United States District Court, M.D. Pennsylvania
Christopher C. Conner, Chief Judge
Advanced Fluid Systems Inc (“AFS”) brings this
action against a former employee and several competitors
asserting claims for misappropriation of trade secrets breach
of fiduciary duty and aiding and abetting said breach AFS
moves for judgment pursuant to Federal Rule of Civil
Procedure 56 on each of its claims (Doc 156) Also before the
court are cross-motions for summary judgment filed by
defendants Integrated Systems and Machinery LLC Livingston
& Haven LLC Clifton B Vann IV and Thomas Aufiero (Docs
Factual Background & Procedural
a Pennsylvania corporation that distributes, manufactures,
and installs hydraulic components for engineering projects.
(Doc. 165 ¶ 2). Defendant Kevin Huber
(“Huber”) was employed at AFS as a full-time
sales engineer between November 2006 and October 2012. (Doc.
169 ¶ 2). Huber left his position at AFS after
incorporating his own firm, Integrated Systems and Machinery,
LLC (“Integrated Systems”), in October 2012.
(Id. ¶¶ 5, 181). This litigation arises
from events circumambient to Huber's departure.
The 2009 Contract
September 2009, AFS entered into a three-year contract with
the Virginia Commonwealth Space Flight Authority (“the
Authority”) to build and maintain equipment for the
NASA rocket launch facility on Wallops Island, Virginia.
(Id. ¶ 6). AFS designed, engineered, and
installed a hydraulic and control launch system for the
Authority at Wallops Island. (See Id. ¶¶
6-7, 9). The system, referred to as the
Teleporter/Erector/Launcher Hydraulic System
(“Hydraulic System”), is comprised of many
constitutent parts, including a component known as the
“strongback.” (Id. ¶¶ 6-7).
The strongback is the platform that carries rockets in a
horizontal position to the launch pad. (Id. ¶
7). A pair of “gripper arms” secure the rocket
against the strongback. (Id. ¶ 111; see, e.g.,
Doc. 166-15). The Hydraulic System then lifts the rocket and
strongback from a horizontal position to a vertical position
and holds the rocket in place for launch. (Doc. 169 ¶
Sciences Corporation (“Orbital”) launches its
Antares rocket from Wallops Island using the Hydraulic System
designed and installed by AFS. (Id. ¶ 6). The
Antares rocket services and supplies the International Space
Station. (See id.) Huber became aware of the Hydraulic System
project and introduced AFS's management team to it
through his friend and Orbital engineer Keith Fava
(“Fava”). (Id. ¶ 15). Huber was
intimately involved with the Hydraulic System project from
its inception, and he was the main point of contact between
AFS and Orbital. (Id. ¶¶ 16-18). Indeed,
Orbital employees considered Huber to be the de
facto manager of the project. (Id.)
supplied the Authority with a comprehensive package of
engineering drawings generated during design and installation
of the Hydraulic System. (Id. ¶¶ 12-13).
Pursuant to the contract between AFS and the Authority, all
materials generated during performance of the agreement are
deemed “work for hire” and the “exclusive
property” of the Authority. (Doc. 165 ¶ 12). The
contract defers to a “Non Disclosure Agreement”
for treatment of confidential information, but AFS and the
Authority never executed such an agreement. (Id.
¶¶ 10-11). Nonetheless, the Authority's lead
engineers testified that they released AFS's drawings
only to those that “needed to know” the
information. (Doc. 158-7, Reed and Nash Dep. 85:6-87:5,
88:3-89:25, 90:23-91:2, 92:3-95:15, Mar. 30, 2016
September of 2012, the Authority experienced financial
difficulty. (Doc. 169 ¶ 109). It sold both the
strongback and Hydraulic System to Orbital to provide
continued funding for launches at Wallops Island.
(Id.) AFS did not execute a nondisclosure agreement
with Orbital. (Doc. 165 ¶ 42). Consequently, Orbital
considers itself to be the legal owner of AFS's
engineering drawings. (Doc. 178 ¶¶ 128-29). This
belief notwithstanding, Orbital maintained a practice of only
disclosing AFS's drawings on a need-to-know basis. (See
Doc. 172-28, Edwards Dep. 90:16-91:12, Mar. 22, 2016
employs security measures to safeguard its engineering files,
including data related to the Hydraulic System. AFS secures
its files on a password-protected server at its headquarters
in York, Pennsylvania. (Doc. 169 ¶¶ 33-35). Its
facility is monitored by security cameras. (Doc. 192-6,
Burkhardt Dep. 24:10-23, May 25, 2016 (“Burkhardt
Dep.”)). To access files on-site, employees must enter
individualized usernames and passwords; to access them
remotely via virtual private network requires two passwords.
(Doc. 169 ¶¶ 33-36). Authority employees and others
at Wallops Island have limited access to these materials
through a password-protected online repository managed by the
Mid-Atlantic Regional Spaceport. (Id. ¶ 37; see
Reed/Nash Dep. 79:25-81:21). AFS's finalized engineering
drawings bear its name as well as a statement that the
drawings are proprietary and confidential. (Doc. 169
¶¶ 13, 34).
Huber's Relationship with the Livingston
Thomas Aufiero (“Aufiero”) was a sales manager at
AFS who worked closely with Huber on the initial Hydraulic
System project. (Doc. 178 ¶ 48; see also Doc. 169 ¶
39). In January 2011, Aufiero left AFS to work as a regional
sales manager for defendant Livingston & Haven, LLC
(“Livingston”). (Doc. 169 ¶¶ 39-41).
Livingston “designs, assembles, and installs hydraulic
fluid systems” and generally competes in the same
market as AFS. (See Doc. 178 ¶¶ 8-9).
after Aufiero began working for Livingston, he emailed Huber
to request photos of the new Hydraulic System cylinders
recently delivered to AFS's headquarters. (Doc. 169
¶¶ 40-42). Huber emailed the requested photos to
Aufiero. (Id. ¶ 41). Ten months later, in
November 2011, Huber emailed Aufiero 10 photos and a video
showing tests of the Hydraulic System. (Id.
¶¶ 43-44). Soon afterward, Huber requested that he
and Aufiero maintain contact using Huber's personal email
address. (See Id. ¶ 45).
2011 or early 2012, Huber began meeting with a team of
Livingston employees at its headquarters in North Carolina.
(Id. ¶¶ 46-47). The team consisted of
Aufiero, defendant Clifton B. Vann, IV (“Vann”),
president of Livingston, and Craig Hill (“Hill”),
a Livingston engineer. (Id.) Huber met and
communicated with this group on several occasions to discuss
Orbital's needs regarding support work for and eventual
upgrades to the Hydraulic System. (See Id.
¶¶ 53, 56, 71, 95-96, 129, 143, 178). Huber
conveyed to the Livingston team that Orbital was unhappy with
AFS's services and that it was seeking new vendors to
service the Hydraulic System. (Doc. 178 ¶¶ 43-50).
told, Huber participated in 338 calls with Livingston
employees on his AFS-issued cellular phone. (Doc. 169 ¶
52). He also communicated electronically with the Livingston
team. During a January 8, 2012 meeting, Livingston
established an account for Huber with Dropbox.com, an online
document-sharing service, and linked Huber's account with
Hill's and Aufiero's Dropbox accounts. (Id.
¶¶ 53-55). A Livingston employee installed a
virtual private network on Huber's AFS-issued laptop
computer, allowing Huber to access Livingston's private
network and AFS's private network on the same device.
(Id. ¶¶ 57-58). The Livingston defendants
also issued Huber a company email address. (Id.
¶ 59). By January 11, 2012, Huber's email signature
on his Livingston account listed him as Livingston's
“Program Manager.” (Id. ¶ 60).
Huber's Departure from AFS
took affirmative steps to help the Livingston employees
familiarize themselves with the Hydraulic System and
Orbital's operations on Wallops Island after his first
meeting at Livingston headquarters. For example, on March 6,
2012, Huber requested a list of Hydraulic System component
parts from Dan Vaughn, AFS's vice president and
engineering manager. (Id. ¶¶ 61-62). Huber
emailed the list, along with attendant prices and profit
margins, to Aufiero. (Id. ¶¶ 64-65). He
also arranged a tour of Wallops Island for Aufiero, Vann, and
Hill on March 21, 2012. (Id. ¶¶ 67-71).
Huber showed the Livingston employees a rocket assembly room,
a launch pad, and the Hydraulic System. (Id.
the March 2012 tour, Huber continued to provide information
about the Hydraulic System to Aufiero, Vann, and Hill via
Dropbox and email. (See Id. ¶ 75). Huber
created a new folder on Dropbox labeled “Orbital
Sciences” and shared it with Aufiero. (Id.
¶¶ 85-91). The folder contained numerous files
including the Hydraulic System cylinder assembly and
arrangement drawings, a “majority” of the
hydraulic schematics for the system, and AFS's pricing
and billing information. (Id.) Huber later emailed
Hill documents containing specifications the Authority
provided to AFS in their original contract for the Hydraulic
System. (Id. ¶ 94).
discussions with the Livingston team continued after Huber
turned over AFS's engineering files. Huber expressed
frustration to Livingston that AFS was ostensibly
contemplating an end to its service work on the Hydraulic
System. (See Doc. 178 ¶¶ 50-51). Huber also
indicated that Orbital was “nervous about not having a
supplier” for necessary parts. (Id. ¶
51). Consequently, Huber arranged another meeting between the
Livingston defendants and Fava for April 12, 2012 to engage
in “high level” discussions about the Hydraulic
System. (Doc. 169 ¶¶ 95-97).
explained during the April 12 meeting that Orbital wanted to
upgrade the Hydraulic System cylinder assembly.
(Id.) He told Huber, Aufiero, Vann, and Hill that
Orbital would either install a new cylinder system at the
launch pad or modify the cylinders it already owned.
(Id.) Fava noted Orbital would announce a
competitive bidding process for the new contract.
(Id.) In his meeting notes, Fava remarked that
Livingston might have a “leg up” on the
competition if it retained Huber. (Id. ¶ 96).
He observed that AFS's “management doesn't
support us or their own employees in the type of team
atmosphere that we need on an R&D program like
Vann, and Aufiero began discussing Livingston's
prospective role in the anticipated upgrades after the
meeting with Fava. (See Id. ¶¶ 101-04).
Huber advised Orbital that if it selected Livingston to
complete the cylinder upgrades, Livingston would likely hire
Huber as project manager. (See Id. ¶ 103). He
also discussed compensation with Vann and Aufiero.
(Id. ¶ 104). Huber remained an employee at AFS
for several months after having these discussions. (See
Id. ¶ 190). Eventually, Huber resigned from AFS
in October of 2012. (See Id. ¶¶ 187, 190).
On October 18, 2012, eight days before his last day at AFS,
Huber incorporated his own firm, Integrated Systems, with the
Nevada Secretary of State. (Id. ¶¶ 181,
The Hydraulic System Upgrade Contracts
issued two contracts for work relating to Hydraulic System
upgrades after competitive bidding periods. Orbital granted
one contract to Livingston for replacement of the
system's strongback gripper arms in December of 2012.
(Id. ¶ 138). In March of 2013, Orbital granted
a second contract to Integrated Systems for manufacture of a
new cylinder assembly. (Id. ¶ 254). Because
AFS's claims implicate actions taken during these
contracts' bidding periods, we recount the details of
each in extenso.
The Gripper Arms Contract
first upgrade concerned the Hydraulic System's gripper
arms. Orbital decided to replace the gripper arms in the
spring of 2012. (Id. ¶ 112). Fava contacted
Huber at his AFS email address to provide design
specifications for the project. (Id. ¶ 113).
Fava indicated that the new gripper arms “would be
designed and installed by AFS.” (Id.) Huber
emailed AFS engineers on June 19, 2012 and requested
“technical recommendations” for the gripper arms
upgrade. (Id. ¶ 117). At the same time, he
continued discussions about the upgrade with his Livingston
contacts. (Id. ¶ 118).
separately approached Livingston about the gripper arms
upgrade. Michael Brainard (“Brainard”), an
Orbital engineer, expressed interest in meeting with
Livingston management to discuss details of the gripper arms
proposal. (See Doc. 178 ¶¶ 60-62). Brainard
surmised that Orbital could share information about AFS's
prior work on the gripper arms upon belief that Orbital
“own[ed] the rights to share that information.”
(Id. ¶¶ 62-63). Fava contacted Aufiero and
Hill to secure a non-disclosure agreement from Livingston so
that Orbital could share information concerning its upgrade
plans. (Doc. 172-23, Brainard Dep. 84:8-85:18, Apr. 12,
2016). Livingston executed the non-disclosure agreement on
May 15, 2012. (Doc. 178 ¶ 60).
policy is to solicit bids from vendors that Orbital deems
qualified to perform the work. (Doc. 169 ¶ 110). Orbital
does not accept unsolicited bids. (See id.) Rather, it
invites prospective vendors to the bidding process by sending
them a request for quote. (Id.) Companies interested
in bidding must then submit a rough order of magnitude
(“rough order”) for Orbital's review.
(Id.) Existing vendors will typically receive a
quote request for future contracts. (Id.)
requested quotes from both AFS and Livingston for the gripper
arms contract. (See Id. ¶¶ 113-14). On
August 10, 2012, Huber submitted a rough order on behalf of
AFS totaling $277, 000. (Id. ¶ 119). One month
later, the Livingston team submitted a firm fixed price of
$320, 500. (Id. ¶ 120). Livingston's firm
price included compensation for Huber. (Id.
¶¶ 130-31). In contemporaneous notes dated
September 5 and 10, 2012, Fava observed that the decision
will “likely come down to price, with a slight nudge
towards AFS due to their experience with the current
system.” (Id. ¶ 133).
authorized Huber to submit a final price of $277, 828.80 on
September 12, 2012. (Id. ¶ 122).
Notwithstanding this final quote duly authorized by AFS
management, on September 17, 2012, Huber submitted a firm
price on behalf of AFS for $410, 383. (Id.
¶¶ 123-24). Huber did not consult AFS management
before presenting the inflated price to Orbital.
(Id. ¶ 124). He specifically asked a new AFS
sales manager not to mention the bid, noting that he
“went extremely high on the quote for a reason.”
awarded the gripper arms contract to Livingston on September
24, 2012. (Id. ¶¶ 133-35). Orbital based
its decision, in part, on the price differential between
Livingston's and AFS's bids. (Id.) Fava
cited AFS's quote and its track record of poor customer
service as Orbital's reasons for deciding against AFS for
the contract. (Doc. 178 ¶ 77). Livingston and Orbital
eventually finalized a price of $285, 685. (Doc. 169 ¶
138). Huber received $41, 322.15 from Livingston after the
latter received the gripper arms contract. (Id.
The Cylinder Upgrade Contract
addition to replacing the gripper arms, Orbital decided to
upgrade the system's hydraulic cylinder assembly.
(Id. ¶ 140). With this upgrade, the Hydraulic
System would ostensibly support a heavier rocket and send a
heavier “payload” to the International Space
Station. (Id.) Orbital determined that it could
obtain this result one of two ways: (1) by replacing its
cylinders' component parts but not the cylinders
themselves, or (2) by installing completely new cylinders and
cylinder assemblies. (Id. ¶ 141).
Aufiero, Vann, and Hill knew of Orbital's planned
cylinder upgrade by March 2012. (Id. ¶ 143).
After learning about Orbital's plan, Huber disclosed to
Aufiero the prices AFS paid for the original hydraulic
cylinders and all component parts. (Id. ¶ 149).
Orbital requested a quote from Livingston for the
construction of new cylinders on July 10, 2012. (Id.
¶ 153). Orbital sent a similar request to Huber to
forward to AFS, specifically inquiring as to the cost of
modifying and reusing the existing cylinders in lieu of
manufacturing new ones. (Id. ¶¶ 153,
157-58). Huber did not deliver this request to AFS.
(Id. ¶ 155).
engineering team, unaware of Orbital's request to quote
both alternatives, tasked Huber to begin developing a quote
for upgrading the existing cylinders. (See Id.
¶ 159). The team also instructed Huber to obtain a
formal quote request from Orbital. (Id.) AFS's
engineers thereafter determined that cylinder modification
would not safely accomplish Orbital's goal of increasing
load capacity. (Id. ¶ 161). The engineers were
also concerned that Orbital's desired three-month
modification turnaround was not feasible. (Id.)
Huber never informed AFS's management that Orbital also
requested a quote for new cylinders. (Id. ¶
September 5, 2012, Huber provided a request for quotation to
AFS for cylinder modification only and proposed a feasibility
study to determine whether AFS could safely modify the
existing cylinders. (Id. ¶¶ 164-65). Huber
estimated the cost of the study to be between $15, 000 and
$25, 000. (Id. ¶ 166). When Huber proposed the
study to Orbital on September 6, Brainard responded that AFS
must first provide a rough order. (Id. ¶ 167).
That same day, Huber encouraged AFS to abandon the upgrade
bid, stating that he did not “think this project is
good business for AFS at this time.” (Id.
¶ 168). In an email five days later, Huber told Fava
that Orbital should not use AFS for its cylinder upgrade and
that Huber would “jump ship” if Orbital chose
another vendor. (Id. ¶ 170). Fava understood
the alternative vendor to mean Livingston. (Id.
¶ 171). Shortly thereafter, Orbital stopped seriously
considering AFS for the cylinder contract. (See Id.
September 27, 2012, Huber met with Aufiero and Hill to
prepare a joint rough order proposal on Livingston's
behalf. (Id. ¶¶ 178-80). Large sections of
Livingston's proposal were copied verbatim from the rough
order AFS submitted for the original cylinder contract.
(Id. ¶ 178). Livingston's rough order
totaled $2, 338, 322. (Id.) Huber, Aufiero, Vann,
and Hill set pricing to align with the costs that AFS
incurred when it installed the original cylinders. (See
Id. ¶ 231).
October 8 and 9, 2012, as Livingston worked on its rough
order for the cylinder contract, Huber used his AFS laptop
and an external hard drive to download approximately 98
gigabytes of data from AFS's servers. (Id.
¶¶ 182-85). Huber downloaded materials pertaining
to the Hydraulic System as well as files related to AFS's
other projects. (Id.; Doc. 158-6, Huber Dep.
265:1-266:10, Feb. 10, 2016 (“Huber Dep.”)). On
the morning of October 9, 2012, Huber submitted his
resignation to AFS. (Doc. 169 ¶ 187). His resignation
became final on October 26, 2012. (Id. ¶ 190).
days following his resignation notice, Huber transferred many
of the downloaded files to Livingston using Dropbox and his
personal email address. (Id. ¶ 194). Huber
began transmitting the files on October 15, 2012, nearly two
weeks before his resignation took effect. (Id.) The
shared information included weld history details, weld maps,
tubing drawings, a spreadsheet of component parts, prices for
the original gimbals, and AFS's “as built”
drawings. (See Id. ¶¶ 196-99, 202-04,
206-17). On October 29, 2012, Huber shared drawings generated
by AFS for both the new cylinders and the new gripper
arms. (Id. ¶¶ 218-21). Huber
altered many of these documents, postdating them and
identifying himself and Integrated Systems as the author.
(Id. ¶¶ 203-04, 207-08, 220). The
documents' substantive content was unchanged.
(Id. ¶¶ 196-99, 202-04, 206-08, 218-21,
submitted its rough order to Orbital, with pricing for both
cylinder upgrade alternatives, on November 2, 2012.
(Id. ¶ 229). Two months later, Integrated
Systems surprised the Livingston team by submitting its own
bid for the cylinder contract. (See Id. ¶ 243).
Like Livingston, Integrated Systems quoted both upgrade
alternatives. (Id.) Huber never informed Livingston
that he intended to bid on the cylinder contract. (Doc. 178
¶ 100). Integrated Systems' bid explicitly cited
drawings that Huber downloaded from AFS's servers as
justification for its price quote. (Doc. 169 ¶ 243).
tentatively awarded the cylinder contract to Integrated
Systems on March 13, 2013 for $2, 028, 966. (Id.
¶ 246). Fava catalogued the potential risks and benefits
of using Integrated Systems for the contract in several
internal documents. Some of these risks included a lack of
proper certification, Integrated Systems' dearth of other
contracts, and its relative inexperience in handling
procurements. (Id. ¶ 247). In support of the
selection, Fava cited Orbital's frustration with
AFS's customer service and management capabilities.
(Id. ¶ 249). Fava observed that although the
Hydraulic System “does what it's supposed to do,
” the Antares rocket suffered problems on “almost
every . . . launch.” (Doc. 178 ¶ 20). Fava
explained that he valued Huber's customer service skills
and appreciated his prior experience with Orbital and NASA.
(Doc. 169 ¶ 249). Orbital confirmed its decision to
award the contract to Integrated Systems upon receiving its
best and final offer. (Id. ¶ 254). The parties
agreed to a contract price of $2, 028, 966. (Id.)
Systems began work on the contract and obtained the new
cylinders in 2014. (See Id. ¶ 259). Thereafter,
in a separate lawsuit, Orbital accused Huber and Integrated
Systems of obtaining the cylinder contract by fraud and
concealment. (See Id. ¶¶ 265-66). Brainard
testified that Orbital would not have awarded the cylinder
contract to Integrated Systems had it known Huber developed
the bid using AFS's engineering files. (Id.
eventually subpoenaed Dropbox for access to accounts that
Huber opened using his personal and business email addresses.
(Id. ¶ 272). Dropbox reported that an account
associated with Huber's personal email address contained
29 gigabytes of data. (Id. ¶ 273). Counsel for
Huber, Integrated Systems, and AFS agreed to the hiring of a
forensic computing expert to examine the Dropbox account
linked to Huber's personal email address. (Id.
¶ 274). The analysis revealed that an unknown Dropbox
user had attempted to delete files in Huber's Dropbox
after AFS served its subpoena. (Id. ¶ 275).
Dropbox restored the files, after which the parties
documented the account's contents. (Id.
¶¶ 276-77). The deleted files included, inter
alia, AFS's schematic for the new gripper arms,
Huber's letter to Orbital submitting the inflated gripper
arms quote without AFS's permission, and his consulting
contract with Livingston for the gripper arms work.
(Id. ¶ 277).