IP Law Daily, TRADE SECRETS—M.D. Tenn.: Proposed purchase price of resort was not a protectable trade secret, (May 11, 2022)

By Kevin M. Finson, J.D.

The purchaser’s trade secrets claims were dismissed because the plaintiff did not plead that it took reasonable steps to protect the alleged trade secret.

A real estate developer failed to plead the existence of a protectable trade secret in connection with its offer to purchase a hotel and resort lodge, the federal district court in Nashville has held. The proposed price to purchase the lodge did not qualify as a trade secrets; the allegations failed to show that the developer took precautions to keep the purported secret from becoming known (BNA Associates, LLC v. Goldman Sachs Specialty Lending Group, L.P., May 9, 2022, Crenshaw, W.).

BNA Associates, LLC (BNA) was a real estate developer that desired to purchase a property known as RT Lodge. RT Lodge was owned by Ruby Tuesday, Inc. (Ruby Tuesday) and sale of the property was subject to restrictions, including that Goldman Sachs Specialty Lending Group, LP (Goldman Sachs) was required to consent to any sale because Ruby Tuesday had pledged the property as security for a loan from Goldman Sachs. Goldman Sachs refused to consent to the sale and expressed interest in purchasing the RT Lodge property for itself. Ruby Tuesday terminated the contract of sale with BNA pursuant to a contractual provision which acknowledged that the sale could not proceed if Goldman Sachs did not consent. BNA filed suit against Goldman Sachs for intentional interference with business relations under Tennessee law and misappropriation of trade secrets under the Tennessee Uniform Trade Secrets Act (TUTSA) and the federal Defend Trade Secrets Act (DTSA). Goldman Sachs moved to dismiss for failure to state a claim.

Trade secrets. The court noted that the analysis under the Tennessee and federal trade secret statutes was effectively the same. BNA argued that its proposed purchase price for RT Lodge was a trade secret, conveyed only to Ruby Tuesday, which Goldman Sachs misappropriated. However, the court found that there was no allegation made of reasonable effort to maintain secrecy of the proposed price. In fact, BNA’s complaint showed exactly the opposite: the contract of sale between Ruby Tuesday and BNA contained no provision requiring that the price be kept confidential. This unrestricted disclosure to a third party was fatal to a trade secret claim, so the court granted Goldman Sachs’ motion to dismiss

The case is No. 3:21-cv-00481.

Attorneys: Eric W. Smith (Bulso PLC) for BNA Associates, LLC. Carmine D. Boccuzzi (Cleary, Gottlieb, Steen & Hamilton LLP) for Goldman Sachs Specialty Lending Group, L.P.

Companies: BNA Associates, LLC; Goldman Sachs Specialty Lending Group, LP

Cases: TradeSecrets TennesseeNews GCNNews