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Board of Regents of University HO-001 System of Georgia v. One Sixty Over Ninety, LLC

Court of Appeals of Georgia, Third Division

June 27, 2019

BOARD OF REGENTS OF THE UNIVERSITY HO-001 SYSTEM OF GEORGIA
v.
ONE SIXTY OVER NINETY, LLC. ONE SIXTY OVER NINETY, LLC
v.
BOARD OF HO-002 REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

          DILLARD, C. J., RICKMAN and HODGES, JJ.

          Hodges, Judge.

         In these interrelated appeals arising from a procurement, we must decide whether a claim under the Georgia Trade Secrets Act of 1990 (OCGA § 10-1-760 et seq.) is available against a state entity under either that statute or the Georgia Tort Claims Act (OCGA § 50-21-20 et seq.) or whether such a claim is barred by sovereign immunity. If a claim is allowed, we must then decide if One Sixty Over Ninety, LLC's ("One Sixty") claim can survive a motion to dismiss filed by the Board of Regents of the University System of Georgia (the "Board"). See OCGA § 9-11-12 (b) (6).

         One Sixty sued the Board for a violation of the Trade Secrets Act after an employee of the University of Georgia distributed certain of One Sixty's materials, submitted to UGA in response to a request for proposal, to a competitor. The Board moved to dismiss One Sixty's complaint, arguing that the complaint was barred by sovereign immunity and, alternatively, that One Sixty failed to state a claim for relief because the materials distributed by UGA were not "trade secrets" as defined by the Trade Secrets Act.

         The Superior Court of Clarke County denied the Board's motion, finding that a litigant may bring an action for a violation of the Trade Secrets Act under the Tort Claims Act, through which the state waived its sovereign immunity, and that it could not find as a matter of law that One Sixty's materials were not trade secrets. The trial court issued a certificate of immediate review, and we granted the Board's application for interlocutory appeal. One Sixty then filed a cross-appeal in which it argued that the trial court erred in finding that there was no express or implied waiver of sovereign immunity in the Trade Secrets Act. We have consolidated these cases for decision on appeal and, for the following reasons, we affirm the trial court's judgment in both cases.

         As a threshold matter, "[t]he trial court's ruling on [a] motion to dismiss on sovereign immunity grounds is reviewed de novo, while factual findings are sustained if there is evidence supporting them." (Citation omitted.) Ambati v. Bd. of Regents of the Univ. System of Ga., 313 Ga.App. 282, n. 3 (721 S.E.2d 148) (2011); see also OCGA § 9-11-12 (b) (1). Similarly, "[w]e review de novo a trial court's determination that a pleading fails to state a claim upon which relief can be granted, construing the pleadings in the light most favorable to the plaintiff and with any doubts resolved in the plaintiff's favor." (Citation and punctuation omitted.) Babalola v. HSBC Bank USA, N.A., 324 Ga.App. 750 (751 S.E.2d 545) (2013); see also OCGA § 9-11-12 (b) (6).

         So viewed, One Sixty's verified complaint[1] alleged that it is a creative services agency that provides branding, strategy, design, public relations, and other services to a variety of clients, including institutions of higher education. Between June and December 2015, representatives of UGA and One Sixty corresponded concerning an upcoming request for proposal for a branding initiative. During the course of these communications, UGA's representative asked One Sixty for information to assist it in the preparation of the request for proposal and confirmed that One Sixty's responsive information would remain confidential. Finally, in December 2015, UGA asked One Sixty to present a webcast to UGA's Strategic Brand Initiative Committee (the "Committee"). UGA notified One Sixty that the webcast would be recorded so that Committee members who could not be physically present for the meeting would be able to view the presentation. In January 2016, One Sixty made a presentation to the Committee by webcast.

         Thereafter, UGA sent One Sixty a request for proposal for the "Strategic Brand Initiative for a Comprehensive Capital Campaign" (the "RFP" or the "Capital Campaign"). One Sixty provided its written proposal in response to the RFP, marked "Confidential & Proprietary," in February 2016. According to One Sixty, its proposal included "confidential information concerning [One Sixty's] proprietary methods, approach, personnel structuring, and pricing." One Sixty also made a live on-campus presentation to the Committee, which was recorded for the benefit of members of the Committee who could not be present. In addition to the confidential information included in its proposal, One Sixty's live presentation contained "creative samples, which disclose [One Sixty's] proprietary method of deploying such sample." One Sixty alleged that it agreed to the recording of its presentation "based on the assurances by UGA that the video would be used solely to show [One Sixty's] presentation to absent Committee members." There is no allegation in One Sixty's complaint that its initial webcast presentation or its recorded on-campus presentation were initially identified as confidential or as trade secrets.

         Ultimately, UGA selected Ologie, LLC, a direct competitor with One Sixty in the higher education community, as the creative services agency for the Capital Campaign. In March 2016, One Sixty learned that UGA shared with Ologie One Sixty's initial webcast presentation, recorded on-campus presentation, "and a curated selection of [One Sixty's] creative work samples in a proprietary new business format" as "examples of work from other vendors[.]" (Punctuation omitted.) One Sixty alleged that Ologie used One Sixty's confidential information in other proposals for which the two companies competed, resulting in losses to One Sixty.[2] After it learned UGA shared the presentations, One Sixty "had multiple discussions with UGA regarding the extent to which the [confidential] [i]nformation was disclosed and the need to maintain its confidentiality as a trade secret." One Sixty also then "submitted an affidavit to UGA in accordance with OCGA § 50-18-72 attesting to the trade secret nature of the [condfidential] [i]nformation to prevent its possible disclosure in response to an open records request."[3]

         As a result of the disclosure of its information, One Sixty sued the Board under the Tort Claims Act for a violation of the Trade Secrets Act. The Board moved to dismiss One Sixty's complaint (1) for lack of subject matter jurisdiction under OCGA § 9-11-12 (b) (1), because the Board's sovereign immunity had not been waived by the Trade Secrets Act; and (2) for failure to state a claim for relief pursuant to OCGA § 9-11-12 (b) (6), arguing that the presentations at issue are not trade secrets as a matter of law because One Sixty failed to protect the confidentiality of the information by designating the presentations as "trade secrets" by submitting an affidavit as required by OCGA § 50-18-72 (a) (34). The trial court denied the Board's motion, concluding that (1) while the Trade Secrets Act does not contain an express or implied waiver of sovereign immunity, a violation of the Trade Secrets Act constitutes a tort that is actionable under the Tort Claims Act; and (2) it could not find "as a matter of law that [One Sixty's confidential] information at issue is not a trade secret simply because there was no affidavit attached to it." The trial court issued a certificate of immediate review to the Board, and we granted the Board's application for interlocutory appeal. The appeal and cross-appeal of the Board and One Sixty, respectively, followed.

         Case No. A19A0007[4]

         1. In a single enumeration of error, One Sixty argues that the trial court erred in concluding that the Trade Secrets Act does not contain a waiver of sovereign immunity. Specifically, One Sixty contends that because the Trade Secrets Act defines a "person" as, in part, a "government [or] governmental subdivision or agency[, ]" and that "a person is entitled to recover damages for misappropriation" of a trade secret, the Trade Secrets Act waives sovereign immunity. OCGA §§ 10-1-761 (3); 10-1-763 (a). We are not persuaded.

         In its order denying the Board's motion to dismiss, the trial court initially stated that "[t]here is no dispute that the [Trade Secrets Act] itself does not contain an express waiver of sovereign immunity[.]" The trial court then rejected One Sixty's argument that the Trade Secret Act's use of "person," defined in part as a "government [or] governmental subdivision or agency," created "an implied right of action against the government."

         As a threshold matter, "[t]he doctrine of sovereign immunity shields the state from suits seeking to recover damages [because] . . . the primary purpose of sovereign immunity is to protect state coffers." In the Interest of A. V. B., 267 Ga. 728 (1) (482 S.E.2d 275) (1997). Therefore, "[t]he sovereign immunity of the state and its departments and agencies can only be waived by an Act of the General Assembly which specifically provides that sovereign immunity is thereby waived and the extent of such waiver." Ga. Const. of 1983, Art. I, Sec. II, Par. IX (e). Such a waiver must be specific because "[t]he state is not bound by the passage of a law unless it is named therein or unless the words of the law are so plain, clear, and unmistakable as to leave no doubt as to the intention of the General Assembly." OCGA § 1-3-8.[5]

         However, "[t]his does not mean . . . that the Legislature must use specific 'magic words' such as 'sovereign immunity is hereby waived' in order to create a specific statutory waiver of sovereign immunity." (Citations omitted.) Colon v. Fulton County, 294 Ga. 93, 95 (1) (751 S.E.2d 307) (2013), overruled on other grounds, Rivera v. Washington, 298 Ga. 770, 778, n. 7 (784 S.E.2d 775) (2016). For example, our Supreme Court found that Georgia's whistleblower statute, OCGA § 45-1-4, waived the State's sovereign immunity for claims brought against a "public employer," partially defined as "the executive, judicial, or legislative branch of the state . . . or any local or regional governmental entity that receives any funds from the State of Georgia[.]" Colon, supra, 294 Ga. at 95-96 (1). In contrast, however, we have determined that the "Georgia RICO Act does not express any waiver of sovereign immunity" despite the fact that its definition of "enterprise" includes "governmental as well as other entities." OCGA § 16-14-3 (3); Tricoli v. Watts, 336 Ga.App. 837, 840 (4) (783 S.E.2d 475) (2016).

         Here, the parties do not dispute that the Trade Secrets Act does not contain an express waiver of sovereign immunity.[6] We further conclude that the act also does not waive the state's sovereign immunity by implication. At the outset, "implied waivers of governmental immunity should not be favored." (Punctuation and citation omitted.) Colon, supra, 294 Ga. at 95 (1). Furthermore, statutes "providing for a waiver of sovereign immunity are in derogation of the common law and thus are to be strictly construed against a finding of waiver." (Citation omitted; emphasis supplied.) Gish v. Thomas, 302 Ga.App. 854, 860 (2) (691 S.E.2d 900) (2010).

         In this case, although the Trade Secrets Act defines a "person," in relevant part, as a "government [or] governmental subdivision or agency[, ]" nothing in the act sufficiently identifies the state or any of its departments to waive the state's sovereign immunity by implication. See OCGA § 1-3-8; Tricoli, supra, 336 Ga.App. at 840 (4); compare City of Union Point v. Greene County, 303 Ga. 449, 454 (1) (a) (812 S.E.2d 278) (2018) (where "only potential parties to an action under OCGA § 36-70-25.1 are counties and affected municipalities[, the statute] can only be interpreted as creating a waiver of sovereign immunity") (emphasis supplied);[7] Colon, supra, 294 Ga. at 95-96 (1) (whistleblower statute waived sovereign immunity where "public employer" defined, in part, as "the executive, judicial, or legislative branch of the state … or any local or regional governmental entity that receives any funds from the State of Georgia") (emphasis supplied); OCGA § 45-19-22 (5) (Fair Employment Practices Act of 1978 defines "[p]ublic employer" as "any department, board, bureau, commission, authority, or other agency of the state") (emphasis supplied).[8]

         Accordingly, in analyzing this case against existing precedent, we conclude that the language of the Trade Secrets Act defining "person" most closely resembles the language of the RICO Act defining "enterprise," which we determined did not contain a waiver of the State's sovereign immunity. See Tricoli, 336 Ga.App. at 840 (4). The General Assembly, in enacting the Trade Secrets Act, certainly could have included "state" or identified the branches of state government in its definition of "person" to make plain its intention that the state's sovereign immunity should be waived.[9] See, e.g., Colon, supra, 294 Ga. at 95-96 (1). The fact that it did not is significant. See, e.g., West v. City of Albany, 300 Ga. 743, 745 (797 S.E.2d 809) (2017) ("We . . . presume that when enacting a statute the General Assembly meant what it said and said what it meant.") (citation and punctuation omitted); compare OCGA § 16-1-3 (12) (definition of "person" in Criminal Code of Georgia includes "government," which is itself defined in OCGA § 16-1-3 (8) as "the United States, the state, any political subdivision thereof, or any agency of the foregoing") (emphasis supplied).

         In sum, because the Trade Secrets Act does not contain any language expressly waiving the state's sovereign immunity, and the words of the Act are not "so plain, clear, and unmistakable as to leave no doubt as to the intention of the General Assembly"[10] that waiver of sovereign immunity may be implied, or was even intended, we affirm the judgment of the trial court that the Trade Secrets Act neither expressly nor impliedly waived the state's sovereign immunity.[11]

         Case No. A19A0006

         2. In its first enumeration of error, the Board contends that the trial court erred in determining that, despite the absence of an express or implied waiver of sovereign immunity in the Trade Secrets Act, a litigant may bring such a claim against a state entity pursuant to the Tort Claims Act. After review of the Trade Secrets Act and what constitutes a tort under Georgia law, we agree with the trial court.

         In the order under review, the trial court first looked to dictionary and statutory definitions of "tort" before examining the history of the Uniform Trade Secrets Act. Next, the trial court analyzed the nature of the claims available under the Georgia Trade Secrets Act. As a result, the trial court concluded that a violation of the Trade Secrets Act "is . . . a tort claim" and that the Trade Secrets ...


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