Bro-Tech Corp. v. Thermax, Inc. (651 F. Supp. 2d 378, 2009)

MEMORANDUM & ORDER

RUFE, District Judge.

I. INTRODUCTION

In this case, Plaintiffs Bro-Tech Corporation, trading as The Purolite Company, and Purolite International Ltd. (collectively “Plaintiffs” or “Purolite”), which are in the business of producing ion exchange resins, bring multiple claims relating to Defendants’ alleged misappropriation of their confidential and trade secret information. There are nine named Defendants: two corporate entities comprising part of the global energy and chemical company the Thermax Group (“Thermax”), three high-ranking employees of Thermax, and four individuals who left the employ of Purolite to join Thermax in 2005. Plaintiffs’ Amended Complaint includes fifteen causes of action or equitable grounds for relief, some brought against certain Defendants, and some brought against all. Plaintiffs bring federal claims for violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Computer Fraud and Abuse Act (“CFAA”), and state law claims of Misappropriation of Trade Secrets in violation of the Pennsylvania Uniform Trade Secrets Act (“PTSA”), Unfair Competition, Tortious Interference with Existing and Prospective Contractual and Business Relationships, Civil Conspiracy, Breach of Contract, Breach of the Duty of Loyalty, Commercial Disparagement, Conversion and Inevitable Disclosure, as well as equitable claims of Unjust Enrichment and Vicarious Liability and a request for preliminary and permanent injunctions. Plaintiffs have since withdrawn the claims for Conversion and Inevitable Disclosure, and these will be dismissed. Certain defendants have asserted affirmative defenses to equitable claims they face. Presently before the Court are three Motions for Summary Judgment filed by various sets of defendants, which encompass virtually all of the causes of action brought against them, and Plaintiffs’ Motion for Summary Judgment as to the affirmative equitable defenses noted above.

II. BACKGROUND

Overall, the Amended Complaint describes a scheme by Defendants to steal and use Purolite’s trade secret information related to the development, production and sale of ion exchange resins. Through the alleged scheme, Purolite employees who knew or could access Purolite’s proprietary chemical technology and sales information would accumulate it, quit Purolite, and go to work for Thermax, bringing Purolite’s proprietary information with them for their new employer’s use and benefit. The evidence adduced, viewed in the light most favorable to Plaintiffs where appropriate, reflects the following regarding the parties and events in this matter.

A. Parties

I. Plaintiffs

Plaintiff Bro-Tech Corporation t/a The Purolite Company is a corporation incorporated under the laws of Delaware with its principal place of business in Pennsylvania. Plaintiff Purolite International Ltd. is a corporation owned in part by The Purolite Company. It is organized under the laws of the United Kingdom with its principal address in South Wales. As noted, the plaintiffs are referred to hereinafter as “Plaintiffs” or “Purolite.”

Purolite was founded, and is primarily run, by members of the Brodie family. Stefan Brodie co-founded Purolite with his brother, Don. At all relevant times, Stefan Brodie was Purolite’s Chief Executive Officer and President. At all relevant times, Don Brodie was Executive Vice-President of Purolite. Also, at all relevant times, Jacob Brodie, Stefan Brodie’s son, was Vice-President of Purolite.

Purolite began business as an importer of ion exchange resins in 1982. It became an ion exchange resin manufacturer in 1984. Purolite operates manufacturing sites in Philadelphia, Pennsylvania, Romania and China, and is the second largest manufacturer of ion exchange resins in the world. Purolite also develops ion exchange resins and related technologies.

2. Defendants

a. Thermax

Defendant Thermax, Inc., d/b/a Thermax USA LTD. is a Michigan corporation ■with its principal place of business in that state. Defendant Thermax Ltd. is a company incorporated under the laws of India. As noted previously, these Defendants are referred to hereinafter as “Thermax.” Among other things, Thermax is a manufacturer of ion exchange resins.

b. Individual Thermax Defendants: Pheroz Pudumjee, Amitabha Mukhopadhyay and S.S. Shastri

Defendants Pheroz Pudumjee (“Pudumjee”), Amitabha Mukhopadhyay (“Mukhopadhyay”) and S.S. Shastri (“Shastri”) have senior roles within Thermax. At all relevant times, Defendant Pudumjee was the Executive Director of Thermax, Ltd., Defendant Mukhopadhyay was the Chief Financial Officer of Thermax, Ltd., and Defendant Shastri was the President of Thermax, Inc. In these roles Mukhopadhyay and Shastri bore direct responsibility for decisions regarding Thermax’s ion exchange resins business in the United States. When discussed collectively, Defendants Pudumjee, Mukhopadhyay and Shastri are referred to hereinafter as the “Individual Thermax Defendants.”

c. Former Employee Defendants: Nancy Gleasman, Cindy Gresham, James Sabzali, and Narvinder Sachdev

The four remaining Defendants are individuals who worked for Purolite before resigning in or around March, 2005, and immediately going to work for Thermax. Defendant Nancy Gleasman (“Gleasman”) worked for Purolite for three years before resigning in 2005. At the time she resigned from Purolite, she held the position, “Midwest Sales Manager.” Defendant Cindy Gresham (“Gresham”) worked for Purolite for twenty-one years as a materials and product manager, and lastly, as a sales representative, before resigning in 2005. Defendant James Sabzali (“Sabzali”) worked for Purolite for nine years before resigning in March, 2005. When he resigned from Purolite, he held the position, “North American Sales and Marketing Manager and International Marketing Manager.” Defendant Narvinder Sachdev (“Sachdev”) is a trained chemical engineer and holds an MBA degree. He worked for Purolite from October, 1986 to March, 2005. In that time, he worked as a development chemist and a production facility manager, and ultimately held a position in which he supervised the technical quality of all Purolite products, worldwide. When discussed collectively, Gleasman, Gresham, Sabzali and Sachdev are referred to hereinafter as the “Former Employee Defendants.”

3. Circumstances and Events underlying this litigation

a. Purolite’s business, internal operations, procedures and security

As noted, Purolite develops, manufactures and sells ion exchange resins (“IER”). Generally speaking, “ion exchange resins are chemical substances used to purify liquids.” They consist of a polymer matrix, ordinarily in the form of a small bead, attached to a “functional group” that is either acidic or basic. The bead, or polymer, is composed of either polystyrene or acrylic. It is made in the first basic step of IER production, called “polymerization.” The polymer is attached to a charged functional group in the second basic step of IER production, called “activation” or in some cases, “sulfonation.” Two broad categories of resin result, cation and anion exchange resins. Anion exchange resins are basic, and cation exchange resins are acidic. Each can be either strong or weak, depending on purpose.

In general, during the process of polymerization, a suspension of monomer (the chemical basis from which polymers are formed), water, and suspending agents that facilitate the formation of beads is placed in a vessel and stirred and heated in a controlled fashion until the desired polymers are produced. Suspension ingredients can be formulated to produce gel polymers or macroporous polymers, which, in turn, are used in gel or macroporous resins of different types and uses. Polymers thus produced are then rinsed and otherwise prepared for activation. The particulars of the next step, activation, vary widely depending on the type of resin to be produced, in terms of anion or cation, strength, and other desired characteristics. Throughout the IER production process, precision in formulation and execution is necessary to achieve the desired result.

Purolite has spent much time and capital researching and testing its IER products and the processes by which they are made. Essential ingredients in Purolite’s products may be known or discoverable. Yet Purolite claims a property interest in its specific product “recipes” or formulations, and also in its exact production processes, which include factors such as time periods, temperatures and equipment used. By May, 2005, through its own research efforts, Purolite had developed proprietary information with respect to many different IER products or production processes. Purolite also manufactured a broad array of IERs and sold them globally. It claims a proprietary interest in its confidential sales information relating to its own sales projections and targets, as well as its relationships with its customers.

Purolite regularly customizes its products to fit the particular needs of its customers. It relies on its sales personnel to communicate with customers or prospective customers about its product offerings and its ability to tailor products for clients. Purolite’s sales representatives maintain contact information for prospective and actual customers, including reports of contact between themselves and such individuals. Its sales representatives also maintain or have access to the company’s pricing information and customer price goals. Purolite considers much of the nonpublic information it keeps with respect to its customer relationships to be proprietary.

Prior to March, 2005 Purolite guarded information on its manufacturing proeesses and product formulations, as well as certain customer and sales information. Purolite employed various security measures with respect to its physical facilities and its computerized data, and maintained internal policies and procedures around confidential information. Among other measures, after 2004, the company’s computerized data was stored on a main server, and employee access to such data was limited in accordance with job purview. Purolite submitted an expert report from Frank Rudewicz on the security measures and policies it had in place prior to March 31, 2005. Rudewicz opines that “the protection measures taken and implemented to safeguard Purolite’s trade secret and confidential information were reasonable and adequate based upon the risks known to Purolite management prior to the theft alleged in the complaint,” and sets forth numerous reasons for his conclusion. In one instance, Rudewicz notes an agreement executed by a sales employee not to disclose Purolite trade secret and “confidential” information, in which “confidential information” is defined to include information regarding sales and customer lists. In another, Rudewicz notes that so-called “batch sheets,” which record the production of IER batches and contain the specific formula and process employed in the same, are accessible only to the particular engineers, chemical operators and plant employees who need to see them.

While employed by Purolite, Defendants Gleasman, Gresham, Sabzali and Sachdev were each provided with a Purolite-owned computer, and had broad but not unlimited authority to use Purolite’s computers to access information stored on Purolite’s server. Installed in each of these Puroliteowned computers was a program to provide an AOL email account, which was to be used for both personal and work purposes. It is undisputed that each Former Employee Defendant had considerable access to Purolite proprietary information relating to product specifications, manufacturing processes and sales.

Both Gresham and Sabzali labored for Purolite under a contract entitled “Employee Patent and Trade Secret Agreement” (“EPTSA”). The EPTSAs contained provisions regarding non-disclosure of “confidential information,” defined to include “strategic plans, standard costs, sales, customer lists, marketing strategies and relationships ....” The EPTSAs provide, “[ejmployee agrees that he will not disclose any such Confidential Information to any unauthorized person or entity for any reason whatsoever while employed by [Purolite] or afterwards without the prior written agreement of the President of [Purolite].” In the copy in evidence of Gresham’s executed EPTSA, portions of the document, including the words “or afterwards” from its non-disclosure section, are crossed out and initialed. Sachdev signed an employment contract when he began working for Purolite in the late 1980’s (“Sachdev Contract”). The contract included a clause regarding nondisclosure of confidential Purolite information, and required the return of all Purolite papers upon termination While Gresham, Sabzali and Sachdev all worked under contract with Purolite, Gleasman did not.

b. The alleged fraud and theft scheme

As noted, Purolite alleges Defendants perpetrated a scheme to purloin much of its proprietary sales and product information for the benefit of Thermax. Purolite asserts that Thermax, through Pudumjee, Mukhopadhyay and Shastri, orchestrated the scheme, in which Purolite information was taken and delivered to Thermax by the Former Employee Defendants in early 2005. The following is a review of the facts forwarded with respect to Plaintiffs’ claims.

The first contact of note reflected in the evidence between Thermax and any of the Former Employee Defendants occurred in 2003, when Sachdev approached Thermax, Thermax offered Sachdev a job, and Sachdev rejected it. In late 2002, Don Brodie expressed dissatisfaction with Sachdev’s performance as general manager of Purolite’s Philadelphia plant. He put Sachdev on notice that if his performance did not improve within six months he would be fired. He also changed Sachdev’s role, removing him from the plant general manager position, moving his office to Purolite’s corporate offices and making him quality assurance manager for Purolite’s China, Philadelphia and Romania plants. These events unsettled Sachdev, who started looking for a new job in early 2003. Sachdev contacted Thermax and other chemical companies during his search. An e-mail sent by Defendant Pudumjee to his wife, Thermax chairwoman Meher Pudumjee, and Thermax executive Prakash Kulkarni on August 25, 2003, shows these company officials refining a document regarding Sachdev’s potential role at Thermax. Sometime in mid-2003, Thermax offered Sachdev a position as head of quality control and business development, but he rejected it because it required extensive work in India. Sachdev then abandoned his job search. It was 2003. He remained with Purolite.

In August, 2004, Thermax developed a company-wide strategic plan which included an aim to increase the growth of Thermax’s chemical division. Internally, the plan was dubbed “Project Evergreen.” One stated goal of Project Evergreen was to “create $10 million dollars specialty resin business in [the] U.S. by 2010.” Defendant Mukhopadhyay was responsible for implementing Project Evergreen as it related to Thermax’s chemical division. Ultimately, Defendants Gleasman, Gresham, Sabzali and Sachdev were hired away from Purolite by Thermax in the spring of 2005 to help implement Project Evergreen. In particular, the evidence reflects the following about the recruitment and hiring of the Former Employee Defendants in late 2004 and early 2005.

1. Recruitment and hiring of Sabzali

Sabzali negotiated employment terms with Thermax in late 2004 and early 2005 while still employed by Purolite. He informed Purolite he would be resigning on February 28, 2005, worked his last day at the company on March 9, 2005, and started working for Thermax immediately thereafter.

These events commenced when Sabzali contacted Thermax chairwoman Meher Pudumjee seeking a position with the company sometime in 2004. Mrs. Pudumjee referred Sabzali to Defendant Shastri, and thereafter, Sabzali was recruited by Thermax. The recruitment and negotiation process lasted several months.

During these employment negotiations, Sabzali maintained his senior marketing position at Purolite in which he was privy to information that the company treated as confidential. Among other things, Sabzali had access to confidential cost data and sales information. Sabzali continued contacting customers as a high-level Purolite representative during his recruitment. For example, on December 9, 2004, Sabzali wrote a letter to Oak Ridge National Laboratories (“Oak Ridge”), with which Purolite had an exclusive five year agreement ending in 2004 to produce a product called A530 on a commercial scale. In the letter Sabzali informed Oak Ridge that Purolite desired to continue its license to produce A530 for Oak Ridge, and that “Purolite recognizes that a five year extension may be possible but it will be on a non-exclusive basis.”

Also in this period, Sabzali transmitted Purolite product manufacturing and customer information to Thermax. He identified Purolite customers who he believed could be converted, in part or in whole, to Thermax customers, and shared such information with Shastri. For example, Sabzali sent an e-mail to Shastri on March 7, 2005, stating, with respect to Purolite’s relationship with a customer, Culligan, “$2 million is half the business I feel we may be able to get away from Purolite.” As another example, an internal Thermax email from February 10, 2005, shows that Sabzali had suggested to Thermax officials that Thermax develop a particular type of anion resin to sell to the company U.S. Filter. Purolite had sold such resin to U.S. Filter in the past, but with quality issues that a new competitor might exploit, according to Sabzali. There is evidence from which it may be reasonably inferred that Sabzali used Purolite proprietary information to solicit customers for Thermax, as by referencing Purolite’s pricing and delivery capabilities for particular products and then undercutting them when communicating with potential customers.

Sabzali also gave Shastri information about Purolite’s IER manufacturing processes and its business costs. Thus, an email dating from sometime in early 2005 shows Shastri telling Mukhopadhyay that “Jim” (as Sabzali was consistently referred to by the parties herein) had “confirmed” certain production methods Purolite used to keep its water softening cation products profitable, and also reporting to Mukhopadhyay the manufacturing, transfer and freight cost Purolite paid to bring its China-made products to the United States. It may be reasonably inferred from the email message that Sabzali provided Shastri with all of the Purolite information referenced therein.

Sabzali also participated in Thermax strategy sessions before leaving Purolite. He created an analysis of Thermax’s market segment, the company’s points of strength and weakness in the IER market, and strategies for advancement and growth within that market. This analysis discussed opportunities for growth involving “New Products,” among them various types of uniform particle size (UPS) resins which Thermax did not then manufacture, and “New Markets,” including the market for Arsenic removal, in which Purolite had an established position.

Sabzali copied and took some of Purolite’s confidential financial and sales data to Thermax after leaving Purolite’s employ in March of 2005. Some such information can be highly perishable, and Sabzali believes the specific data he took was not current, and was therefore “useless,” at the time he left Purolite. One sales-related item Sabzali took was a PowerPoint presentation which he had helped develop for use in Purolite sales meetings regarding the arsenic market and ways in which Purolite could attempt to enter that market, as it eventually did. After joining Thermax, Sabzali testified that he may have modified the PowerPoint presentation to show the name “Thermax” in place of “Purolite,” otherwise left it intact, and then presented it to Thermax officials. Also, approximately four weeks after joining Thermax, Sabzali presented a slideshow on the company’s strategic sales plan to Thermax executives that listed customers Thermax should target for its water softening products, based on these companies’ product needs. Several of the companies listed were Purolite customers.

2. Sabzali recommends Thermax recruit Gleasman, Gresham and Sachdev

During a formal employment interview with the Thermax board of directors and Shastri in late 2004, Sabzali presented information and views on IER sales in the United States and strategic steps for Thermax to take to increase its share of the IER market in this country. Among other things, he recommended that Thermax hire a person knowledgeable about the manufacture of commodity IERs, including strong acid cation and uniform particle size resins. Thermax contacted Sachdev to set up an interview during this Sabzali interview. Defendant Shastri “took the lead” in recruiting Sabzali and Sachdev to join Thermax.

Sabzali also recommended that Thermax hire Gleasman and Gresham to help increase Thermax’s North American IER sales. An e-mail communication dated March 9, 2005 sent by Shastri to Amitabha and Defendant Pudumjee reflects that Sabzali had urged Thermax to hire Gleasman and Gresham to join a North American sales force that would report to him. In the e-mail, Shastri argues for the additions despite their expense by explaining that Thermax projected to grow its U.S. chemical business by over $2 million from fiscal year 2004-05 to fiscal year 2005-06, an earnings jump supported by increased projected sales in 2005-06: “Jim [Sabzali] has identified accounts worth $10 million that we hope to convert.” Sabzali had begun recruiting Gleasman and Gresham before he left Purolite for Thermax, although they first contacted him regarding positions with Thermax after learning he would be leaving.

3. Recruitment and hiring of Sachdev

Thermax began recruiting Sachdev to leave Purolite and join it in October or November, 2004. Defendants Mukhopadhyay and Pudumjee interviewed Defendant Sachdev in December, 2004, and Thermax made a decision in principal to hire him around that time. Sachdev accepted an offer from Thermax on March 16, 2005. He had announced his resignation from Purolite on March 15, 2005. His last day at Purolite was March 29, 2005, and he officially started working for Thermax on April 1, 2005.

Sachdev’s contract with Thermax listed as “deliverables” non-solvent cation resin, uniform particle size resin, fine mesh resin, and other types of IER, many of which were manufactured by Purolite. Shastri consulted with Defendants Pudumjee, Mukhopadhyay and Sabzali (who was still employed by Purolite at the time) regarding the “deliverables” to be included in Sachdev’s Thermax contract. Thermax was not capable of producing uniform particle size resins on a commercial scale as of March, 2005, and Thermax did not bring uniform particle size and non-solvent resins to market before hiring Sachdev.

While negotiating employment terms with Thermax, Sachdev requested a list of Thermax products from Defendant Shastri in order to identify differences, or “gaps,” in the two companies’ product lines. Shastri provided Sachdev such a list while Sachdev was still with Purolite. Also during his recruitment, Sachdev emailed Pudumjee and Mukhopadhyay, informing them that he was making visits to Purolite facilities around the world, and that the visits were “accomplishing a great deal” and were “important from our point of view for the future.” Pudumjee responded to Sachdev’s email, and in an apparent reference to the foregoing statement, wrote, “[a]ll other matters — especially your visits to China, etc., I agree with you.”

When Sachdev resigned from Purolite, he was obligated to return all Purolite proprietary information to the company. However, before he left, he copied thousands of Purolite files onto one or more personal data storage devices, or “thumb drives,” which he owned. Also prior to leaving, Sachdev accessed both the Purolite server and his Purolite-owned computer and deleted some quantum of files contained therein. The exact nature of what he deleted is not clear, although some of it was personal information, such as personal e-mails, which he was permitted to delete. Sachdev understood that he was not permitted to delete non-personal information from Purolite’s server.

After leaving Purolite and joining Thermax, Sachdev attached one or more of his thumb drives containing thousands of Purolite files to at least two computers owned by Thermax, one in Michigan, and one in India. Sachdev downloaded the information on the thumb drive or drives onto these Thermax computers. Forensic analysis of the contents of one of the thumb drives in question showed that it contained over 12,000 files including Purolite product manufacturing processes, customer lists, product specifications for particular customers, product costs, and research and development data, among other information.

4.. Recruitment and hiring of Gleasman

Gleasman received a job offer from Thermax on March 12, 2005, announced her resignation from Purolite on March 14, 2005, with a final day of March 24, 2005, and began working at Thermax immediately thereafter. As noted, she was in regular contact with Sabzali at Thermax prior to leaving Purolite. In a March 12, 2005 offer letter to Gleasman, Sabzali — now acting as Thermax, Inc.’s General Manager— described how Thermax was aiming to expand its share of the North and South American IER market, and described Gleasman’s potential role with the company. He specified the products she would be expected to promote, including “UPS resins when they become available later this year.”

During early March, 2005 Gleasman corresponded with certain Purolite customers and informed them she would soon resign to work for a competitor. Gleasman continued to possess her Purolite-owned laptop containing proprietary Purolite information for several weeks after her last day with the company on March 24, 2005. She used the laptop to support her work for her new employer, Thermax. She returned this laptop to Purolite only after transferring some or all of its contents to a thumb drive and a laptop owned by Thermax, including Purolite documents marked as confidential.

Gleasman began to compile a list of potential customers for Thermax immediately upon starting to work there. The list consisted of customer names, addresses, phone numbers, and email addresses, as well as, in some cases, notes about conversations or meetings Gleasman had held with the potential customer. In making the list, she retrieved such information from the Purolite-owned computer that she continued to possess for several weeks after leaving Purolite. Gleasman had gathered some of this information while employed at Purolite, but a significant amount of it — for example, information regarding the majority of Purolite’s domestic accounts for water softening products — • was already in Purolite’s possession when Gleasman arrived. Gleasman used the customer information to cultivate business for Thermax, including during her final weeks as a Purolite employee.

5. Recruitment and hiring of Gresham

Gresham accepted a job offer from Thermax in mid-March, 2005, announced her resignation from Purolite on March 14, 2005, with a final day of March 24, 2005, and began working at Thermax immediately thereafter. Before she left Purolite she transferred files from her Purolite computer to a computer given to her by Thermax, including Purolite sales documents which she knew were confidential. Prior to returning Purolite’s computer, she deleted all information from the AOL account it contained. Gresham was permitted to delete her personal emails from the AOL account, but not any Puroliterelated emails.

Before Gresham left Purolite she was copied to a string of e-mails among Thermax employees with the subject line, “Samples: Donaldson & ABA Water.” The message string begins with an exchange on March 16, 2005, between Jim Sabzali, then of Thermax, and Vivek Naik of Thermax regarding IER bead specifications required by a potential customer, Donaldson, as told to Sabzali. Gresham is copied to the email exchange along with two other people. On March 22, 2005, two days before she left Purolite, Gresham responded to the string of emails, writing to Naik to request analysis and pricing information on Thermax unsieved beads — a product discussed in the emails as potentially of interest to Donaldson. Confronted at her deposition with this email Gresham repeatedly stated that she did not attempt to solicit customers for Thermax at any time before leaving Purolite on March 24, 2005.

Gresham retained Purolite documents after leaving Purolite’s employ, but she did not access any Purolite-owned computer. Among the files Gresham retained on her Thermax computer was Purolite’s 2005 Sales Forecast for the Southeastern United States (the “2005 Forecast”), which contained Purolite’s projections for sales to targeted customers in a variety of categories, including customer product, selling price, and Purolite’s gross margin. Gresham knew Purolite considered this information confidential. Gresham testified that she never used the 2005 Forecast or other Purolite information after leaving Purolite. However, there is evidence in the record that Gresham sent Purolite documents relating to particular product formulations, production and testing processes to Sabzali and Vivek Naik of Thermax, among others, on March 30, 2005, and June 2, 2005, after she joined Thermax. There is also evidence that a representative of the Culligan Company e-mailed her at Purolite on March 15, 2005, requesting pricing on certain Purolite products, and that Gresham did not respond until April 4, 2005, after joining Thermax, and only then with information on comparable Thermax products.

6. Events at Thermax in early and mid-2005

Mary Schuler, a Thermax employee in the company’s Novi, Michigan, U.S. headquarters with job functions in finance, office management and human resources, was given the task of creating new employee files for Gleasman, Gresham, Sabzali and Sachdev in February or March of 2005. Schuler reported to Shastri. She spoke to Shastri expressing surprise and confusion about the hires of the Former Employee Defendants. When she stated, “that’s industrial sabotage ... [tjell me [Sachdev] is not going to take proprietary information from Purolite,” Shastri did not respond. She later confronted Defendant Pudumjee, stating, “I can’t believe you’re committing industrial sabotage against a competitor by hiring four of their people and one of them is bringing formulas and processes with him.” Schuler was fired days later, on May 9, 2005.

A brief time after Schuler’s firing, Thermax, Inc.’s warehouse manager Daniel Naffin was instructed by Shastri to be alert to a delivery of certain boxes to Thermax’s Novi, Michigan warehouse. When the boxes were delivered Naffin brought them to Shastri’s office, where he found Shastri and Sachdev, whom he had not previously met. Naffin opened the boxes and repacked their contents, as instructed by Shastri. Naffin saw that they contained papers marked “Purolite” and “confidential.” Naffin then took the repacked boxes to the DHL/overseas shipments area of the warehouse. He never saw the boxes again.

Purolite has adduced expert evidence with respect to the IER formulae and processes at issue and also with respect to damages. Lawrence Golden is Purolite’s primary IER expert, and Dr. Alexander Klibanov is Purolite’s additional IER expert. In one original and two supplemental reports produced during the lengthy course of this litigation Golden opines that “Thermax has obtained and made use of Purolite’s proprietary information respecting the manufacture of ion exchange resins.” In particular, Golden has identified 79 Purolite technologies related to IER production in the files found on Sachdev’s thumb drive, and has opined that these technologies could be applied to improve or develop a broad range of IER products. Upon review of Thermax production and laboratory files produced herein and dating from relevant time periods, it is Golden’s opinion that Thermax has actually used seven of the Purolite technologies at issue since March, 2005, and that Thermax is positioned to use at least six more. Klibanov seconds these opinions.

One example forwarded by Purolite to illustrate the alleged manner in which Thermax obtained and sought to use confidential Purolite customer information relates to a product called ArsenXnp. At all relevant times, SolmeteX, a chemicals firm, was a Purolite customer. SolmeteX patented a product to remove arsenic from water called ArsenXnp, and approached Purolite in 2004 to develop jointly a process that would enable commercial production of the product. On September 29, 2004, SolmeteX and Purolite entered into a contract whereby Purolite became the exclusive manufacturer of ArsenXnp. The contract provided that “[a]ny improvements, discoveries, and changes by Purolite in the course of [the ArsenXnp research and development] and any Intellectual Property conceived, created, or developed by Purolite in performance under this contract will be the joint property of both Purolite and SolmeteX.” The contract’s term was ten years. Sabzali negotiated the contract for Purolite while still employed there, and also created Purolite’s plan for the marketing and sales of ArsenXnp. Purolite developed and refined the product formula after obtaining the SolmeteX exclusive contract. Don Brodie testified that sales of ArsenXnp generated one million dollars in revenue for Purolite in 2005, and were anticipated to generate twice that amount in 2006.

A February, 2005 e-mail between Shastri and Sachdev and copied to Defendant Pudumjee shows that these defendants had explicitly discussed ArsenXnp and a closely related product during Sachdev’s recruitment by Thermax. On March 10, 2005, while negotiating his departure from Purolite to work at Thermax, Sachdev received an email from a Purolite employee containing Purolite’s current formula for the ArsenXnp product. Sachdev had no involvement in Purolite’s ArsenXnp project or its relationship with SolmeteX, and had no reason within the scope of his employment to possess the ArsenXnp formula.

On June 26, 2005, after he and Sachdev had joined Thermax, Sabzali sent an e-mail to numerous Thermax employees in which he summarized the procedure for manufacturing ArsenXnp on a commercial scale. The e-mail stated that Thermax soon would be receiving an order for approximately five hundred thousand dollars worth of ArsenXnp from SolmeteX, that SolmeteX intended to sign a long term manufacturing, sales and distribution contract with Thermax for the product, and that the company intended to cancel its existing contract with Purolite. On July 7, 2005, SolmeteX representatives met with Thermax employees Sabzali, Sachdev and Vivek Naik. The SolmeteX representatives expressed a lack of confidence in Purolite’s ability to produce ArsenXnp of acceptable quality, and Sabzali convinced the company to place an for order “back up” ArsenXnp with Thermax. In a July 12, 2005 e-mail to Shastri, Mukhopadhyay, Sabzali and Sachdev regarding the meeting, Naik wrote, “[p]lease do not share this information with anybody as SolmeteX has exclusivity agreement with Purolite for manufacturing this resin.” It appears that, at some point between July, 2005, and January, 2006, SolmeteX suspended its contract with Purolite for ArsenXnp. Ultimately, a January 13, 2006 letter from SolmeteX’s president to Purolite shows that, while the Purolite-SolmeteX contract for ArsenXnp was temporarily suspended, it was not cancelled, and was reinstated as of January 13, 2006, under all original terms. Plaintiffs assert that SolmeteX told Thermax to stop producing ArsenXnp at that time.

Purolite has also adduced evidence of disparaging communications made about Purolite to Purolite customers by certain Former Employee Defendants after they joined Thermax. A primary example is a July 14, 2005 e-mail response from Gleasman to a Purolite customer who had written to her, telling her that Purolite had charged him an analysis fee which he had not expected, and that he had told a Purolite representative that he was not going to pay it. In part, Gleasman’s reply stated:

DO NOT PAY THEM THAT INVOICE!!!!! I can’t believe the shit they have pulled. I am ashamed to have been affiliated with them. All is well on this end though. This company is absolutely amazing. Their integrity, morals, business and personal ethics are so refreshing!!!! ... Amazing what quality you can make when you manufacture with the correct % DVB and don’t cut back on anything.

In a second example, Jacob Brodie testified that in the summer of 2005 he learned that Gleasman had communicated to Purolite customer Culligan that Purolite was changing its manufacturing processes in certain ways, resulting in poor quality products, and that Gresham had told a Culligan representative that she believed Purolite was mixing its U.S.-made and China-made products and mislabeling the final product as having been made in this country.

Sachdev and Thermax do not presently mount an attack on the evidence that Sachdev introduced to Thermax Purolite proprietary “recipes” and “know-how” related to the production of several types of IER in early 2005, and that Thermax applied some of this information in its production of IERs thereafter. While it similarly appears that Gleasman, Gresham, and Sabzali brought a variety of Purolite information with them to Thermax and put such information to use for Thermax in March, 2005 and after, the exact legal status of this information is presently contested and will be discussed below.

4. Procedural background and the instant Motions

Purolite filed a Verified Complaint, Motion for Preliminary Injunction and Motion for Temporary Restraining Order against Thermax, Inc., and Sachdev on May 18, 2005. These original parties entered a Stipulated Temporary Restraining Order which the Court approved on May 20, 2005, that restrained and enjoined the then-named Defendants from a broad array of conduct relating to use of Purolite confidential information. On August 1, 2005, Purolite filed an Amended Complaint against all current Defendants that is the operative pleading from the Plaintiffs. The following causes of action appear in the Amended Complaint and remain in contention.

Against all Defendants, Plaintiffs bring claims for Misappropriation of Trade Secrets in violation of the Pennsylvania Uniform Trade Secrets Act (“PTSA”), Common Law Unfair Competition, Tortious Interference with Existing and Prospective Contractual and Business Relationships, and Civil Conspiracy, and also seek imposition of a Preliminary and Permanent Injunction.

Plaintiffs bring additional claims against sub-sets of Defendants. Against Gresham, Sabzali and Sachdev, Purolite brings a claim of Breach of Contract. Against all of the Former Employee Defendants, Purolite brings a claim for Breach of the Duty of Loyalty. Against Gleasman, Gresham and Sachdev, Plaintiffs bring a claim for Violation of the Computer Fraud and Abuse Act (“CFAA”). Against Gleasman and Thermax, Plaintiffs bring a claim of Common Law Commercial Disparagement. Against Gleasman, Gresham, Mukhopadhyay, Pudumjee, Sabzali, Sachdev and Shastri, Plaintiffs bring claims under 18 U.S.C. sections 1962(c) and (d) (“RICO”). And against Thermax alone, Plaintiffs seek relief under theories of Unjust Enrichment and Vicarious Liability. In their Answer to Purolite’s Amended Complaint, filed in March of 2006, Defendants raised various affirmative defenses, one of which — the equitable defense of unclean hands — is presently at issue, as well as several Counterclaims which have heretofore been dismissed as withdrawn.

This litigation is now over four years old. It has been marked by aggressive tactics, rampant motions practice and conflagrations at every conceivable turn, as a review of the docket reveals. Defendants and Plaintiffs filed a combined total of four Motions for summary judgment in late 2007 and early 2008, with briefing complete by mid-March, 2008. At a conference on April 15, 2008, Plaintiffs asked the Court to defer entering its ruling on the summary judgment Motions on the ground that material discovery abuses by Defendants had just come to light. Perhaps unsurprisingly, Defendants did not object to the delay. The Court granted Plaintiffs’ request, and established an additional period of discovery and a schedule for pre-trial proceedings including the filing of supplementary expert reports and summary judgment briefs. This supplementary briefing schedule was extended multiple times at party request, and finally concluded in late July, 2009.

In three separate Motions, Defendants have moved for summary judgment on virtually all of Purolite’s claims. Likewise, Plaintiffs have moved for summary judgment on Thermax’s Counterclaims and certain equitable affirmative defenses raised by various Defendants, but after the dismissal of Thermax’s Counterclaims and other developments, only the equitable defense of unclean hands remains at issue. The Court has considered each Motion, Response in Opposition, and all additional replies, as well as the voluminous evidentiary materials submitted by the parties, and these Motions are now ready for disposition.

III. SUMMARY JUDGMENT STANDARD

Under Federal Rule of Civil Procedure 56(c), a court may grant summary judgment only “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” A fact is “material” if it could affect the outcome of the suit, given the applicable substantive law. A dispute about a material fact is “genuine” if the evidence presented “is such that a reasonable jury could return a verdict for the nonmoving party.”

When considering a summary judgment motion, the Court does not weigh the evidence or make credibility determinations. Moreover, “the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” An inference based on speculation or conjecture cannot create a material fact.

The party moving for summary judgment on a claim has the initial burden of demonstrating that there is no genuine issue of material fact as to that claim. If the movant satisfies this requirement, the nonmovant cannot rest on its pleadings, but rather must “set out specific facts showing a genuine issue for trial,” in order to avoid summary judgment. The nonmovant does so by submitting evidence that would establish the essential elements of its claim. The facts the nonmovant relies on for this purpose must be demonstrated by evidence that is capable of being admissible at trial. In sum, “[wjhere the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’ ”

IV. DISCUSSION

The Court first addresses Defendants’ Motions for summary judgment, then turns to the remaining issue in Plaintiffs’ Motion.

A. Summary Judgment as to Plaintiffs’ Claims

1. Plaintiffs’ RICO Claims — Counts XI and XII

a. RICO Allegations and Basis for Motion

Purolite brings claims against the Former Employee Defendants and the Individual Thermax Defendants (collectively, the “RICO Defendants”) for violations of 18 U.S.C. § 1962(c) and § 1962(d). To make out a claim under § 1962(c) a plaintiff must show that each defendant (1) conducted or participated in the conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. A violation of § 1962(d) is established through evidence of a conspiracy to act in a manner that violates § 1962(c). Here, the alleged enterprise is Thermax. Plaintiffs allege the RICO Defendants directly and indirectly conducted Thermax’s affairs in a manner constituting a “pattern of racketeering activity” that injured Purolite. Substantively, Purolite alleges criminal activity in the form of mail and wire fraud, transportation of stolen goods and receipt of stolen goods, as well as a conspiracy to commit such crimes. The constituent predicate acts alleged are e-mail and telephone calls in furtherance of a scheme to defraud Purolite of its proprietary information, actual conversion of Purolite information in the form of electronic and paper files, and delivery and receipt of such information obtained through fraud or theft. Purolite also argues that use or threatened use of proprietary information thus obtained constitutes a predicate act for RICO purposes.

The RICO Defendants move for summary judgment on Purolite’s RICO claims, asserting that Plaintiffs’ evidence is incapable of establishing that they engaged in a “pattern of racketeering activity” because it demonstrates neither of the two types of “continuity” which could show such a pattern under applicable law. At most, the defendants claim, Plaintiffs’ evidence demonstrates that the alleged pattern lasted for approximately eight months, a length of time that cannot satisfy the durational requirement for the continuity element of a RICO claim. The RICO Defendants assert that because no genuine fact issue appears around the duration of the alleged pattern, summary judgment is appropriate as to Plaintiffs’ claim under § 1962(c). And if summary judgment is granted as to the § 1962(c) claim, the RICO Defendants contend it should be granted as to Plaintiffs’ § 1962(d) claim as well, since a conspiracy claim under § 1962(d) cannot lie absent a showing of a substantive RICO violation.

b. Facts

The Court finds that no genuine issue exists as to the following facts. The first communication between any of the RICO Defendants regarding the alleged scheme to defraud occurred, at the earliest, in August, 2004. Evidence could support the inference or conclusion that it was then that the Individual Thermax Defendants acted to implement a strategy to hire Sabzali, Sachdev, Gleasman and Gresham, and thereby obtain Purolite proprietary information through the machinations of these Former Employee Defendants.

Thus, the Court finds that the evidence does not support an inference that Sachdev’s approach of Thermax in early 2003 and Thermax’s subsequent job offer to him in mid-2003 were related to or done in furtherance of the later alleged scheme described above. It appears that Sachdev approached several companies in early 2003, Thermax among them, because he believed he would soon be fired from Purolite. Unlike the evidence adduced from the late-2004, early-2005 period, the previously-seen internal Thermax e-mail from August, 2003, discussing Sachdev’s potential role at the company does not evince any intent or plan to obtain Purolite proprietary information through fraud, theft or otherwise. The e-mail shows Thermax’s general desire to enter or improve its standing in various U.S. IER markets, including the market for UPS resins, and to improve the quality of everything from its products and manufacturing processes to its documentation and health procedures. But evidence of a company’s desire to strengthen perceived weaknesses cannot be considered evidence of a predicate criminal act without at least a hint of some sort of reasonably concurrent and related offense conduct. Yet no evidence appears from around the time of Sachdev’s 2003 discussions with Thermax suggesting that a scheme to misappropriate trade secrets had yet been devised. In this absence of evidence, Sachdev’s 2003 job discussions with Thermax will not be considered an aspect of the alleged RICO scheme.

Evidence does show that e-mail and telephone communication among and between the RICO Defendants regarding the alleged scheme to defraud increased in frequency and intensity throughout November and December, 2004, and through early 2005, culminating in Sabzali, Gleasman, Gresham and Sachdev resigning from their positions at Purolite to accept positions at Thermax in March, 2005. At least one RICO Defendant — Sachdev—admitted that he took copies of confidential Purolite information when he left Purolite’s employ in March, 2005, and subsequently put this information into Thermaxowned computers. It is contested whether Sabzali, Gleasman and Gresham delivered a variety of Purolite proprietary information to Thermax when they came. In contrast, it is undisputed that the last month in which any RICO Defendant was employed by Purolite was March of 2005. No evidence appears to suggest that any RICO Defendant could access Purolite facilities or Purolite’s computer network after that month. Moreover, no evidence appears to suggest that any RICO Defendant obtained any Purolite proprietary information after March 31, 2005.

Plaintiffs set forth additional evidence which they contend should inform the Court’s ruling as to the RICO claims. Plaintiffs assert that, while the means of the alleged RICO scheme were fraud and theft during 2004 and 2005, its purpose was to misappropriate confidential Purolite information which Thermax could use to improve its manufacturing efficiencies, reduce its costs, reach new customers and develop new products, and thus compete unfairly with Purolite, thereafter. Plaintiffs point to evidence showing that after Sabzali, Sachdev, Gleasman and Gresham misappropriated confidential Purolite information and delivered it to Thermax in March, 2005, Thermax proceeded to use this information to achieve the goals stated above. Purolite offers several alleged examples of such use, and contends that the threat of future use of the misappropriated information, to Thermax’s unfair advantage and Purolite’s detriment, will continue indefinitely into the future.

c. RICO Discussion

Plaintiffs bring two claims under RICO, one substantive, for violation of 18 U.S.C. § 1962(c), and one alleging a conspiracy to violate § 1962(c), as prohibited under § 1962(d). Because “any claim under section 1962(d) based on conspiracy to violate the other subsections of section 1962 must fail if the substantive claims are themselves deficient,” this analysis begins with the RICO Defendants’ Motion as to Plaintiffs’ substantive RICO claim.

Section 1962(c) of the RICO statute makes it “unlawful for any person employed by or associated with any enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity.” The RICO Defendants ground their Motion on a challenge to the capacity of Plaintiffs’ evidence to show the “pattern” element of the claim.

To satisfy the “pattern” requirement, a plaintiff must demonstrate, among other things, that the racketeering acts alleged “amount to or pose a threat of continued criminal activity.” The requisite “continuity” can be either closed- or open-ended in form. Closed-ended continuity is established by “proving a series of related predicates over a substantial period of time,” which, under the case law of this Circuit, appears to mean a period of at least twelve consecutive months. In contrast, open-ended continuity is shown through “past conduct that by its nature projects into the future with a threat of repetition.” The predicate offenses at issue here are mail fraud, wire fraud, and interstate transportation and possession of stolen property. As to continuity generally, the Supreme Court has explained that “[p]redicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement: Congress was concerned in RICO with long-term criminal conduct.”

Regarding the question of continuity in this case, RICO Defendants argue that Plaintiffs allege a pattern of racketeering activity that lasted, at most, eight months, between sometime in August, 2004, when the earliest evidence of a potential predicate act by any RICO Defendants appears, and late March, 2005, when the final RICO Defendant left the employ of Purolite. In other words, RICO Defendants argue the alleged scheme to misappropriate Purolite’s information through related predicate acts of theft and fraud, as well as any threat of future theft or fraud against Purolite by the defendants, began and ended within this period of time.

In contrast, Plaintiffs would have the Court find that the claimed RICO pattern of racketeering activity continued through at least August 2007, and potentially to the present and beyond, since after the defendants misappropriated Purolite’s information, they allegedly used it for the benefit of the enterprise, Thermax. Based on this view, Purolite contends that the evidence could support a finding of both closed- and open-ended continuity: closed-ended because the scheme began in late 2004 and lasted at least until an episode of alleged use of the misappropriated information by Thermax in August 2007, and open-ended because, now that Thermax has seen the Purolite information, it can never “unlearn” it and could potentially use it for years to come. Purolite thus treats the use of misappropriated information by Thermax as a predicate act of the scheme to defraud. That is, it conflates the use of the proceeds of a scheme to defraud and fraud itself.

The evidence presented is incapable of establishing closed- or open-ended continuity. With respect to closed-ended continuity, the alleged scheme to misappropriate Purolite information through fraud concluded when the targeted information was misappropriated and all relevant Defendants left Purolite’s employ. It does not appear that, thereafter, further acts of fraud resulting in the misappropriation of Purolite information occurred, let alone several months’ or years’ worth of such acts. Without more, the use of information misappropriated through the alleged fraud does not constitute the sort of “continued criminal activity” Purolite must identify in order to demonstrate continuity. The alleged subsequent business use of the misappropriated information does not function to extend the fraudulent scheme’s duration because such use is not a predicate act of the scheme; indeed, it was possible only because the fraud had reached fruition and achieved the misappropriation at issue. Thus, at most, the evidence shows that the alleged scheme was consummated within eight months — not a “substantial period of time” that might establish closed-ended continuity under RICO. Purolite’s closed ended continuity theory therefore fails.

Moreover, “[a] short-term scheme threatening no future criminal activity will not suffice” to demonstrate open-ended continuity. Here, the defendants have demonstrated that there is no genuine issue of material fact as to whether a similar fraudulent misappropriation, or any predicate act incidental to the same, threatens to occur again in the future. RICO Defendants’ alleged ongoing business use of the information, relied on by Plaintiffs to demonstrate open-ended continuity, is simply not the type of long-term criminal activity that RICO prohibits. Causes of action for misappropriation of trade secrets or unfair competition, among others, may allow Plaintiffs a remedy for any unfair business use of the allegedly misappropriated information at issue here, but such use, occurring after the conclusion of the fraudulent scheme and employing its proceeds, does not itself amount to or threaten future criminal activity. The law on this point is clear. Plaintiffs’ open-ended continuity theory thus fails as well.

Because the evidence does not permit Plaintiffs to establish continuity, as is necessary to sustain their substantive “pattern of racketeering activity” claim under RICO section 1962(c), summary judgment will be granted to RICO Defendants on that claim. As a consequence, summary judgment will also be granted as to Plaintiffs conspiracy claim under section 1962(d), since “the existence of a RICO conspiracy rises or falls on the existence of a substantive RICO violation,” and no other substantive RICO violation is here alleged.

Accordingly, Counts XI and XII will be dismissed.

2. Plaintiffs’ CFAA Claim — Count VIII

Defendants Gleasman, Gresham, and Sachdev move for summary judgment on Count VIII of Purolite’s Amended Complaint, wherein Plaintiffs allege that these defendants violated the Computer Fraud and Abuse Act (“CFAA”). It appears Plaintiffs claim violations of sections 1030(a)(4) and (a)(5) of the Act. Factually, Plaintiffs base the claims on the deletions of e-mails and files located on Purolite-owned computers and Purolite’s server, done by Gleasman, Gresham and Sachdev around the time that they joined Thermax. Defendants argue that because they were authorized to access the relevant computers when they took the actions alleged, they cannot be liable under CFAA. Plaintiffs argue that genuine issues of material fact exist as to whether the defendants were authorized to act as they did, rendering summary judgment inapt at this time.

It is a violation of section 1030(a)(4) of CFAA to:

knowingly and with intent to defraud, access! ] a protected computer without authorization, or exceed!] authorized access, and by means of such conduct further!] the intended fraud and obtain! ] anything of value ....

The term “exceeds authorized access,” in turn, is defined in CFAA to mean, “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled to so obtain or alter.”

While several elements are necessary to sustain a claim under section 1030(a)(4), Gleasman, Gresham and Sachdev base their Motion as to this section solely on a purported lack of genuine fact issue around the element of authorization. The defendants argue that when they accessed Purolite’s computers in the manner at issue, they were neither without authorization nor exceeding authorized access, as required for liability under section 1030(a)(4), since they were, at the time, Purolite employees permitted to use their Purolite computers in this manner. Plaintiffs counter that because the defendants were not permitted to delete the files they deleted, and because they accessed Purolite’s computers with the purpose of defrauding Purolite, the access was not authorized. In part, the dispute raises a question of law.

To a degree, the parties’ positions mirror a split in the cases addressing the legal meaning of “authorization” and “exceeds authorized access” in section 1030(a)(4). Certain courts, viewing these terms through the lens of agency law principles, have held that an employee is not authorized to access an employer’s computer in a manner inconsistent with the duty of loyalty to the employer, such that an employee can violate section 1030(a)(4) by accessing an employer’s computer which he is generally permitted to use with a purpose to misappropriate or misuse the employer’s proprietary information. Other courts, based on the language of CFAA, its legislative history, the rule of lenity in interpreting statutes with criminal or quasi-criminal applications, and a compelling critique of the contrary line of cases, have adopted the narrower view that these terms describe action that is “tantamount to trespass in a computer.” Under this view, an employee who may access a computer by the terms of his employment is “authorized” to use that computer for purposes of CFAA even if his purpose in doing so is to misuse or misappropriate the employer’s information. The Court is persuaded by the reasoning in the latter line of cases, and adopts the less capacious view of the legal meaning of “without authorization” and “exceeds authorized access” expressed therein.

Against the proper legal backdrop, a court’s assessment of the quality or extent of a particular individual’s authorization to access a computer is informed by the facts o