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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Powercorp Alaska v. Alaska Energy Authority (10/12/2012) sp-6715
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER .
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
POWERCORP ALASKA, LLC, and )
KWIG POWER COMPANY, ) Supreme Court No. S-13729
)
Appellants, ) Superior Court No. 3AN-07-06732 CI
)
v. ) O P I N I O N
)
ALASKA ENERGY AUTHORITY, ) No. 6715 - October 12, 2012
RON MILLER, KRIS NOONAN, and )
CONTROLLED POWER, )
INC., )
)
Appellees. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Craig Stowers, Judge.
Appearances: Thomas R. Wickwire, Fairbanks, for
Appellants. Michael G. Mitchell, Assistant Attorney General,
Anchorage, and Daniel S. Sullivan, Attorney General,
Juneau, for Appellees Alaska Energy Authority, Ron Miller,
and Kris Noonan. Michael W. Seville, Burr, Pease, & Kurtz,
Anchorage, for Appellee Controlled Power, Inc.
Before: Carpeneti, Chief Justice, Fabe and Winfree, Justices.
[Christen and Stowers, Justices, not participating].
CARPENETI, Chief Justice.
WINFREE, Justice, dissenting in part.
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I. INTRODUCTION
A quasi-independent governmental agency manages a program designed
to improve power generation in small Alaska villages that are located off the electrical
grid. One such village believed that the agency did not respect the wishes of village
leaders in securing a contract to improve that village's power-generation facility. The
village, joined by a company that produces a key component used in improving power
generation in village areas, sued the agency. The plaintiffs alleged that the agency
erroneously awarded contracts for power generation and that agency employees
improperly disclosed the company's trade secrets to its competitor. The superior court
dismissed all of the plaintiffs' claims on motions for summary judgment. Because we
agree there are no disputed issues of material fact and the defendants are entitled to
judgment as a matter of law, we affirm the decision of the superior court in all respects.
II. FACTS AND PROCEEDINGS
The present appeal concerns many of the same underlying facts as
Powercorp Alaska, LLC v. State, Alaska Industrial Development & Export Authority,
Alaska Energy Authority (Powercorp I)1 and involves some of the same parties.
The Rural Power System Upgrade (RPSU) program seeks to improve
power generation in small Alaska villages that are located off the electrical-grid system.
The federal Denali Commission has provided grant funds to support this program. The
Alaska Energy Authority, a public corporation of the State of Alaska, has received and
administered grants from the Denali Commission to support the RPSU program.
Through the RPSU program, the Energy Authority developed plans to provide automatic
paralleling switchgear to power-generation facilities in approximately 120 small Alaskan
1 171 P.3d 159, 161-62, 167 (Alaska 2007). Parts II.E and II.F concern
events that took place after the facts discussed in Powercorp I .
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villages. Switchgear technology "matches power generation with demand on a
continuous, automatic basis." This practice helps provide more efficient power
generation.
Powercorp Alaska, LLC and Controlled Power, Inc. both develop and build
automatic paralleling switchgear technologies. A key component of automatic
paralleling switchgear is a supervisory controller, which responds to data sent by various
sensors. The supervisory controller sends instructions to engine controllers, which, in
turn, adjust power generators to optimum operating speed. The supervisory controller
bases its "instructions" on data received from the sensors and pre-programmed
parameters. The industry standard for supervisory controllers is a "programmable logic
controller" (PLC). Controlled Power has used this piece of equipment in at least two
RPSU projects. By contrast, Powercorp's supervisory controller "relies on a personal
computer rather than a PLC to derive the commands sent to the engine controllers."
Powercorp and Controlled Power both have tried to secure, and sometimes have secured,
contracts with the Energy Authority to install switchgear as part of the RPSU program.
A. Powercorp Switchgear Technology; Information Provided To Noonan
Powercorp asserts that a key component of its switchgear system is an
engine controller manufactured "under license" by Woodward, a company that makes
control equipment. This piece of technology, known as a GSS controller, receives
instructions from the supervisory controller and passes them on to the power generators.
The record suggests that the GSS controller is similar to the GCP-30 series controller,
which is manufactured by Woodward and sold throughout the world. In response to a
discovery request, Powercorp denied that the " 'Woodward engine controller, prepared
as a licensed product by Woodward to Powercorp' . . . is identical to a Woodward engine
controller that is available in the open market, except that it has a Powercorp faceplate."
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Controlled Power seems to have accepted this denial (at least for purposes of argument),
describing the product Powercorp licensed from Woodward as having "the same features
as the [GCP-]31 and [GCP-]32, but [with] more whistles and bells." Powercorp contends
that its "use of the Woodward GCP was much more extensive than any other control
system designer or manufacturer, who used it to control just one engine." Powercorp
asserts that it has developed special software programs to expand the capabilities of the
Woodward engine controller. It is not clear how many people - within Powercorp or
Woodward - are familiar with the special capabilities of the GSS controller or the
technical details of its development.
Powercorp alleges that it sent the Energy Authority a confidentiality
agreement on January 10, 2003. This agreement had not been signed by March 2003,
when Powercorp engineer Juergen Zimmerman met with Energy Authority employee
Kris Noonan. At this meeting, Zimmerman explained how the Woodward GCP Engine
Controller could be added to the Energy Authority system. In a document entitled
"affidavit" but which was not notarized, Zimmerman stated that he demonstrated to
Noonan how and where to wire the engine controller by drawing on a wiring diagram
that Noonan provided. Powercorp alleges that this information was disclosed to Noonan
with the understanding that it would not be communicated to others outside the Energy
Authority.2 This was, according to Powercorp, "the only incident of disclosure that there
is any evidence of."
The Energy Authority admits that in the spring of 2003, Noonan discussed
technical functions of the Powercorp system with Zimmerman, as part of what Noonan
perceived to be a Powercorp "sales pitch." The Energy Authority states that "Mr.
2 The Energy Authority signed a confidentiality agreement in August 2004.
It is not clear if this agreement was received before or after the March 2003 meeting.
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Noonan gave Mr. Zimmerman drawings of a switchgear system that had been designed
by [the Energy Authority], built by Controlled Power, and installed by [the Energy
Authority] in Tuluksak in order for Powercorp to consider whether, and to show [the
Energy Authority] how, Powercorp could provide a system meeting this design." In a
later affidavit, Noonan states, "[Zimmerman's] drawing may have included the
Woodward controller, but it was not of interest or concern to me how to wire the
Woodward GCP controller or any other Woodward controllers into [the Energy
Authority's] system - since [the Energy Authority] was very familiar with Woodward
controllers and this information was available from Woodward." In the same affidavit,
Noonan denies the allegation that Zimmerman showed Noonan "how to wire the
Woodward GCP Engine Controller into a schematic drawing of the [the Energy
Authority's] current system" and denies asking Zimmerman to do so.
B. Demonstration Sites: Stevens Village And Golovin
In November 2003, the Energy Authority approved a waiver for alternative
procurement methods. This waiver authorized the Energy Authority to award sole-
source (non-competitive) contracts for two RPSU program sites: Stevens Village and
Golovin. Through this non-competitive process, Powercorp and Controlled Power were
each awarded a contract to design and build fully automatic switchgear for one of the
villages. Powercorp alleges that the sole-source procurement of the Controlled Power
system was part of a plan to position Controlled Power to obtain other RPSU contracts.
The Energy Authority justified the sole-source procurement on the ground
that it would allow the Energy Authority to compare and evaluate different switchgear
3
systems. "While Controlled Power intended to install PLC switchgear, Powercorp
3 Powercorp I , 171 P.3d at 162, 168.
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would showcase its PC-based system, which would be the first of its kind in the United
States."4 The final specifications for the demonstration sites were developed after the
waiver authorizing sole-source contracts was approved. In August 2004, after the bid
specifications were issued, Powercorp sent the Energy Authority a second confidentiality
agreement, which was then signed by an Energy Authority representative.
C. Invitation To Bid REG 04-230 For Eight Other Villages Including
Kwigillingok
While installation at the demonstration sites was underway, the Energy
Authority arranged installation of switchgear at other villages. In 2004, the Energy
Authority solicited bids for the installation of automatic switchgear systems in eight
villages: Arctic Village, Hughes, Kongiganak, Koyukuk, Kwigillingok, Manokotak,
Nikolski, and Pedro Bay. The Energy Authority solicited bids through a competitive
process, issuing ITB [invitation to bid] No. REG-04-230. The winning bidder would
contract to install switchgear in all eight villages.
Bid specifications for ITB REG 04-230 were developed by engineering
consultant Brian Gray. The Energy Authority states that specifications are developed
through an "iterative" process. The parties agree that the REG 04-230 specifications
were based, in part, on the specifications used for the Stevens Village switchgear
installation. The specifications required use of an Allen-Bradley PLC supervisory
controller and Woodward GCP-31 engine controller. Powercorp asserts that this bid
specification disclosed to Controlled Power key information that Noonan had learned
about the Woodward component and how to connect it. Controlled Power asserts that
it had used a Woodward GCP-30 series engine controller in its switchgear systems as
4 Id. at 162.
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early as 2001. The Energy Authority has included Woodward engine controllers in
contract solicitations at least since 2004.
As the only responsive bidder, Controlled Power was awarded the eight-
village switchgear-installation contract described in ITB REG 04-230. Powercorp did
not submit a bid; it had "no intention" to submit a bid using PLC technology.5 In
Powercorp I , we affirmed the award of the eight-village contract to Controlled Power.6
In that case, Powercorp argued that the invitation to bid failed to provide critical
information and gave Controlled Power an unfair advantage.7 But we affirmed the
administrative hearing officer's conclusion that the invitation to bid provided sufficient
information to prepare a competitive bid and the officer's alternative conclusion that
"[e]ven if the information had been deficient, Powercorp would not have standing to
object, because it had no intention of submitting a bid using a PLC, and the general rule
is that only a prospective bidder has standing to protest the terms of a solicitation."8
D. Kwigillingok Power Plant Upgrade Project
The Native Village of Kwigillingok (Kwigillingok) is one of the villages
covered by the REG 04-230 invitation to bid. In June of 2002, representatives of the
Energy Authority and Kwigillingok signed a grant agreement concerning the
Kwigillingok Power Plant Upgrade Project. The agreement designates Kwigillingok as
the grantee and the Energy Authority as both the grantor and the grantee's agent.
5 Id. at 163.
6 Id. at 161.
7 Id. at 162.
8 Id. at 171.
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The agreement provided that upon receipt of funds from the Denali
Commission, the Energy Authority would grant Kwigillingok "funds for the construction
of the Project and performance of the Project work under the terms outlined in this
agreement." The original agreement provided that the Energy Authority would "grant
funds to pay for expenses incurred by the Grantee that are authorized under this
Agreement, in an amount not to exceed $210,000" and that performance would be
completed "no later than December 31, 2003." These terms appear to have been
amended, as the project took more time and became more expensive than the parties first
expected. Performance deadlines were extended until the end of 2005. It appears that
the Denali Commission agreed to contribute over $258,000 for the project.
The grant agreement assigned the Energy Authority primary responsibility
for managing the project:
The Authority will serve as the Grantee's agent for the design
and construction management of the Project, including, but
not limited to, where applicable, issuing Invitations to Bid
and selecting contractors. The Authority will be responsible
for all matters related to the Project design and construction,
including, but not limited to: approval of plans and
specifications; choices of scheduling, manpower, and
methods; procedures for administering the Project;
procurement of materials; insurance during construction;
disposition of surplus equipment; payment of all Project
billings; complying with all federal reporting requirements
(except as [otherwise] provided . . .); performance of final
project inspection; and issuance of a Notice of Project
Completion.
The parties disagree about the nature of the duties the Energy Authority owed to
Kwigillingok under this agreement. The complaint asserted that the Energy Authority
administers federal Denali Commission funds "under a trustee relationship for the benefit
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of . . . rural Alaska villages," including Kwigillingok. The Energy Authority rejects this
characterization.
The agreement assigns the grantee responsibility for other aspects of the
project, including securing permits and real property for the power generation site and
serving as a liaison between the Energy Authority and the local community. The parties
agree that the grantee Kwigillingok is responsible for future "operation and maintenance
costs" associated with the switchgear system. Under the grant agreement, Kwigillingok
is also responsible for "reviewing project documents and monitoring the Project work
to the extent necessary for Grantee to determine that the work is proceeding satisfactorily
. . . ." The agreement adds:
The Grantee will promptly raise with the Authority any
concerns or issues it may have regarding the Project, and if
those concerns or issues are not satisfactorily resolved will
promptly give written notice with a detailed description of the
concerns or issues to the Authority's contact[.]
As the only responsive bidder, Controlled Power was awarded the eight-
village switchgear-installation contract that covered Kwigillingok.9 Implementation of
the Kwigillingok project was delayed as a result of the protest appeal concerning ITB
REG 04-230. On September 13, 2004, the hearing officer issued a decision
recommending that Powercorp's protest appeal be denied and the Controlled Power
contract proceed as planned. Powercorp appealed this decision to the superior court and
later to this court; the contract was not stayed pending the outcome of those appeals. On
September 27, 2004, the installation contract was awarded to Controlled Power.
William Igkurak, Kwigillingok's facilities director, sent two letters to the
Energy Authority expressing his disapproval of the decision to award the contract to
9 Id. at 162.
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Controlled Power and his desire to have a "wind-ready" Powercorp switchgear system
installed. The first letter was sent on October 5, 2004, and the second letter was sent on
November 9, 2004. Mike Harper, the Energy Authority's deputy director, responded to
each letter within ten days. Harper's first letter stated that the switchgear-installation
contract with Controlled Power could be cancelled under certain circumstances (i.e. if
cancellation was in the best interests of the Energy Authority); that if the Kwigillingok
portion of the contract were canceled, the Energy Authority would be liable for
approximately $12,000 in terminations costs; and that cancellation of the contract would
not guarantee installation of the Powercorp system because procurement would be
governed by federal purchasing rules.
Igkurak's second letter stated, "We would like to place an immediate hold
on the Controlled Power control system, and proceed immediately with the procurement
process to substitute a Powercorp wind-ready system." Harper's reply stated that "[t]he
regulations do not allow [the Energy Authority] to enter into a sole-source (non-
competitively procured) contract with Powercorp," and that "[i]f the Native Village of
Kwigillingok is willing to pay all increased costs, the President or other authorized
representative of the Native Village of Kwigillingok (Grantee) should send us a letter
that so indicates." Al Ewing, a representative of the Denali Commission who was copied
on Mr. Igkurak's letters, sent a response on November 22, 2004. Ewing wrote that he
"cannot support the alteration or amendment of any portion of the financial assistance
award for [Kwigillingok's] power system upgrade. If the Native Village of Kwigillingok
is determined to alter the project, it must be prepared to accept responsibility for any
additional costs incurred . . . ." The Energy Authority asserts that Kwig Power Company
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(Kwig Power), a division of the Native Village of Kwigillingok, did not respond to
Harper's second letter or Ewing's letter; Kwig Power does not deny this.10
E. Invitation To Bid REG 05-067 For Another Five Villages
In the next stage of RPSU implementation, the Energy Authority invited
bids for the installation of switchgear in five more villages: Chuathbaluk, Crooked
Creek, Sleetmute, Stony River, and Takotna. This invitation to bid was labeled ITB No.
REG 05-067; it was not considered in Powercorp I . The REG 05-067 solicitation was
based in part on the REG 04-230 invitation to bid; the Energy Authority revised the
solicitation it had used for the earlier eight-village contract in an effort "to make
alternative [non-PLC] systems responsive." The new solicitation required each
prospective contractor to submit a bid identifying, as Option 1, how it would create a
switchgear system using an Allen-Bradley supervisory controller; alternatively, the
solicitation allowed the bidder to identify, as Option 2, how it would create a switchgear
system assuming certain equipment substitutions were allowed. The solicitation
provided that "[a]ward will be made on the lowest priced responsive and responsible bid
for either Option 1 or Option 2. [The Energy Authority] may decide to choose between
Option 1 or Option 2 if selection of either option would not change the ranking of the
bidder."
The Energy Authority and Powercorp interpreted this language differently.
Before the bidding period opened, Powercorp filed a protest with the Energy Authority.
When the protest was denied, Powercorp appealed and sought an administrative hearing.
The hearing officer explained:
10 The parties seem to agree that for the purposes of this appeal Kwig Power
Company and the Native Village of Kwigillingok are a single legal entity.
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As Powercorp understood the invitation, even if Powercorp's
bid for the Powercorp system was lower than any other bid,
including all of the Option No. 1 bids, the energy authority
would have had the discretion to reject the Powercorp system
and choose the lowest-priced Option 1 bid. For that reason,
and because it had no intention of supplying a system in
conformity with Option 1, Powercorp filed a protest and did
not submit a bid on either option. . . . [T]he energy
authority's intent was that the award would be made to the
bidder who made the lowest bid for either Option No. 1 or
Option No. 2 from among all of the bids submitted, and that
the authority retained discretion to choose that bidder's other
option, but only if that bidder's other option was also the
lowest bid for that option. Under the authority's
understanding, if Powercorp's Option No. 2 bid (the
Powercorp proprietary system) was the lowest of all bids on
either option, then the authority was obligated to award the
contract to Powercorp, and could only switch to Option No. 1
(the energy authority's system) if Powercorp's Option No. 1
bid was also the lowest bid on that option.
Powercorp also argued that it should not have been required to submit a bid on Option
No. 1 in order to submit a bid on Option No. 2. The Energy Authority argued that a bid
on Option No. 1 was required "in order to ensure that bidders fully understand our
system requirements and provide a system that offers similar performance and has
similar layout and construction." The hearing officer dismissed Powercorp's argument
as moot because Powercorp had not shown that, but for the Option 1 requirement, it
would have been the successful bidder.
Powercorp also argued that the Energy Authority had abused its discretion
by issuing an invitation to bid, seeking competitive bids that met certain design
standards, instead of issuing a request for proposals, seeking proposals that met
performance criteria. The hearing officer concluded that AS 36.30.100 provides the
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Energy Authority with discretion to proceed with competitive bidding in this case and
that the Authority had not abused its discretion.
F. Civil Claims
The underlying facts of this case were in dispute as early as June 2004
when Powercorp protested ITB REG 04-230 invitation to bid. This case was initiated
in superior court when Powercorp and Kwig Power alleged various civil claims against
Controlled Power, the Energy Authority, Energy Authority Executive Director Ron
Miller, Energy Authority employee Kris Noonan, and other defendants who are not
parties to this appeal. An initial complaint was filed on August 11, 2006, identifying the
defendants listed above and two plaintiffs, Powercorp and Harvey Paul, manager of the
Puvurnak Power Company of Kongiganak. Kwig Power was not identified as a plaintiff
in the original complaint, nor was the Native Village of Kwigillingok. On
December 18, 2006, the First Amended Complaint was filed, listing the same defendants.
The amended complaint listed Powercorp and Kwig Power Company as plaintiffs; it did
not list Harvey Paul, the Puvurnak Power Company, or the village of Kongiganak as
plaintiffs. On April 1, 2008, Powercorp and Kwig Power filed the Second Amendment
Complaint, listing all the same parties as the prior complaint.
In its Second Amended Complaint, Powercorp alleged that Kwig Power
was damaged as a result of the Energy Authority's refusal to install the Powercorp
control system (Count I). The complaint suggested that Kwig Power's damages consist
of future "operation and maintenance costs," noting that "the Powercorp system . . . had
been shown to save up to 50% of the fuel costs when installed in [similar] towns . . . ."
Kwig Power also asserted claims against Noonan for working to exclude the Powercorp
system from the Kwig Power procurement (Count III) and against Miller for failing to
ensure compliance with procurement laws and competitive bidding (Counts VI, VII).
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Powercorp asserted claims against Noonan for interference with prospective
economic advantage and misappropriation of a Powercorp trade secret under
AS 45.50.910 et seq. (Counts III, IV). Powercorp alleged that Controlled Power was
liable for unjust enrichment as a result of the trade-secret misappropriation and liable for
colluding with other defendants to inhibit competition (Counts V, VIII). Powercorp
further alleged that it was also damaged as a result of Miller's "negligent failures to act"
and Miller's improper decision to authorize sole-source procurement for the
demonstration project awarded to Controlled Power (Counts VI, VII).
The Energy Authority, Noonan, and Miller submitted an answer that largely
denied the plaintiffs' allegations and raised several affirmative defenses. Controlled
Power filed a similar answer. The defendants later moved either for dismissal under
Rule 12(b)(6) or for summary judgment.
On July 21, 2008, the superior court dismissed most of the claims against
the Energy Authority, Noonan, and Miller. The claims against Controlled Power were
dismissed in February 2009, following a hearing. The final claim, alleging trade-secret
misappropriation by Noonan, was dismissed at a hearing in September 2009. Controlled
Power and Noonan lodged proposed written findings and conclusions following the oral
rulings in which the superior court dismissed claims against them; the court signed these
orders in June 2009 and October 2009. In November 2009, the superior court entered
final judgment.
During the course of this multi-year litigation, the superior court made a
number of procedural rulings, which are addressed, as necessary, in Part IV.H.
Powercorp and Kwig Power appeal. Their appeal addresses the superior
court's decision to dismiss their claims in addition to several rulings concerning
discovery and timing.
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III. STANDARD OF REVIEW
Orders granting summary judgment are reviewed de novo.11 The
applicability and scope of official immunity present questions of law, which we review
de novo.12 The applicability of res judicata and collateral estoppel raises questions of
law, which we review de novo.13 We generally review procedural decisions of the
superior court for abuse of discretion.14 "We may affirm the superior court on any basis
supported by the record, even if that basis was not considered by the court below or
advanced by any party."15
IV. DISCUSSION
A. Collateral Estoppel
There is no dispute that the facts underlying this case overlap significantly
with the facts of Powercorp I . Issues resolved in prior litigation may limit the scope of
questions before us now, if collateral estoppel applies. Thus, we consider first whether
collateral estoppel applies so as to preclude our consideration of any issues raised by
Powercorp and Kwig Power.
The Energy Authority, Miller, and Noonan urge us to apply collateral
estoppel to affirm the superior court's dismissal of several claims. Powercorp and Kwig
11 Smith v. Stafford, 189 P.3d 1065, 1070 (Alaska 2008).
12 Weed v. Bachner Co., 230 P.3d 697, 699 (Alaska 2010).
13 Matanuska Elec. Ass'n v. Chugach Elec. Ass'n , 152 P.3d 460, 465 (Alaska
2007).
14 Prentzel v. State, Dep't of Pub. Safety, 169 P.3d 573, 592 (Alaska 2007)
(citing Balough v. Fairbanks N. Star Borough , 995 P.2d 245, 254 (Alaska 2000)).
15 Smith, 189 P.3d at 1070 (quoting Gilbert M. v. State, 139 P.3d 581, 586
(Alaska 2006)).
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Power contend that the collateral estoppel doctrine does not resolve the present dispute.
Collateral estoppel prohibits a party from re-litigating an issue of fact if the following
four factors are met:
(1) the party against whom the preclusion is employed was a
party to or in privity with a party to the first action; (2) the
issue precluded from relitigation is identical to the issue
decided in the first action; (3) the issue was resolved in the
first action by a final judgment on the merits; and (4) the
determination of the issue was essential to the final
judgment. [16]
But we have recognized that it is not always possible to resolve a case through collateral
estoppel, even if that case arises from the same underlying facts and theory as prior
litigation.17
The Energy Authority correctly argues that collateral estoppel can be
asserted defensively. It does not matter if Noonan, Miller, or Controlled Power were not
parties to Powercorp I . What matters is that Powercorp - "the party against whom the
preclusion is employed" - was a party to the prior action.18 The first element of
collateral estoppel is satisfied with respect to Powercorp's claims.
16 State, Dep't of Health & Soc. Servs., Office of Children's Servs. v. Doherty,
167 P.3d 64, 71 (Alaska 2007) (quoting Powers v. United Serv. Auto Ass'n , 6 P.3d 294,
297 (Alaska 2000)).
17 Latham v. Palin , 251 P.3d 341, 345 (Alaska 2011) (applying discretionary
immunity doctrine to claims not barred by collateral estoppel in Latham's third challenge
to legislation affecting his right to criminal-sentence appeal).
18 Smith, 189 P.3d at 1075 ("[Defendants] Stafford and Cox have met their
burden under the first element because [Plaintiff] Smith was a party to the original CINA
case.").
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But the other elements are less straightforward, and we agree with
Powercorp that the appellees cannot satisfy all the elements of collateral estoppel. "One
of the most difficult problems in the application of [collateral estoppel] is to delineate the
issue on which litigation is, or is not, foreclosed by the prior judgment."19 In isolating
which issues from Powercorp I are identical to issues in the present case, we consider
a number of factors, such as:
Is there a substantial overlap between the evidence or
argument to be advanced in the second proceeding and that
advanced in the first? Does the new evidence or argument
involve application of the same rule of law as that involved
in the prior proceeding? Could pretrial preparation and
discovery relating to the matter presented in the first action
reasonably be expected to have embraced the matter sought
to be presented in the second? How closely related are the
claims involved in the two proceedings?[20]
In Powercorp I , we considered "whether the Energy Authority showed 'illegal
favoritism' to Controlled Power . . . by 'working with it to design its system[,] then
specifying it in the [REG 04-230] ITB.' "21 The same invitation to bid is a subject of the
present case. And Powercorp has made a similar argument here: Powercorp has alleged
that Controlled Power colluded with Noonan in order to ensure that only Controlled
Power could successfully bid on the switchgear installation contract for the first eight
villages. However, the claims in this case go beyond the scope of the issues litigated in
19 RESTATEMENT (SECOND) OF JUDGMENTS § 27 cmt. c (1982).
20 Id. ; see also Matanuska Elec. Ass'n v. Chugach Elec. Ass'n , 152 P.3d 460,
468 (Alaska 2007) ("A comparison of the issues reveals that precisely the same questions
that would be considered . . . in adjudicating MEA's breach of contract claim were
resolved through the Commission's Order 26.").
21 Powercorp I , 171 P.3d 159, 164 (Alaska 2007).
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Powercorp I . Powercorp I dealt with an illegal favoritism claim based on a theory that
Controlled Power maintained undue influence on the procurement process.22 Here,
Powercorp brings a trade secret misappropriation claim, an accompanying unjust
enrichment claim against Controlled Power, and civil claims against several individuals.
Although the claims may have some similarities, the legal analysis differs for these new
claims. Moreover, the underlying facts are not identical. Powercorp I only addressed
the sole-source procurement at the two demonstration sites and the invitation to bid on
the eight villages. These new claims also incorporate the special issues of the
Kwillingok installation, the invitation to bid in five more villages, and disputes regarding
disclosure and secrecy. Because the scope of this suit is much broader than the issues
addressed in Powercorp I , collateral estoppel is not appropriate here.
In addition, the determinations in Powercorp I were not essential to a final
judgment on the merits, as required by the third and fourth elements of the collateral
estoppel doctrine. In Powercorp I , Powercorp waived the argument that the Energy
Authority bore the burden of proof on its chosen method of procurement.23 Moreover,
judgment against Powercorp in that case was justified on the alternative ground that
Powercorp lacked standing to protest the procurement.24 For these procedural reasons,
the determination that there was no "illegal favoritism" was not "essential" to the final
judgment; indeed, there was no such conclusive determination in Powercorp I.
Accordingly, Powercorp I was not a judgment on the merits that supports the application
of collateral estoppel in the present case. Thus, we turn to an analysis of each count of
the complaint and the affirmative defenses of absolute and qualified immunity.
22 Id. at 164.
23 Id. at 165.
24 Id.
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B. Official Immunity
Because the application of absolute or qualified immunity could bar several
of the appellants' claims,25 we address these defenses before analyzing each claim.
Miller and Noonan contend that claims against them are barred by official immunity.
Powercorp does not respond to these contentions in its brief, but Kwig Power does argue
that both Noonan and Miller are not entitled to immunity. Official immunity shields
government employees from defending themselves against claims arising out of
discretionary acts undertaken in the course of official duties.26 We have explained that
"a public employee . . . may not be held liable for acts done in line of official duty
involving a mistake in judgment or discretion, or because of erroneous interpretation and
application of law . . . ."27
The complaint in this case includes claims against Noonan for tortious
interference with prospective economic advantage and misappropriation of a trade secret;
it also includes claims against Miller for negligent supervision of Noonan and improper
approval of sole-source procurement. Powercorp and Kwig Power argued in the superior
court that approval of the sole-source procurement for the Stevens Village demonstration
25 The partial dissent would remand the immunity issue because it was "never
raised in the . . . trial court." However, remand is not necessary as we have held that
"[w]e may affirm the superior court on any basis supported by the record, even if that
basis was not considered by the court below or advanced by any party." Smith v.
Stafford, 189 P.3d 1065, 1070 (Alaska 2008) (quoting Gilbert M. v. State, 139 P.3d 581,
586 (Alaska 2006)).
26 Aspen Exploration Corp. v. Sheffield , 739 P.2d 150, 159-60 (Alaska 1987)
("As our prior decisions in this area indicate, we are of the opinion that some form of
immunity for public officials is necessary simply to insure that government continues to
function.").
27 Id. at 153 (quoting State v. Stanley, 506 P.2d 1284, 1292 (Alaska 1973)).
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site helped position Controlled Power to obtain other contracts because it allowed the
defendants to exchange information that was incorporated into the specifications for the
next two switchgear-installation contracts (REG 04-230 and REG 05-670). According
to the complaint, the invitations to bid for the next two contracts were "in effect" sole-
source procurements directed to Controlled Power. Powercorp and Kwig Power have
pointed to the following actions to support their claims: (1) Noonan's preparation of a
competitive-bid waiver for the demonstration sites; (2) Miller's approval of the
competitive-bid waiver; (3) communications between Noonan and the RPSU contractors;
(4) solicitation of REG 04-230 and REG 05-670 contracts through the invitation to bid
process (instead of requests for proposals); and (5) publishing contract specifications that
require an Allen-Bradley supervisory controller and Woodward engine controller. These
are all discretionary actions undertaken in the course of official duties; in the words of
the Energy Authority, these acts required the defendant officials to use discretion and
judgment and to consider various alternatives in "[d]etermining the particularized needs
of the Alaska Energy Authority RPSU communities and the specific types of upgrades
and technical equipment that are responsive to energy needs of Alaska's rural
communities." Because the claims against Noonan and Miller arise out of official
discretionary conduct, official immunity applies to these claims.
Now we must determine whether absolute or qualified immunity applies to
Miller's and Noonan's conduct. Qualified immunity shields government employees
from liability if their actions are done in good faith without malice or corruption.28
Certain government officials are entitled to the broader protections of absolute
28 Id. at 158 ("Under a rule of qualified immunity, a public official is shielded
from liability only when discretionary acts within the scope of the official's authority are
done in good faith and are not malicious or corrupt.").
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immunity;29 when such immunity applies, a court should dismiss claims without any
inquiry into the motive of the official defending the suit.30 In determining whether an
official is entitled to absolute or qualified immunity, we have considered three factors:
(1) the nature and importance of the function performed by the officer; (2) the likelihood
that the officer will be subjected to frequent accusations of wrongful motives and how
easily the officer could defend against such allegations; and (3) the availability to the
injured party of other remedies or other forms of relief.31 We have been reluctant to
"cloak" public officials with absolute immunity in all cases.32 Qualified immunity
applies unless a government official in a particular case presents adequate evidence to
show that the official, discretionary acts underlying the case warrant absolute
immunity.33
The Energy Authority and Noonan concede that Noonan is not entitled to
absolute immunity,34 but they argue that, as a high-level official, Miller is entitled to
29 See, e.g ., Whalen v. Hanley, 63 P.3d 254, 258 (Alaska 2003) ("Legislative
immunity, where it applies, is absolute, and not merely qualified.").
30 Aspen , 739 P.2d at 158 ("[Absolute] immunity applies whether the
allegedly tortious conduct was done maliciously, corruptly, or in bad faith.").
31 Id. at 159-60.
32 Id. at 158 ("[Q]ualified immunity is sufficient to protect the honest officer
who tries to do his duty.").
33 Id. at 159 ("We perceive no logical or compelling reason why a public
official should always be entitled to absolute immunity.").
34 This position is consistent with our holding in Weed v. Bachner Co., 230
P.3d 697, 704 (Alaska 2010) (concluding procurement official was entitled to qualified
immunity for allegedly tortious conduct arising out of bid evaluations).
-21- 6715
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absolute immunity.35 But Miller did not present specific evidence to satisfy the three-part
test.36 As Powercorp notes, relief available through the bid-protest process is limited;37
this counsels against the application of absolute immunity. Although the procurement
of switchgear equipment appears to play an important role in improving rural power
generation, this is insufficient to tip the balance in favor of absolute immunity. We
conclude that qualified immunity applies to both Miller's and Noonan's conduct in this
case; thus, the appellants must present evidence of bad faith, malice, corruption, or other
outrageous conduct in order for the claims against Miller and Noonan to survive
summary judgment.38
To the extent that Powercorp and Kwig Power alleged bad faith on the part
of Miller, that claim was unsupported by the record and consisted of mere accusations.
They point to no record evidence that would support bad faith on Miller's part. As noted
above, Powercorp did not respond at all on the immunity issue in its reply brief in this
court. Kwig Power did address the issue, but, as to Miller, did no more than advance
broad policy arguments concerning the interests of Alaska's villages in obtaining state-
35 Smith v. Stafford, 189 P.3d 1065, 1073 ("[G]enerally 'absolute immunity
applies only to judges, legislators, and the highest executive officers of various levels of
government.' ").
36 Weed, 230 P.3d at 701 ("Although it might sound intuitively correct that
qualified immunity would increase the likelihood of tort suits in this context, as the
officials argue, intuition alone is not sufficient: In evaluating this factor in the past, we
have required empirical evidence that frequent suits are likely.").
37 AS 36.30.585(c) ("[I]f a protest is sustained in whole or part, the protester's
damages are limited to reasonable bid or proposal preparation costs.").
38 Aspen , 739 P.2d at 158 (quoting W. PROSSER , HANDBOOK OF THE LAW OF
TORTS § 132 at 989 (4th ed. 1971) ("[O]fficial immunity should not become a cloak for
malicious, corrupt, and otherwise outrageous conduct on the part of those guilty of
intentional abuse of power . . . .")).
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of-the-art control systems. Neither appellant claimed that the issue was not raised below
or that our consideration of this alternative ground for affirmance - raised in detail by
appellees the Energy Authority, Miller, and Noonan - would be unfair to them. Under
these circumstances, we conclude that official immunity provides an alternative basis to
uphold the superior court's dismissal of Counts VI and VII against Miller.
With respect to Noonan, the allegations of Powercorp and Kwig Power are
more robust. They allege that Noonan engaged in "intentional wrongdoing" to advance
his own "financial and career interests." They further suggest that Noonan, in bad faith,
destroyed documents related to this litigation. Powercorp also alleges in its reply brief
that Noonan "pressur[ed] or threaten[ed] Powercorp to induce it to sell or make available
. . . its control system." With respect to Noonan, the appellants have produced sufficient
evidence of bad faith to survive summary judgment. Thus, we address the merits of the
claims against Noonan - Counts III and IV - below.
C. It Was Not Error For The Superior Court To Dismiss Count I - Kwig
Power's Claim That The Energy Authority Caused It Injury.
Kwig Power alleges that it was harmed as a result of the Energy
Authority's refusal to install the Powercorp control system. It suggests that damages
consist of future "operation and maintenance costs" and that "the Powercorp system . . .
had been shown to save up to 50% of the fuel costs when installed in [similar] towns
. . . ." Kwig Power does not specify what kind of duty the Energy Authority allegedly
breached, but its pleadings and briefing implicate several areas of law including contract
obligations, tort duties, and fiduciary relationships.
The Energy Authority argues that Kwig Power's claim is barred by estoppel
or waiver. It maintains that by not responding to the Energy Authority's letter of
November 19, 2004, Kwig Power led the Energy Authority to believe that it would not
protest the installation of the Controlled Power system and forfeited any claim to that
-23- 6715
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effect. The Energy Authority further argues that even if Kwig Power had presented a
viable breach of contract claim, it would be "barred because the Village of Kwigillingok
breached its obligations under the grant agreement." The Energy Authority rejects Kwig
Power's characterization of the Energy Authority as a trustee.
Waiver, or the intentional relinquishment of a known right, can be
accomplished by an express statement or by conduct that is "inconsistent with any other
intention than a waiver, or where neglect to insist upon the right results in prejudice to
another party."39
In this case, the grant agreement describes the Energy Authority as Kwig
Power's "agent for the design and construction management of the Project, including,
but not limited to, where applicable, issuing Invitations to Bid and selecting contractors."
It assigns to the Energy Authority "responsib[ility] for all matters related to the Project
design and construction, including but not limited to: approval of plans and
specifications; . . . procedures for administering the Project; [and] procurement of
materials." These terms explicitly authorized the Energy Authority to solicit bids for the
installation of switchgear in Kwigillingok, to enter a contract with the sole responsive
bidder, and to finalize specifications for the installation of that switchgear. The contract
sets out the understanding that the Energy Authority will comply with procurement laws
in its efforts to solicit bids and secure a switchgear contract. Although Kwig Power
expressed to the Energy Authority some reservations about the contracting process, it did
so only after the contract was awarded to Controlled Power and never responded to the
Energy Authority's November 19 letter about terminating the Controlled Power contract.
39 Carr-Gottstein Foods Co. v. Wasilla, LLC, 182 P.3d 1131, 1136 (Alaska
2008) (quoting Milne v. Anderson , 576 P.2d 109, 112 (Alaska 1978)).
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Under these circumstances, we agree with the Energy Authority that Kwig
Power waived its right to protest the installation of Controlled Power switchgear. It
forfeited this claim by leading the Energy Authority to believe that it acceded to the
installation.
Our position is not changed by Kwig Power's assertion in the complaint
that the Energy Authority administers federal grant funds "under a trustee relationship"
for the benefit of Kwig Power and other villages. Kwig Power waived this argument by
failing to adequately brief it.40 We affirm the superior court's decision to dismiss
Count I.
D. It Was Not Error For The Superior Court To Dismiss That Part Of
Count III Setting Out Kwig Power's Claim Against Noonan For
Working To Exclude The Powercorp System From The Kwigillingok
Procurement.
Kwig Power asserts separate claims against Noonan for working to exclude
the Powercorp system from the Kwigillingok procurement (Count III). The Energy
Authority and Noonan defend the superior court's decision to dismiss this claim on
various grounds, including waiver, statute of limitations, immunity, and other grounds.
Here, too, we conclude that the claim is barred by waiver. As discussed in Part IV.B, the
behavior of Kwig Power led the Energy Authority and its employees to believe that
Kwig Power acceded to the installation of a Controlled Power system. We affirm the
superior court's dismissal of this claim.
40 See Hidden Heights Assisted Living, Inc. v. State, Dep't of Health & Soc.
Servs., Div. of Health Care Servs., 222 P.3d 258, 270 n.60 (Alaska 2009) (holding an
argument to be "waived for inadequate briefing and failure to raise the issue in the
statement of points on appeal"); Adamson v. Univ. of Alaska , 819 P.2d 886, 889 n.3
(Alaska 1991) ("[W]here a point is given only a cursory statement in the argument
portion of a brief, the point will not be considered on appeal.").
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E. It Was Not Error For The Superior Court To Dismiss That Part Of
Count III Setting Out Powercorp's Claim Against Noonan For
Intentional Interference With Prospective Economic Advantage.
Powercorp asserts a claim against Noonan for intentional interference with
prospective economic advantage. To establish a claim of intentional interference with
prospective economic advantage, the plaintiff must provide evidence of:
(1) the existence of a prospective business relationship
between the plaintiff and a third party; (2) knowledge by the
defendant of the prospective relationship, and intent to
prevent its fruition; (3) conduct by the defendant interfering
with the relationship; (4) failure of the prospective
relationship to culminate in pecuniary benefit to the plaintiff;
(5) causation of the plaintiff's damages by the defendant's
conduct; and (6) absence of privilege or justification for the
defendant's action.[41]
Powercorp's intentional interference claim is premised on the notion that Powercorp has
an existing prospective business relationship with the Energy Authority, but it has not met
this threshold requirement. Procurement laws entitle Powercorp to a fair bidding process
in which no particular contractor is favored from the outset. Submitting a bid entitles the
bidder to "fair and honest consideration."42 Submitting a bid does not provide any one
bidder with a contract expectancy superior to the rights of other bidders.43 In this case,
Powercorp did not submit a bid; the bid-protest hearing officer concluded that
41 J & S Servs. v. Tomter , 139 P.3d 544, 551 (Alaska 2006).
42 King v. Alaska State Hous. Auth ., 633 P.2d 256, 261 (Alaska 1981) ("[A]n
agency, in soliciting bids, implicitly contracts to give those bids fair and honest
consideration.").
43 Id. at 260 ("[T]he distinction between appellants and any other disappointed
bidders amounts to nothing more than the right to the award of the contract in the unlikely
event of an ASHA decision that the merits of their proposal were exactly equal to those
of the best of the competing proposals.").
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"Powercorp could have responded, substituting an Allen-Bradley PLC controller for its
own controller, but it chose not to because . . . it is not interested in building systems
using other controllers." Powercorp has not produced other evidence to contradict the
hearing officer's conclusion. Powercorp has not shown that but for Noonan's
interference, it expected to enter a contract with the Energy Authority from which it
would derive economic benefits. The superior court did not err in dismissing Count III.
F. It Was Not Error To Dismiss Count IV - Powercorp's Claim That
Noonan Misappropriated A Trade Secret.
Count IV of the complaint alleges that Noonan misappropriated a
Powercorp trade secret and that Controlled Power was unjustly enriched as a result. The
parties agree on the outlines of the governing law: A trade secret misappropriation claim
cannot be established unless the plaintiff had a trade secret that was communicated to the
defendant in circumstances giving rise to a duty of secrecy.44 Alaska's Uniform Trade
Secrets Act defines the relevant terms.45
1. Trade secret
Alaska Statute 45.50.940(3) provides the following two-part definition for
the term "trade secret":
"[T]rade secret" means information that
(A) derives independent economic value, actual or potential,
from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use; and
44 See, e.g., Utah Med. Prods., Inc. v. Clinical Innovations Assocs., 79 F.
Supp. 2d 1290, 1311 (D. Utah 1999) (citing Water & Energy Sys. Tech., Inc. v. Keil, 974
P.2d 821, 822 (Utah 1999)).
45 See AS 45.50.930 (incorporating by reference AS 45.50.910 -.945).
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(B) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.[46]
The first part of this definition asks if the alleged trade secret is something worthy of
being kept secret, and the second part of the definition asks if the alleged trade secret was
actually kept secret to a reasonable degree. The following six factors have been used to
determine whether information constitutes a trade secret under Missouri's trade secret
statute, which adopts the same two-part definition found in AS 45.50.940(3):
(1) the extent to which the information is known outside of
[the] business; (2) the extent to which it is known by
employees and others involved in [the] business; (3) the
extent of measures taken by [the business] to guard the
secrecy of the information; (4) the value of the information to
[the business] and to [its] competitors; (5) the amount of
effort or money expended by [the business] in developing the
information; (6) the ease or difficulty with which the
information could be properly acquired or duplicated by
others.[47]
Each factor is relevant to the inquiry in this case insofar as it helps determine whether the
disputed information was marked with indicia of secrecy at the time it was disclosed to
46 See also State, Dep't of Natural Res. v. Arctic Slope Reg'l Corp., 834 P.2d
134, 137-38 (Alaska 1991) (considering definition of "trade secret" in determining
whether appellee had a "property interest" as part of unconstitutional-taking analysis and
concluding that DNR did not effect an unconstitutional taking of the appellee's
proprietary well-drilling data); RESTATEMENT (FIRST) OF TORTS § 757 cmt. b (1939) ("A
trade secret may consist of any formula, pattern, device or compilation of information
which is used in one's business, and which gives him an opportunity to obtain an
advantage over competitors who do not know or use it.").
47 Secure Energy, Inc. v. Coal Synthetics, LLC, 708 F. Supp. 2d 923, 926
(E.D. Mo. 2010) (quoting Cerner Corp. v. Visicu, Inc., 667 F. Supp. 2d 1062, 1077-78
(W.D. Mo. 2009) (interpreting MO . REV . STAT . 417.453)). These factors are also
mentioned in RESTATEMENT (FIRST) OF TORTS § 757 (1939).
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Noonan. "The status of information claimed as a trade secret must be ascertained
through a comparative evaluation of all the relevant factors, including the value, secrecy,
and definiteness of the information as well as the nature of the defendant's
misconduct."48
Powercorp identifies the subject of its alleged trade secret most clearly when
it explains in its reply brief:
The existence of the Woodward Controller is not Powercorp's
trade secret. It is Powercorp's custom program modifications
and how to wire it into the system that enabled it to replace
the functions of several other components, get the gensets
"talking to each other" and collect data which would be
accessible via remote monitoring. This is Powercorp's use of
its version of its highly modified Woodward Engine
controller.
(Emphasis added.) At oral argument, Powercorp specified that one part of its secret
involves leaving vacant the X4 and X5 terminals of the Woodward controller. The trade
secret issue is also addressed in affidavits (some un-notarized) and depositions of some
Powercorp employees, as well as Powercorp's responses to discovery. The question
before us now is whether Powercorp exercised reasonable efforts to protect its allegedly
unique methods of programming and wiring. This is ordinarily a question of fact,
although, in some extreme cases, where the plaintiff could not have expected its
information to remain secret, this may be resolved as a matter of law.49
48 RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 39 cmt. d (1995).
49 Fail-Safe LLC v. A.O. Smith Corp. , 744 F. Supp. 2d 831, 857 (E.D. Wis.
2010) (citing Learning Curve Toys, Inc. v. PlayWood Toys, Inc. , 342 F.3d 714, 725-26
(7th Cir. 2003); Rockwell Graphic Sys., Inc. v. DEV Indus., Inc. , 925 F.2d 174, 179-80
(7th Cir. 1991); Tax Track Sys. Corp. v. New Investor World, Inc., 478 F.3d 783, 787 (7th
Cir. 2007)).
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Powercorp has produced some evidence about the value of its wiring and
programming information to its business and to its competitors, the amount of effort or
money expended in developing the programming and wiring information, and how
difficult it would be for others to properly acquire or duplicate the same information and
methods. Powercorp has asserted that it "developed [its] version of the Woodward
GCP-31 (known as the GSS) controller over years of working with Woodward's
predecessor, Leonhard-Reglenau," and that "nobody but Powercorp and Woodward
knew what expanded functions it could do." These assertions are roughly supported by
the affidavit of Gavin Bates, which alleges that during the development of the GSS
controller, Powercorp and Woodward shared "the understanding that the features we,
Powercorp, have paid for will not be incorporated in the version available to the general
public."
By sending its confidentiality agreement to the Energy Authority,
Powercorp made an effort to keep its information secret.50 The fact that Zimmerman
disclosed key information to Noonan in March, several months before the agreement was
signed, does not necessarily mean that Powercorp acted unreasonably in its attempt to
keep the information secret. Taking the evidence in the light most favorable to
Powercorp, we assume that Powercorp believed that Noonan was aware of the
information's sensitive nature by virtue of the parties' relationship and in light of
Powercorp's sending the confidentiality agreement to the Energy Authority. In his
affidavit, Zimmerman asserts that he believed Noonan "was asking for particulars on how
50 Id. ( "[I]n determining whether a claimant took reasonable steps to protect
information as a trade secret, 'the presence or absence of confidentiality agreements or
other means to convey confidentiality . . . has a significant and predictable bearing on the
outcome of the case.' ") (quoting CMBB LLC v. Lockwood Mfg., 628 F. Supp. 2d 881,
885 (N.D. Ill. 2009)).
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the Powercorp system worked because he was evaluating our system for purchase."
Although Zimmerman did not secure Noonan's signature on the agreement at the meeting,
and there is no indication that Zimmerman mentioned confidentiality to Noonan before
their discussion, it was reasonable for Zimmerman to respond openly to Noonan's
questions, considering that the Energy Authority planned to evaluate the Powercorp
system and had to follow strict protocols to maintain impartiality during the procurement
process. The nature of the government-bidder relationship counsels in favor of
Powercorp's position that the information was a trade secret.51
In light of this evidence, and despite some reservations,52 we conclude under
51 See Wilkes v. Pioneer Am. Ins. Co. of Fort Worth, 383 F. Supp. 1135, 1141
(D.S.C. 1974) (identifying "a limited degree of confidentiality [that is] inherent in
dealings with [government] officials"); but see Eli Lilly & Co. v. Envtl. Prot. Agency, 615
F. Supp. 811, 820 (D.C. Ind. 1985) (concluding that parties who submitted trade secret
pesticide data to the Environmental Protection Agency prior to the enactment of a law
that guaranteed confidentiality could not expect such confidentiality).
52 There are two strong arguments that counsel against the conclusion
Powercorp has produced sufficient evidence of reasonable efforts to maintain secrecy.
First, there is no indication that Powercorp did anything between May 2004 and
September 2004 to remind the Energy Authority of the secret nature of Powercorp's
information. May 2004 is when the Energy Authority released the bid specifications for
REG 04-230. According to Powercorp's own theory of the case, the release of these bid
specifications should have alerted Powercorp to the possibility that secret information
had been disclosed. But there is no indication that Powercorp contacted the Energy
Authority to limit the spread of this information.
Second, Powercorp has left significant gaps in its development of the
evidence in this case. Powercorp has not put into the record evidence of its general
information-security practices, including information about the number of employees
who have access to the Woodward programming/wiring information, whether that
information is available to a limited category of employees, or any regular protocols -
such as confidentiality agreements, passwords, and locked premises - that might help
(continued...)
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Alaska's generous summary judgment standard that there is a genuine issue of fact about
the existence of a trade secret. There is sufficient evidence in the record to support
Powercorp's position that it derived economic value from a method of programming or
wiring a Woodward controller, which was not readily ascertainable by others.
However, we reject the argument that simply using a Woodward controller
constitutes a trade secret. It is undisputed that some Woodward controllers, the GCP-30
series, are "sold and distributed throughout the world." The superior court properly
summarized the evidence in the record when it stated that Woodward "has no problem
with discussing . . . how to use [these] devices and how to work with and modify them
to accomplish the purpose that the consumer is looking for." And Woodward makes
available at least some information about how to wire its controllers. Powercorp argues
that certain key pieces of information - such as the idea to leave the X4 and X5 terminals
52 (...continued)
to limit access to this information. Evidence of these internal information-security
practices commonly appears in courts' evaluations of trade secret claims. See, e.g.,
Cerner Corp., 667 F. Supp. 2d at 1077-78 ("Visicu required [non-disclosure agreements]
and labeled the documents as confidential and proprietary information. Additionally,
while Visicu made sales presentations for its eICU solution and attended trade shows,
Visicu did not make handouts available absent a [non-disclosure agreement]."); Crane
Helicopter Servs., Inc. v. United States , 56 Fed. Cl. 313, 325-26 (Fed. Cl. 2003) ("The list
of precautions taken by Bell to protect its trade secret information, as described in Mr.
McCrary's unrefuted affidavit, is sufficient to meet this requirement."); Reingold v.
Swiftships, Inc., 126 F.3d 645, 650 (5th Cir. 1997) ("[D]uring his ownership of the mold
Reingold maintained exclusive control and did not disclose it to or allow its use by
anyone prior to leasing it to Swiftships."). This information relates directly to the first
three factors identified above. Although the parties seem to agree that the GSS controller
was manufactured under license from Woodward, Powercorp has not produced the
licensing agreement or other evidence of Woodward's specific obligations under the
agreement that would support the limited availability of this information. Powercorp is
not required to produce evidence of all six factors to survive summary judgment, but the
gaps in its evidence are apparent.
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vacant - were not generally available. The idea to leave certain terminals vacant and
related programming methods may be relatively unknown. It is also reasonable to infer
that any information known to Woodward as a result of its GSS licensing agreement with
Powercorp was generally unknown. But it is unreasonable to infer from the record that
the idea to use a Woodward controller was not ascertainable by others. Insofar as
Powercorp alleges that its trade secret covers the general use of, or access to, a Woodward
controller, its trade-secret claim fails.
2. Misappropriation
For Powercorp's claim to survive, Powercorp must also produce evidence
of misappropriation.53 The Trade Secret Act defines "misappropriation" as follows:
(A) 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; or
(B) disclosure or use of a trade secret of another without
express or implied consent by a person who
(i) used improper means to acquire knowledge of the trade
secret; or
(ii) at the time of disclosure or use, knew or had reason to
know that knowledge of the trade secret was derived from or
through a person who had utilized improper means to acquire
it or who owed a duty to the person seeking relief to maintain
its secrecy or limit its use, or was acquired under
circumstances giving rise to a duty to maintain its secrecy or
limit its use; or
(iii) before a material change of the person's position, knew or
53 See Utah Med. Prods., Inc. v. Clinical Innovations Assocs., 79 F. Supp. 2d
1290, 1311 (D. Utah 1999) (internal citations omitted).
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had reason to know that it was a trade secret and that
knowledge of it had been acquired by accident or mistake[.][54]
The statute provides that " 'improper means' includes theft, bribery, misrepresentation,
breach or inducement of a breach of a duty to maintain secrecy, or espionage through
electronic or other means."55
Powercorp has asserted that the bid specification for ITB REG 04-230
disclosed to Controlled Power key information that Noonan had learned about the
Woodward component and how to connect it. But there is no indication in the record that
this bid specification contained secret information. The bid specification required use of
a Woodward controller. Even if Noonan were responsible for releasing this information
and the bid specification provided Controlled Power with the idea to use the GCP-31, the
communication of that idea does not violate the trade secrets statute.
Powercorp's main argument under the "misappropriation" prong seems to
be that it is inconceivable that Controlled Power would have developed remote
monitoring capability without improper access to Powercorp's secret information, which
it must have obtained through Noonan. At oral argument before the superior court,
Powercorp emphasized that it took years to develop its unique wiring and programming
method for use with the Woodward GSS controller. Powercorp contrasted this with the
relatively short period in which Controlled Power learned to wire and program a GCP
controller for the RPSU contract. Controlled Power admits that its engineers figured out
how to wire a Woodward GCP controller in response to the Energy Authority's
specification of that device for the REG 04-230 contract. But the fact that Controlled
Power was able to use a Woodward controller does not compel the conclusion that
54 AS 45.50.940(2).
55 AS 45.50.940(1).
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Noonan made an improper disclosure to Controlled Power in this case. The superior
court properly declined to make this inference.56
Powercorp has not presented sufficient evidence to support the inference that
Noonan acquired information through "improper means" or that Noonan "knew or should
have known" that he improperly obtained a secret. According to Powercorp's own
allegations, it freely disclosed information to Noonan at a March 2003 meeting. Thus,
there is no indication that Noonan acquired the information by improper means. Absent
evidence that Noonan acquired the information by improper means, Powercorp must
provide evidence to support the inference that Noonan used or disclosed information that
he either knew or should have known was secret. The closest evidence to which
Powercorp might point is the confidentiality agreement that was sent to the Energy
Authority in January 2003. But it is not clear from the record that Noonan had actually
seen this agreement. Nor is there any evidence that Zimmerman put Noonan on notice that
they would discuss secret Powercorp methods. And there is no evidence that Noonan
disclosed wiring or programming information to Controlled Power or any other party.
Because Powercorp has not supported its allegation that Noonan engaged in
misappropriation, we affirm the superior court's decision to dismiss Count IV.
56 See Kewanee Oil v. Bicron Corp., 416 U.S. 470, 476 (1974) ("A trade
secret law . . . does not offer protection against discovery by fair and honest means, such
as by independent invention, accidental disclosure, or by so-called reverse engineering,
that is by starting with the known product and working backward to divine the process
which aided in its development or manufacture."); see also Burns v. Erving , 810 F. Supp.
2d 1167, 1172 (D. Nev. 2011) (in rejecting plaintiffs' misappropriation of ideas claim,
court emphasized plaintiffs offered no evidence, other than their own disbelief, that
defendant took or used their idea in any way rather than creating the relevant marketing
campaign on his own).
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G. It Was Not Error To Dismiss Count V - Powercorp's Claim That
Controlled Power Misappropriated A Trade Secret.
Count V of the complaint alleges that Controlled Power misappropriated a
Powercorp trade secret and that Controlled Power was unjustly enriched as a result. For
this claim to survive summary judgment, Powercorp must produce either evidence of
"improper acquisition" under AS 45.50.940(2)(B)(i) or evidence that Controlled Power
"knew or had reason to know" that it had received and used a trade secret under
AS 45.50.940(2). This evidence is not before us. There is no indication that Controlled
Power adopted Powercorp's unique wiring or programming method or used this
information in any way. Powercorp has not produced evidence that would rebut the
assertions of Controlled Power employees that they were able to wire the GCP controller
based on information they obtained from Woodward. While Woodward's willingness to
disclose some information about its GCP controllers does not undercut the conclusion that
Powercorp's method of wiring and programming constituted a trade secret, the availability
of this information is at odds with Powercorp's argument that Controlled Power could not
have devised a legitimate wiring method within several months. It is not reasonable to
infer that Controlled Power obtained Powercorp's secret wiring and programming
information through unlawful misappropriation. We affirm the superior court's decision
to dismiss Count V.
H. It Was Not Error To Dismiss Count VIII - Powercorp's Claim That
Controlled Power Illegally Colluded With Gray And Noonan.
Count VIII alleges that Controlled Power colluded with Noonan and others
to increase costs and obstacles to other prospective bidders. Powercorp alleged that, as
a result of this collusion, the invitation to bid included "a short delivery requirement" with
which only Controlled Power could comply and that Controlled Power was able to
comply with this requirement only as a result of its contacts with defendants Noonan and
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Gray. The complaint also alleges that only Controlled Power "was able to reduce the
performance bond requirement."
Powercorp mentions Count VIII only once in its opening brief. Count VIII
is not clearly addressed in Powercorp's statement of the issues or statement of points on
appeal. And Powercorp's brief does not directly address the short delivery or
performance-bond requirements mentioned in this part of the complaint. We are unable
to discern, and thus unable to address, an argument here. We conclude that Powercorp has
waived this argument.57
Powercorp also fails to explain how alleged deficiencies in the bid
specification could result in any liability for Controlled Power. If this is a claim of tortious
interference, it fails for the reasons discussed in Part IV.E. To the extent that the
allegations in Count VIII advance a different argument, we consider such argument
waived.58
I. No Procedural Ruling Of The Superior Court's Constitutes Abuse Of
Discretion.
Powercorp also raises the following points on appeal: (1) The superior court
erred in precluding Powercorp from deposing Energy Authority employees Lenny Landis
and Bob Havemeister on Powercorp's trade secret claim against Noonan or any other
issue; (2) the superior court erred in granting Controlled Power summary judgment on the
grounds of failure to identify a trade secret when Powercorp had moved for a protective
order to prevent further unauthorized disclosure of a trade secret; and (3) the superior
court erred in denying Powercorp's motion to compel Controlled Power to produce
correspondence between it and the other defendants. Each of these arguments fails.
57 See supra note 40.
58 Id.
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As to the first argument, Alaska Civil Rule 26(b)(1) provides:
Parties may obtain discovery regarding any matter, not
privileged which is relevant to the subject matter involved in
the pending action, whether it relates to the claim or defense
of the party seeking discovery or to the claim or defense of
any other party . . . . The information sought need not be
admissible at the trial if the information sought appears
reasonably calculated to lead to the discovery of admissible
evidence.
This standard authorizes the parties to seek substantial amounts of information, but it
requires parties to act reasonably. Whether information is "reasonably calculated to lead
to the discovery of admissible evidence" depends on the circumstances of the case, and
this question is entrusted to the discretion of the trial judge:59
Under Civil Rule 26(b)(2), the superior court may limit the use
of discovery methods such as depositions if it determines that
the burden or expense of the proposed discovery outweighs its
likely benefit, taking into account the needs of the case, the
amount in controversy, the parties' resources, the importance
of the issues at stake in the litigation, and the importance of
the proposed discovery in resolving the issues.[60]
The underlying facts of this case were in dispute as early as June 2004 when
Powercorp protested the REG 04-230 invitation to bid. Before the complaint was filed
in this case, Landis, Havemeister, and Noonan had testified in administrative proceedings
concerning Powercorp's REG 04-230 and REG 05-670 bid protests. The complaint in
this case was filed in August 2006. The first motion seeking to dismiss claims was filed
in February 2008. Motions seeking to dismiss the other claims followed.
59 Lee v. State , 141 P.3d 342, 347 (Alaska 2006).
60 Prentzel v. State, Dep't of Pub. Safety , 169 P.3d 573, 594 (Alaska 2007)
(citing Alaska R. Civ. P. 26(b)(2)(A)(iii)).
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Controlled Power filed its motion for summary judgment in March 2008.
In November, following an extension, Powercorp opposed the motion for summary
judgment and sought a protective order. Controlled Power filed its reply in December,
making the motion ripe for resolution by the superior court, which held oral argument in
February 2009. In the 11 months before the court ruled on the motion for summary
judgment, Powercorp was engaged in a series of discovery disputes with Controlled
Power. At the February hearing, Powercorp argued that it should not be required to go
to Controlled Power headquarters to examine voluminous discovery documents, which
were the subject of earlier orders to compel. At the hearing, the court granted Controlled
Power's motion for summary judgment and rejected, as moot, Powercorp's argument
about the voluminous discovery. The court later explained that asking Powercorp to bear
the costs of copying was reasonable. This discovery ruling was not an abuse of
discretion.
Although it dismissed the claims against Controlled Power, the court granted
Powercorp's protective order at the February hearing. Granting Controlled Power's
motion for summary judgment on the same day as the protective order was not an abuse
of discretion in light of that fact that the motion for a protective order was filed well after
the issues addressed on summary judgment had become evident.
After the February 2009 hearing, the only remaining claim alleged trade-
secret misappropriation by Noonan. Then, between March 19 and 25, 2009, Powercorp
apparently contacted the Energy Authority about deposing Noonan, Havemeister, and
Landis. On March 26, the Energy Authority asked Powercorp to explain the relevance
of the Havemeister and Landis depositions to the remaining claim. On the same day,
Powercorp provided barely two weeks notice that it planned to depose Havemeister and
Landis on April 7, 2009. Asserting that Powercorp did not respond to its request for an
explanation, the Energy Authority then sought a protective order to prevent the Landis
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and Havemeister depositions from going forward and made a request for expedited
consideration.
On April 1, 2009, the court issued an order, which stated:
The Court . . . does not currently see a reason for the plaintiff,
Powercorp's scheduling such short fused depositions. If
Powercorp has compelling reasons for conducting the
depositions of the [Energy Authority] employees on the
proposed schedule, it can state those reasons and provide its
responses to the underlying motion by the close of business
Friday, April 3, 2009. If there is no need to conduct the
depositions on April 7, 2009, the plaintiff can respond to the
underlying motion in due course.
The parties continued to exchange correspondence on the issue of Landis's deposition in
late August 2009, when the Energy Authority stated that Landis would be available for
a deposition in September. In the meantime, Powercorp's opposition to Noonan's motion
for summary judgment had come due. The superior court had granted an extension on
the opposition in April. But it denied a motion to extend the deadline further under Rule
56(f). Powercorp argued that by denying the second extension, the court "effectively
granted the motion to quash the depositions." Powercorp claims that without Landis's
deposition, Noonan would "have his scapegoat"; by this, Powercorp seems to mean that
Noonan could blame Landis for any errors in the procurement process. The final claim,
alleging trade secret misappropriation against Noonan, was dismissed at a hearing in
September 2009, almost three years after the complaint was filed. The court's decision
to dismiss this claim - after three years of litigation and several extensions - was not
premature, and it was not an abuse of discretion.
V. CONCLUSION
For the reasons discussed above, we AFFIRM the decision of the superior
court.
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WINFREE, Justice, dissenting in part.
I agree with the court's conclusion to reverse the trial court's summary
judgment ruling to the extent it was based on the doctrines of collateral estoppel and res
judicata. But I am unable to agree with the court's conclusion to affirm at least a portion
of that ruling on the alternative ground of qualified immunity for Ron Miller. Official
immunity was never raised in the summary judgment motion practice in the trial court,
no party had reason to submit evidence on Miller's bad faith during that motion practice,
the trial court did not consider or rule on qualified immunity for Miller in that motion
practice, and there was no reason to appeal from a qualified immunity decision not made
by the trial court. I therefore find procedural unfairness in the court's conclusion that
Miller's alleged bad faith is "unsupported by the record [and] waived due to inadequate
briefing." I would remand the immunity question for resolution by the trial court after the
parties have had a fair opportunity to make an evidentiary record on the question.
I also would reverse the trial court's summary judgment ruling on
Powercorp Alaska, LLC's trade secret misappropriation claims against the Alaska Energy
Authority defendants and Controlled Power, Inc. In my view there are a number of
genuine issues of material fact barring summary judgment on these claims.1 This would
obviate the need to decide Powercorp's assertion of procedural errors in connection with
the dismissal of those claims.
I otherwise agree with today's decision.
1 I take no position on the court's statement of the relevant law for the trade
secret misappropriation claims; cf. Alaska Appellate Rule 106 (stating that decision on
issue by two of three justices does not create binding precedent).
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