IP Law Daily, TRADE SECRETS—11th Cir.: Aerospace company’s trade secrets claim against Boeing revived, (Apr 7, 2025)

By Carolin Dennis, B.Sc., LL.B., LL.M.

An aerospace company can pursue its Missouri Trade Secrets Act claim against Boeing to the extent it bases the claim on an unjust enrichment theory.

The U.S. Court of Appeals for the Eleventh Circuit reversed the district court’s dismissal of Pemco Aircraft Engineering Services Inc’s (Pemco’s) trade secrets claim and remanded the case for further proceedings, allowing Pemco to pursue recovery based on Boeing’s alleged unjust enrichment. The appellate court found that the limitation of liability provision in the master agreement applies to Pemco’s trade secrets claim, barring most categories of damages, including incidental, punitive, and consequential damages. However, the appellate court held that the provision does not bar recovery for unjust enrichment (Alabama Aircraft Industries, Inc. v. Boeing Co., No. 22-13776 (11th Cir. Apr. 4, 2025)).

Background. In 2005, Pemco Aircraft Engineering Services Inc, now known as Alabama Aircraft Industries, Inc. (Pemco), and The Boeing Co. (Boeing) entered into an agreement to submit a joint bid for a contract to maintain, repair, and upgrade the U.S. Air Force’s fleet of KC-135 Stratotanker aircraft. After the Air Force reduced the number of aircraft for upgrade work, Boeing informed Pemco that it was terminating their agreement for a joint bid. The two companies then submitted competing bids, and the government awarded the contract to Boeing. Pemco sued Boeing for breach of contract and misappropriation of trade secrets, alleging Boeing used Pemco’s proprietary information to submit its own bid. The district court concluded that Alabama law governed the trade secrets claim and dismissed it under Alabama’s two-year statute of limitation period. A jury trial was held on the breach of contract claim and a jury awarded Pemco $2.1 million. Pemco appealed the district court’s dismissal of the trade secrets claim. The Eleventh Circuit held that Missouri’s five-year statute of limitations period applied, rather than Alabama’s two-year period, under the choice of law provision in the underlying contract, and thus the claim was not time-barred. The case was remanded to the district court for further proceedings on the trade secrets claim. After remand, Pemco filed a new complaint, asserting a single claim against Boeing for a violation of the Missouri Trade Secrets Act by misappropriation of Pemco’s trade secrets. The district court dismissed this claim, concluding that the contractual limitation of liability provision barred all additional damages since Pemco had already recovered the maximum amount allowed for breach of contract. Pemco appeals the district court’s judgment dismissing its trade secrets claim.

Limitation of liability provision. The appellate court rejected Pemco’s argument that the non-disclosure agreement is itself a stand-alone contract and found that the master agreement and non-disclosure agreement function as a single contract because of the merger clause. Further, the appellate court noted that the limitation of liability provision in the master agreement is not limited to breach of contract claims and applies to tort claims as well. Additionally, the limitation of liability provision that Pemco and Boeing agreed to did not violate Missouri public policy. Thus, the appellate court held that the limitation of liability provision in the master agreement applies to Pemco’s trade secrets claim, barring most categories of damages, including incidental, punitive, and consequential damages. However, the appellate court found that the limitation of liability provision does not bar recovery for unjust enrichment, which Pemco had alleged.

Trade secrets claim. The appellate court found that unjust enrichment damages are distinct from the direct, out-of-pocket damages Pemco had already recovered and are not categorically barred by the limitation provision. Pemco has alleged a tort claim under the Missouri Trade Secrets Act that is not dependent on its breach of contract claims. In dismissing the claim, the district court concluded that Pemco had already recovered all of the damages that were available to it on its breach of the non-disclosure agreement claim. However, in its trade secrets claim, Pemco alleged a category of recovery different from that for which it was compensated when it received direct, out-of-pocket damages on its claim that Boeing had breached the non-disclosure agreement. Pemco claimed that Boeing was unjustly enriched through its misappropriation of Pemco’s trade secrets and that it is entitled to obtain Boeing’s ill-gotten gains. The Missouri Trade Secrets Act expressly and plainly addresses unjust enrichment and makes recovery of the amount of the unjust riches proper so long as that amount is not duplicative of what the plaintiff is receiving as actual loss damages for the misappropriation. The unjust enrichment recovery Pemco seeks is separate and distinct from Pemco’s out-of-pocket expenses for which it was compensated by the jury verdict award on its claim against Boeing for breach of the non-disclosure agreement. The two categories of recovery would not be duplicative. Thus, the damages Pemco received for its direct, out-of-pocket loss for the breach of the non-disclosure agreement did not compensate it for Boeing’s alleged unjust enrichment caused by the misappropriation of Pemco’s trade secrets.

Therefore, the appellate court reversed the district court’s dismissal of Pemco’s trade secrets claim and remanded the case for further proceedings, allowing Pemco to pursue recovery based on Boeing’s alleged unjust enrichment. The appellate court also denied Pemco’s request to reassign the case to a different district judge.

The Case is No. 22-13776.

Judge: Carnes, E.

Attorneys: Laurie Webb Daniel (Webb Daniel Friedlander, LLP) for Alabama Aircraft Industries, Inc. Craig S. Primis (Kirkland & Ellis, LLP) for Boeing Co.

Companies: Alabama Aircraft Industries, Inc.; Boeing Co.

Cases: TradeSecrets MissouriNews