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Infinity Fluids Corp. v. General Dynamics Land Systems, Inc.

United States District Court, D. Massachusetts

September 29, 2016

INFINITY FLUIDS CORP., Plaintiff,
v.
GENERAL DYNAMICS LAND SYSTEMS, INC., Defendant.

          MEMORANDUM OF DECISION

          TIMOTHY S. HILLMAN, DISTRICT JUDGE.

         Background

         Plaintiff, Infinity Fluids Corp., (“Plaintiff” or “Infinity”) has filed claims against Defendant, General Dynamics Land Systems, Inc. (“Defendant” or “GDLS”) alleging claims for Breach of Contract (Count I), Unjust Enrichment (Count II), Misappropriation or Misuse of Trade Secret Information (Count III), Misappropriation of Confidential Information (Count IV), violations of the Massachusetts Consumer Protection Act, Mass.Gen.L. ch. 93A (“Chapter 93A”) (Count V), and Negligent Misrepresentation in violation of Chapter 93A (Count VI), Negligent Misrepresentation (Count VII), Fraudulent Misrepresentation in violation of Chapter 93A (Count VIII), and Fraud and Deceit (Count IX), This Memorandum of Decision addresses Defendant's Motion For Summary Judgment (Docket No. 118). For the reasons set forth below, that motion is granted, in part and denied, in part.

         Facts

         GDLS is a defense contractor that designs and manufactures various types of armored combat vehicles for the United States Military. In the late 1990's, GDLS contracted with the United States Marines (“Marines”) to develop an armored amphibious tank capable of being launched from a ship at sea, eventually named the Expeditionary Fighting Vehicle (“EFV”). In connection with development of the EFV, in 2008 GDLS was awarded a $700 million cost-plus-incentive fee contract with the Marines, which scope of work included continuation of system development and demonstration for the EFV, as well as the manufacture of seven fully-equipped prototype vehicles for the Marines for testing (“EVF Program”). GDLS encountered difficulty with the EFV's ability to start in cold weather conditions. In April 2008, GDLS performed a trade study to resolve the cold start functionality issue. The study concluded that an electric heater would be the best option to resolve the cold start issue.

         In 2008, GDLS solicited vendors for component parts that could be incorporated into the final design of the EFV. Infinity was one such vendor. Infinity claimed to be able to research, design and sell to GDLS an electric heater that could assist in warming the engine's coolant fluid prior to starting the engine in cold temperatures. On May 8, 2008, GDLS and Infinity signed a Proprietary Data Agreement (“PDA”) to govern their exchange of proprietary information in connection with development of the EFV. The PDA states that it is intended to allow the parties to exchange proprietary information in contemplation of a business arrangement between them.

         The PDA expressly states that the parties:

intend to exchange information to support [GDLS] on the Expeditionary Fighting Vehicle (‘EFV') and the MK46 Weapon Station …, and wish to protect the confidentiality of certain Proprietary Information (as herein defined) disclosed in furtherance thereof.
1 The term Proprietary Information includes all information, in whatever form or medium previously provided or provided in connection this Agreement which is identified as proprietary by the disclosing party as follows: (i) written documents and permanent records are to be marked with a restrictive legend of the disclosing party such as “proprietary”, “confidential” or the like and (ii) oral or visual information shall be identified as proprietary at the time of disclosure and so confirmed in writing within thirty (30) days of the presentation, such writing to contain a restrictive legend and a summary of the Proprietary Information delivered at the oral or visual presentation.
Notwithstanding the foregoing, this Agreement does not restrict disclosure or use of any information which would otherwise be considered “Proprietary Information” if the receiving party can demonstrate: (a) the information is published or generally known by the public (other than as a result of the breach of this Agreement); (b) the information was known by the receiving party at the time of disclosure as evidenced by competent proof; (c) the information has become lawfully available to the receiving party from a third party without restriction on disclosure; (d) the disclosing party approved in writing the public release by the receiving party; (e) the information was developed or discovered by the receiving party without access to or use of any Proprietary Information provided by the disclosing party; (f) the protection period has expired; or (g) the information was required to be released pursuant to applicable law, governmental regulation, legal order, notice, subpoena, investigative demand or similar directive provided that the receiving party first, to the extent permitted by law gives the disclosing party sufficient notice to provide it with a reasonable opportunity to seek injunctive or other similar equitable relief to prevent disclosure or to obtain a protective order to govern such disclosure.
3. Each party agrees: (i) to use the other's Proprietary Information solely for purposes of the [EVF] Program; (ii) not to disclose or reveal to any third party without the disclosing party's prior written consent, any portion of the disclosing party's Proprietary Information or any notes, summaries, or other information derived from the Proprietary Information; (iii) to disclose Proprietary Information of the disclosing party or portions thereof only to those employees, contract employees, or other agents or representatives of the receiving party who need to know such information in confidence under terms and conditions at least as restrictive as the terms and condition of this Agreement and; and (iv) not to use any portion of the disclosing party's Proprietary Information for personal gain or to advance or support the reviewing party's other business ventures or the business ventures of others

         The PDA explicitly permits the use of Proprietary Information (as defined therein) by the parties in connection with the EVF Program. Infinity's President, Robert Evans (“Evans”) signed the PDA on behalf of Infinity; he read and understood it at the time he signed it. Evans understood that GDLS was engaged in developing the EFV for the Marines, and that the PDA was entered in order to govern the parties' exchange of information related to the EVF Program. It was also Evans' understanding that the confidential information which Infinity would be providing to GDLS wasn't going “to [be] share[d] with anyone else beyond the project” and that Infinity's Proprietary Information could not be disclosed to third parties without its consent. Infinity did not provide any confidential business information or trade secrets to GDLS prior to entering the PDA. After entering the PDA, Infinity labeled confidential information provided to GDLS “proprietary” and sent emails indicating that the technology and or information included therewith contained Proprietary Information.

         Infinity was considered to have a viable, preferred solution because its heater could reside within the EFV. The product proposed by Infinity was a pre-existing marketable product known as the CENTAX Heater, which Infinity planned to redesign to meet the needs of the EVF Program. Infinity was going to have to make substantial changes to customize the CENTAX design in order to meet GDLS's needs. Infinity's heater solution and technology contained valuable trade secrets and confidential information including: (1) custom product design which was capable of meeting GDLS's technical requirements at a size and weight which allowed it to reside onboard the EFV; (2) custom product geometry including element transition/termination, ring design, bus bar configuration, terminal locations, stand-off materials, insulators, and heat transfer design; (3) custom saddle termination design; and (4) custom testing equipment and protocols designed for testing of Infinity's GDLS heaters, including equipment and protocols used for measurements of temperature, flow rate, resistance, power, etc. Evans spent years perfecting the CENTAX heater and Infinity's business depends upon its unique heaters and the trade secrets they contain. Sales are driven by the inherent benefits of its products and intellectual property. For that reason, Infinity took steps to protect its trade secrets and confidential information: It marks documents containing trade secrets as confidential, maintains computer security, and only provides access to its secret information to individuals with a reasonable need to know. Additionally, Infinity limits the dissemination of its confidential or proprietary information to third parties by entering into non-disclosure agreements such as the PDA.

         Infinity's intention was to sell heater units to GDLS on a per-item price basis.[1] On February 24, 2009, GDLS submitted a purchase order (“Purchase Order #40034755”) to Infinity for seven of its heater assemblies at $6, 840 each. Purchase Order #40034755 was later revised to include $38, 679 in non-recurring engineering and tooling costs claimed by Infinity to be necessary in redesigning its CENTAX heater to meet the requirements of the EFV Program (because building the heater for GDLS required Infinity to re-design its standard CENTAX heater, Infinity had to purchase additional equipment and spend time developing a heater that would meet GDLS's specifications). This one time engineering and tooling cost was paid in full on April 2, 2009.

         Purchase Order #40034755 explicitly incorporates the Purchase Order Terms and Conditions (“Terms and Conditions”). The Terms and Conditions expressly provide that:

any acceptance by Seller on purported terms and conditions that differ in any way from the provisions of the Contract [as defined herein]. . . shall not become part of, or in any way alter, amend or otherwise modify any of the provisions of, the Contract. Any shipment of goods, performance of services, or commencement of work on supplies by Seller shall be deemed to be only upon the terms and conditions contained in the Contract, except to the extent that Buyer may otherwise expressly consent in a writing signed by the representative (or his/her successor) of Buyer who signed [Purchase Order #40034755].

         Evans understood that Purchase Order #40034755 represented the scope of what GDLS agreed to pay Infinity.[2]

         Infinity acknowledges that at the time GDLS submitted Purchase Order #40034755, it did not have a functioning product that met the requirements of the EFV Program. The reason for the product's failure is disputed. Since the EFV was in a redesign phase when GDLS and Infinity began working together, the engine compartment of the EFV was already populated with components. Infinity's heater needed to be bent into a complicated pattern in order to be inserted into the engine's existing void space. Infinity produced heaters which although otherwise meeting GDLS's technical specifications, could not be bent to the desired redesign geometry (which would allow them to fit into the limited space) without breaking. According to Infinity, GDLS told Infinity to manufacture its heater and that GDLS would locate a pipe bender capable of twisting and turning Infinity's heater to fit the EFV engine. GDLS provided Infinity with the names of possible pipe vendors. According to GDLS, while it may have identified potential pipe vendors who could assist Infinity in bending the heaters, it was ultimately Infinity's responsibility to bend the heaters.

         GDLS continued to work with Infinity to develop a functioning product, and the parties continued to exchange information in connection with this effort. On July 15, 2009, GDLS issued a second purchase order (“Purchase Order #40055319” and together with Purchase Order #40034755m “Purchase Orders”) to Infinity for two CENTAX heater “test bed” prototype units at $6, 678 each, totaling $13, 356. GDLS paid Infinity in full for these additional prototypes upon delivery, despite the fact that testing of the prototypes was ultimately unsuccessful. GDLS Purchase Order #40034755, for seven of Infinity's heater assemblies at $6, 840 each, was cancelled in late August 2009. GLDS did not pay Infinity for the prototypes and did not negotiate with Infinity as to their price despite requests from Infinity to do so. GDLS also requested that Infinity perform work outside of the Purchase Orders and that Infinity purchase and/or expedite equipment. Infinity performed this work and purchased equipment related to ...


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