Erroneous Jury Instructions Cause Kansas Supreme Court To Reverse Jury Verdict In Trade Secret/Restrictive Covenant Case

Co-authored by Viktoria Lovei.

The Supreme Court of Kansas recently issued an opinion in Wolfe Electric, Inc. v. Duckworth and Global Cooking Systems, LLC, No. 99,536 (Ka. Oct. 21, 2011), a trade secret misappropriation and restrictive covenant case brought by a manufacturer of conveyor pizza ovens, Wolfe Electric, against its former president, Duckworth, and his new conveyor pizza oven company, Global Cooking Systems. At trial, the jury had found in favor of Wolfe Electric on all causes of action, including breach of contract and misappropriation of trade secrets in violation of the Kansas Uniform Trade Secrets Act (“KUTSA”), and awarded it damages in a variety of categories. The defendants appealed the jury verdict on numerous grounds and the Supreme Court reversed the jury verdict and remanded the case back to the trial court. While there were numerous issues before the Supreme Court, the court’s reversal was based on its finding that multiple jury instructions were erroneous. In particular, the Supreme Court held that the jury instructions did not properly conform to KUTSA by allowing defendants to be held liable for misappropriating confidential information when KUTSA only prohibits the misappropriation of trade secrets. The court found that the trial court also erred by providing various instructions which allowed the jury to find defendants liable for actions (e.g., merely forming a competitive business) which were not prohibited by the narrow restrictive covenants in Duckworth’s employment contract. In that regard, the Supreme Court also held that because the interpretation of a contract is a question of law for the court to decide, the trial court erred by allowing the jury to interpret Duckworth’s employment contract.

While not presenting any new substantive trade secret or non-compete issues, the decision reaffirms that erroneous jury instructions are ripe grounds for appeal and potentially reversal and should therefore be scrutinized closely to ensure that they accurately state the law.