# Burbank Grease Services, LLC v. Sokolowski > Wisconsin Supreme Court · July 13, 2006 · 294 Wis. 2d 274 URL: https://www.frixlaw.com/law-library/cases/9690334 ## Case - **Full name:** Burbank Grease Services, LLC, Plaintiff-Appellant-Petitioner, v. Larry Sokolowski and United Grease LLC and United Liquid Waste Recycling, Inc., Defendants-Respondents - **Court:** Wisconsin Supreme Court - **Decided:** July 13, 2006 - **Citations:** 294 Wis. 2d 274; 717 N.W.2d 781; 81 U.S.P.Q. 2d (BNA) 1972; 24 I.E.R. Cas. (BNA) 1825; 2006 WI 103; 2006 Wisc. LEXIS 398 - **Precedential status:** Published - **Opinion:** Dissent by Bradley - **Judges:** Roggensack, Bradley, Abrahamson - **Cited by:** 100 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9690334 ## How later opinions describe it (automated extraction) - recognizing that Wisconsin courts generally interpret and apply provisions in § 134.90 “in accord with other UTSA jurisdictions” - stating that "the label given the claim in the complaint is not dispositive" ## Opinion text ANN WALSH BRADLEY, J. ¶ 51. {dissenting). This court is not interpreting Wis. Stat. § 134.90 in a vacuum. 1 Section 134.90 is based on the Uniform Trade Secrets Act (UTSA), which 44 states have adopted in some form. See Unif. Trade Secrets Act (amended 1985), 14 U.L.A. 529 (Master ed. 2005). Many states have already weighed in on the interpretation of this uniform law. ¶ 52. What is remarkable about the majority opinion is its disregard of the legislative directive that *309 § 134.90 be interpreted to "make uniform the law relating to misappropriation of trade secrets among the states." Section 134.90(7). Although the majority opinion sets forth a litany of cases in footnotes, it fails to recognize that a listing of UTSA cases is no substitute for the mandated uniformity analysis. Why does the majority ignore the legislative directive that § 134.90 be construed to further a uniform interpretation of UTSA among the states? ¶ 53. The majority unabashedly answers the question. It does not think that the uniformity goal is all that important, so it casts it aside. Rather, what is of prime importance to the majority is its own purported plain-language construction of the statute: "cases from other jurisdictions cannot substitute for our construction of the relevant Wisconsin Statute." Majority op., ¶ 32. Lest the reader think that this disregard of the legislative directive is an isolated statement in its opinion, such disregard permeates the majority's analysis. ¶ 54. Not only does the majority disregard the directive of the legislature on how this statute should be interpreted, but also it concludes that its own purported plain-language interpretation is the only "reasonable interpretation." Id., ¶ 28. In the wake of its conclusion, the majority discards what the court of appeals and legal commentators describe as the correct or prevailing interpretation. Because the majority's approach undermines the uniformity goal of UTSA, I respectfully dissent. r — H ¶ 55. One essential goal of UTSA is to make uniform the law of the states adopting it. Indeed, the legislature specifically adopted this goal as a directive in *310 § 134.90(7): "This section shall be applied and construed to make uniform the law relating to misappropriation of trade secrets among states enacting substantially identical laws." Both the drafters of UTSA and the legislature have recognized the need for uniformity in a world of business where transactions occur between states as frequently as within one state's borders. ¶ 56. At most, the majority pays lip service to UTSA's uniformity goal and the corresponding legislative directive. It fails to engage in the necessary analysis to determine what is the uniform interpretation of the preemption provisions in UTSA or how cases decided by courts in other UTSA jurisdictions analyze the language in these provisions. ¶ 57. Instead, the majority reasons that its interpretation promotes the required uniformity of interpretation because: (1) its interpretation is based on the plain meaning of the words "trade secret," (2) other states have the same language in the statute, and (3) some of those states' interpretations of UTSA are in accord with its interpretation. It reasons "[our] construction in this regard is in accord with the promotion of uniformity by [§ 134.90(7)], because the statutory definition of a trade secret is made uniform throughout the states enacting a version of the Uniform Trade Secrets Act (UTSA), and our application of that definition has been in accord with other UTSA jurisdictions." Majority op., ¶ 26. ¶ 58. Of course other states have the same language in the statute. That is the nature of uniform laws. The question is not whether other states have the same language, but rather how do other states interpret that language and why do they interpret it that way? ¶ 59. The majority does not seem to care about the answer. Concluding that its analysis of the plain *311 language of the statute "results in only one reasonable interpretation," it declares that the "statute is not ambiguous." Id., ¶ 28. What about states that interpret the statute differently than does the majority? Why is the interpretation given by courts in those states unreasonable? ¶ 60. The majority weakly attempts to address these questions. It does not analyze the interpretations of other states observing only that "cases from other jurisdictions cannot substitute for our construction of the relevant Wisconsin Statute." Id., ¶ 32. ¶ 61. Furthermore, the majority asserts that a number of UTSA cases from other jurisdictions are distinguishable because "they relied only on the nature of the UTSA as creating generally uniform laws." Id., ¶ 30. This assertion is specious. The majority is distinguishing these cases for doing precisely what they were supposed to do (and precisely what the legislature has directed this court to do in § 134.90(7)): apply and construe § 134.90 in a manner to make the law uniform among states adopting UTSA. ¶ 62. In discarding other states' interpretations, the majority stands the legislative directive of uniformity on its head. What is needed is a thoughtful analysis of the interpretations of other states. Instead, the majority strikes out on its own path that begins and ends with its own purported plain-language construction. Ironically, the majority does not explain how its interpretation of § 134.90(6) comports with the plain language of § 134.90(7), the legislative directive for a uniform interpretation. ¶ 63. I acknowledge that courts across jurisdictions may be less than absolutely uniform in their approaches to UTSA preemption. This lack of absolute uniformity, however, does not mean that this court *312 should discard everything they have said. Although legitimate debate may remain as to what rule of preemption UTSA dictates, the majority should at least meaningfully engage in that debate. ¶ 64. Standing in contrast to the majority's approach is that of the court of appeals. Unlike the majority, the court of appeals' decision undertakes an analysis of the interpretations that courts in other UTSA jurisdictions have given to the UTSA preemption provisions embodied in § 134.90(6). See Burbank Grease Servs., LLC v. Sokolowski, 2005 WI App 28, ¶¶ 29-37 , 278 Wis. 2d 698 , 693 N.W.2d 89 . ¶ 65. The court of appeals determined that if common law claims for unauthorized use of confidential information that did not meet the statutory definition of a trade secret were permitted, the result would undermine the uniformity and clarity that motivated the creation and passage of UTSA. Id., ¶ 30. It further determined that the prevailing rule in most UTSA jurisdictions is that UTSA is meant to replace tort claims for unauthorized use of confidential information with a single statutory cause of action. Id., ¶ 35. ¶ 66. The court of appeals found this rule persuasive. It therefore concluded that § 134.90(6) preempts common law claims, however denominated, that are based solely on allegations or evidence of unauthorized use of confidential information, regardless of whether that information meets the statutory definition of a trade secret. Id., ¶ 37. ¶ 67. I laud the court of appeals for its analysis of UTSA case law in light of the purposes of UTSA in order to reach what it deemed the proper interpretation of § 134.90(6). The court of appeals correctly sought to further UTSA's uniformity goal and obey the corre *313 sponding legislative directive in § 134.90(7). If only the majority would do the same. ¶ 68. The court of appeals' interpretation of UTSA's preemption provision is contrary to the majority's interpretation but consistent with that of legal commentators. One such commentator, Robert Unikel, explains in detail. He divides the case law in UTSA jurisdictions into three views. See Robert Unikel, Bridging the "Trade Secret" Gap: Protecting "Confidential Information" Not Rising to the Level of Trade Secrets, 29 Loy. U. Chi. L.J. 841 ,886-87 (Summer 1998). Under the first view, which is the view adopted by the court of appeals and rejected by the majority opinion, there is preemption of all non-UTSA claims for the protection of both trade secrets and other confidential information. Id. at 886 . Unikel explains that, absent contrary legislative guidance by a state, this view "is the most reasonable." Id. at 887 . Contrast the majority opinion: "Our analysis ... results in only one reasonable interpretation." Majority op., ¶ 28. ¶ 69. Are Unikel and the court of appeals unreasonable, or is the majority? Here is Unikel's explanation for why the interpretation of UTSA applied by the court of appeals is the more reasonable: Permitting litigants in UTSA states to assert common-law claims for the misappropriation or misuse of confidential data would reduce the UTSA to just another basis for recovery and leave prior law effectively untouched. Further, by expressly exempting "contractual remedies, whether or not based upon misappropriation of a trade secret" and "other civil remedies that are not based upon misappropriation of a trade secret" from its preemptive penumbra, the UTSA makes clear that only those claims addressing or arising out of wrongs distinct from pure information piracy survive passage of *314 the trade secret statute. Indeed, contrary interpretations of the UTSA's "Effect on Other Law" provision [§134.90(6) in Wisconsin], such as those embodied in the second and third views of UTSA preemption, effectively negate the UTSA's goal of promoting uniformity in "trade secrets" law. Additionally, these contrary interpretations render the statutory preemption provision effectively meaningless. Bridging the "Trade Secret" Gap, at 888 (emphasis added; footnotes omitted). ¶ 70. Thus, the majority opinion has adopted one of the views that Unikel says "render[s] the statutory preemption provision effectively meaningless." Id. That does not sound very reasonable to me. ¶ 71. Moreover, the court of appeals and Unikel do not stand alone. Another commentator's interpretation of UTSA, like that of Unikel and the court of appeals, is that the intent of UTSA was to preempt common law claims based on "allegedly secret information" regardless of whether such information would previously have been denominated a "trade secret": Beginning in the late 1990s, courts applying UTSA in states around the country have ruled that many alternative trade secret claims — alleged as unfair competition, common law misappropriation, unjust enrichment, and so forth — are pre-empted by the UTSA's statutory scheme.... The common thread among these cases is that each state's legislature intended to occupy the field of claims involving allegedly secret information through the UTSA. Tait Graves, A Trade Secret by Any Other Name is Still a Trade Secret: Why UTSA Pre-emption Matters, 10 Intell. Prop. Strat., No. 7, 3 (April 2004) (emphasis added). *315 ¶ 72. In the end, the majority discards all interpretations of UTSA but its own, concluding that its purported plain-language interpretation is the only reasonable one. In the wake of its conclusion, the majority rejects what the court of appeals and legal commentators describe as the correct or prevailing interpretation. The majority thereby undermines the uniformity goal of UTSA and violates the corresponding legislative directive in § 134.90(7). ¶ 73. The problem with the majority opinion is amplified by its approach to the definition of "trade secret" in § 134.90(1) (c). Although this court was not asked to review whether Burbank's customer information was a "trade secret" under the statutory definition, 2 the scope of that definition is pivotal in interpreting the preemption provisions in UTSA. This much the majority seems to recognize. See majority op., ¶ 19. ¶ 74. The majority concludes, however, that § 134.90(6) does not preempt civil remedies based on misappropriation of "confidential information" that falls outside the statutory definition of a "trade secret." Majority op., ¶ 1. The majority thereby distinguishes between "statutorily-defined" trade secrets as actionable under UTSA and other "confidential information" as actionable under Wisconsin common law. Id., ¶ 24. Such a distinction, however, may be just what the drafters of UTSA (and the Wisconsin legislature in adopting UTSA) sought to avoid. ¶ 75. The majority's conclusion again appears to be at odds with the interpretation given UTSA by legal *316 commentators. According to one commentator, UTSA was intended to divide information into two categories: (1) actionable "trade secrets" and (2) unprotected knowledge or skill. For example, one commentator writes: The Restatement of Unfair Competition, following the lead of the Uniform Trade Secrets Act and cases following the Act, eliminates the distinction between information that is a trade secret and other confidential information. All secret information of economic value falls within the definition of trade secrets. Trade secrets are protected against any misappropriation. Edmund W. Kitch, The Expansion of Trade Secrecy Protection and the Mobility of Management Employees: A New Problem for the Law, 47 S.C. L. Rev. 659 , 662 (Summer 1996) (emphasis added; footnotes omitted). ¶ 76. Similarly, Unikel states that UTSA reflects a " 'two-tiered' approach to the protection of commercial knowledge — an approach in which information is classified only as either a protected 'trade secret' or unprotected 'general skill and knowledge.'" Bridging the "Trade Secret" Gap, at 868. 3 ¶ 77. To the extent these commentators are correct, the majority's construction of § 134.90 is not. If these commentators are correct, it would appear that common law causes of action for misappropriation of *317 "confidential information" that is not a "trade secret" under UTSA are no longer available in UTSA states such as Wisconsin. ¶ 78. The majority's construction of § 134.90(6) would undermine uniformity if courts in other states gave their analogous provisions of UTSA such a construction. If litigants in the various states could maintain common law claims for misappropriation of "confidential information" that does not rise to the level of a UTSA-defined "trade secret," then trade secret law across jurisdictions would continue to depend on the varying common law rules as to misappropriation of economically-valuable secret information. The majority does not endeavor to explain how this could have been the intent of either the drafters of UTSA or the legislature. I-H HH ¶ 79. In sum, the majority disregards the uniformity goal of UTSA, disobeying the legislative directive that § 134.90 be construed to further a uniform interpretation of UTSA among the states. Because I disagree with the majority's approach, I respectfully dissent. ¶ 80. I am authorized to state that Chief Justice SHIRLEY S. ABRAHAMSON joins this dissent. All references to the Wisconsin Statutes are to the 2003-04 version. Burbank did not seek review of the court of appeals' determination that its customer information was not a "trade secret" as defined in Wis. Stat. § 134.90 (l)(e). Unikel characterizes both the First Restatement of Torts and the Third Restatement of Unfair Competition as reflecting the same approach. Robert Unikel, Bridging the "Trade Secret" Gap: Protecting "Confidential Information" Not Rising to the Level of Trade Secrets, 29 Loy. U. Chi. L.J. 841 ,867-68 (Summer 1998). He is somewhat critical of this two-category approach, however, and he argues for a three-category approach. Id. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9690334. Public record. Not legal advice.