Jenkins v. APS Insurance, LLC

Cite as 2013 Ark. App. 746
ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-13-426
OPINION DELIVERED DECEMBER 18, 2013
PEARL JENKINS APPEAL FROM THE PULASKI
APPELLANT COUNTY CIRCUIT COURT,
THIRD DIVISION
[NO. 60CV-08-9799]
V.
HONORABLE JAY MOODY,
JUDGE
APS INSURANCE, LLC
APPELLEE AFFIRMED
ROBERT J. GLADWIN, Chief Judge
This case returns after we dismissed an earlier appeal for lack of a final order. Jenkins
v. APS Ins., LLC, 2012 Ark. App. 368. In this appeal, Pearl Jenkins challenges the judgment
of the Pulaski County Circuit Court entered on a jury’s verdict finding that she
misappropriated trade secrets and that awarded compensatory and punitive damages to APS
Insurance, LLC. Jenkins raises five points, arguing that the tort claims brought by APS were
preempted by the Arkansas Trade Secrets Act and that the damage awards were not
supported by the evidence, were contrary to the law, and were excessive. We affirm.
In 2003, David Donley joined Steve Perry to form APS Insurance. APS also offered
payroll and tax-preparation services. Jenkins, a mutual friend of both Donley and Perry, was
hired to be APS’s customer service representative. On Friday, June 13, 2008, Donley removed
files and software from APS’s office, and formed his own firm, Donley & Associates Insurance,
LLC (D&A). Donley also had Jenkins email him the list of all of APS’s clients and then delete
Cite as 2013 Ark. App. 746
the list from APS’s computer. When Perry returned to work the following Monday, he
discovered the missing and the deleted files and was notified that Donley had established D&A
and that Jenkins had left APS’s employment to join D&A.
On August 28, 2008, APS sued Donley for injunctive relief and other damages. APS
later amended its complaint to add Jenkins and D&A as defendants. In its complaint, APS
asserted claims for violation of the Theft of Trade Secrets Act;1 computer fraud and computer
trespass;2 breach of fiduciary duty against Donley and Jenkins; conversion; trespass on the case;
violation of the Deceptive Trade Practices Act against Donley and D&A; tortious interference
with contractual relations and business expectancies; and civil conspiracy. It also requested an
accounting, that a constructive trust and/or equitable lien be imposed against all defendants,
and reserved the right to plead further. Separate answers were filed by Donley and D&A and
by Jenkins. In her answer, Jenkins asserted that APS’s exclusive remedy was the cause of
action under the Trade Secrets Act.
Jenkins filed two identical counterclaims against APS and Perry, asserting claims for
abuse of process, malicious prosecution, and outrage. She nonsuited the first counterclaim and
the second was stricken as being filed in violation of the court’s scheduling order.
After David Donley, individually, filed for bankruptcy protection, the case against
Jenkins and D&A proceeded to trial before a jury. After APS rested its case, it withdrew its
claims for breach of fiduciary duty against Jenkins and Donley, its trespass claim, and its claim
1
Ark. Code Ann. §§ 4-75-601 to -607 (Repl. 2011).
2
Ark. Code Ann. §§ 5-41-103 to -106 (Repl. 2006).
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under the Deceptive Trade Practices Act against D&A. In a verdict signed by ten jurors, APS
was awarded $29,066.22 in actual damages and punitive damages of $15,000 against Jenkins.3
The judgment entered on the jury’s verdict noted that the issues against Donley could
not be tried because of a pending bankruptcy, and that APS had reserved its rights to proceed
against Donley “consistent with further orders and proceedings of the United States
Bankruptcy Court.” The judgment did not address APS’s claims for equitable relief, i.e.
accounting and imposition of a constructive trust or equitable lien. It also did not formally
dismiss the claims APS withdrew during trial.
After the circuit court denied Jenkins’s posttrial motion, Jenkins attempted to appeal
from the judgment. We dismissed the appeal for lack of a final order. Jenkins, supra. We also
pointed out several deficiencies with both the briefs and the record. Id.
Following remand, Jenkins filed a motion seeking to have the circuit court certify the
judgment as final pursuant to Arkansas Rule of Civil Procedure 54(b). APS opposed the
motion, pointing out that its claims for injunctive and equitable relief were still pending.
David Donley entered into a consent judgment in favor of APS in the amount of
$150,062.98. This order stated that APS agreed to forbear enforcement of the consent
judgment in accordance with the parties’ settlement agreement. Jenkins filed a timely notice
of appeal from this order.
After a hearing on the pending motions, the circuit court entered an order granting
injunctive relief against Jenkins. The court also ordered Jenkins to file an accounting of all
3
The jury unanimously awarded actual damages of $50,062.98 and punitive damages
of $100,000 against D&A.
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transactions between Donley, D&A, and Jenkins and all former APS clients. The court
further imposed a constructive trust and equitable lien against Jenkins and any property or
funds she received through transactions with former APS clients. The court further ruled that
all other causes of action and relief sought by APS had merged into the judgment previously
entered. Jenkins’s request for Rule 54(b) certification was denied as moot.4 This appeal
followed.
Our standard of review of the denial of either a motion for directed verdict or a
motion for judgment notwithstanding the verdict is whether the jury’s verdict is supported
by substantial evidence. ConAgra Foods, Inc. v. Draper, 372 Ark. 361, 276 S.W.3d 244 (2008).
We will reverse only if there is no substantial evidence to support the jury’s verdict, and the
moving party is entitled to judgment as a matter of law. Id. Substantial evidence is that which
goes beyond suspicion or conjecture and is sufficient to compel a conclusion one way or the
other. Id. It is not our place to try issues of fact; rather, we simply review the record for
substantial evidence to support the jury’s verdict. Id. In determining whether there is
substantial evidence, we view the evidence and all reasonable inferences arising therefrom
in the light most favorable to the party on whose behalf judgment was entered. Id. A motion
for directed verdict should be denied when there is a conflict in the evidence, or when the
evidence is such that fair-minded people might reach a different conclusion. McMickle v.
Griffin, 369 Ark. 318, 254 S.W.3d 729 (2007).
4
The circuit court later amended its order to clarify that Jenkins’s obligation to return
certain information to APS was limited to that information within her possession, custody,
or control.
4
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We must first determine whether any of Jenkins’s arguments on appeal are preserved
for our review. This has to do with the nature and scope of the arguments Jenkins made at
trial and in her posttrial brief.
At the conclusion of APS’s case, Jenkins made a motion for directed verdict, arguing
that there was no evidence that the information taken even qualified as “trade secrets.” She
also moved for a directed verdict on the computer-fraud and trespass claims. Jenkins further
moved for a directed verdict on the conversion and on the tortious-interference claims. She
did not adopt any of the arguments for directed verdict made by D&A. The circuit court
denied the motion. At the close of the defense case, the circuit court stated that all motions
made at the close of APS’s case were renewed and denied. APS then presented the rebuttal
testimony of Jerry Crowder. No motions for directed verdict were made or renewed.
Although Jenkins filed her posttrial motion as one for judgment notwithstanding the
verdict, she also asserted that she was entitled to a new trial under Ark. R. Civ P. 59(a)(4),
(5), and (6). The distinction between a motion for new trial and a directed-verdict motion
is a fine one. Wal-Mart Stores, Inc. v. Tucker, 353 Ark. 730, 120 S.W.3d 61 (2003). Moreover,
we should not be guided blindly by titles but should look to the substance of motions to
ascertain what they seek. Cornett v. Prather, 293 Ark. 108, 111, 737 S.W.2d 159, 160–61
(1987). In Jackson v. Arkansas Power & Light Co., 309 Ark. 572, 573, 832 S.W.2d 224, 225
(1992), the supreme court held that a motion to vacate that stated that the judgment was void
because “it is contrary to the facts, the law, public policy and is clearly contrary to the
preponderance of the evidence,” was really a motion for a new trial under Ark. R. Civ. P.
59(a)(6).
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In her posttrial motion, Jenkins made the arguments she now raises on appeal. In
effect, Jenkins is raising legal arguments concerning whether APS’s tort claims against her
were preempted by the Trade Secrets Act and that punitive damages are unavailable under
the Act. As such, her posttrial motion could properly be considered a motion for new trial
under Ark. R. Civ P. 59(a)(6). The argument regarding excessiveness of the compensatory
and punitive damages was preserved by the posttrial motion because it asserted that the
“damages awarded were excessively large and were so large as to indicate that such were
awarded as a result of passion or prejudice.” By tracking the language of Ark. R. Civ. P.
59(a), the motion was sufficient to preserve the issue. See Stacks v. Jones, 323 Ark. 643, 916
S.W.2d 120 (1996). We believe that these arguments are properly preserved for our review.
Jenkins also raises issues concerning whether APS properly proved its damages, thus
challenging the sufficiency of the evidence. However, a motion for new trial is not a
challenge to the sufficiency of the evidence. Wal-Mart Stores, Inc. v. Tucker, 353 Ark. 730,
120 S.W.3d 61 (2003). In order to challenge the sufficiency of the evidence, Jenkins was
required to move for a directed verdict at “the close of all the evidence.” See Ark. R. Civ.
P. 50(e). Jenkins failed to do so after APS presented rebuttal testimony, resulting in a waiver
of her sufficiency-of-the-evidence arguments. Advocat, Inc. v. Sauer, 353 Ark. 29, 111 S.W.3d
346 (2003); Bronakowski v. Lindhurst, 2009 Ark. App. 513, 324 S.W.3d 719.
Jenkins first argues that APS’s claims are preempted by the Arkansas Trade Secrets Act,
and, therefore, the circuit court erred by not granting her motion for summary judgment.
Although Jenkins is correct in arguing that the Act preempts certain tort claims, R.K. Enter.,
LLC v. Pro-Comp Mgmt., Inc., 356 Ark. 565, 571–74, 158 S.W.3d 685, 688–90 (2004), the
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denial of summary judgment is not an appealable order or subject to review even after there
has been a trial on the merits. Ligon v. Davis, 2012 Ark. 440, ___ S.W.3d ___.
As a further part of this point, Jenkins argues that the circuit court erred by denying
her motion for a directed verdict on the basis that the Trade Secrets Act preempted APS’s
tort claims. In response, APS argues that not all of its claims are preempted because the Act
specifically states that it does not affect other civil liability or relief that is not based upon
misappropriation of a trade secret. Ark. Code Ann. § 4-75-601(b)(1).
In its complaint, APS asserted claims for violation of the Theft of Trade Secrets Act;
computer fraud and computer trespass; breach of fiduciary duty; conversion; trespass on the
case; violation of the Deceptive Trade Practices Act; tortious interference with contractual
relations and business expectancies; and civil conspiracy. At the close of its case, APS
nonsuited its claims for breach of fiduciary duty; trespass on the case; and violation of the
Deceptive Trade Practices Act. Thus, the claims for violation of the Trade Secrets Act,
violation of the computer-fraud and trespass statutes, conversion, tortious interference, and
civil conspiracy were submitted to the jury.
Our supreme court has expressly held that the Trade Secrets Act preempts tort claims
for conversion of trade secrets and conspiracy because they stem from the same acts constituting a
violation of the Trade Secrets Act. R.K. Enter., 356 Ark. at 574, 158 S.W.3d at 690 (emphasis
added). Therefore, the circuit court erred in submitting those causes of action to the jury.
Id. That does not end the inquiry, however, because, consistent with our supreme court’s
holding in R.K. Enterprise, other courts have held that claims of tortious interference are not
automatically preempted where they are not based upon the misappropriation of trade
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secrets. E.g., Alpha Sch. Bus Co., Inc. v. Wagner, 910 N.E.2d 1134 (Ill. App. Ct. 2009); Raven
Indus., Inc. v. Lee, 783 N.W.2d 844 (S.D. 2010); Thola v. Henschell, 164 P.3d 524 (Wash. Ct.
App. 2007). The Thola court held that the plaintiff’s tortious-interference claim was not
preempted where the tortious-interference claim was not based on the former employee’s
misappropriation of a client list, but rather on the former employee’s in-person solicitation
of the former employer’s clients to terminate their business relationship with the former
employer and follow the former employee to the new business. 164 P.3d at 530. Here, it
appears that the allegations contained in APS’s amended complaint to support this cause of
action are, in addition to the theft of the information, that Donley contacted former APS
clients to solicit their business for D&A.
Also, the Act specifically states that it does not affect contractual or other civil liability
that is not based upon misappropriation of a trade secret. Ark. Code Ann. § 4-75-602(b).
APS asserted a claim for violation of the computer-crime statute, Ark. Code Ann. §§ 5-41-
101 to -107. The computer-crime statute provides a civil cause of action for damages,
including lost profits. Ark. Code Ann. § 5-41-106(a). The complaint asserts that Jenkins
deleted a significant portion of confidential information from APS’s computers. This action
falls within the definition of computer trespass found in Ark. Code Ann. § 5-41-104(a).5
Because the jury’s finding was rendered on a general verdict form, we have no way
of knowing the particular theory on which the jury found Jenkins liable. Bradshaw v. Alpha
5
Section 5-41-104(a) provides that “[a] person commits computer trespass if the
person intentionally and without authorization accesses, alters, deletes, damages, destroys, or
disrupts any computer, computer system, computer network, computer program, or data.”
8
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Packaging, Inc., 2010 Ark. App. 659, 379 S.W.3d 536. Normally, we would affirm if there
is substantial evidence to support the jury’s verdict. Id. However, Jenkins has waived her
challenge to the sufficiency of the evidence. Therefore, we cannot say that the circuit court
erred in denying Jenkins’s posttrial motion.
For her next point, Jenkins asserts that the verdict was not supported by the evidence.
Specifically, her argument is that the information misappropriated does not qualify as “trade
secrets” as that term is defined in the Act. The only issue properly preserved under this point
is whether Donley and Jenkins took “information” within the meaning of the Trade Secrets
Act. See Wal-Mart Stores, Inc. v. P.O. Mkt., Inc., 347 Ark. 651, 66 S.W.3d 620 (2002).
(holding that whether something is “information” within the meaning of the Act is a legal
question). Here, the information allegedly taken by Donley and Jenkins contained not only
the names of customers, but valuable information regarding those customers and their
policies, agent compensation plans, premium and rate structures, and details concerning
APS’s relationship with various insurance companies, among other things. As such, it qualifies
as a “compilation” under the Act. Moreover, this is not the type of information that could
be readily ascertained in another manner, such as by looking in the telephone directory. See
Jaraki v. Cardiology Assocs. of Ne Ark. P.A., 75 Ark. App. 198, 55 S.W.3d 799 (2001).
Jenkins’s argument focuses on the application of the six factors to the definition of
“trade secrets.” This presents a question of fact. Wal-Mart Stores, Inc. v. P.O. Mkt., supra.
Therefore, the motion for directed verdict based on those facts falls under the renewal
requirement of Ark. R. Civ. P. 50. Because Jenkins failed to properly renew the motion, it
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was not preserved for appeal, and the circuit court’s denial of the motion for judgment
notwithstanding the verdict was not in error.
Jenkins’s third point is that APS failed to adequately prove its damages. This is a
challenge to the sufficiency of the evidence to support the award. As such, it is waived due
to Jenkins’s failure to renew her motion for directed verdict at the close of all of the
evidence. Advocat, supra; Bronakowski, supra.
Jenkins next challenges the award of punitive damages. Punitive damages are not
recoverable under the Trade Secrets Act. See Brown v. Ruallam Enters., Inc., 73 Ark. App.
296, 44 S.W.3d 740 (2001). They can, however, be recovered in cases of tortious
interference with contractual relationships. Allstate Ins. Co. v. Dodson, 2011 Ark. 19, 376
S.W.3d 414. Jenkins waived her challenge to the sufficiency of the evidence to support
punitive damages by failing to properly renew her motion for directed verdict. Because there
was a basis for imposition of punitive damages other that the misappropriation of the
information, we cannot say that the circuit court erred.
For her final point, Jenkins argues that the verdicts were excessive. As indicated
earlier, this point is preserved for our review. However, the argument is not sufficiently
developed in that it contains no analysis or discussion. Rather, Jenkins’s entire argument on
this point is one sentence in which she asserts that the compensatory and punitive damages
were the result of passion and prejudice and cites Travis Lumber Co. v. Deichman, 2009 Ark.
299, 319 S.W.3d 239, for support of her argument. It is well settled that we will not make
a party’s argument for them or consider an argument that is not properly developed. Teris,
LLC v. Chandler, 375 Ark. 70, 289 S.W.3d 63 (2008).
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Affirmed.
PITTMAN and WHITEAKER , JJ., agree.
Scholl Law Firm, PLLC, by: Scott A. Scholl, for appellant.
Hopkins Law Firm, A Professional Association, by: Ryan J. Caststeel, for appellee.
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