Argued: September 27, 2018
from the United States District Court for the District of
Maryland, at Greenbelt. Deborah K. Chasanow, Senior District
Nicholas Hantzes, HANTZES & ASSOCIATES, McLean, Virginia,
R. Goldstein, JERRY R. GOLDSTEIN, P.C., Silver Spring,
Maryland, for Appellee.
AGEE and FLOYD, Circuit Judges, and John A. GIBNEY, Jr.,
United States District Judge for the Eastern District of
Virginia, sitting by designation.
Inc. ("AirFacts") appeals from the district
court's judgment after a bench trial in favor of Diego de
Amezaga on AirFacts' breach of contract and
misappropriation of trade secrets claims. AirFacts, Inc.
v. de Amezaga, No. DKC 15-1489, 2017 WL 3592440 (D. Md.
Aug. 21, 2017). For the following reasons, we affirm the
judgment in part, vacate it in part, and remand to the
district court for further proceedings consistent with this
de Amezaga worked for AirFacts, a developer and licenser of
revenue accounting software, from 2008 to 2015. AirFacts'
primary product is TicketGuard, an auditing software that
analyzes ticket fares for airlines and travel agencies to
ensure tickets are sold for the appropriate price.
TicketGuard's algorithms compare a ticket price to
commissions, taxes, and airline industry rules like those
collected by the Airline Tariff Publishing Company
("ATPCO"). An AirFacts employee conducts an automated
audit by inputting ticket data into TicketGuard, running the
software, and recording the ticket's proper price. If
that price differs from the price for which the ticket sold,
AirFacts issues a debit memo to the airline or travel agency
that sold the ticket, and the airline or travel agency under
audit handles the refund process. AirFacts also audits ticket
refunds for airlines and travel agencies, but it does not
process ticket refunds for them.
AirFacts, Mr. de Amezaga rose from a product development
analyst to a director responsible for managing programmers
and coders, developing analytical software, and managing
client relationships. He worked under an Employment Agreement
with AirFacts ("Agreement"), two paragraphs of
which are at issue here. First, Paragraph 4.2 required Mr. de
Amezaga to return all AirFacts property, including documents,
upon leaving the company:
Upon termination of his engagement with AirFacts for any
reason, the Employee shall promptly deliver to AirFacts all
equipment, computer software, drawings, manuals, letters,
notes, notebooks, reports, and all other material and records
of any kind, and all copies thereof (including copies on
written media, magnetic storage or other computer storage
media), that may be in the possession of, or under the
control of, the Employee, pertaining to Confidential
Information acquired and Inventions developed by the Employee
during the term of his engagement with AirFacts. The Employee
further agrees to fully disclose and deliver any of the above
described materials in his possession and, at AirFacts's
request, execute, upon his own (or his counsel's) review,
any and all documents reasonably necessary to ensure and
verify compliance with the terms of the Agreement.
J.A. 1213. On February 6, 2015, Mr. de Amezaga gave AirFacts
his notice of resignation. Before he departed the company,
Mr. de Amezaga's supervisors informed him that they might
contact him if they had questions about his work after he
left. On February 13, Mr. de Amezaga's final day at
AirFacts, he emailed a spreadsheet outlining a proration
framework and a database model (collectively, "Proration
Documents"), both relating to AirFacts' upcoming
proration software product, to his personal email
to the end of his employment with AirFacts, the company had
allowed Mr. de Amezaga and "a few" other employees
to set up Lucidchart accounts to store and access company
documents. J.A. 830. Lucidchart is an online document storage
month after his AirFacts employment ended, Mr. de Amezaga
used his AirFacts employee credentials to remotely log in to
his AirFacts account on Lucidchart. From the Lucidchart
account, Mr. de Amezaga downloaded two flowcharts displaying
ticket price rules derived from the ATPCO and its Fare By
Rule system ("Flowcharts"). Mr. de Amezaga had
spent about four months at AirFacts creating the Flowcharts
to display the rules, relevant processing information, and
"things from [his] head" to make auditing tickets
more systematic and easier for AirFacts employees. J.A. 827.
After downloading the Flowcharts, he submitted them as a part
of his job application to a travel agency. Except as noted,
Mr. de Amezaga never accessed the Proration Documents or
Flowcharts or disclosed them to anyone. AirFacts claims Mr.
de Amezaga breached Paragraph 4.2 by retaining these
documents after he resigned and misappropriated AirFacts'
trade secrets by sending the Flowcharts to the travel
second paragraph of the Agreement at issue, Paragraph 8.1,
imposed a non-compete restriction on Mr. de Amezaga's
employment for a year after he left AirFacts. In Paragraph
8.1, Mr. de Amezaga agreed not to
(d) [p]erform services for, own, work for, consult, be
employed by, or become financially interested in any the
[sic] employer's customers (as defined below) unless the
services being performed is [sic] not in competition with, or
similar to, either (i) the services or products provided by
the employer during the term of the employee's employment
or (ii) anticipated services or products of the employer of
which the employee has material knowledge.
J.A. 1213. In 2014, American Airlines ("American")
obtained a license from AirFacts to use TicketGuard as part
of American's in-house ticket auditing process.
American's Travel Agency Audit department audits domestic
flight tickets sold by travel agencies and is the only
department at American that uses TicketGuard.
months after leaving AirFacts, Mr. de Amezaga began working
at American in the Refunds department, but only after he
informed his future supervisors of the Agreement and its
prohibitions on the types of work he could perform. American
assured AirFacts that Mr. de Amezaga's work would not
violate the Agreement and informed Mr. de Amezaga's new
coworkers of his legal obligations to AirFacts. At American, Mr.
de Amezaga manages approximately 100 ticket refund employees
whose task is to process ticket refunds directly to
passengers. When passengers seek refunds directly from
American, the airline uses proprietary software to analyze
tickets under industry fare rules and then issues refunds to
passengers when appropriate. On one occasion, Mr. de Amezaga
helped American's Travel Agency Audit department process
a backlog of international flight ticket refunds. AirFacts
contends Mr. de Amezaga has breached the Agreement through
his work at American.
also alleges Mr. de Amezaga breached the Agreement's
restriction on providing services which are similar to
AirFacts' anticipated products. Specifically, while at
AirFacts, Mr. de Amezaga helped to develop customized
proration software for airlines. Proration occurs when a
passenger buys a multi-airline ticket for a trip and the
ticket revenue must be prorated among each airline pursuant
to negotiated airline agreements and industry standards.
AirFacts developed its proration product to help an airline
recoup the revenue due for its leg of the trip. Mr. de
Amezaga helped to develop and market the proration software
to American and Alaska Airlines ("Alaska"), but
only Alaska purchased the customized product. Although the
software was unfinished when Mr. de Amezaga left, he spent
about fifty percent of his final months at AirFacts working
on the proration product.
joining American, Mr. de Amezaga has, among his duties,
attended weekly staff meetings that included senior employees
of American's Proration department, received
intra-company emails addressed to him as well as Proration
department employees, and coordinated between the Revenue
Accounting department (the Refunds department's parent)
and the Proration department on an accounting project.
AirFacts claims Mr. de Amezaga's interaction with
American's Proration department employees constitutes a
breach of the Agreement in light of his intimate prior
knowledge of the proration software AirFacts was developing
when he resigned.
sued Mr. de Amezaga in the District of Maryland for breach of
contract under Paragraphs 4.2 and 8.1 of the Agreement (Count
One); misappropriation of trade secrets under the Maryland
Uniform Trade Secrets Act ("MUTSA") (Count Two);
and conversion (Count Three). AirFacts also sought injunctive
relief to protect the documents Mr. de Amezaga took, and the
district court entered a temporary restraining order
prohibiting Mr. de Amezaga from destroying any AirFacts
documents. Later, the Parties consented to a preliminary
injunction requiring Mr. de Amezaga to return all AirFacts
documents and allowing AirFacts to forensically search his
electronic devices. The forensic searches confirmed that Mr.
de Amezaga did retain the documents integral to the claims on
appeal after his termination of employment with AirFacts.
court held a five-day bench trial during which AirFacts
abandoned its conversion claim, admitting that it
"ha[d]n't been able to establish" that Mr. de
Amezaga deprived AirFacts of any documents. J.A. 1010;
see 2017 WL 3592440, at *3. In its memorandum
opinion, the court concluded that AirFacts had also abandoned
its Paragraph 4.2 breach of contract claim. The court thus
analyzed Count One only as to Paragraph 8.1 of the Agreement
and found that Mr. de Amezaga's work at American was
neither similar to AirFacts' work nor in competition with
AirFacts' proration product. On Count Two, the court
found that the Flowcharts contained public information and
were widely available to AirFacts' employees, and it
concluded those documents were not trade secrets under the
MUTSA. And while the court held the Proration Documents were
MUTSA trade secrets, the court found that Mr. de Amezaga did
not misappropriate those documents because he accessed them
with authorization while he was an AirFacts employee.
Consequently, the court entered judgment for Mr. de Amezaga
on all counts. AirFacts timely appealed, and this Court has
jurisdiction under 28 U.S.C. § 1291.
review a judgment following a bench trial under a mixed
standard of review-factual findings may be reversed only if
clearly erroneous, while conclusions of law . . . are
examined de novo." Roanoke Cement ...