Citations
- 295 F. Supp. 3d 467
Full opinion text
Christopher C. Conner, Chief Judge
MEMORANDUM
Plaintiff Advanced Fluid Systems, Inc. ("AFS") commenced this action alleging that the collective defendants-a former employee and several of AFS's competitors-colluded to deprive AFS of its trade secrets and valuable business opportunities. Following more than four years of litigation and several rounds of dispositive motion practice, the court on September 18, 2017 convened a bench trial to address AFS's remaining claims for misappropriation of trade secrets, breach of fiduciary duty, and aiding and abetting said breach, and to hear evidence on AFS's request for compensatory, exemplary, and punitive damages. Pursuant to Federal Rule of Civil Procedure 52(a), we set forth our findings of fact and conclusions of law below.
I. Findings of Fact and Procedural History
A. The Parties & Their Relationships
AFS distributes, manufactures, and installs hydraulic components and hydraulic systems. (See Doc. 236 at 2; see also 9/20/17 Tr. 146:24-147:1; 9/25/17 Tr. 10:17-11:19). The company is headquartered in York, Pennsylvania. (See Doc. 236 at 2, 4). Dan Vaughn ("Vaughn") serves as AFS's vice president and engineering manager. (9/18/17 Tr. 72:21-22). Vaughn oversees "large engineering projects" and directs AFS's sales and engineering teams. (Id. at 73:5-9). His father, Jim Vaughn, is founder and president of the firm. (Id. at 101:9-10, 117:7-9; 9/22/17 Tr. 130:17-20). In November 2006, AFS hired defendant Kevin Huber ("Huber"). (See 9/18/17 Tr. 99:14-16; 9/21/17 Tr. 14:4-6; 9/25/17 Tr. 10:3-5; see also AFS Ex. 6 at 1). Huber was employed by AFS continuously through his resignation on October 26, 2012. (See 9/18/17 Tr. 37:15-19).
Defendant Livingston & Haven, LLC ("Livingston") designs, assembles, and installs hydraulic fluid systems and is headquartered in North Carolina. (See Doc. 236 at 5). Defendant Clifton B. Vann IV ("Vann") is the chief executive officer of Livingston's holding company. (See 9/19/17 Tr. 137:21-138:1, 140:2-22). He was president of Livingston at all times relevant herein. (AFS Ex. 42 at 2). Defendant Thomas Aufiero ("Aufiero") was employed first as sales engineer and eventually as sales manager at AFS from 1989 through January 2011, when he left to work for Livingston as regional sales manager. (9/21/17 Tr. 11:10-12:16, 21:6-8). Huber too forged a relationship with the Livingston defendants beginning in January 2012, in hopes of pursuing business opportunities of mutual interest. (See id. at 28:7-29:18, 37:1-17). Huber left his position at AFS after incorporating his own firm, Integrated Systems and Machinery, LLC ("Integrated Systems"), in October 2012. (9/25/17 Tr. 8:17-9:21). This litigation has its genesis in Huber's concurrent affiliations with AFS, Livingston, and Integrated Systems. (See generally Docs. 70, 236).
B. Huber's Employment with AFS
Huber joined AFS as a full-time sales engineer in November 2006. (See 9/18/17 Tr. 99:14-16; 9/21/17 Tr. 14:4-6; 9/25/17 Tr. 10:3-5). He was employed with AFS consistently until his abrupt resignation in October 2012. (9/18/17 Tr. 37:15-22; 9/20/17 Tr. 14:4-11). At some point after Huber's departure, AFS learned that, for a three-month period in 2008, Huber worked contemporaneously for both AFS and another equipment manufacturer, Dayton T. Brown. (See 9/21/17 Tr. 14:16-16:4; 9/25/17 Tr. 159:24-163:4). Huber received compensation from both employers during this time, (see 9/25/17 Tr. 160:8-162:4), but never informed either AFS or Dayton T. Brown of the dual-employment arrangement, (see 9/21/17 Tr. 14:16-23, 15:25-16:19; 9/25/17 Tr. 161:6-12, 163:2-4).
Shortly after beginning employment with AFS, Huber gave AFS the "lead" on a hydraulics project at Wallops Island, Virginia. (See 9/18/17 Tr. 99:17-18; 9/21/17 Tr. 78:11-22). A college friend of Huber's, Keith Fava ("Fava"), was employed by Orbital Sciences Corporation ("Orbital") and advised Huber that Orbital and the Virginia Commonwealth Space Flight Authority ("the Authority") were seeking a hydraulics supplier to design a system to launch Orbital's "Antares" rocket from NASA's facility on Wallops Island. (See 9/21/17 Tr. 78:11-22). The Antares rocket services and supplies the International Space Station. (See Doc. 236 at 3; see also 9/20/17 Tr. 63:21-64:1). AFS contracted with the Authority in September 2009 to build, install, and maintain the system. (See AFS Ex. 15).
The resulting installation-the Teleporter/Erector/Launcher Hydraulic System ("Hydraulic System")-is comprised of several constituent parts, depicted and labeled below:
(AFS Ex. 272A). The "TEL" or "strongback" component is a platform which carries the rocket in a horizontal position to the launch pad. (See AFS Ex. 16; 9/18/17 Tr. 75:1-9, 77:3-5). A pair of "gripper arms" secure the rocket to the strongback. (AFS Ex. 16; 9/18/17 Tr. 77:6-8). The strongback "mates" to the cylinder assemblies, at which point the system is prepared for the launch sequence. (AFS Ex. 16; 9/18/17 Tr. 75:10-16). The Hydraulic System lifts the rocket into a vertical position over a 30-minute period. (See AFS Ex. 16; 9/18/17 Tr. 75:10-16). After liftoff, the system's unique "rapid retract" feature pulls the strongback away in a matter of seconds. (See 9/18/17 Tr. 76:3-12). AFS designed the cylinder assemblies together with Maritime Hydraulic, with whom it subcontracted to manufacture the hydraulic cylinders themselves. (See id. at 87:4-9).
AFS developed and supplied the Authority with a comprehensive package of engineering drawings generated during the system's design and installation. (See AFS Ex. 20; see also 9/18/17 Tr. 92:5-93:3). All drawings delivered by AFS included an AFS title block declaring:
This drawing discloses propriety and confidential data of Advanced Fluid Systems, Inc., and may not be used disclosed or released, in whole or in part, for any purpose outside the authorized recipient, without signed authorization, and must be returned upon request.
(E.g., AFS Exs. 67, 69-81; see also AFS Ex. 20; 9/18/17 Tr. 92:25-93:10, 125:12-22). These materials were accessible through a password-protected online repository by a limited number of employees of the Authority, Orbital, and Martinez & Turek, a manufacturer subcontracted to design the system's gripper arms. (See 9/20/17 Tr. 25:6-26:5).
AFS employee Guy Baum ("Baum") served initially as a full-time project manager for the Hydraulic System. (9/20/17 Tr. 67:12-22). Baum retired in June 2011, at which point Huber unofficially assumed Baum's responsibilities and served as the de facto project manager for the remainder of the AFS-Orbital relationship. (Id. at 67:25-68:2; see 9/18/17 Tr. 99:23-24; 9/20/17 Tr. 68:17-69:2, 173:8-174:1; 9/21/17 Tr. 27:4-6). Key members of the Hydraulic System teams from both the Authority and Orbital agreed that, with few and minor exceptions, they were satisfied with AFS's work. (See, e.g., AFS Ex. 274, Reed and Nash Dep. 24:7-26:15, Mar. 30, 2016 ("Reed/Nash Dep."); 9/20/17 Tr. 65:17-70:25; VCSFA Ex. 5). According to Orbital's lead engineer, Michael Brainard ("Brainard"), the system worked "flawlessly" at its first launch and "performed very well" on subsequent launches. (9/20/17 Tr. 66:2-67:2; AFS Ex. 18). Brainard's principal criticism was with Baum, with whom Brainard did not get along with and whose project management services Brainard found to be lacking. (See 9/20/17 Tr. 67:10-24, 68:10-16). Brainard agreed that his minor customer service complaints were remediable and likely could have been resolved by AFS's hiring of a new project manager dedicated to Orbital. (Id. at 68:7-9, 170:2-4).
C. Huber's Courtship with Livingston
Aufiero resigned from AFS in January 2011, (9/18/17 Tr. 106:2-3; 9/21/17 Tr. 21:6-8), and joined Livingston as regional sales manager and industrial hydraulic project manager. (9/21/17 Tr. 26:1-19). Aufiero began to recruit Huber to join Livingston shortly after his own departure. (Id. at 22:6-16). He kept in close touch with Huber and remained interested in AFS's work on the Hydraulic System. (Id. at 22:23-23:6). Aufiero asked Huber to send him photographs of the recently-completed cylinder assemblies on January 30, 2011, and Huber complied. (AFS Ex. 28; AFS Ex. 29 at 1-2; 9/20/17 Tr. 23:7-16). In November 2011, Huber shared videos and photographs with Aufiero of milestone testing of the Hydraulic System's rapid retract function. (AFS Exs. 30, 30A, 30B, 31-32, Ex. 32-wmv; 9/18/17 Tr. 107:4-108:25). Huber thereafter asked Aufiero to shift communications to Huber's personal Gmail address. (AFS Ex. 9).
Huber began collaborating with Livingston on business opportunities as early as December 2011. Their discussions initiated with a Navy test stand project; Huber advised Aufiero that AFS lacked capacity to bid on this project. (See 9/21/17 Tr. 31:2-25). Huber visited Livingston's headquarters for the first time on January 8, 2012 to discuss the Navy project. (Id. at 28:18-29:3). At least four "high level" Livingston employees-Vann, Aufiero, Craig Hill ("Hill"), and Wayne Hawkins ("Hawkins")-attended this meeting. (Id. at 28:24-29:18). Each knew that Huber was employed by their competitor, and each knew that Huber was attempting to steer valuable business their way. (Id. at 30:16-31:4). Over the coming months, Huber directed two other opportunities-an Air Force test stand and a Passaic Valley Sewerage Commissioners' project-to Livingston. (See AFS Exs. 45-47, 218). Huber never presented these opportunities to AFS. (9/25/17 Tr. 6:13-7:16).
During the January 8, 2012 meeting, Huber and the Livingston team also discussed the Hydraulic System on Wallops Island. (9/19/17 Tr. 157:4-10). Huber told attendees that "the relationship between AFS and [Orbital] was souring, and at some point the customer was going to do something different and did [Livingston] want to participate." (Id. at 157:11-17). That same day, Hill invited Huber to his commercial Dropbox folder, allowing Huber and Livingston employees to share documents electronically. (9/22/17 Tr. 34:6-18). Vann knew about the Dropbox arrangement by February 2012 but never questioned it. (9/20/17 Tr. 21:24-22:5). Livingston also installed a virtual private network ("VPN") on Huber's AFS laptop and provided him with a Livingston email address. (See AFS Ex. 42 at 2). Huber's signature line on his Livingston email account identified him as Livingston's "Program Manager." (See, e.g., AFS Ex. 43 at 2; see also AFS Ex. 211 at 4).
Defendants' collaboration accelerated in earnest after the January meeting. Huber obtained a confidential list of spare parts and component pricing for the Hydraulic System from AFS on March 6, 2012 and forwarded it directly to Aufiero. (AFS Ex. 48; AFS Ex. 49 at 1; 9/18/17 Tr. 109:6-112:24). On March 9, 2012, Huber introduced Livingston to Orbital as a potential alternate vendor, stating by email to Brainard: "I have this other company that is willing to come up and speak to you...about long term support" for the Hydraulic System. (AFS Ex. 52). Huber knew by this point that contract opportunities for "enhancements to the TEL and TEL Hydraulic System[ ]" were "coming" in the near future. (See AFS Ex. 49). He shared this information with Livingston, (see id. ), but not with AFS, (see 9/18/17 Tr. 113:10-25).
Huber coordinated a visit to Wallops Island on March 21, 2012, for Aufiero, Hill, and another Livingston employee to meet Orbital staff and become acquainted with the Hydraulic System. (AFS Ex. 55). Vann was aware of this trip. (See 9/21/17 Tr. 59:12-22). The group met briefly with Fava during this visit, and he explained Orbital's plan to upgrade the gripper arms and the cylinders, as well as the need for a "spares" supplier. (See 9/21/17 Tr. 59:23-61:18, 167:12-14). They also toured the rocket assembly and launch areas of the facility. (See id. at 62:7-63:13, 167:19-168:6). Huber took Hill to the area below the launch pad to view the cylinder assemblies themselves. (Id. at 62:19-63:13, 168:2-6). While there, Huber and Hill encountered AFS's on-site engineer, Tom Reiker ("Reiker"). (9/21/17 Tr. 64:19-65:2). Aufiero expressed concerned that Reiker might report the encounter to AFS management. (See id. at 65:18-66:12; see also AFS Ex. 57). He memorialized these concerns in an email exchange two days later:
Aufiero: Kevin, I thought about it more and I am thinking Tom
[Reiker] might have sent an email to Dan [Vaughn]. Dan [Vaughn] would tell Jim [Vaughn] right away.
Huber: Craig [Hill] definitely was not too smooth in there. I wanted to shoot myself when he told Tom [Reiker] who he was.
Aufiero: We should have had a plan before he went in....
(AFS Ex. 57). In the same email exchange, Huber shared video of AFS's most recent rapid retract testing milestones at Wallops Island. (See id.; AFS Ex. 56-wmv). Brainard was unable to attend the March 21 meeting, but Huber sent a follow-up email to him on March 23, making his intentions regarding Livingston clear: "What I am going to do is create a 'road map' of how to phase out AFS and incorporate another company (that you select) like [Livingston] to partner with you on the TEL Enhancement and Long Term Maintenance and Support." (AFS Ex. 59).
Huber coordinated a second visit to Wallops Island for April 12, 2012, this time inviting Vann in attempt to impress Orbital. (See AFS Exs. 90-91; 9/10/17 Tr. 42:24-43:6). In the interim, Huber shared dozens of AFS documents with members of the Livingston team to prepare them for the meeting. Huber emailed Aufiero eleven pages of hydraulic and electrical spares for the system. (See AFS Ex. 60). These spreadsheets provided a comprehensive look at the system's component parts. (9/18/17 Tr. 123:15-16). On April 2, 2012, Huber downloaded many of AFS's engineering drawings and its bills of materials to an external hard drive and then uploaded them to the Livingston Dropbox, noting that the upload included "[t]he majority of the hydraulic schematics." (AFS Exs. 62-63; 9/18/17 Tr. 124:3-134:20). Each drawing featured AFS's proprietary stamp. (AFS Exs. 67, 69-81; see 9/18/17 Tr. 125:19-22). These documents were valuable to Livingston and provided a baseline understanding of the system's infrastructure in advance of their meeting with Orbital. (9/21/17 Tr. 50:14-51:8). This file drop included what Huber described as "top level drawings and hydraulic schematics" for the entire Hydraulic System. (AFS Ex. 56). Huber also shared the original system specifications provided by Orbital to AFS in 2010 for the initial Hydraulic System design. (See AFS Ex. 88). Hill agreed that this document helped him to prepare for the second Orbital meeting. (9/22/17 Tr. 28:13-16).
Huber corresponded directly with Vann in advance of the April 12, 2012 meeting with Orbital. Huber told Vann in an April 4 email that he was "working diligently" to give Livingston an edge with Orbital. (AFS Ex. 86). Despite Vann's present claim that he was "alarmed" that an AFS employee was working on his company's behalf, (see 9/20/17 Tr. 51:6-9), he nonetheless followed up with Huber, speaking to him about the opportunity by phone for nearly an hour the following day, (see id. at 54:19-55:15; 9/25/17 Tr. 138:10-139:4).
Vann, Aufiero, Hill, and Huber had dinner together the night before the Orbital meeting. (9/19/17 Tr. 174:19-175:1; 9/21/17 Tr. 41:15-23; 9/25/17 Tr. 142:25-143:8). During the meeting, Vann told Huber that "he would have to leave AFS to continue a relationship with Livingston." (9/21/17 Tr. 43:19-44:1; see 9/19/17 Tr. 174:13-175:1; 9/20/17 Tr. 19:16-20:13; 9/21/17 Tr. 41:22-44:1). Vann and Aufiero each separately recalled this conversation. (9/19/17 Tr. 174:13-175:1; 9/20/17 Tr. 19:16-20:13; 9/21/17 Tr. 41:22-44:1). When asked whether he ever followed up with Huber about this issue, Vann explained that he assumed it was Huber's responsibility to resolve the conflict: "Well, as I recall it just seemed to drag and I didn't obviously call Kevin Huber every day and ask are you still employed at your company, but we anticipated that he would leave at any time, and he just seemed to stay there." (9/20/17 Tr. 25:13-17). Vann never enforced or followed up on his directive. (Id. at 25:18-26:3; 9/21/17 Tr. 70:21-25, 71:17 72:2). Ostensibly, Livingston's employees were equally concerned with the risk Huber posed to Livingston itself, with Hill postulating that if Huber was this willing to disclose AFS's confidential information, he might also "share [Livingston's] information or he would use [Livingston's] information to get stuff." (See 9/22/17 Tr. 61:4-16).
On April 12, 2012, Huber, Vann, Aufiero, and Hill met with Fava on Wallops Island to discuss Orbital's upgrade plans for the Hydraulic System. (AFS Ex. 240). Fava explained to Vann, Aufiero, and Hill that Orbital was competitively bidding the upgrades because Orbital had experienced issues with AFS's customer service and desired a dedicated project manager for the system. (See id. at 2). Among other things, the group discussed the alternatives Orbital was considering for the upgrade-a "new" cylinder option and a "modified" cylinder option. (Id. at 1-2). Fava indicated in a subsequent email to Brainard that although Orbital would bid the contract competitively, Livingston would have a "leg up" if it retained Huber to manage the project. (Id. ) Huber thereafter acquired Livingston's labor rates from Aufiero and increased AFS's labor rates above Livingston's to, in Huber's words, "justify LnH taking over!!!" (AFS Exs. 96-97; 9/18/17 Tr. 119:2-21). Huber did not share Orbital's upgrade plans with AFS until three months later. (See 9/18/17 Tr. 113:22-25).
Livingston offered Huber a compensation package on May 25, 2012. (See AFS Ex. 209). Vice President Tim Gillig ("Gillig") summarized the compensation agreement in an email to Huber, copying Vann, Aufiero, and Hawkins:
1. [Livingston] will pay you 5.5% of the overall sales for the project we are sending you today. Note: This is regardless of how profitable the project is. In other words, [Livingston] is guaranteeing you this figure.
2. [Livingston] would like to propose you be the the [sic] project manager on this project. This figure is within our quote and will be pulled out for your eyes only.
3. [Livingston] will pay you once we get paid per each progressive payment.
4. There will be milestones involved and once these are met the customer will be obligated to pay [Livingston]. If we receive 20% of the overall sale price of the job we will pay you 20% of your portion of the project. This will continue until the entire project is complete.
5. Any additional engineering changes will be paid in the same manner.
Wayne Hawkins will be sending our proposal to you this afternoon. If you have any questions please feel free to contact Tom [Aufiero], Wayne, or myself. I hope this meets your expectation and I look forward to the huge success this could be to really kick off our relationship together.
Best Regards,
Tim Gillig
Vice president of Sales
Livingston & Haven
(Id. ) Gillig confirmed that the "project" referenced in his email "related to the [H]ydraulic [S]ystem down on Wallops Island." (AFS Ex. 277, Gillig Dep. 18:19-19:7, 21:16-22:1, Mar. 3, 2016 ("Gillig Dep.")). Gillig knew Huber was an AFS employee at the time he offered the compensation package to him. (See id. at 14:14-15:3). Vann approved the compensation agreement. (Id. at 16:5-17:1; 9/19/17 Tr. 168:23-169:10). Vann, like Gillig, knew Huber remained an AFS employee, (9/19/17 Tr. 169:11-14), yet the package did not include a requirement that Huber leave AFS before joining Livingston's team, (Gillig Dep. 18:7-18). The purpose of the compensation package was "to pay...Huber for business that he steered toward[ ] or participated in with Livingston." (9/19/17 Tr. 169:7-10).
1. Gripper Arms Contract
Orbital sought bids from both AFS and Livingston for replacement of the Hydraulic System's gripper arms. (9/20/17 Tr. 75:15-18; see AFS Ex. 102; AFS Ex. 238 at 5). Huber asked AFS's engineers to develop technical recommendations for the gripper arms project, (see AFS Ex. 104), while simultaneously corresponding with Livingston employees about their design, (AFS Ex. 105). Huber "provide[d] a lot of...ideas" and "technical support" to Livingston regarding the gripper arms "because [he] knew the application." (9/25/17 Tr. 103:12-21). On August 10, 2012, Huber submitted a rough order of magnitude (an industry term for preliminary proposal) on AFS's behalf totaling $277,000. (AFS Ex. 106). Livingston submitted its firm fixed price in the amount of $320,500 on September 7, 2012. (AFS Ex. 107).
AFS authorized Huber to submit a final price of $277,828.80. (See AFS Ex. 108; 9/18/17 Tr. 139:21-140:15; 9/21/17 Tr. 117:2-23). The engineering department built a profit margin of 30 to 40 percent into its final authorized price. (9/18/17 Tr. 140:5-9). Huber nonetheless inflated AFS's final firm fixed price to ensure that the Livingston bid was more competitive. (See AFS Ex. 109). On September 17, 2012, he submitted a firm fixed price on AFS's behalf in the amount of $410,383-more than $130,000 higher than the amount authorized by AFS's engineering team. (Id.; see also AFS Ex. 108). Huber concealed this bid from everyone at AFS except its newest sales manager, Dwylan Lefever ("Lefever"). (See 9/18/17 Tr. 143:10-144:10; see also 9/19/17 Tr. 81:8-17). Huber assured Lefever that he "went extremely high on the quote for a reason." (AFS Ex. 110). Copies of Huber's inflated firm fixed price and AFS's gripper arms drawings were found in Livingston's files and in its Dropbox account during discovery. (See AFS Ex. 111; AFS Ex. 204 at 2; AFS Ex. 206; AFS Ex. 267 at 11).
Orbital awarded the gripper arms contract to Livingston. (AFS Ex. 238 at 32, 34; 9/20/17 Tr. 76:8-9, 80:20-21). In contemporaneous notes throughout the bidding process, Fava observed that the choice "will likely come down to price, with a slight nudge toward[ ]AFS due to their experience with the current system." (AFS Ex. 238 at 22, 26). Fava later confirmed that the award to Livingston was "[b]ased on price." (9/20/17 Tr. 76:8-11, 80:17-20, 175:12-20). Brainard agreed that the "high price [was] the principal reason why AFS lost this contract." (Id. at 80:17-20).
Huber continued assisting Livingston with its gripper arms design throughout the fall as the team prepared for a November 7, 2012 "kick off" meeting with Orbital. (See AFS Ex. 149). At Aufiero's request, Huber shared AFS's gripper arms schematics with Livingston engineer Sumpter Smith ("Smith"). (AFS Ex. 162 at 1-3; AFS Ex. 164; 9/21/17 Tr. 146:15-17). Huber also shared a gripper arms bill of materials with Aufiero, Hill, Hawkins, and Smith that was "virtually identical" to the one prepared by AFS's engineers. (9/18/17 Tr. 150:16-151:10; AFS Ex. 165 at 1, 4-6). Huber participated in a conference call with this same group a few days later during which they discussed AFS's gripper arms drawing. (See AFS Exs. 166-67; 9/21/17 Tr. 153:18-154:19). Afterward, Livingston altered its design to borrow three of AFS's features: counterbalance valves, isolation logic valves with pilot control, and pressure transducers. (See 9/18/17 Tr. 146:16-149:16; 9/21/17 Tr. 147:22-150:13, 155:16-156:20; see also AFS Ex. 168 at 7; AFS Ex. 69 at 7; AFS Ex. 170).
Orbital and Livingston agreed on a design and a final contract price of $285,685 in December 2012. (AFS Ex. 178). Livingston subsequently received an installation contract for the gripper arms valued at $157,967 and a refurbishment contract following an on-site explosion valued at $219,776. (See AFS Ex. 265 at 7; AFS Ex. 266 at 7-8). Brainard confirmed that AFS likely would have received these contracts had it been selected for the gripper arms upgrade. (See 9/20/17 Tr. 81:13-15). Livingston paid Huber $41,322.15 for securing the gripper arms contract. (AFS Ex. 180 at 2; see also AFS Ex. 113; 9/22/17 Tr. 63:19-64:4).
2. Cylinder Upgrade Contract
In 2012, Orbital also began exploring two options for upgrading the Hydraulic System's cylinders: the new cylinder option, which contemplated installation of new cylinders and cylinder assemblies, and the modified cylinder option, which would replace the cylinders' component parts but not the cylinders themselves. (See AFS Ex. 240; 9/18/17 Tr. 152:24-153:12). Orbital hoped to increase the cylinders' capacity by 250,000 pounds to allow the Antares rocket to carry a heavier payload. (9/18/17 Tr. 152:17-29; 9/20/17 Tr. 81:16-24). AFS initially had an "advantage" for the contract as the incumbent vendor on Wallops Island. (9/20/17 Tr. 74:9-17). Orbital wanted the same vendor to perform the gripper arms and the cylinder upgrades. (Id. at 122:11-123:4, 194:5-22).
Huber and Livingston knew of Orbital's intent to bid both cylinder options by their April 12, 2012 meeting with Fava. (See AFS Ex. 240 at 1; 9/20/17 Tr. 182:10-12). Orbital's engineers wanted AFS to bid on both options, and expressed as much to Huber. (9/20/17 Tr. 83:13-23, 189:10-190:15). Fava advised Huber that "Orbital was interested in having AFS submit proposals on both options." (See id. at 189:90-190:15). Yet Huber never presented the new cylinder option to AFS, (9/18/17 Tr. 153:10-20), and he concealed the modified cylinder option from AFS until July 2012, (id. at 113:22-114:2).
a. April through May 2012
In the weeks after the April 12 meeting on Wallops Island, Huber put Livingston in touch with AFS's cylinder subcontractor, Maritime Hydraulic, and provided Livingston with confidential pricing information that AFS received from Maritime Hydraulic in 2011 for the original system build. (See AFS Exs. 118-20; 9/18/17 Tr. 162:20-164:20). No one but AFS and Maritime Hydraulic previously had access to this information. (See 9/18/17 Tr. 164:21-165:3). Huber also shared AFS's 2011 selling prices with Aufiero, who later supplied them to Hill. (AFS Exs. 121-22). Orbital eventually executed a nondisclosure agreement with Livingston on May 16, 2012, authorizing document sharing between Orbital and Livingston as they explored Orbital's options. (See L & H Ex. 75). Shortly after the agreement was executed, Orbital engineer Kris Edwards ("Edwards") shared a limited set of three engineering drawings with Livingston. (See L & H Ex. 73 at 18-51). Neither Huber nor AFS are party to the nondisclosure agreement. (L & H Ex. 75). No member of the Orbital team authorized Livingston to accept AFS's documents from Huber, and no member of the team authorized Huber to provide AFS's documents to Livingston. (Reed/Nash Dep. 87:6-20; 9/20/17 Tr. 89:12-90:7, 183:23-184:8, 201:8-17).
b. June through September 2012
Huber eventually presented the cylinder modification option to AFS in July 2012. (9/18/17 Tr. 113:22-114:2, 152:8-10). AFS sought and received a formal request for quote for the modification option on September 5, 2012. (9/18/17 Tr. 152:20-23; AFS Ex. 129). The AFS team was concerned that the cylinder modification option was not feasible-its engineers did not believe the existing assembly could support an increased payload, and they agreed that the system could not be modified on Orbital's tight deadline. (See 9/18/17 Tr. 154:8-12, 155:11-156:25; 9/19/17 Tr. 125:1-129:14). Huber proposed a feasibility study to Orbital, but Brainard responded that AFS must first provide a rough order. (AFS Exs. 131-32; see also 9/18/17 Tr. 155:19-25). Huber urged AFS not to bid the cylinder modification, stating in an email that he did not think the project was "good business for AFS at this time" and that he had "trepidation in moving ahead." (AFS Ex. 131). AFS obliged Huber's guidance and discontinued its pursuit of the project. (See 9/19/17 Tr. 76:16-78:25, 125:1-128:5). Vaughn testified at trial that AFS would have been interested in the new cylinder option, describing it as the "much cleaner way to proceed." (9/18/17 Tr. 158:1-5).
Huber continued his campaign to disparage AFS throughout this time period. In an email to Fava on September 11, 2012, he stated:
Keith,
I can't get anything done over here. Larry & Dave are the only guys doing their part efficiently.
This Gripper Arm thing is 90% there…all I need is for Dan to get his Manufacturing numbers firm and fixed and it's stalling. I had it layed [sic] up on a tee and I'm getting the most ridiculous response.
Forget about the Cylinders.
My advise [sic] is to go with an alternative vendor and then I'll jump ship....
Sorry for the hassle.
Later, Kevin
(AFS Ex. 133). Huber had already received the gripper arms bill of materials from AFS's engineering team at the time of this message. (9/18/17 Tr. 160:25-161:11). Not long after this email, Orbital stopped seriously considering AFS as a contender for the cylinder upgrade. (See 9/20/17 Tr. 194:14-195:5). According to Fava, once AFS lost the gripper arms contract in late September, it was at a "huge disadvantage" for the cylinder contract. (Id. at 194:14-19).
Huber encouraged Livingston from the outset to pursue Orbital's preferred new cylinder option and to "no quote" the modification option that he confined AFS to. (AFS Ex. 118). Orbital sent a formal request for quote to Livingston for the new cylinder option on July 10, 2012. (AFS Ex. 125). Huber worked in earnest with Livingston to prepare its quote. He emailed photos to Aufiero and Hill depicting construction, assembly, and testing of the original cylinders at AFS's headquarters. (See AFS Ex. 135; 9/18/17 Tr. 165:22-167:2). He participated in regular and lengthy phone calls with Livingston's engineers to discuss their joint proposal for the new cylinders. (See AFS Ex. 8 at 4-7). And he participated in a meeting with Hill and Aufiero at Livingston's headquarters on September 27, 2012. (See AFS Ex. 137; AFS Ex. 278, Aufiero Dep. 137:8-23, Feb. 12, 2016 ("Aufiero Dep."); 9/21/17 Tr. 96:9-97:2). The Livingston team "looked at everything" in developing a rough order for the cylinders, including AFS's top-level hydraulic schematics and other engineering drawings provided by Huber over the preceding six months. (See Aufiero Dep. 139:12-141:15; 9/21/17 Tr. 97:3-17).
c. October through December 2012
Huber registered a domain name and established an email address for his new company, Integrated Systems, on October 6, 2012. (See AFS Exs. 139-40). At the same time, he continued communicating with Livingston concerning its rough order for the new cylinder upgrade. (See AFS Ex. 8 at 7; see, e.g., AFS Ex. 143 at 1-3; AFS Ex. 159). Unbeknownst to Livingston, Huber was secretly preparing to submit his own competing bid for the cylinder upgrade on behalf of Integrated Systems. (See Brainard Ex. 27 at 2-3).
Beginning at approximately 6:00 p.m. on October 8, 2012 and continuing through the evening, Huber used his AFS laptop to copy nearly 98 gigabytes of data to an external hard drive. (AFS Ex. 267 at 3; see AFS Ex. 142; 9/18/17 Tr. 49:4-51:8). Huber downloaded "all of the design drawings, all the documents that had been prepared [by AFS] and approved by NASA, all the test procedures, all the bill of materials, everything associated with the entire [Hydraulic System] project." (9/18/17 Tr. 170:11-15; see AFS Ex. 267 at 3). He also took documents specific to AFS's gripper arms quote, as well as "all AFS engineering projects with pending customer quotes" and "all AFS files on completed AFS projects going back to 1993." (AFS Ex. 267 at 3; see also 9/18/17 Tr. 49:4-21). Huber tendered his resignation notice to AFS the next day, setting a projected resignation date of November 9, 2012. (See 9/18/17 Tr. 37:15-22). Huber was in contact with Aufiero over the course of this two-day period. (See AFS Ex. 8 at 7). Huber later accelerated his resignation date to October 26, 2012. (See 9/18/17 Tr. 37:23-38:1). When Huber returned his laptop to AFS, staff discovered it to have been wiped of emails, documents, and a drawing program. (Id. at 38:16-21; AFS Ex. 267 at 1-2).
Huber and the Livingston team doubled down on their preparatory efforts in late October 2012 after receiving notice of the November 7 gripper arms "kick off" meeting. (See AFS Ex. 149). In his scheduling email, Fava advised that Orbital would need Livingston's rough order for the cylinders by November 2 to be able to discuss that contract at the November 7 meeting. (Id. ) Huber thereafter emailed to Aufiero, Hill, and Hawkins many of the files he downloaded earlier in the month. (AFS Exs. 150, 158). These files included weld maps and weld history reports, (AFS Exs. 151-54), a Non-Destructive Evaluation Plan, (AFS Exs. 155-56), and tubing assembly diagrams, (AFS Exs. 157-58). To conceal his theft, Huber postdated the files and substituted "Integrated Systems" for "Advanced Fluid Systems, Inc." as the author and owner. (See AFS Exs. 153-58). Huber participated in a second, daylong meeting at Livingston's offices on October 29. (See AFS Ex. 159; 9/25/17 Tr. 52:22-24; see also 9/21/17 Tr. 187:17-188:14, 189:9-190:3). Livingston submitted its rough order of magnitude for the cylinder upgrade on November 2, 2012. (AFS Ex. 173). Orbital and Livingston representatives discussed the proposal in detail during the November 7 "kick off" meeting. (See AFS Ex. 177 at 5). Livingston's rough order relied on drawings generated by AFS and insider knowledge revealed by Huber. (See 9/18/17 Tr. 186:4-187:18; 9/22/17 Tr. 5:10-14; see also AFS Ex. 173 at 2; AFS Ex. 135).
d. January through March 2013
Orbital ultimately awarded the cylinder contract to Integrated Systems, to the "complete surprise" of the Livingston team. (See 9/22/17 Tr. 117:15-118:4). According to Aufiero, Vann was "stunned" and "certainly not happy" with the development. (Id. at 120:12-121:10). Integrated Systems submitted a firm fixed price of $1,495,890 for the cylinder modification option and $1,768,998 for the new cylinder option. (AFS Ex. 183 at 10). Orbital asked Integrated Systems to submit a best and final offer for the new cylinder option alone. (AFS Ex. 189). On March 5, 2013, Integrated Systems submitted its best and final offer with a price of $1,974,966. (AFS Ex. 191 at 14). Integrated Systems' firm fixed price and best and final offer cited directly to, incorporated, and relied on AFS's documents. (See AFS Ex. 183 at 1, 3, 11; AFS Ex. 191 at 1-2).
On March 20, 2013, Orbital awarded the cylinder contract to Integrated Systems. (AFS Ex. 192). Orbital and Integrated Systems later agreed to a final, modified contract price of $2,028,966. (AFS Ex. 193 at 2). In a post-selection risk assessment analysis, Fava cited Huber's familiarity with the hydraulic system and the cost savings of working directly with Integrated Systems in justifying its decision. (L & H Ex. 15 at 3-4). Brainard later intimated that Orbital would not have awarded the cylinder contract to Integrated Systems had it known of Huber's conduct. (See 9/20/17 Tr. 90:12-23).
D. Lost Profits
Vaughn arrived at AFS's lost profits figure together with Dr. Jonathan A. Cunitz ("Dr. Cunitz"), who was qualified at trial as an expert in damages calculation and analysis. (9/19/17 Tr. 110:17-18, 111:17-19). Vaughn and Dr. Cunitz calculated lost profits as follows:
Gripper Arms Subcontract Subcontract Price: $285,685 Less AFS Hardware Costs: ($112,000) Less AFS Labor Costs: ($67,650) AFS Lost Profit: $106,035 Gripper Arms Installation Subcontract Price: $157,967 Less AFS Hardware Costs: ($18,800) Less AFS In-House Labor Costs: ($39,480) Less AFS Miscellaneous Costs: ($7,158) Less AFS On-Site Labor/Travel Costs: ($20,326) AFS Lost Profit: $72,203 Gripper Arms Refurbishment Subcontract Price: $219,776 Less AFS Hardware Costs: ($100,000) Less AFS Labor Costs: ($40,830) Less AFS On-Site Labor/Travel Costs: ($2,200) AFS Lost Profit: $76,746 Cylinder Upgrade Subcontract Final Price: $1,956,011 Less AFS Hardware Costs: ($853,186) Less AFS Labor Costs: ($261,800) AFS Lost Profit: $841,025
(AFS Ex. 265 at 9-13; AFS Ex. 266 at 10-14). Vaughn calculated AFS's estimated costs by consulting with AFS engineers and relying on his familiarity with AFS labor rates and its engineering, project management, and administrative capacity for such projects. (See AFS Ex. 265 at 3-4).
Hill submitted a defense expert report and offered comments in response to AFS's calculations. (See L & H Ex. 44). Hill remonstrated broadly that Vaughn's and Dr. Cunitz's damages calculations were too high. (See id. ) The value of Hill's report and testimony is seriously undermined by several inconsistencies in his own calculations which he was unable to explain at trial. (See, e.g., 9/22/17 Tr. 53:9-13; compare L & H Ex. 44 ¶¶ 8-9, 16-19 with AFS Exs. 160, 273).
E. This Litigation & The Dropbox Discovery
AFS commenced this action on December 24, 2013. (Doc. 1). In its initial complaint, AFS named Huber, Integrated Systems, Livingston, Vann, Aufiero, and Orbital as defendants. (Id. ) AFS asserted misappropriation, tortious interference with contract and prospective contractual relations, unjust enrichment, common-law unfair competition, conversion, common law conspiracy, and Computer Fraud and Abuse Act claims against all defendants, and Lanham Act claims against all defendants but Orbital. (Id. at 28-34). AFS also charged Huber with breach of fiduciary duty and the other defendants with aiding and abetting Huber's breach. (Id. at 34-35). AFS thereafter voluntarily dismissed Orbital from the lawsuit. (See Doc. 57). After Rule 12 motion practice winnowed the claims, AFS filed a second amended complaint on July 7, 2014, (Doc. 70), and all defendants filed answers on August 4, 2014, (Docs. 77-80).
During discovery, AFS subpoenaed Drobox for access to any accounts associated with Huber's personal and business email addresses. (AFS Ex. 244 at 5-6). Dropbox reported that Huber had created two accounts: one affiliated with his personal Gmail address, and another affiliated with his AFS email address. (Id. at 1, 9-10). Forensic examination revealed that, shortly after AFS served its subpoena, Huber deleted a number of files and folders from his personal Dropbox account. (AFS Ex. 268 at 2, 4; AFS Ex. 244 at 2, 4, 16). Dropbox restored portions of the folders at counsel's request. Analysis of the restored folders showed that Huber deleted AFS's gripper arms schematics, his inflated firm fixed price for the gripper arms, circuit drawings for AFS's gripper arms design, the hydraulic system end-item data package delivered by AFS to the Authority following completion of the system in 2011, and his consulting contract with Livingston for the gripper arms work. (See AFS Ex. 268 at 4; AFS Exs. 204-08). The parties thereafter proceeded with discovery.
Following Rule 56 motion practice, (see Doc. 236), the court convened a bench trial over the course of six days from September 18 through September 25, 2017. (See Docs. 303-08). The court set an initial deadline of November 29, 2017 for all parties to submit proposed findings of fact and conclusions of law. (Doc. 299). At the Livingston defendants' request, the court extended the deadline to December 4, 2017. (See Doc. 316, 319). AFS submitted its proposed findings and conclusions on November 16, 2017, (see Doc. 312), and Huber and Integrated Systems followed suit on December 4, 2017, (see Doc. 323). To date, the Livingston defendants have not complied with the court's order. Accordingly, the Livingston defendants have waived any opportunity to present their factual and legal position to the court.
II. Conclusions of Law
Several issues of liability are settled at this juncture. We held at the Rule 56 stage that unequivocal record evidence established that Huber and Integrated Systems had misappropriated AFS's trade secrets under the Pennsylvania Uniform Trade Secrets Act ("PUTSA"), 12 PA. CONS. STAT. § 5301 et seq. (Doc. 236 at 28-31). We found that AFS had proven two of the requisite elements of its common law tort claim for breach of fiduciary duty against Huber, but resolved that genuine disputes of fact precluded disposition of the third and final element. (Id. at 37-39). We also determined that AFS had failed to show tortious conduct by Integrated Systems, necessitating summary judgment in Integrated Systems' favor, and that manifold factual disputes precluded summary judgment on AFS's aiding and abetting claim against Livingston, Vann, and Aufiero. (Id. at 42-44).
Three inquiries remain. First , whether Livingston, Vann, or Aufiero are liable for misappropriation of trade secrets under Pennsylvania law. Second , whether Huber is liable for breaching his fiduciary duty to AFS, and whether the Livingston defendants are liable for aiding and abetting said breach. And third , whether and to what extent compensatory, exemplary, and punitive damages are warranted. We address these issues seriatim .
A. Misappropriation of Trade Secrets by Livingston, Vann, and Aufiero
Pennsylvania law divides "misappropriation" into three distinct categories:
"acquisition," "use," and "disclosure." 12 PA. CONS. STAT. § 5302. AFS advances its misappropriation claim under the first theory, contending that the Livingston defendants "misappropriated AFS'[s] trade secrets through improper 'acquisition.' " (Doc. 312 at 94 ¶ 5). PUTSA defines the offense of misappropriation by acquisition as the "acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means." 12 PA. CONS. STAT. § 5302. "Improper means" include, inter alia , "theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy or espionage through electronic or other means." Id.
There is no dispute that the Livingston defendants acquired trade secrets belonging to AFS. (Doc. 236 at 32-34). The record is rife with proof that, beginning in March 2012, the Livingston defendants eagerly accepted from Huber copious AFS documents relating to the cylinder upgrade. The information shared included an 11-page Hydraulic System spares spreadsheet, 88 pages of engineering drawings, 37 pages of system specifications, and price and cost data for the system's cylinder assemblies. During the gripper arms bidding process, Huber also shared AFS's firm fixed price with Livingston via Dropbox, in addition to AFS's gripper arms drawings and other documents in October 2012 and January 2013. Each of these documents contained AFS's trade secrets as defined by Pennsylvania law. (Doc. 236 at 20-28). The only extant determination is whether the Livingston defendants knew or should have known that Huber acquired these trade secrets by improper means. See 12 PA. CONS. STAT. § 5302.
Each Livingston defendant at minimum had constructive knowledge that Huber obtained AFS's trade secrets by improper means before transmitting them to Livingston employees. Vann, Aufiero, Hill, Hawkins, and Smith each received confidential AFS documents from Huber throughout 2012. With the exception of documents altered by Huber to include Integrated Systems' title block, most documents transmitted to the Livingston team contained AFS's propriety stamp, which declared:
This drawing discloses propriety and confidential data of Advanced Fluid Systems, Inc., and may not be used disclosed or released, in whole or in part, for any purpose outside the authorized recipient, without signed authorization, and must be returned upon request.
No defendant was able to offer a credible explanation for wholly disregarding AFS's proprietary stamp. Moreover, Vann, Aufiero, Hill and Hawkins were aware that Huber was an AFS employee the entire time. They were aware of it when they granted him access to Livingston's commercial Dropbox, when they installed a VPN on Huber's AFS laptop, and when they provided him a Livingston email address. And they were aware of it each time they accepted a confidential drawing from him. Huber confirmed that his employment with AFS was no secret to Livingston. Yet the Livingston defendants eagerly accepted AFS's confidential documents from Huber for nearly a year.
The Livingston defendants offer two justifications for their conduct. First , they suggest that Orbital employees intimated to Vann, Aufiero, and others that Orbital legally owned all drawings and other materials produced by AFS pursuant to the 2009 contract. (See 9/18/17 Tr. 27:12-28:8; see also Doc. 175-2 at 11-12). At trial, counsel averred that Orbital, "from day one," represented to Livingston that Orbital owned the Hydraulic System drawings. (See 9/18/17 Tr. 28:3-5). Counsel also alleged that Edwards, Orbital's then-ground systems engineer, shared certain documents with Livingston pursuant to the nondisclosure agreement. (Id. at 27:23-28:3). It follows, counsel posited, that the Livingston defendants were justified in believing that Huber could also share AFS's materials with them. (Id. at 27:16-28:8).
The chronology established at trial belies this contention. The Livingston defendants began their collaboration with Huber in early January 2012, granting him access to Livingston's Dropbox, establishing a Livingston VPN on his AFS-issued laptop, and providing him with a Livingston email address. These actions enabled Huber to share AFS's confidential documents with Livingston, which he did as early as March 2012. On March 27, 2012, for example, Huber emailed a spreadsheet containing spare part requirements and pricing for the Hydraulic System to Aufiero. On April 2, 2012, he transmitted a batch of AFS engineering drawings to Aufiero via Dropbox, including a "majority of the hydraulic schematics," to provide Livingston with a leg-up during its April 11, 2012 meeting with Orbital. And on April 4, 2012, Huber provided Hill with the 37-page specifications on which AFS's system design was based.
The nondisclosure agreement heralded by defendants as authorizing their acceptance and use of these documents was not executed until May 16, 2012-nearly two months after Huber's first transmissions. And it was not until June 2012 that Edwards shared with Livingston a limited set of AFS drawings pursuant to the nondisclosure agreement. The Livingston defendants could not have been relying on Orbital's conduct at the time they accepted AFS documents from Huber in March and April.
Nor does the nondisclosure agreement or Orbital's conduct absolve the Livingston defendants for their actions after May 16, 2012. The only reasonable inference to be drawn from the nondisclosure agreement and Edwards' disclosure of documents is that Orbital believed it was authorized to share documents with Livingston. The record offers no support for the Livingston defendants' claimed belief that Huber was authorized to share AFS's engineering drawings. Per contra , Orbital's employees and the Authority's employees testified uniformly that neither entity authorized Huber to share AFS's drawings with Livingston, nor did either authorize Livingston to accept the documents from Huber. Both entities confirmed that to do so would contravene their internal policies. We cannot credit the Livingston defendants' post hoc rationalization of their conduct.
Second , the Livingston defendants intimate that industry practice countenances their conduct. Livingston's counsel adjured during opening statements that it is "common practice in the engineering field" for customers shopping new engineering firms to share schematics developed by an incumbent in the course of soliciting quotes. (See 9/18/17 Tr. 24:23-25:7). Whether this practice exists is irrelevant to the claims sub judice . AFS does not assert that the Livingston defendants violated the law by accepting a limited batch of drawings from Orbital. It contends they did so by acquiring those documents from Huber -a known employee of a firm against which Livingston was actively competing.
Several additional points bear emphasis. The Livingston defendants were not merely passive recipients of AFS documents. Livingston employees used the documents provided by Huber to prepare for meetings with Orbital and, on at least one occasion, solicited specific documents from him. Regarding documents Huber transferred to Aufiero in advance of Livingston's April 2012 meeting with Orbital, Aufiero admitted at trial that he "absolutely" reviewed the documents to gather an "understanding" of the Wallops Island project. Hill concurred that the documents helped the Livingston team prepare for the meeting. Later, when bidding for the cylinder upgrade was in full swing, Aufiero explicitly asked Huber to forward the hydraulic schematic for both the cylinders and the gripper arms. Vann conceded that he was aware as early as February 2012 of the document sharing between his employees and Huber.
Finally, the evidence establishes that the Livingston defendants knew Huber's conduct was wrong. Hill voiced concern to Aufiero about trusting Huber, postulating that if Huber's ethics did not impede him from sharing AFS documents, he might likely do the same to Livingston. Vann testified with respect to receipt of AFS's internal pricing information that had he "known that [his]...high-level employees[ ] were getting internal pricing from another company," he would have directed them to reject it. (9/19/17 Tr. 184:6-9). Aufiero testified that he did not take AFS's documents with him when he left the firm and agreed to do so is "wrong." (9/21/17 Tr. 77:4-18). He further testified that he knew AFS management would not "have been happy about" what Huber was doing. (Id. at 75:15-18). Yet each of these individuals persisted in their collusion with Huber.
AFS has proven by a preponderance of the evidence that Vann and Aufiero acquired AFS's trade secrets from Huber knowing that Huber had obtained same through "improper means." See 12 PA. CONS. STAT. § 5302. Vann's and Aufiero's stated beliefs that their conduct was aboveboard are untenable against the weight of the record, in particular the chronology of events and circumambient indicia of awareness of Huber's wrongdoing. These defendants knew that their conduct was inappropriate and resolved that the risk was worth the reward.
AFS has also proven by a preponderance of the evidence that Livingston is vicariously liable for the acts of Vann and Aufiero. No court has yet addressed whether PUTSA allows for vicarious trade secret liability. The near unanimous consensus of federal and state courts holds that the Uniform Trade Secrets Act-on which the Pennsylvania statute is based-does contemplate vicarious liability when state law otherwise provides the cause of action. Pennsylvania law recognizes respondeat superior liability for intentional and even criminal acts of an employee. Brezenski v. World Truck Transfer, Inc., 755 A.2d 36, 39 (Pa. Super. Ct. 2000) (citing Fitzgerald v. McCutcheon, 270 Pa.Super. 102, 410 A.2d 1270, 1271-72 (1979) ). We join the majority of federal and state courts and hold that PUTSA authorizes vicarious trade secret liability.
Under Pennsylvania law, an employer may be vicariously liable for its employee's intentional acts if the conduct (1) is similar in kind to that which the employee is hired to perform, (2) occurs "substantially within" the temporal and spatial scope of employment, and (3) is "actuated," at least in part, in service of the employer. See PNC Mortg. v. Superior Mortg. Corp., No. 09-5084, 2012 WL 628000, at *30 (E.D. Pa. Feb. 27, 2012) (citing Bro-Tech Corp. v. Thermax, Inc., 651 F.Supp.2d 378, 419-20 (E.D. Pa. 2009) ; Costa v. Roxborough Mem. Hosp., 708 A.2d 490, 493 (Pa. Super. Ct. 1998) ). Vann's and Aufiero's actions (as well as the actions of Hill, Hawkins, and Smith) related directly to their job duties, occurred fully within the temporal and spatial scope of their work, and were motivated, at least in part, by a desire to serve Livingston. The court finds that Livingston is vicariously liable for its employees' misappropriative acts.
B. Breach of Fiduciary Duty by Huber
Under Pennsylvania law, employees owe a duty of loyalty to their employer. Synthes, Inc. v. Emerge Med., Inc., 25 F.Supp.3d 617, 667 (E.D. Pa. 2014) (citing Crown Coal & Coke Co. v. Compass Point Res., LLC, No. 07-1208, 2009 WL 891869, at *5 (W.D. Pa. Mar. 31, 2009) ). This duty obliges employees to refrain from competing with their employer or assisting its competitors and from using protected information to a competitor's advantage. See id. (citing RESTATEMENT (THIRD) OF AGENCY § 8.04 - .05 ( AM. LAW INST. 2006) ). To sustain its claim for breach of fiduciary duty, AFS must demonstrate that: (1) Huber failed to act in good faith and for AFS's sole benefit in the course of his employment; (2) AFS suffered an injury; and (3) Huber's failure to act solely for AFS's benefit was "a real factor in bring[ing] about" that injury. See id. (alteration in original) (quoting McDermott v. Party City Corp., 11 F.Supp.2d 612, 626 n.18 (E.D. Pa. 1998) ). The court held at the summary judgment stage that AFS has proven the first two elements of this claim. (Doc. 236 at 37-38).
No Pennsylvania court has defined the term "real factor," nor has any federal court interpreted the phrase. The Pennsylvania Suggested Standard Civil Jury Instructions define "real factor" as akin to "factual cause," to wit:
Breach of Fiduciary Duty-Factual Cause
The defendant agent or fiduciary is legally responsible for the damages suffered by the plaintiff if the defendant's ... intentional misconduct was a factual cause of those damages.
If the damages in question would have been sustained even if the agent or fiduciary had not... acted wrongfully, then the defendant's conduct would not be a factual cause in causing the plaintiff's damages. On the other hand, the defendant's... intentional misconduct was a factual cause in causing the plaintiff's damages if those damages would not have been sustained had the defendant not acted as [he] [she] did.
PA. SUGGESTED STANDARD CIVIL JURY INSTRUCTIONS § 6.230 (2003). Huber agrees that this definition controls. (Doc. 323 ¶¶ 165-66).
The full scope of Huber's efforts to undermine AFS and support Livingston was illuminated at trial. Huber did not deny the majority of the conduct supporting AFS's breach of fiduciary duty claim. Indeed, Huber admitted:
• that he twice organized site visits to Wallops Island for the Livingston team to meet with Orbital engineers, (see 9/25/17 Tr. 122:14-23, 132:11-133:4);
• that he met with the Livingston team in advance of those meetings to prepare and better position them, (see id. at 123:25-124:17);
• that part of that preparation included disclosure and use of AFS confidential documents, (see id. at 126:12-19);
• that in April of 2012, he was "working diligently in positioning [Livingston] in a favorable position" with Orbital, (id. at 124:18-126:4);
• that he inflated AFS's gripper arms bid without authorization from engineering, (see id. at 48:23-49:9); and
• that he instructed a new sales manager to conceal the inflated bid from engineering, (see id. at 47:13-49:9).
The record establishes that Orbital asked Huber to secure quotes from AFS for both cylinder options-its preferred option of building new cylinders and the alternative of modifying the current cylinders-and that Huber never shared the new cylinder request with AFS. He did, however, assist Livingston in bidding the new cylinder contract. Eventually, Huber secured the new cylinder contract for himself and his new firm, Integrated Systems.
We find that Huber was the direct cause of AFS losing the gripper arms contracts. Indeed, the record reflects textbook causation. Huber inflated the gripper arms quote prepared by AFS's engineering department by more than $130,000. Orbital cited this inflation in explaining why it chose Livingston over AFS. Fava and Brainard testified that Orbital's decision was "[b]ased on price." Brainard left no room for doubt, confirming that "high price" was "the principal reason why AFS lost this contract." Both agreed that, prior to Huber's interference, AFS had a clear advantage over Livingston for the gripper arms contract. This testimony wholly refutes Huber's suggestion that Orbital had written AFS off as a vendor due to past customer service issues.
We reject Huber's claim that he had good reason to submit the self-described "extremely high" gripper arms bid on AFS's behalf. (See Doc. 323 ¶ 70). Huber invokes a host of retrospective justifications for his conduct-claiming that the AFS engineering team failed to account for installation costs, discounts yet to be negotiated by Orbital, and Huber's own desired commission margin. (See id. ) To the extent these concerns actually animated Huber's conduct, we can conceive of no legitimate basis for his failure to raise them with AFS's engineers at the time. We simply cannot credit Huber's ex post facto justification or his specious claim that he did in fact "want AFS to get the gripper arms contract." (9/25/17 Tr. 47:10-11). Huber inflated AFS's gripper arms bid and concealed his conduct in an effort to price AFS out of contention. He succeeded and, in doing so, deprived AFS of the gripper arms contract.
Huber was also a real factor in denying AFS an opportunity to pursue the preferred cylinder upgrade option. Orbital wanted a single vendor to handle both of the 2012 contracts, and AFS's loss of the gripper arms contract placed it at a "huge disadvantage" for the cylinder upgrade. Orbital relied exclusively on Huber to communicate to AFS that Orbital was seeking quotes for both a cylinder modification option and a new cylinder option. Orbital's lead engineers described AFS as a "a legitimate contender" for either of the contracts and confirmed that AFS in fact had an "advantage" as Orbital's incumbent vendor. Orbital engineers eventually discovered that modification of the cylinders was not feasible with their launch schedules and that the only workable option was to manufacture and install new cylinders. Huber knew all of this, and he knew that AFS was interested in a new cylinder option. Yet he concealed the new cylinder opportunity, deliberately limiting AFS to the risky cylinder modification option. He openly encouraged Livingston to pursue the favored new cylinder option. And he pressured Orbital to abandon AFS for Livingston.
More direct evidence of causation is difficult to fathom. Huber's subterfuge resulted in Orbital rejecting AFS's gripper arms bid and prevented AFS from ever competing for the new cylinder contract. What is more: Huber intended this result. Uncontradicted evidence reflects that Huber endeavored to have Livingston replace AFS as the vendor on Wallops Island. At trial, he never once expressed concern for AFS's interests. He instead testified that his goal was "to help the customer," that Orbital "needed somebody to stand by them," and that he "definitely...had a loyalty to" Orbital. (9/25/17 Tr. 96:12-97:13; see id. at 159:7-14). Tellingly, Huber also conceded: "and of course I wanted to help myself." (Id. at 97:6-8). Huber adhered to a perceived duty of loyalty to everyone but his own employer. Huber is liable to AFS for breach of fiduciary duty. A more compelling case for such a breach is difficult to conjure.
C. Aiding and Abetting Breach of Fiduciary Duty by Livingston, Vann, and Aufiero
To prevail on a claim for aiding and abetting a fiduciary's breach, AFS must establish (1) that Huber breached his fiduciary duty to AFS, (2) that the Livingston defendants knew of Huber's breach, and (3) that the Livingston defendants offered "substantial assistance or encouragement" to Huber in effecting his breach. See Synthes, 25 F.Supp.3d at 674-75 (quoting Reis v. Barley, Snyder, Senft & Cohen, 667 F.Supp.2d 471, 491 (E.D. Pa. 2009) ). In other words, the Livingston defendants must have known that Huber's activities constituted a breach of fiduciary duty and nevertheless assisted or encouraged that breach. See id. at 675 (quoting Bd. of Trs. of Teamsters Local 862 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 174 (3d Cir. 2002) ); Bair v. Pu