Pacific Alternative Energy Resource, LLC v. Global Alternative Fuels LLC, et al.
(Placer County Superior Court Case No. SCV 0039050).
On May 11, 2022, Krsto Mijanovic and Steven Scordalakis successfully obtained a defense verdict in a trade secrets case involving claims of a breach of non-disclosure agreement, among other business torts. In a six-week jury trial in Placer County Superior Court, Haight represented Global Alternative Fuels, LLC (“Global”) and Rio Valley Biofuels LLC (“RVB”), which are biodiesel companies, along with their parent company, MVT Services LLC (“MVT”). This case arose from a business relationship between Global and Plaintiff Pacific Alternative Energy Resources, LLC (“PAER”) that started in July 2011. PAER served as Global’s broker for feedstock that Global used for its production of biodiesel. PAER located feedstock suppliers, brokered transactions, and handled the logistics of transporting the feedstock to Global’s plant in El Paso, Texas. In exchange for PAER’s brokerage services, Global paid PAER commissions for thousands of transactions involving over 100 million pounds of feedstock.
Fifteen months into the business relationship, PAER required Global to sign a non-disclosure agreement (“NDA”), and PAER later claimed the feedstock suppliers that PAER introduced to Global were “confidential” and that Global could not “circumvent” PAER with respect to any such suppliers “in perpetuity.” Global terminated the business relationship when it suspected that PAER was not acting in Global’s best interest. PAER then sent Global a list of 34 vendors and suppliers that PAER considered its trade secrets, and claimed Global was prohibited from conducting business with such entities under the NDA.
“We faced a daunting challenge to win. Global’s former disgruntled employee hastily signed an onerous NDA with a non-circumvention provision, which PAER claimed prevented Global from buying feedstock directly from numerous suppliers,” stated Krsto Mijanovic, a Senior Partner at Haight and lead trial attorney. “PAER also alleged that the identities of those suppliers were its trade secrets. Thus, it was critical for the future of Global’s business that it prevail on these claims. We simply presented a more compelling case. It was a great and just outcome,” he said.
In January 2017, PAER filed suit against Global, RVB, and MVT, alleging various business torts, including misappropriation of PAER’s feedstock suppliers, which PAER claimed were covered by the NDA. PAER claimed that Global had merged with RVB as a shield to use PAER’s trade secrets and that Defendants interfered with PAER’s business relationships with its suppliers. At trial, PAER’s managing member, David Marlowe, testified over five days concerning the various trade secrets and PAER’s supplier list that PAER developed. Mr. Marlowe further testified that Global breached the NDA and misappropriated PAER’s trade secrets when Global circumvented PAER by continuing to conduct business with the suppliers at issue, thereby depleting PAER’s sources of feedstock without just compensation. Mr. Marlowe testified that Global’s actions destroyed PAER’s business for which PAER sought monetary damages, including loss of commissions, lost profits, punitive damages, and attorneys’ fees.
Global filed a Cross-Complaint against PAER for various business torts, including breach of fiduciary duty. It also named PAER’s sister company and Mr. Marlowe as cross-defendants based on alter ego allegations. After the six-week trial, the jury returned a defense verdict on PAER’s Complaint, and also returned a verdict in favor of Global on its Cross-Complaint, finding PAER, its sister company, and Mr. Marlowe liable for concealment, conversion, breach of fiduciary duty, and unfair business practices.