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Sonoco Products Co. v. Guven

United States District Court, D. South Carolina, Florence Division

January 8, 2015

Sonoco Products Company, Plaintiff,
v.
Levent Güven, Defendant.

OPINION AND ORDER

BRUCE HOWE HENDRICKS, District Judge.

Plaintiff, Sonoco Products Company ("Sonoco"), filed this action against Defendant, Levent Güven ("Güven"), alleging claims for breach of contract, breach of duty of loyalty, and misappropriation of trade secrets. On October 28, 2014, this Court entered an order striking Güven's Answer and entering a default judgment in favor of Sonoco pursuant to Federal Rule of Civil Procedure Rule 37(b)(2)(A) based on Güven's willful failure to obey the Court's discovery orders dated June 18, 2014 and August 19, 2014 (ECF No. 124) (the "Sanctions Order'). A hearing was held on December 17, 2014 for the purpose of determining Sonoco's damages (the "Damages Hearing"). After carefully reviewing and considering the evidence presented at the Damages Hearing, for the reasons set forth below, the Court finds that judgment shall be entered against Güven in the amounts set forth below.

I. REPRESENTATION OF AND NOTICE TO GÜVEN.

From the date Güven was initially served with the summons and complaint and brought into this matter, Güven was vigorously represented by qualified and able counsel in all proceedings in this lawsuit, including Sonoco's motion for sanctions, up until October 28, 2014, when the Court issued an order granting the motion to withdraw as counsel filed by Güven's counsel of record (ECF No. 124 at 18). Güven expressly consented to his counsel's motion to withdraw as counsel as evidenced by his signed consent (ECF No. 98-2).[1] Güven's counsel briefed and opposed the motion for sanctions on behalf of Güven and also attended the hearing on Sonoco's motion for sanctions, where counsel for Güven argued on behalf of Güven against the sanctions sought by Sonoco. Güven's counsel also opposed Sonoco's underlying motion to compel discovery through briefs and arguments at the hearing on the motion to compel, and even sought reconsideration of the order compelling Güven to produce the discovery that ultimately led to the motion for sanctions (ECF No. 86). The Court allowed Güven's counsel to withdraw as counsel only after the Court had already decided to grant Sonoco's motion for sanctions. See Transcript of Motion Hearing, Oct. 20, 2014, at pp. 13-15 (sanctions motion heard and ruled on before Court took up counsel's renewed motion to withdraw); ECF No. 124 at 18 (the permission for Güven's counsel to withdraw as counsel contained at end of Sanctions Order).

The Sanctions Order required Sonoco to serve Güven with copies of the Sanctions Order and Sonoco's attorney's fees affidavit (ECF No. 122) by mailing these documents to the address set forth in the Sanctions Order ("Güven's Service Address") (ECF No. 124 at 18). Güven's Service Address was provided to the Court by Güven, represented by Güven to be his address for service of papers, and represented by Güven to be the address where any service in this case would be received and accepted by him. The Certificate of Service of H. Sam Mabry, III (ECF No. 130) establishes that Sonoco mailed these documents to Güven's Service Address. The Court finds that Sonoco has complied with the service requirements set forth in the Sanctions Order.

By Text Order dated October 30, 2014, this Court scheduled the Damages Hearing in this matter for December 17, 2014 (ECF No. 128). The Certificate of Service of H. Sam Mabry, III (ECF No. 130) establishes that Sonoco served Güven with a copy of this Text Order on November 4, 2014, by mailing a copy of the Order to Güven's Service Address (ECF No. 124 at 18). Although not required to do so, Sonoco also served Güven with a Notice of Damages Hearing which accurately and specifically set forth the time, place, location and purpose of the Damages Hearing (Sonoco Damages Hearing Exhibit 1). The written Notice advised Güven of his and/or his counsel's right to appear at the Damages Hearing and participate as permitted by law. The Court finds that service of this notice was valid and sufficient under United States law. See Fed.R.Civ.P. 5(b)(2)(C) (stating that a paper filed after the summons and complaint may be served by "mailing it to the person's last known address"); Local Rule 83.I.07, DSC (requiring counsel seeking withdrawal as counsel to provide the Court "with a mailing address" for the client); ECF No. 98-1 at n. 1 (listing Güven's address).[2]

In addition to mailing the Notice by United States Mail in accordance with United States law, the Notice of Damages Hearing was translated into Turkish and the translated Notice of Damages Hearing served on Güven in Turkey. Sonoco has submitted to the Court the Declaration of Murat Karkin stating that the translated Notice of Damages Hearing was served on Güven in Turkey on November 25, 2014, in accordance with Turkish law and procedure. (Sonoco Damages Hearing Exhibit 2).

The Court finds Güven was provided with more than sufficient notice of the Damages Hearing to satisfy United States law, including due process under the United States Constitution. Güven did not attend the Damages Hearing, nor did anyone attend on his behalf. However, because Güven was clearly provided with notice and opportunity to appear and participate at the Damages Hearing, his failure to attend the hearing does not affect in any way the application of this order or the enforceability of a judgment based on this order under United States law. See, e.g., Davis v. Hutchins, 321 F.3d 641, 645-46 (7th Cir. 2003) (rejecting the defendant's argument that a default judgment violated due process where the defendant failed to attend hearings on damages since the defendant "was afforded notice and the opportunity to respond."); Yusov v. Yusuf, 892 F.2d 784, 787 (9th Cir. 1989) (affirming default judgment in the sum of $2, 035, 387.90 against defendants who failed to attend the hearing on the default judgment where the court found the defendants "had proper notice of the hearing"); see also Fosberry v. Coyle Bus. Prods., No. 2:10-cv-00799-RMG-BHH, 2012 U.S. Dist. LEXIS 59616 (D.S.C. April 30, 2012) (entering a default judgment against a party that was served with a notice of the damages hearing but failed to attend).

II. EFFECT OF THE DEFAULT JUDGMENT.

When a default is entered against a defendant, the law is clear that the wellpleaded factual allegations in the complaint are deemed admitted and the court is to accept such factual allegations as true. DIRECTV, Inc. v. Rawlins, 523 F.3d 318, 322 n.2 (4th Cir. 2008) (citing Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001)); Mary Kay Inc. v. Ayres, 827 F.Supp.2d 584, 589 (D.S.C. 2011); see also Fosberry v. Coyle Bus. Prods., No. 2:10-cv-00799-RMG-BHH, 2012 U.S. Dist. LEXIS 46061 (D.S.C. March 29, 2012) adopted by, motion granted by, judgment entered by 2012 U.S. Dist. LEXIS 59616 (D.S.C. April 30, 2012). The court must then determine whether the well-pleaded factual allegations in the complaint support the relief sought in the action. Ryan, 253 F.3d at 780; Mary Kay Inc., 827 F.Supp.2d at 590. If liability is established, the court must then determine the appropriate amount of damages. Bank of Camden v. Hooker, No. 8:14-cv-01050-JMC, 2014 U.S. Dist. LEXIS 115017, at **2-3 (D.S.C. Aug. 19, 2014) (citing Ryan, 253 F.3d at 780-81). The Court's analysis will proceed in this manner.

III. FINDINGS OF FACT AS TO LIABILITY.

Having found Güven to be in default, the Court accepts Sonoco's well-pleaded factual allegations as true, including the following factual findings that are particularly material to the damages claims:

1. Güven is a Turkish National who holds a United States Permanent Resident Card (informally known as a Green Card), issued by the United States Government, granting him permanent resident status.

2. Güven was employed by Sonoco from June 1, 1998, to April 5, 2010, when Sonoco terminated his employment.

3. Prior to his employment with Sonoco, Güven had no experience or knowledge of the industrial products business.

4. Through Sonoco's management trainee program, Güven spent time in multiple Sonoco plants, both in the United States and in foreign locations, learning the operations and competitive strategies of the Industrial Products Division of Sonoco.

5. Güven successfully completed Sonoco's management trainee program, and he thereafter accepted an expatriate assignment to be employed as the Sales and Marketing manager for a Sonoco subsidiary in Bursa, Turkey ("Sonoco Turkey").

6. Güven was heavily involved in managing Sonoco Turkey's operations, and Sonoco entrusted him with a high level of management autonomy and information.

7. Güven co-managed Sonoco Turkey with Adem Gürada (Gürada), who was a direct employee of Sonoco Turkey. Güven served as the Sales and Marketing Manager for Sonoco Turkey, and Gürada served as the Regional Operations Manager. Güven and Gürada managed all aspects of Sonoco Turkey's operations.

8. Güven's duties for Sonoco Turkey gave him access to and knowledge of Sonoco's trade secrets and proprietary information, including manufacturing and sales processes, product and sales formulas, manufacturing and sales strategies, pricing formulas and strategies, highly specialized manufacturing devices and equipment, customer lists, source lists, supplier lists, sales contacts, and business relationships (collectively, the "Protected Information").

9. Sonoco's Protected Information includes trade secrets under the South Carolina Trade Secrets Act, S.C. Code Section 39-8-20(5). Sonoco has made reasonable efforts to maintain the secrecy of its trade secrets.

10. Sonoco Turkey's operations are based in large part on Sonoco's Protected Information, so Güven became intimately familiar with the Protected Information while managing Sonoco Turkey.

11. Prior to beginning work with Sonoco, Güven entered into an Employee Agreement, whereby he promised to protect certain trade secrets and proprietary information of Sonoco. Through the Employee Agreement, Güven specifically acknowledged and agreed:

(a) that Sonoco "desires to protect its manufacturing know-how, trade secrets, technical developments, and proprietary information regarding its products and markets";
(b) that the Protected Information includes, but is not limited to, "written as well as unwritten technical and business information [...], raw material sources, specifications and costs; production equipment configurations and designs; manufacturing techniques and process parameters; confidential marketing information including strategic plans, product preferences and purchasing frequencies [...]. This proprietary information constitutes valuable trade secrets or confidential information [...] which are the property of [Sonoco], and I agree not to disclose or use the same other than in the business of [Sonoco]";
(c) "not to, directly or indirectly, disclose or make available to any third party or use outside of [Sonoco] during or after my employment (including by resignation, termination, or retirement), any proprietary information or trade secrets, including information received by [Sonoco] from third parties under conditions of secrecy, without the prior written consent of an authorized official of [Sonoco]";
(d) "to safeguard all Confidential information at all times so it is not exposed to, or taken by, unauthorized persons, and when entrusted to me will exercise my best efforts to assure its safe-keeping";
(e) that he "shall not, for a period of two (2) years following my last day of employment with [Sonoco], enter into any employment relationship wherein my duties would present a material prospect of disclosure or use of Confidential Information belonging to [Sonoco] or which would otherwise violate [Sonoco's] obligations of secrecy owed to a third party. While the period of this covenant against employment under the circumstances specified in this paragraph shall expire in two (2) years, I acknowledge that my general obligation to refrain from actually using or disclosing proprietary information or trade secrets [...] shall continue beyond this term and specifically until the information shall become public through no fault on my part."

12. In addition to the Employee Agreement, before beginning his employment with Sonoco, Güven received and agreed to the terms of Sonoco's Policies on Business Conduct, which sets forth the high ethical standards that Sonoco requires its employees to observe as a term of employment. Güven thereafter received annual copies of Sonoco's Policies on Business Conduct throughout the term of his employment with Sonoco. He regularly acknowledged receipt of the Policies on Business Conduct, and he regularly reaffirmed his promise to abide by them.

13. The Policies on Business Conduct required Güven, among other things, to conduct business in an ethical manner, to deal fairly and honestly, to disclose conflicts of interest, not to maintain any undisclosed interests in vendors, to protect corporate assets and confidential information, and to use company work time to perform only the business of the company.

14. While employed with Sonoco, Güven and Gürada secretly formed a company called Konfida Ambalaj Tekstil San. Ve Tic. Ltd. Sti. ("Konfida"), for the purpose of competing directly with Sonoco Turkey, using Sonoco's Protected Information for their own purposes and pecuniary benefit.

15. Konfida competes directly with Sonoco Turkey, offering identical products to Sonoco's customers, and Konfida manufactures its products using the same formulas, designs, machines, equipment, and supplies as Sonoco Turkey. In particular, and without limitation, Konfida unlawfully uses Sonoco's Proprietary Information to manufacture and sell bobbins for rolled textile products without compensating Sonoco.

16. Konfida's manufacturing operations are virtually identical to Sonoco Turkey's in every respect.

17. The manufacturing equipment used by Sonoco Turkey is custom designed for Sonoco, and is part of its Protected Information.

18. Similarly, the designs of the manufacturing set-ups, the manufacturing processes, and the manufacturing formulas used by Sonoco Turkey are unique to Sonoco and are part of Sonoco's Protected Information.

19. After forming Konfida, and while still employed by Sonoco, Güven and Gürada solicited Sonoco Turkey's ...


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