties agree that the individual defendants were " at will" employees and that none had a contract for any definite term or compensation. None of the defendants entered into a confidentiality or non-compete agreement related to the terms of employment with the plaintiff.
The medical group known as Quality Cardiovascular Care, LLC (" QCC") was formed by Dr. Mark Rosenberg. He is the sole owner of the group. The defendant, Dr. Michael Malinics began to work with Dr. Rosenberg in June 2003 for QCC. Dr. George Antonopoulos began to work with Dr. Rosenberg in August 2004. Anne Casey was an office manager in the business who was hired as an office employee in February 2006.
All of the patient files, including contact information, appointment information, medical treatment and histories were kept in a computer system developed by Dr. Rosenberg. QCC had a billing system entitled " PMS" which was available to him and the office manager at the main office and a satellite office in Woodbury.
DISCUSSION
Under the Uniform Trade Secrets Act, Conn. Gen. Stat. § 35-50 et seq., a plaintiff can seek damages, among other remedies, for the misappropriation of trade secrets.
A trade secret may be " information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that (1) derives independent economic value, actual or potential from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from the disclosures or use, and (2)is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." Customer lists and customer information can be trade secrets if the elements of a trade secret are proven. In determining whether information is a trade secret, the law sets forth six factors to be considered pursuant to C.G.S. § 35-51(d). They are: 1) the extent to which the information is known outside of the plaintiff's business; 2) the extent to which the information is known by employees and others involved in the business; 3) the extent of measures taken by plaintiffs to guard the secrecy of the information; 4) the value of the information to plaintiffs and its competitors; 5) the amount of effort or money expended by plaintiffs in developing the information, and 6) the ease or difficulty with which the information could probably be acquired or duplicated by others. Plastic & Metal Fabricators, Inc. v. Roy, 163 Conn. 257, 265 fn.3, 303 A.2d 725 (1972). There are four additional factors cited by other courts which are: 7) the extent to which the principal-agent relationship was a confidential or fiduciary one; 8) the method by which the former agent acquired the alleged secret; 9) the former agent's personal relationship with the customers; and 10) the unfair advantage accruing to the former agent from the use of his former principal's alleged secret." Nationwide Mutual Ins. Co. v. Stenger, 695 F.Supp. 688, 691 (D.Conn. 1988).
" [T]he party claiming trade secret protection must prove that the information . . . was the subject of reasonable efforts to maintain its secrecy." Elm City Cheese Co. v. Federico, 251 Conn. 59, 78, 752 A.2d 1037 (1999). " [T]he question of whether in a specific case, a party has made reasonable efforts to maintain the secrecy of a purported trade secret is by nature a highly fact-specific inquiry . . . What may be adequate under the peculiar facts of one case might be considered inadequate under the facts of another. According to § 35-51(d)(2), the efforts need only be ' reasonable under the circumstances . . .'" [Emphasis in original. Internal citations omitted.]
Here the plaintiff alleges in the Second Revised Complaint (First Count) that the defendants Malinics and Antonopoulos with the assistance of the office manager, Anne Casey stole confidential trade secrets in the form of business information related to the receipts, expenses, business practices and employee compensation as well as the confidential patient information including names, medical history, dates of scheduled future appointment and insurance information. (Par. 20a and b.) The plaintiff alleges the defendants utilized the information to open a new practice and in an attempt to destroy the plaintiff's practice.
The defendants contend that the doctors had the legal right to leave the employment of Quality Cardiovascular Care and establish their own medical practice related to cardiac care. The defendants contend that they had no obligation to the plaintiff because they did not sign a non-compete and were " at will" employees.
The plaintiff has not argued that the defendants were restricted in their employment efforts but argues in the First Count that the defendants illegally took the medical files of patients without the knowledge of the plaintiff well in advance of their termination of employment with the plaintiff. The facts allege that the defendants, contrary to their conduct of negotiating a purchase of the medical practice, were involved in a conspiracy with the office manager, Anne Casey, and unbeknownst to the plaintiff, she removed the SSIMED files and information for their new practice by eliciting the assistance of Anne Casey to enter the office after hours and place the information on a computer disc. The plaintiff has provided the court with argument as to the confidential nature of the materials which were secreted by Ms. Casey for the specific use of opening a competing business. It is this action of taking what the plaintiff identifies as protected medical files that is the heart of the trade secrets claim by the plaintiff.
The fact that the individual doctor did not personally copy the information or create his own list without access to the computer by Ms. Casey creates some question as to whether the information was easily accessible or whether the plaintiff had reasonable protection for the information.
The argument at this stage of the proceedings indicates that although the information as to the patients was available to each specific doctor, the information was secured by the computer process developed by Quality Cardiovascular Associates because of the sensitive nature and the various laws regarding the protection of the information such as HIPPA laws. Although the defendants argue that they would be entitled to have the patient follow them, there appears to be certain procedures and standards which are followed to notify the patients of the change of address for the doctor and to allow the patient to seek out the doctor for continued treatment. This process certainly allows an orderly transfer of files and protects the patients from having their confidential medical records copied and available to another group without their express approval.
An alleged trade secret is not deprived status under the Connecticut Uniform Trade Secrets Act (CUTSA) simply because it is comprised of material that are common and commercially available, rather an inventors ability to combine these elements into a successful process, like the creation of a recipe from common cooking ingredients, is a trade secret entitled to protection. Dreamcatcher Software Development v. Pop Warner Little Scholars, Inc., D.Conn. 2004, 298 F.Supp.2d 276 (2004).
Under CUTSA misappropriation can be proved by evidence of an advantage gained by building upon another's successful secrets or deliberately steering clear of another's developmental missteps and dead ends with their attendant waste of resources. On-Line Technologies v. Perkin-Elmer Corp., 253 F.Supp.2d 313 (2003).
This action is unique in the claim of a trade secret because the lists at issue involve medical patients who are not only protected in the sense of clients (patients) of the plaintiff but also have protections provided by law as to medical records which would include the names, addresses, and medical appointments. There are methods and standards that allow the disclosure or transfer of the patients to the defendants such as the patient requesting to have their files sent to NVCA. Unlike the case cited by the defendants of Charter Oak Lending Group, Inc. v. August, Superior Court, Complex Litigation, judicial district of Waterbury, Docket No. CV 054009529, (May 7, 2013, Dooley, J.) which involved investment clients, the files in this case involve medical patients. In Charter Oak Lending, the clients were brought to the business by the defendants and were described as friends, family and former business associates. The clients in Charter Oak Lending were particular to the defendants and the list of clients had been assembled by the defendants' submission of the names and information to the plaintiff. The defendant doctors do not have a list of patients which they can designate as solely their patient. The doctors do not appear to input medical information into the files and keep an ongoing record of their patients. It is office employees who were utilized to run the PMS program and submit bills to insurance companies, Medicare and Medicaid. The doctors claim there is a personal relationship with the patients and thus there is no trade secret. This is contrary to laws which do not permit any exchange of the material in a patient's file and the inability of the doctors to create the files of their patients based upon the personal relationship. Unlike a client list such as in Charter Oak Lending or a list of subscribers to a magazine company, the lists here were not created by the doctors or available for public review. Here, the clients are medical patients whose records and files are not part of a client list of the individual doctors. The specific facts of this action require a different analysis and findings of fact to determine whether the names, addresses and medical information are trade secrets which cannot be disclosed. It is clear the HIPPA laws do not allow any information to be shared and in order to gain access, permission is required very much like the notification to the patients of the doctors relocation and the right of the patient to ask for a transfer of their file to the new location or relocated doctor.
A misappropriation of a trade secret may never have been an issue if the defendants allowed the referral of patients following their departure from the medical practice to proceed as is provided for in the AMA standards as a normal course upon formation of the new medical practice. Thus, notice would be provided by QCC to patients upon inquiry or by general notice.
The list of factors to be considered for determination of a trade secret supports the conclusion that this determination is a question of fact. When determination of admissibility of evidence hinges on other necessary facts that can properly be determined only during trial after necessary pre-requisite testimony has been presented, such determination is more appropriately made after such prerequisite testimony has been presented rather than pursuant to pre-trial motion in limine. Richmond v. Longo, 604 A.2d 374, 27 Conn.App. 30, cert. denied, 606 A.2d 1328, 222 Conn. 902 (1992). Thus, the request to permit the defendants to have an opportunity under the guise of a motion in limine to decide this very fact based issue leads to the obvious conclusion that unless there was such a strong basis with no genuine issue of fact presented in a motion for summary judgment the issue of whether (under the factors) the patient list is a trade secret should be decided by a jury.