IP Law Daily, TRADE SECRETS—Cal. App.: Summary judgment affirmed in airship contract dispute, (Jul 26, 2024)

By Kevin M. Finson

A summary judgment decision finding trade secrets claims time-barred was affirmed because the plaintiffs themselves admitted in deposition the dates on which they became aware of the alleged misconduct and those dates were outside the applicable statutes of limitations.

A California state trial court properly found that Lockheed Martin was entitled to summary judgment on trade secrets and related claims brought against it by a former business partner, the California Court of Appeals in Los Angeles has held. The plaintiff pointed to no evidence which could overcome its own admissions as to when it was aware of the alleged misconduct, which was clearly outside the applicable statutes of limitations (Sky Lift Aeronautics, LLC v. Lockheed Martin Corp., No. B322705 (Cal. App. July 24, 2024)).

Sky Lift Aeronautics, LLC and Millenium Airship, Inc. (collectively, Sky Lift) brought suit in February of 2018 against Lockheed Martin Corporation (Lockheed), Robert Binns, and Hybrid Enterprises (Hybrid) for claims which, after several demurrers and amendments, ended up as alleging violation of the California Uniform Trade Secrets Act, breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and promissory estoppel, as well as violation of the California unfair competition law and related torts. All of the claims centered around contracts between Sky Lift, Millenium, and Lockheed to market airships and an allegation that Binns, who was at one point employed by Sky Lift, conspired with Hybrid, which he was involved in creating, and Lockheed to use Sky Lift’s and Millenium’s confidential information in their own airship projects.

The trial court sustained a demurrer as to the unfair competition and tort claims on the ground that they were preempted by the California Uniform Trade Secrets Act, and subsequently entered summary judgment on the surviving claims on the grounds that they were time-barred. Sky Lift appealed.

Statute of limitations. Sky Lift argued that there was a dispute of material fact as to when it became aware of the claims it had against all three defendants. The court found that Sky Lift’s executives had admitted in deposition that they suspected Binns had “turned coat” sometime between January of 2014 and January of 2015, rendering the claims related to his action time-barred under the applicable three-year statute of limitations. Although Sky Lift argued that it was not aware of all of its claims against all of the defendants until later, the court held that because the claims centered around the same alleged conspiracy between Binns and the others, knowledge of that alleged conspiracy was when the limitations period began to run.

As for the breach of contract claims against Lockheed, Sky Lift was unable to controvert Lockheed’s evidence that it knew about the alleged breach in 2013 or no later than January 2014, outside the applicable four-year statute of limitations.

Leave to amend. Sky Lift argued that the trial court erred in denying leave to amend its claims that the court had found were preempted by the trade secrets statute. Noting that this was reviewed on an abuse of discretion standard, the court held that the trial court was within its discretion to deny leave to amend when Sky Lift failed to identify what specific facts it could possibly allege to cure the defect in its pleading.

The appellate court affirmed the summary judgment entered by the trial court.

The Case is No. B322705.

Judge: Chavez, J.

Attorneys: Tarpey Wix (Bendel Law Group) for Sky Lift Aeronautics, LLC and Millenium Airship, Inc.. Kenneth R. Taketa (Crowell & Moring LLP) for Lockheed Martin Corp. and Hybrid Enterprises, LLC.

Companies: Sky Lift Aeronautics, LLC; Millenium Airship, Inc.; Lockheed Martin Corp.; Hybrid Enterprises, LLC

Cases: TradeSecrets CaliforniaNews