Omni Direct v. Creative Direct Response (Cir. Ct. Mont. Co.)

Filed:  December 18, 2018

Opinion by: Judge Rubin

Holding:  Section 11-1207 of the Maryland Uniform Trade Secrets Act (MUTSA), which provides for both legal and equitable remedies in the event of a misappropriation of a trade secret, displaces common law claims that could be based on the same set of operative facts, even if “extra” facts are added to the other claims.

Facts:   Two direct mail marketing companies, Omni Direct (Omni) and Creative Direct Response (Creative), signed an NDA to pursue a business development collaboration for targeting the Hispanic community based on Omni’s expertise in this field.  Omni later sued Creative for allegedly using confidential information from Omni to start its own in-house Hispanic marketing program.

Analysis:  11-1207 of Maryland’s Commercial Law Article “displaces conflicting tort, restitutionary and other law…providing civil remedies for misappropriation of a trade secret.”  The purpose of this provision is to avoid pleading in the alternative if a Court decides during the trial that the information is not a trade secret.

This provision, adopted by other states from the Uniform Trade Secrets Act (USTA), has divided courts across the United States into three camps, although Maryland has not examined it in detail.  One, some courts throw out all duplicate common law claims, except contract-based remedies, even if the Court decides the information is not a trade secret.  Two, other courts allow a plaintiff to pursue other civil remedies in that lawsuit.  Three, a final group of courts take a middle of the road approach and displace other claims that are “based solely on the alleged misappropriation of a trade secret.”  Maryland courts have not had the opportunity to evaluate the displacement provision.

Here, the Circuit Court for Montgomery County dismissed Counts IV through VII because they were “grounded in the same core of operative facts” as Counts I through III which claimed a trade secret violation under MUTSA.  Adding “extra” facts and pleading in the alternative is exactly what the USTA sought to avoid with the displacement provision.

The full opinion is available PDF.

Price v. Murdy (Ct. of Appeals)

Filed: December 18, 2018

Opinion by: Barbera, C.J.

Holding:

The Maryland Consumer Loan Law (“MCLL”) is considered an “other specialty” under Md. Code Ann., Cts. & Jud. Proc. § 5-102(a)(6), so any MCLL claim has a twelve-year statute of limitations.

Facts:

Two consumers financed the purchase of their vehicles through loans under $6,000.  The consumers brought a putative class action against a lender for violating the MCLL. The MCLL provides, among other matters, that a person may not engage in the business of making loans unless the person is licensed or meets certain exemptions.  The consumers alleged that the lender was unlicensed under the MCLL.  They further alleged that the lender failed to provide notice of repossession, as well as charged compound interest and inappropriate attorney fees.

The consumers brought this action after Maryland's blanket three-year statute of limitations, therefore the lender asserts that this claim should be barred.  However, the consumers argue that MCLL is an “other specialty” statute, allowing the claim to be brought within a twelve-year statute of limitations.

The United States District Court for the District of Maryland presented a certified question of law to the Maryland Court of Appeals: “Whether the MCLL § 12-302's licensing requirement is an "other specialty" subject to Maryland's twelve[-]year limitations period under [CJP] § 5-102(a)(6)?”

Analysis:

The general statute of limitations in Maryland is three years for civil actions.  CJP § 5-101.  There are exceptions, one of which is a twelve-year statute of limitations for any specialty statute.  CJP § 5-102(a)(6).

The Maryland Court of Appeals addressed a similar issue in Master Fin. Inc. v. Crowder, 409 Md. 51 (2009), when addressing whether the Maryland State Secondary Mortgage Loan Law was an “other specialty” and therefore subject to the twelve-year statute of limitations.

The Crowder Test lays out three elements that must be met for a statute be an “other specialty,” making the twelve-year statute of limitations apply:

(1) the duty, obligation, prohibition, or right sought to be enforced is created or imposed solely by the statute, or a related statute, and does not otherwise exist as a matter of common law;

(2) the remedy pursued in the action is authorized solely by the statute, or a related statute, and does not otherwise exist under the common law; and

(3) if the action is one for civil damages or recompense in the nature of civil damages, those damages are liquidated, fixed, or, by applying clear statutory criteria, are readily ascertainable.

Crowder, 409 Md. at 70.

Applying the Crowder Test, the parties agree that only prong one and three were at issue.

Prong One: The Court of Appeals concluded that the MCLL’s licensing requirement is part of a statutory scheme that includes but is not limited to licensing, interest rates, and attorney fees.  Therefore, the licensing requirement is “created or imposed solely by the statute,” and prong one is fulfilled.

Prong Three: The Court held that “readily ascertainable” is not mutually exclusive from the requirement of fact-finding to determine the damages.  Readily ascertainable should not be confused with “relative ease of proof.”  The Court of Appeals held that the third element is satisfied as the documents and additional information provided by the lender and consumers would allow the damages to be “readily ascertainable.”

The full opinion is available in PDF.