The full case caption appears at the
end of this opinion. O P I N I O N PER CURIAM: SUMMARY This case addresses, among other issues, Nevada’s Uniform Trade Secrets Act (the”UTSA”), codified at NRS 600A.010-.100. The underlying dispute arose in 1990,when Michelle Frantz (“Frantz”), a sales manager for Johnson Business Machines(“JBM”), a Las Vegas distributor of plastic gaming cards, decided to seekemployment with JBM’s card manufacturer, Plastic Graphics, Inc. (“Plastic”).Plastic was owned by Wesley Ru (“Ru”) and Antonio Accornero (“Accornero”); Ru andAccornero also owned a badge and button business called Western Badge & Trophy(“Western”) (hereinafter collectively referred to as “appellants”). After Frantz’s departure from JBM, its profits spiraled downward. Because JBMbelieved Frantz had stolen its “trade secrets” to assist Plastic inmisappropriating JBM’s customers, JBM filed suit against appellants seekingcompensatory damages, punitive damages, and attorney fees and costs based onnumerous causes of action. After a bench trial, the district court awarded JBM compensatory damages,punitive damages, and attorney fees and costs. Appellants filed this timelyappeal alleging several instances of error. We conclude that the district courterred in calculating compensatory damages and in failing to consider NRS600A.050(2) before awarding punitive damages. We therefore vacate the districtcourt’s award of compensatory and punitive damages, and reverse and remand thismatter for recalculation of damages. FACTS JBM is a family-owned business founded by Charles R. Johnson (“Charles”) in LasVegas, Nevada. JBM sold printed plastic cards with personalized embossments thatwere purchased by casinos and used as VIP and slot machine player tracking cards. In 1987, Charles hired Frantz as a salesperson for JBM. Frantz was an at-willemployee and was not required to sign a covenant-not-to-compete contract. Charlestestified that he taught Frantz everything about the plastic card business.Eventually, Frantz was promoted to sales manager of JBM. In addition to Frantz,JBM had two other employees: Charles’s wife, Barbara Johnson, and machine managerSteve Larsen (“Larsen”). Throughout the years, Charles testified that he and Frantz developed a trustingrelationship, and Charles gave Frantz keys to the offices, security codes to thebuilding, and access to customer and pricing lists. Charles further testifiedthat the aforementioned customer information and pricing lists were secured infile cabinets and protected as a trade secret. Charles’s testimony wascorroborated by John Luogo (“Luogo”), vice president of sales for another plasticcard company, who stated in his deposition that bid and pricing information andcustomer lists are proprietary, confidential information in the plastic cardindustry. According to Charles, another confidential aspect of JBM’s business was the factthat JBM did not manufacture the plastic cards that it sold. In order to protectthis confidential information, JBM required Plastic, its manufacturer, to shipthe cards directly to JBM where the cards were relabeled and reboxed before beingdistributed to JBM’s casino accounts. Additionally, Charles testified that beforeJBM entered into a contract with Plastic to manufacture JBM’s cards, Accornero,an owner of Plastic, orally promised Charles that he would not solicit JBM’scustomers under any circumstances. This was an alleged promise that Accornerowould eventually break. In October 1990, Accornero hired Frantz as a salesperson and began competingagainst JBM in the plastic card industry. Frantz testified that after she beganworking for Plastic, she went to several hotels to talk to people with whom shehad established a rapport. Frantz further testified that she sent out numerousletters and faxes announcing that she now worked for Plastic, the “directrepresentative of the manufacturer” and that she could offer “more competitivepricing and guaranteed delivery times.” Shortly after Frantz’s departure, Larsen contacted all of JBM’s customers to tryto establish a business rapport and to inform them that Frantz had left JBM.Larsen testified that he had difficulties with the purchasing representatives ofsome casinos and that they were “negative or hostile.” Larsen further testifiedthat after Frantz left, JBM lost approximately 40% of its card sales and 30% ofits machine sales to Plastic. Moreover, Larsen testified that although he did notsee Frantz take any customer or pricing lists, several lists were missing afterFrantz’s departure. In October 1990, Frantz received the Riverboat, Showboat, and Harrah’s accountsby underbidding JBM. Thereafter, Frantz was served with notice that JBM wasseeking a temporary restraining order (“TRO”) to prevent her from directlysoliciting JBM’s customers. The TRO was granted and became effective November 7,1990. Frantz testified that post-TRO she never contacted any of JBM’s customersto solicit their business. However, Frantz further testified that she followedthrough on the Harrah’s, Riverboat, and Showboat orders that were arranged priorto the TRO. Despite Frantz’s testimony that she complied with the TRO, JBM alleged thatFrantz conspired with Ru and Accornero to avoid the court order by “referring”sales to Ru. Martha Kehn (“Kehn”), a purchasing agent for Boyd Properties,testified that sometime after Frantz left JBM, Frantz contacted her and told herthat although Frantz could not take orders, Ru “would take care of anything” sheneeded. Additionally, Kehn testified that Frantz told her that JBM had an outsidesupplier of plastic cards. JBM further alleges that Frantz’s phone records indicate that she did not complywith the TRO. According to these records, Frantz made 195 calls to Western fromher home and 48 calls to Promotional Graphics, another business entity owned byRu and Accornero, between December 5, 1990, and October 17, 1991. At the end of 1990, Frantz became an independent contractor, rather than anemployee of Plastic, and continued to sell for Western and Promotional Graphics.However, Frantz’s sales for Western were disappointing. Consequently, in April1991 Plastic allegedly terminated its relationship with Frantz. Thereafter, Frantz tried to establish her own business called Action Graphics.Frantz was unsuccessful and eventually filed for unemployment. When Frantz’sunemployment claim was denied, Plastic agreed to pay her severance until shecould find alternate employment. Frantz testified that, during this period oftime, she was not attempting to sell cards for Plastic. Plastic, however, paidFrantz $3,000.00 per month allegedly as severance pay until August 1991 andrequired her to submit Action Graphics’ invoices in order to receive payment. InOctober 1991, Frantz obtained a retail sales position and ceased working in theplastic card industry. On May 1, 1991, JBM successfully pursued a preliminary injunction against Frantz.The district court granted the injunction finding that Frantz’s conduct wasunethical and violated her duties as an agent for JBM. In addition to seeking aninjunction, JBM sued appellants for the following causes of action: (1)misappropriation of confidential information; (2) breach of fiduciary duty; (3)interference with prospective economic advantage; (4) fraud; (5)misrepresentation; (6) unjust enrichment; and (7) civil conspiracy. At trial, JBM presented expert testimony on damages from its expert witness,Donald McGhie (“McGhie”). McGhie is a certified public accountant and has workedas a chief operating officer at Bally’s Las Vegas. McGhie’s estimation of damageswas based on the number of player tracking cards that he calculated were utilizedby slot machines in various casinos. McGhie concluded that there was a 10:1ratio, namely that ten player tracking cards were sold for each slot machine permonth. McGhie used invoices from four different casinos to calculate this figure:(1) JBM’s invoices from the Stardust from 1989-94; (2) Faraday’s (one of JBM’scompetitors) invoices from the Mirage from 1992-94; (3) Plastic’s invoices fromthe Showboat, Atlantic City from 1989-90; and (4) Plastic’s invoices from theRiverboat, Reno from 1989-90.
[FOOTNOTE 1] McGhie testified that his goal in calculating the 10:1 ratio was to find a methodby which he could project the lost profit of the thirteen casino accounts thatJBM claimed that it lost to Plastic. After coming up with the 10:1 ratio, McGhieused JBM’s 1990 records from the Stardust to calculate a gross profit percentagefor both magnetic and Hollerith plastic cards,2 totaling 18.86% and 34.68%,respectively. McGhie then calculated the losses associated with thirteen casinosthat occurred between 1990-95: (1) the Golden Nugget, loss sustained from1990-95; (2) the Showboat, loss sustained from 1990-94; (3) the Eldorado, theRiverboat, and the Mirage, losses sustained from 1990-95; (4) the Goldstrike,loss sustained from 1990-93; (5) Circus Circus, Excalibur, Slots of Fun, Luxor,Colorado Belle, and the Edgewater, losses sustained in 1993; and (6) the SilverLegacy, Reno, loss sustained in 1995. Further, McGhie calculated JBM’s losses associated with the reduced cost ofHollerith punching, loss of profit from the sale of machines, the cost ofreengineering the plastic card artwork, and the opportunity cost of not getting anew warehouse built. In sum, McGhie testified that the loss of profit fromplastic card sales was $411,042.00 and the loss of profits from accounts wherethere was a reduction in sales price amounted to $566,016.00. In making the aforementioned calculations, McGhie admitted that he assumed thatJBM’s losses resulted from appellants’ conduct. McGhie testified that he did notcontact any of the thirteen casinos to see why they had stopped doing businesswith JBM. JBM alleges, however, that causation can be inferred from appellants’aforementioned conduct and from Accornero’s deposition, where he stated that heintended to compete against JBM and would do so by taking its customers.Additionally, JBM alleges that causation can be inferred from the fact thatAccornero told a former Plastic employee, Terry Malan (“Malan”), that Accornerowas going to put JBM out of business by taking all of its customers. After a ten-day bench trial, the district court entered a judgment in favor ofJBM and issued sixty pages of findings of fact and conclusions of law. Thedistrict court awarded JBM $222,014.55 for lost profits, but explicitly limitedthe period of loss to eighteen months from Frantz’s departure. The district courtalso awarded JBM $47,612.75 for price reduction on plastic cards, businessmachines, and Hollerith punching services. Further, the district court awardedJBM the following punitive damages against each defendant: (1) Frantz -$4,000.00; (2) Accornero – $50,000.00; (3) Plastic Graphics – $50,000.00; (4) Ru- $25,000.00; and (5) Western Badge – $25,000.00. Finally, JBM was awarded$160,000.00 in attorney fees pursuant to NRS 600A.060 or NRS 18.010(2)(b),$15,779.00 in expenses, and $15,481.31 in costs. This judgment was reduced tosatisfy Frantz’s counterclaim for wages owed to her by JBM and to satisfyPlastic’s counterclaim seeking satisfaction of a California judgment against JBM. Appellants filed this timely appeal alleging numerous instances of error,including that the district court erred in relying on McGhie’s testimony, inawarding attorney fees, and in granting punitive damages. Further, appellantscontend that there was insufficient evidence of causation. We agree withappellants that the district court erred in calculating damages and in failing toconsider NRS 600A.050(2) in awarding punitive damages. Accordingly, although weaffirm the order of the district court in all other respects, we vacate thedistrict court’s award of compensatory and punitive damages, and remand thismatter to the district court for recalculation of such damages. DISCUSSION Preliminarily, before our discussion of appellants’ contentions on appeal, weaddress the issue of the parties’ and the district court’s failure to apply theUTSA, specifically NRS 600A.090(b) — a controlling statute that precludes someof the causes of action upon which the district court based its award. SeeBradley v. Romeo, 102 Nev. 103, 105, 716 P.2d 227, 228 (1986) (“The ability ofthis court to consider relevant issues sua sponte in order to prevent plain erroris well established . . . . Such is the case where a statute which is clearlycontrolling was not applied by the trial court.”) (citation omitted). I. The Nevada Uniform Trade Secrets Act NRS 600A.090 of the Nevada Uniform Trade Secrets Act, titled “Effects of chapteron other law and remedies,” provides that: 1. Except as otherwise provided in subsection
[FOOTNOTE 2], this chapter displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret. 2. This chapter does not affect: (a) Contractual remedies, whether or not based upon misappropriation of a trade secret; (b) Other civil remedies that are not based upon misappropriation of a trade secret; or (c) Except as otherwise provided in NRS 600A.035, criminal sanctions, whether or not based upon misappropriation of a trade secret. (Emphasis added.) The plain language of NRS 600A.090 precludes a plaintiff frombringing a tort or restitutionary action “based upon” misappropriation of a tradesecret beyond that provided by the UTSA. In interpreting NRS 600A.090, a federaldistrict court has held that a plaintiff’s claims for unjust enrichment andunfair competition were precluded by the UTSA since these two claims wereduplicative of plaintiff’s claim for misappropriation of trade secrets. SeeHutchison v. KFC Corp., 809 F. Supp. 68, 70 (D. Nev. 1992). In light of the plain language of NRS 600A.090 and the holding in Hutchison,
[FOOTNOTE 3] weconclude that the district court erred in relying on numerous tort andrestitutionary causes of action that were explicitly excluded by statute, as theyall related to a misappropriation of a trade secret. Specifically, the districtcourt erred in awarding damages based on the following causes of action: (1)misappropriation of confidential information, (2) breach of fiduciary duty, (3)intentional interference with contractual relations, (4) intentional interferencewith prospective advantage, (5) the tort of breach of the covenant of good faithand fair dealing,
[FOOTNOTE 4] (6) civil conspiracy, and (7) unjust enrichment. These causesof action would normally be precluded by NRS 600A.090 because they arose from asingle factual episode, namely misappropriation of bidding and pricinginformation. Although we conclude that the district court erred in grounding liability incommon law claims that were displaced by statute, we further conclude that thiserror was harmless. See NRCP 61. We determine that this error was harmless inlight of the fact that NRS 600A.090 merely codifies the common law elements ofmisappropriation of confidential information of which JBM pleaded and profferedsufficient circumstantial evidence at trial. The elements of a misappropriation of trade secrets claim include: (1) a valuabletrade secret;
[FOOTNOTE 5] (2) misappropriation
[FOOTNOTE 6] of the trade secret through use, disclosure,or nondisclosure of use of the trade secret; and (3) the requirement that themisappropriation be wrongful because it was made in breach of an express orimplied contract or by a party with a duty not to disclose. See Peter R.J.Thompson, An Outline of 23 California Common Law Business Torts, 13 Pac. L.J. 1,19-20 (1981); see also NRS 600A.030(2) (defining misappropriation). Thedetermination of whether corporate information, such as customer and pricinginformation, is a trade secret is a question for the finder of fact. See WoodwardInsur., Inc. v. White, 437 N.E.2d 59, 67 (Ind. 1982). Factors to be consideredinclude: (1) the extent to which the information is known outside of the business and the ease or difficulty with which the acquired information could be properly acquired by others; (2) whether the information was confidential or secret; (3) the extent and manner in which the employer guarded the secrecy of the information; and (4) the former employee’s knowledge of customer’s buying habits and other customer data and whether this information is known by the employer’s competitors . . . . Id. (citations omitted); see also K.H. Larsen, Annotation, Former Employee’sDuty, in Absence of Express Contract, Not to Solicit Former Employer’s Customersor Otherwise Use This Knowledge of Customer Lists Acquired in Earlier Employment,28 A.L.R. 3d 7 (1969) (setting forth a comprehensive list of factors forconsideration of whether customer information constitutes a trade secret). We emphasize that not every customer and pricing list will be protected as atrade secret. In Neal v. Griepentrog, 108 Nev. 660, 666, 837 P.2d 432, 435(1992), this court held that discount lists given by hospitals to various medicalproviders were not trade secrets, and should therefore be disclosed to thepublic. The instant customer and pricing information, however, is unlike that inNeal because there was testimony below that it was extremely confidential, itssecrecy was guarded, and it was not readily available to others because theplastic gaming card industry is highly specialized. II. Causation Appellants contend, however, that there was insufficient evidence to support afinding that appellants misappropriated trade secrets because there was no directevidence that appellants caused JBM’s damages since not one lost customertestified that it ceased doing business with JBM because of appellants’ conduct.We disagree that such direct evidence is necessary and conclude that there wassufficient circumstantial evidence that appellants misappropriated tradesecrets.
[FOOTNOTE 7] Causation is a question for the finder of fact that will not be overturned unlessclearly erroneous. See Hermann Trust v. Varco-Pruden Buildings, 106 Nev. 564,566, 796 P.2d 590, 591-92 (1990); see also Frances v. Plaza Pacific Equities, 109Nev. 91, 94, 847 P.2d 722, 724 (1993). Causation may be inferred from thecircumstantial evidence presented at trial. See Erik Electric Co. v. Elliot, 375So. 2d 1136, 1138 (Fla. Dist. Ct. App. 1979); Prentice Medical Corp. v. Todd, 495N.E.2d 1044, 1049-50 (Ill. App. Ct. 1986). In the instant matter, there was adequate circumstantial evidence to support thedistrict court’s finding that appellants diverted JBM’s trade secrets, therebycausing JBM economic loss. First, there is sufficient circumstantial evidence that Frantz misappropriatedJBM’s trade secrets. The following evidence supports this conclusion: (1)Larsen’s testimony that there were pricing lists missing after Frantz left, andthat thereafter JBM lost 40% of its card sales; (2) Frantz’s testimony that shesent out numerous faxes and letters to JBM’s customers stating that she couldoffer “more competitive pricing” and that she worked for the “directmanufacturer”; (3) Frantz’s phone records indicating that post-TRO Frantz made195 calls to Western and 48 calls to Promotional Graphics, including severalcalls to Western’s fax number; and (4) Kehn’s testimony that Frantz contacted herpost-TRO and told her that if Kehn needed anything she could contact “Wes.” Second, there is sufficient circumstantial evidence to support a finding thatAccornero and Plastic
[FOOTNOTE 8] misappropriated JBM’s trade secrets. This evidenceincludes: (1) Malan’s testimony that Accornero told him that he intended tocompete against JBM and put it out of business by taking all of its customers;and (2) the testimony of another former employee of Accornero, who stated thatAccornero had hired him from a competitor and asked him to use his knowledge ofhis former employer’s pricing structure and customer base to sell for Plastic. Third, there was sufficient circumstantial evidence that Ru and Western wereinvolved in misappropriating JBM’s trade secrets, including: (1) Kehn’s testimonythat Frantz told her that she was unable to take orders but that Kehn “could callWes and he would take care of anything that — he would help me in anyway that hecould”; (2) Ru’s signing of a Western Graphics check payable to Frantz forreimbursement for supplies at a trade show, a show at which Charles testifiedFrantz solicited JBM’s customers; and (3) Frantz’s numerous post-TRO phone callsand faxes to Western’s office. Accordingly, we conclude that there was sufficient circumstantial evidence in therecord to support the district court’s finding that appellants misappropriatedtrade secrets, thereby causing JBM damage. We therefore affirm the districtcourt’s conclusion that appellants were liable for JBM’s damages. III. Compensatory damages Appellants next argue that the district court misapplied McGhie’s calculation ofdamages. We agree. The district court has “wide discretion in calculating an award of damages, andthis award will not be disturbed on appeal absent an abuse of discretion.”Diamond Enters., Inc. v. Lau, 113 Nev. 1376, 1379, 951 P.2d 73, 74 (1997)(citation omitted). With respect to proof of damages, we have held that a party seeking damages hasthe burden of providing the court with an evidentiary basis upon which it mayproperly determine the amount of damages. See Mort Wallin v. Commercial Cabinet,105 Nev. 855, 857, 784 P.2d 954, 955 (1989). Further, we have noted that damagesneed not be proven with mathematical exactitude, and that the mere fact that someuncertainty exists as to the actual amount of damages sustained will not precluderecovery. See Mort Wallin, 105 Nev. at 857, 784 P.2d at 955. Finally, this courthas held that to meet this burden of proof, a party seeking damages may utilizean expert economist to assist in the calculation of the total damages sustained,provided this expert testimony is not speculative but is instead based on factsknown to the expert at the time. See Freeman v. Davidson, 105 Nev. 13, 16, 768P.2d 885, 887 (1989); see also Gramanz v. T-Shirts and Souvenirs, Inc., 111 Nev.478, 485, 894 P.2d 342, 347 (1995) (holding that it is an abuse of discretion foran expert to give an opinion on facts beyond his knowledge). In the instant matter, appellants proffered testimony from McGhie, an expertwitness on damages, whose calculations were sufficiently grounded in facts knownto him at the time. Specifically, McGhie calculated the amount of lost profitsfor a five-year period, from 1990-95, by applying the percentage of profit thatJBM had made from past sales to a reasonable approximation of future sales. The district court relied on McGhie’s testimony but explicitly limited liabilityfor JBM’s losses to an eighteen-month period beginning when Frantz left JBM inOctober 1990, and ending in April 1992. In cases where a district court properlylimits liability to a specified period of time, it is an abuse of discretion toconsider losses outside this time period in calculating damages. Here, in arriving at total damages, it appears that the district court calculatedtotal damages by applying a pro rata share equivalent to eighteen months of lossfor each casino account, regardless of whether the loss occurred within therequisite time period. Eight of the thirteen casino accounts utilized by McGhiein his calculations, however, sustained losses outside the time period ofliability found by the district court. These accounts included: Showboat, 1993;Circus Circus, 1993; Excalibur, 1993; Slots of Fun, 1993; Luxor, 1993; ColoradoBelle, 1993; Edgewater, 1993; and Silver Legacy, 1995 (collectively hereinafter”the post-1992 losses”). We conclude that the district court abused itsdiscretion by including a pro rata share of the post-1992 losses in itscalculation because such damages were sustained outside the time period for whichappellants were found liable. We therefore vacate the district court’s award ofdamages and remand this matter for an evidentiary hearing for recalculation ofdamages that actually occurred solely within the eighteen-month time period fromOctober 1990 to April 1992. IV. Punitive damages Appellants next contend that the district court erred in awarding punitivedamages against Ru, Western, and Plastic because there was no evidence ofoppression, fraud, or express or implied malice. Although we conclude that therewas substantial evidence in the record to support the district court’s findingthat appellants acted maliciously,
[FOOTNOTE 9] we reverse the district court’s grant ofpunitive damages so that it may consider NRS 600A.050(2). NRS 600A.050(2) provides that: If willful, wanton or reckless misappropriation or disregard of the rights of the owner of the trade secret exists, the court may award exemplary damages in an amount not exceeding twice the award made under subsection 1. Pursuant to the plain language of NRS 600A.050(2), a punitive damages award underthe UTSA is limited to two times the compensatory damages award. Because we havevacated the district court’s award of compensatory damages for recalculation, wenecessarily vacate the punitive damages award so that the district court canensure that the parameters of NRS 600A.050(2) are satisfied. V. Attorney fees Appellants next contend that the district court erred in awarding attorney feeswithout a statutory basis for doing so. We disagree. A district court’s award of attorney fees will not be disturbed on appeal absenta manifest abuse of discretion. See Nelson v. Peckham Plaza Partnerships, 110Nev. 23, 26, 866 P.2d 1138, 1139-40 (1994). It is an abuse of discretion to awardattorney fees without a statutory basis for doing so. See Rowland v. Lepire, 99Nev. 308, 315, 662 P.2d 1332, 1336 (1983). In the case at bar, the district court awarded JBM $160,000.00 in attorney feespursuant to NRS 18.010(2)(b), or alternatively, under NRS 600A.060. We concludethat the district court abused its discretion in relying on NRS 18.010(2)(b) as astatutory basis for its award. We further conclude, however, that this error washarmless because the district court’s grant of attorney fees was proper under NRS600A.060. A. NRS 18.010(2)(b) The plain language of NRS 18.010(2)(b) and our case law interpreting it do notpermit an award of attorney fees for acting maliciously or engaging inunacceptable discovery tactics.
[FOOTNOTE 10] See Chowdhry v. NLVH, Inc., 109 Nev. 478, 851P.2d 459 (1993); Semenza v. Caughlin Crafted Homes, 111 Nev. 1089, 901 P.2d 684(1995). Rather, NRS 18.010(2)(b) allows an award of attorney fees to theprevailing party when a party has alleged a groundless claim that is notsupported by any credible evidence at trial. See Allianz Ins. Co. v. Gagnon, 109Nev. 990, 996, 860 P.2d 720, 724 (1993). Our review of the record reveals no evidentiary basis to support the districtcourt’s explicit finding that appellants asserted frivolous counterclaims. Acounterclaim cannot be frivolous as a matter of law when the party asserting thecounterclaim actually prevails on the counterclaim. Here, both Frantz and Plasticprevailed on their counterclaims, and the district court reduced JBM’s judgmentto satisfy Frantz’s counterclaim for lost wages and Plastic’s counterclaim forpayment of a California judgment against JBM. Accordingly, because appellants did not assert a groundless counterclaim, thedistrict court abused its discretion in awarding attorney fees pursuant to NRS18.010(2)(b). This error was harmless, however, because there was a proper statutory basis forthe district court’s award of attorney fees — NRS 600A.060(3). NRS 600A.060(3)provides that where “[w]illful and malicious misappropriation exists, the courtmay award reasonable attorney’s fees to the prevailing party.” Here, the districtcourt found that malicious misappropriation existed. Therefore, attorney feeswere proper pursuant to NRS 600A.060(3). CONCLUSION We conclude that the district court erred in calculating damages. We thereforevacate the district court’s award of compensatory and punitive damages and remandthis matter for an evidentiary hearing for the purpose of recalculating damages.All other portions of the judgment entered below are affirmed. :::FOOTNOTES:::
FN1 Specifically, the card ratio was based on the following time periods andnumbers: From 1992-94, Faraday sold 693,000 cards to the Mirage, averaging eightcards per slot machine. From 1989-94, JBM sold 1.5 million cards to the Stardust,averaging ten cards per slot machine. From 1989-91, over a seventeen-monthperiod, Plastic sold 96,000 cards to the Riverboat, averaging twelve cards perslot machine. From 1989-91, over a sixteen-month period, Plastic sold 334,000cards to the Riverboat, averaging twelve cards per slot machine.
FN2 A Hollerith card is a card containing customer information in a binary codethat is punched with rectangular holes through a plastic card. A magnetic card isa card that contains customer information in a magnetic strip.
FN3 We note that our approval of Hutchison is not without limitation. Indeed, we donot agree that the UTSA provides a blanket preemption to all claims that arisefrom a factual circumstance possibly involving a trade secret. There may befuture instances where a plaintiff will be able to assert tort claims, includingintentional interference with prospective advantage and intentional interferencewith existing contract, that do not depend on the information at issue beingdeemed a trade secret, and thus are not precluded by the UTSA. See PowellProducts, Inc. v. Marks, 948 F. Supp. 1469, 1474 (D. Colo. 1996). The factualcircumstances underlying the claims in this matter, however, are completelydependent on the facts concerning misappropriation of trade secrets, and aretherefore barred by the UTSA.
FN4 We note that JBM’s cause of action for breach of the implied covenant of goodfaith and fair dealing would not be barred provided it was grounded in contract.An implied covenant of good faith and fair dealing exists in every Nevadacontract and essentially forbids arbitrary, unfair acts by one party thatdisadvantage the other. See Consolidated Generator v. Cummins Engine, 114 Nev.1304, 1311, 971 P.2d 1251, 1256 (1998); Overhead Door Co. v. Overhead Door Corp.,103 Nev. 126, 128, 734 P.2d 1233, 1235 (1987). NRS 600A.090(2)(a) explicitly provides that contractual remedies, even thosebased upon misappropriation of trade secrets, are not displaced by the UTSA.Accordingly, we conclude that the district court did not err in awarding damagesbased on the contractual remedy of breach of the covenant of good faith and fairdealing.
FN5 NRS 600A.030(5) defines a trade secret as: information, including, without limitation, a formula, pattern, compilation, program, device, method, technique, product, system, process, design, prototype, procedure, computer programming instruction or code that: (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other persons who can obtain commercial or economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
FN6 Misappropriation is further defined by statute. NRS 600A.030(2) provides that: “Misappropriation” means: (a) Acquisition of the trade secret of another by a person by improper means; (b) 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 (c) Disclosure or use of a trade secret of another without express or implied consent by a person who: (1) Used improper means to acquire knowledge of the trade secret; (2) At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was: (I) Derived from or through a person who had used improper means to acquire it; (II) Acquired, under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (III) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (3) Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
FN7 In so concluding, we recognize that there is legal support holding to thecontrary that requires direct evidence of causation, such as testimony of clientslost, to establish causation in employee disloyalty cases. See McCallister Co. v.Kastella, 825 P.2d 980, 984 (Ariz. Ct. App. 1992); Bancroft-Whitney Co. v. Glen,411 P.2d 921 (Cal. 1966). However, we explicitly disapprove of such a requirementbased on our belief that an existing business is entitled to compensation ininstances where indirect circumstantial evidence shows that its competitorsharmed it through unfair and illegal business tactics.
FN8 Appellants also contend that compensatory and punitive damages should not havebeen assessed against the corporations, Plastic and Western, absent evidence ofcorporate misconduct. We disagree. We have previously held that a corporation isliable for damages committed by an agent employed in a managerial capacity actingwithin the scope of employment as a matter of law. See Smith’s Food & Drug Cntrs.v. Bellegarde, 114 Nev. 602, 610, 958 P.2d 1208, 1215 (1998). Because Accorneroand Ru are officers and managers of Plastic and Western, respectively,Accornero’s and Ru’s tortious acts committed within the scope of their employmentare attributable to these corporations as a matter of law.
FN9 The following evidence supported the district court’s finding of malice: (1)testimony that Frantz took JBM’s confidential customer and pricing information;(2) testimony that Frantz sent faxes to all of JBM’s customers announcing thatJBM did not manufacture its own cards and that she could offer “competitive”pricing; (3) testimony that Frantz did not comply with the TRO; (4) testimonythat Accornero planned on taking all of JBM’s customers in violation of his oralpromise not to compete with JBM; and (5) testimony that Frantz contacted Kehn inviolation of the TRO and “referred” her to Ru. See NRS 42.005; see also Paullinv. Sutton, 102 Nev. 421, 423, 724 P.2d 749, 750 (1986) (in reviewing the factualevidence supporting a punitive damages award, this court will presume allevidence favorable to the prevailing party and draw all reasonable inferences inthe prevailing party’s favor).
FN10 NRS 18.010(2) provides: In addition to the cases where an allowance is authorized by specific statute, the court may make an allowance of attorney’s fees to a prevailing party: . . . . (b) Without regard to the recovery sought, when the court finds that the claim . . . was brought without reasonable ground or to harass the prevailing party. (Emphasis added.)
Frantz v. Johnson Frantz v. Johnson 116 Nev. Adv. Op. No. 53 May 4, 2000 IN THE SUPREME COURT OF THE STATE OF NEVADA No. 29588 MICHELLE FRANTZ, ANTONIO ACCORNERO, individually, PLASTIC GRAPHICS, INC., aCalifornia corporation, WESTERN BADGE & TROPHY CO., a California corporation,WESLEY RU, individually and as an officer of WESTERN BADGE & TROPHY, and ACTIONGRAPHICS, A NEVADA PARTNERSHIP, CONSISTING OF MICHELLE FRANTZ, ANTONIO ACCORNERO,AND WESLEY RU, Appellants, vs. CHARLES R. JOHNSON, D/B/A PLASTIC PRINT-A-CARD CO., D/B/A JOHNSON BUSINESSMACHINES, Respondent. Appeal from a judgment pursuant to a bench trial. Eighth Judicial District Court,Clark County; James A. Brennan, Senior Judge. Affirmed in part, reversed in part, and remanded. Thorndal Armstrong Delk,Balkenbush & Eisinger and Brian K. Terry, Las Vegas, forAppellants. Bill C. Hammer, Ltd., Las Vegas, for Respondent. BEFORE ROSE, C.J., SHEARING and BECKER, JJ.
