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ATTORNEYS FOR PLAINTIFF/COUNTER-DEFENDANT Craig W. Wiley Michael W. Padgett Indianapolis, Indiana Robin K. Vinson Raleigh, North Carolina Charles W. Pautsch Milwaukee, Wisconsin

ATTORNEYS FOR DEFENDANTS/COUNTER-PLAINTIFFS Donald E. Knebel Lynn C. Tyler Aaron M. Staser Jennifer L. Schuster Indianapolis, Indiana

FILED
Mar 21 2012, 4:13 pm

In the

Indiana Supreme Court
No. 94S00-1109-CQ-546 LOPAREX, LLC,

of the supreme court, court of appeals and tax court

CLERK

Plaintiff/Counter-Defendant, v. MPI RELEASE TECHNOLOGIES, LLC, GERALD KERBER, AND STEPHEN ODDERS, Defendants/Counter-Plaintiffs.

Certified Question from the United States District Court for the Southern District of Indiana No. 1:09-CV-01411-JMS-AB The Honorable Jane E. Magnus-Stinson, Judge

March 21, 2012 Shepard, Chief Justice. Just over a century ago, in Wabash Railroad Co. v. Young, this Court held that Indiana`s Blacklisting Statute violated the constitutional Single Subject requirement. We therefore held the statute did not provide a cause of action to individuals who voluntarily leave their employment. Since then, the people have revised this constitutional requirement, and our

standards for its application have evolved, casting continued reliance on Young into doubt.

The vitality of Young and other questions related to the scope of the Blacklisting Statute are now before us by virtue of a certified question from the U.S. District Court for the Southern District of Indiana. Pursuant to Indiana Appellate Rule 64, Judge Jane Magnus-Stinson has certified the following questions:

1. Is Wabash Railroad Co. v. Young, 162 Ind. 102, 69 N.E. 1003 (1904), still good law, such that individuals who voluntarily leave employment are precluded from pursuing a claim under Indiana`s Blacklisting Statute? 2. In an action brought under Indiana`s Blacklisting Statute, are attorney fees incurred in defending an unsuccessful claim against a former employee or in prosecuting a claim by a former employee recoverable as compensatory damages? 3. Is an unsuccessful suit to protect alleged trade secrets, within which a former employer seeks to preclude any competitive employment of a former employee by pursuing permanent injunctive relief and in settlement negotiations, a basis for recovery under Indiana`s Blacklisting Statute? We respond as follows: (1) Young is no longer good law and individuals who voluntarily leave employment are not barred from making a claim under Indiana`s Blacklisting Statute; (2) attorney fees are not an element of compensatory damages under the Blacklisting Statute; and (3) an employer`s suit against a former employee to protect trade secrets is not a basis for recovery under the Blacklisting Statute.

2

Background Stephan Odders and Gerald Kerber1 are former employees of Loparex, LLC, a corporation in the release liner industry.2 During their employment, Odders and Kerber gained in-depth knowledge of Loparex`s sales practices, strategies, and client information, as well as technical information about its formulas, production processes, and proprietary machinery.

Loparex fired Odders in September 2008.

Odders was then subject to a one-year

noncompetition agreement forbidding him from soliciting Loparex customers or working for a competitor within certain territorial limits. Loparex alleges that during that one year, Odders met on multiple occasions with representatives of MPI Release Technologies, LLC, 3 a competitor in the release liner industry. Loparex alleges these meetings were inconsistent with the restrictions of its noncompetition agreement. Odders began a new job with MPI in September 2009.

Kerber resigned from Loparex in September 2009 and immediately began employment with MPI, though he was also subject to a similar one-year agreement. Loparex alleges that Kerber took notebooks and digital memory devices with him. Loparex apparently believed these items contained trade secrets, although that does not appear to have been confirmed.

In October 2009, Loparex sued Kerber in Illinois state court, seeking injunctive relief under the Illinois Trade Secrets Act and damages resulting from Kerber`s breach of the

1

Though Kerber and Odders are technically the counterplaintiffs in their blacklisting claim, for simplicity we refer to them here as the Defendants.
2

The release liner industry involves products such as nametags with peel-off backings, window films, and roofing underlayment. The particular formulas involved in these products are apparently closely guarded trade secrets.
3

MPI Release Technologies, Inc., while a defendant in the original case, is not a counterplaintiff in the blacklisting claim. 3

noncompetition agreement. Loparex dismissed that suit and re-filed in the U.S. District Court for the Southern District of Indiana in November 2009. This time, Loparex included claims against Odders but still sought both injunctive relief and damages. At the same time, Loparex sought to enjoin MPI from employing Kerber and Odders, a request later withdrawn. On several occasions, Loparex apparently offered to dismiss its suit if MPI agreed to terminate the employment of Kerber and Odders. Loparex had sent cease and desist letters to Kerber and Odders before filing its lawsuits.

In April 2010, Kerber and Odders filed amended answers and counterclaims accusing Loparex of blacklisting in violation of Indiana law. The counterclaims seek damages including, among other things, the attorney fees Kerber and Odders incurred in defending themselves against Loparex`s litigation. Judge Magnus-Stinson certified these questions to us in September 2011, after she denied Loparex`s motions to dismiss the counterclaims and granted summary judgment to Kerber and Odders on Loparex`s claims.

Indiana's Blacklisting Statute

The relevant portion of the Blacklisting Statute, a provision creating a cause of action for damages resulting from a former employer engaging in blacklisting, provides:

If any railway company or any other company, partnership, limited liability company, or corporation in this state shall authorize, allow or permit any of its or their agents to black-list any discharged employees, or attempt by words or writing, or any other means whatever, to prevent such discharged employee, or any employee who may have voluntarily left said company`s service, from obtaining employment with any other person, or company, said company shall be liable to such employee in such sum as will fully compensate him, to which may be added exemplary damages. Ind. Code

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