Alifax Holding Spa v. Alcor Scientific Inc. et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
ALIFAX HOLDING SPA, )
)
Plaintiff, )
)
v. ) C.A. No. 14-440 WES
)
ALCOR SCIENTIFIC INC.; and )
FRANCESCO A. FRAPPA, )
)
Defendants. )
___________________________________)
MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
This is the latest chapter of a transatlantic saga pitting an
Italian producer of diagnostic medical instruments, Alifax Holding
SpA, against its Rhode Island-based competitor, Alcor Scientific,
Inc., and its itinerant former employee, Francesco Frappa. In
this motion for partial summary judgment, Alifax has asked the
Court to answer the following question: which jurisdiction’s law
should define the alleged duty of confidentiality owed by Frappa
to his Italian ex-employer? The answer: Italy’s.
Frappa’s contractual employment relationship with Sire Ana-
lytical S.r.l., an Italian company acquired by Alifax, is the only
conceivable source of his alleged duty of secrecy. His decade-
long employment relationship was negotiated, consummated, per-
formed, and terminated in Italy. Neither Frappa nor his work for
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Sire were connected in any way to Rhode Island. Alifax’s claim
for trade secret misappropriation under a Rhode Island statute
based on acts that occurred within the state does not alter the
source of his alleged duty. Accordingly, Italian law governs the
substance of Frappa’s alleged duty of confidentiality to Alifax in
this action.
I. Background
The stage was set for the current strife between Alifax and
Alcor during Francesco Frappa’s time as a student in Udine, Italy.
In 2000, Frappa interned as a trainee at Sire, a local company.
(Pl.’s Statement of Undisputed Facts (“PSUF”) ¶ 2, ECF No. 165.)
After two years, he discussed taking a permanent role with Sire’s
CEO and was promoted to the position of mechanical fitter appren-
tice.1 (Id. ¶¶ 3-4)
Frappa and Sire executed a hiring letter formalizing the ap-
prenticeship in Udine on October 7, 2002.2 (Id. ¶ 5; see also SUF
Ex. A at 2, ECF No. 155-1). The letter states that it was a
1 Defendants respond to various contentions by stating “dis-
puted but irrelevant,” without specifically citing contrary record
evidence. Such responses do not create a genuine dispute of fact.
See LR Cv 56(a)(3); Ruiz Rivera v. Riley, 209 F.3d 24, 28 (1st
Cir. 2000) (“[F]ailure to present a statement of disputed facts,
embroidered with specific citations to the record, justifies the
court’s deeming the facts presented in the movant’s statement of
undisputed facts admitted and ruling accordingly.”).
2 The parties have provided undisputed translations, in whole
or part, of all Italian-language documents.
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communication pursuant to cited sections of Italian law and that,
“[f]or other provisions not expressly provided for . . . see the
laws in effect and the National Collective Bargaining Agreement
applied to the MECHANICAL ENGINEERING INDUSTRY.” (PSUF Ex. A at
2 (emphasis added).) The “[a]pprenticeship length” was three-and-
a-half years, and Sire agreed to pay Frappa “per [the] Collective
Bargaining Agreement used by the company.” (Id.)
Alifax, an Italian corporation headquartered in Padova, It-
aly, acquired Sire two years later.3 (SUF ¶ 11; see also Pl.’s
Statement of Disputed Facts (“PSDF”) ¶ 3, ECF No. 161-1.) Frappa
nevertheless became a permanent mechanical fitter for Sire in Oc-
tober 2004. (PSUF ¶ 12.) He was promoted over seven years to
different roles with more responsibility. (Id. ¶ 13-14.) His
duties included hardware and software development as well as work
with Alifax’s erythrocyte sedimentation rate (“ESR”) analyzers,
clinical devices used to test blood samples for indicia of non-
specific inflammation. (Id. ¶¶ 20-22.) At least some of his ESR-
related duties were supervisory. (Id. ¶¶ 22-23.) Frappa worked
exclusively at Sire facilities in Udine and nearby Nimis or at
Alifax’s Padova headquarters. (Id. ¶ 27.) He answered to
3 Sire merged completely into Alifax during this litigation.
(See PSDF ¶ 3.)
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supervisors in Italy and collected his pay and benefits in Italy.
(Id. ¶¶ 28-29.)
Frappa gave notice of his intent to resign from Sire at the
end of August 2011, citing a “change of position” as the motive
for his departure. (Id. ¶ 30; PSUF Ex. B at 2.) His notice was
effective September 1, 2011, but he explained that he intended “to
remain at the company for the entire two-month notice period as
set forth in the Contract.” (PSUF Ex. B at 2.) Prior to leaving,
Frappa forwarded certain information concerning an “anemia factor”
and myeloma from his Sire email account to a personal email ac-
count. (See PSDF ¶ 106.)
Frappa’s resignation followed a week-long trip to Rhode Is-
land as the guest of Alcor’s founder, Carlo Ruggieri. (PSUF ¶
52.) Alcor is a Rhode Island corporation that also produces di-
agnostic devices. (See Pl.’s Statement of Additional Undisputed
Facts (“PSAUF”) ¶ 1, ECF No. 173-1.) Ruggieri invited Frappa to
Rhode Island based on a lead from an industry professional to
assess whether Frappa might leave Alifax and whether they might
work together. (See PSUF ¶ 52; PSUF Ex. F at 4.) At the end of
Frappa’s two-month notice period, Ruggieri told Alcor’s staff
Frappa would “immediately take over full responsibility for Al-
cor[‘s] most advanced diagnostic product development projects” as
a vice president of research and development. (SUF ¶ 33; SUF Ex.
E at 2.)
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Frappa moved to Rhode Island around May 2012 and began working
on Alcor’s iSED ESR analyzer. (SUF ¶ 33; PSAUF Ex. 1 at ¶ 8, ECF
No. 169-6.) The iSED competes with Alifax’s analyzers by delivering
blood test results for ESR in just twenty seconds.4 (See Second
Am. & Suppl. Compl. ¶ 8, ECF No. 68; Defs.’ Answer to Pl.’s Second
Am. & Suppl. Compl. & First Am. Countercl. ¶ 8, ECF No. 71.) Alcor
developed the iSED in Rhode Island where it is headquartered.
(PSAUF ¶¶ 1, 3.) Frappa remains employed by Alcor, but now resides
in Europe. (PSUF ¶ 34; PSDF ¶ 2; Defs.’ Answer to Second Am. &
Suppl. Compl. ¶ 2). He remains an Italian citizen. (PSUF ¶ 34.)
When Alifax discovered the iSED had rapid analytical capa-
bilities comparable to its devices, it cried foul. It accused
Alcor and Frappa of misappropriating its trade secrets and using
its proprietary information to develop the iSED, thereby violating
the Rhode Island Uniform Trade Secrets Act (Count II) and breaching
the confidential relationship between Frappa and Alifax (Count
III).5 (See generally Second Am. & Suppl. Compl.)
4 The traditional Westergren method of calculating ESR re-
quires testing times of one to two hours to obtain suitable re-
sults. (PSDF ¶ 17.)
5 Alifax also claims patent and copyright infringement. (See
generally Second Am. & Suppl. Compl.)
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II. Legal Standard
A party is entitled to summary judgment if “the record, con-
strued in the light most flattering to the nonmovant, ‘presents no
genuine issue as to any material fact and reflects the movant’s
entitlement to judgment as a matter of law.’” Lawless v. Steward
Health Care Sys., LLC, 894 F.3d 9, 20–21 (1st Cir. 2018) (quoting
McKenney v. Mangino, 873 F.3d 75, 80 (1st Cir. 2017), cert. denied,
138 S. Ct. 1311 (2018)); see also Fed. R. Civ. P. 56(a).
Alcor argues Alifax’s request for a choice-of-law ruling un-
der Rule 56 is improper because it will not determine any disputed
claim. This is incorrect. Rule 56(a) expressly authorizes a party
to seek partial summary judgment on “part of each claim or de-
fense.” Fed. R. Civ. P. 56(a) (emphasis added). The term “judg-
ment” in this context is often a misnomer. See Minority Police
Officers Ass’n of South Bend v. City of South Bend, 721 F.2d 197,
200 (7th Cir. 1983). “A partial summary judgment is merely an
order deciding one or more issues in advance of trial; it may not
be a judgment at all, let alone a final judgment on a separate
claim.” Id. The 2010 amendments to Rule 56(a) comport with this
understanding. See Fed. R. Civ. P. 56, advisory committee notes
to 2010 amendments (“The first sentence is added to make clear
. . . that summary judgment may be requested . . . as to a claim,
defense, or part of a claim or defense.” (emphasis added)).
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An order declaring which law will govern a discrete issue in
Count II and all of Count III is a ruling on “part of a claim or
defense.” Id. It is procedurally consistent with the routine
rulings of many courts resolving choice-of-law issues through par-
tial summary judgment. See, e.g., Kase v. Seaview Resort & Spa,
599 F. Supp. 2d 547, 549 (D.N.J. 2009); Deep Marine Tech., Inc. v.
Conmaco/Rector, L.P., 515 F. Supp. 2d 760, 768 (S.D. Tex. 2007).
Here, the facts bearing on the choice-of-law analysis are undis-
puted. The issue is therefore ripe for resolution. See Reisch v.
McGuigan, 745 F. Supp. 56, 58 (D. Mass. 1990) (“Because there are
no material facts in dispute . . . the choice of law issue can be
decided on defendants’ summary judgment motion, as can any ques-
tions of [foreign] law presented under Fed. R. Civ. P. 44.1.”).
III. Discussion
A federal court sitting in diversity applies the forum state’s
choice of law rules. See Baker v. St. Paul Travelers Ins. Co.,
595 F.3d 391, 392 (1st Cir. 2010); Lexington Ins. Co. v. Gen.
Accident Ins. Co. of Am., 338 F.3d 42, 46 (1st Cir. 2003). For
tort-based claims, Rhode Island follows an interest-weighing ap-
proach to determine what jurisdiction “bears the most significant
relationship to the events and the parties.” Harodite Indus.,
Inc. v. Warren Elec. Corp., 24 A.3d 514, 534 (R.I. 2011) (emphasis
and quotation marks omitted). The Rhode Island Supreme Court has
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not adopted a definitive analysis for contract-based claims.6 It
has applied both the lex loci contractus doctrine and an interest-
weighing test. Compare DeCesare v. Lincoln Benefit Life Co., 852
A.2d 474, 484 (R.I. 2004) (noting that for contract-based claims,
“the law of the state where the contract was executed governs”),
with Gordon v. Clifford Metal Sales Co., 602 A.2d 535, 539 (R.I.
1992) (applying interest-weighing analysis).
Alifax has made this inquiry trickier by pleading claims that
may draw upon the law of up to three different sovereigns. But
this challenge is not insurmountable. As the Court has already
held, multiple jurisdictions’ laws may be applied under the prin-
ciple of depecage. See Alifax Holding SpA v. Alcor Sci., Inc.,
No. CA 14-440 S, 2015 WL 5714727, at *2 (D.R.I. Sept. 29, 2015).
Depecage permits “different issues in a single case, arising out
of a common nucleus of operative facts, [to] be decided according
to the substantive law of different states.” Id. (citing Putnam
Res. v. Pateman, 958 F.2d 448, 464–65 (1st Cir. 1991); see also
Oyola v. Burgos, 864 A.2d 624, 628 (R.I. 2005) (explaining that
conflict-of-laws “questions are issue-specific”).
6 The First Circuit has remarked that, under Rhode Island law,
the “proper choice-of-law test for contract cases [is] shrouded in
uncertainty.” Crellin Techs., Inc. v. Equipmentlease Corp., 18
F.3d 1, 5 (1st Cir. 1994) (reviewing various tests applied by the
Rhode Island Supreme Court).
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Alifax seeks a choice of law ruling with respect to one ele-
ment of Count II (breach of a duty of secrecy) and Count III
(breach of a confidential relationship). Pursuant to the depecage
principle, the Court considers these counts separately, but in
reverse order.
A. Count III: Breach of a Confidential Relationship
1. Does Count III Sound in Tort or Contract?
Count III alleges that Frappa breached a fiduciary duty cre-
ated by the terms of his employment with Sire by disclosing Sire’s
confidential information to Alcor. (See Second Am. & Suppl. Compl.
¶ 73; see also Pl.’s Mot. for Partial Summ. J. 12 (“Pl.’s Mot.”),
ECF No. 155.) Alifax argues that because Frappa’s duty arose out
of his contractual employment with Sire, Count III “sounds in
contract” and triggers Rhode Island’s related choice-of-law prin-
ciples, favoring Italy. (Pl.’s Mot. 12-13.) Alcor stresses that
Count III does not plead breach of contract; it pleads breach of
fiduciary duty, which is a tort. (Defs.’ Opp’n to Pl.’s Mot. for
Partial Summ. J. (“Defs.’ Opp’n”) 7, ECF No. 169-2.) Alcor’s
balancing of jurisdictional interest factors favors Rhode Island.
Alifax’s characterization of Count III as contract-based re-
lies foremost on the Rhode Island Supreme Court’s holding in
Matarese v. Calise, 305 A.2d 112 (R.I. 1973). Matarese is a
curious case. The plaintiff engaged the defendant, through an
oral agreement made in Italy, to secure title to certain property
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in Italy from its owner in the United States. See Matarese, 305
A.2d at 115. Rather than purchasing the land for plaintiff, de-
fendant bought it for himself, and was found liable for breaching
a fiduciary duty to plaintiff. Id. at 116.
The defendant appealed, arguing the trial court erroneously
applied Rhode Island law rather than Italian law. The Court dis-
agreed, stating the agreement “created a personal relationship
between plaintiff and defendant of principal and agent whereby in
return for a valid consideration, defendant would act in a fidu-
ciary capacity to obtain the property in question for plaintiff.”
Id. at 118. It further ruled that “[t]his agreement and the rela-
tionship created by it are governed by the usual rules of con-
tract,” and applied the corresponding choice-of-law principles.
Id. Because the agreement creating the relationship was made “with
a view to performance in [the United States],” id., it fell within
an exception to the general rule that “contracts are governed by
the laws of the state or country in which they are made . . . .,”
id. at n.4 (quotation marks omitted).
Matarese conflicts with the orthodox understanding that a
claim for breach of fiduciary duty sounds in tort. See, e.g.,
Wampanoag Grp., LLC v. Iacoi, 68 A.3d 519, 523 (R.I. 2013); Zuba
v. Pawtucket Credit Union, 941 A.2d 167, 173 (R.I. 2008); see also
Restatement (Second) of Torts § 874 (Am. Law Inst. 1979). This
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dissonance may make for an intriguing academic discussion.7 The
Matarese holding is nevertheless reasonably clear: if a fiduciary
duty arises from an express agreement’s terms, contract-based
rules govern any choice-of-law question. Here, Frappa’s duty to
Alifax is premised on the terms of an express agreement as con-
strued in light of Italian law: the national collective bargaining
agreement for the mechanical engineering industry (“NCBA”).8 Pur-
suant to Matarese, such a claim sounds in contract, thus the prin-
ciples for contract-based claims must determine any choice of law.9
2. Substantive Choice-of-Law Analysis
Italy is the favored jurisdiction under all applicable tests
for a contract-based claim. The Court agrees with Alifax that
Frappa’s hiring letter convincingly demonstrates the parties’ in-
tent to apply Italian law to his employment relationship, even in
7 Italian law is a particularly bad fit for a bifurcated
choice-of-law model. Italian employment relationships are funda-
mentally contractual, but agreements are minimalist in form and
rely heavily on duties established as a matter of law or in an-
cillary collective agreements. See, e.g., Piergiovanni Mandruzzato
& Sara Bittolo, Italy, in 1A International Labor and Employment
Laws 6-1, 6-15 (4th ed. 2014).
8 There is no dispute that an Italian contract must be con-
strued under Italian law. (See Defs.’ Opp’n 7.)
9 This finding does not conflict with the ruling on Alcor’s
Motion to Dismiss, which suggested the interest-weighing factors
for torts would apply. Although the factors were discussed, this
issue was not before the Court. Moreover, the Court specifically
declined to provide a choice of law ruling on the underdeveloped
record. See Alifax, 2015 WL 5714727, at *2.
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the absence of an express governing law clause. See Restatement
(Second) of Conflict of Laws § 187 cmt. a (Am. Law Inst. 1971).10
The letter states that it was issued pursuant to identified sec-
tions of Italian law and expressly incorporates “the laws in ef-
fect” in addition to the NCBA. (PSUF Ex. A at 2.) Frappa admits
he “understood that Italian law applied to the contract.” (Frappa
Decl. ¶ 4, ECF No. 169-6.) Thus, the Court must respect the
parties’ choice of Italian law. See DeFontes v. Dell, Inc., 984
A.2d 1061, 1067 (R.I. 2009) (following Restatement (Second) of
Conflict of Laws § 187 (Am. Law Inst. 1971)). But if the parties’
choice was not enough, they executed Frappa’s hiring letter and
formed the employment relationship under the NCBA in Italy.11 The
lex loci contractus doctrine therefore would require the Court to
apply Italian law. See, e.g., DeCesare, 852 A.2d at 484; Union
Sav. Bank v. DeMarco, 254 A.2d 81, 83 (R.I. 1969).
An interest-weighing analysis yields the same result. See
10 Comment (a) instructs that “even when the contract does not
refer to any state, the forum may nevertheless be able to conclude
from its provisions that the parties did wish to have the law of
a particular state applied. So the fact that the contract contains
legal expressions, or makes reference to legal doctrines, that are
peculiar to the local law of a particular state may provide per-
suasive evidence that the parties wished to have this law applied.”
11 As explained infra, the Court finds that an Italian court
would likely apply the terms of the NCBA to Frappa’s employment
with Sire beyond the express period of his apprenticeship.
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Gordon v. Clifford Metal Sales Co., 602 A.2d 535, 538 (R.I. 1992)
(considering Restatement factors); see also Restatement (Second)
of Conflict of Laws §§ 6, 188 (Am. Law Inst. 1971). The relevant
factors include:
(a) the place of contracting,
(b) the place of negotiation,
(c) the place of performance,
(d) where the contract’s subject matter is
located, and
(e) the domicile, residence, nationality,
place of incorporation and place of busi-
ness of the parties.
See Restatement (Second) of Conflict of Laws § 188 (Am. Law Inst.
1971). The Court may also consider policy factors such as:
(a) the needs of the interstate and interna-
tional systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested
states and the relative interests of those
states in the determination of the par-
ticular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the partic-
ular field of law,
(f) certainty, predictability and uniformity
of result, and
(g) ease in the determination and application
of the law to be applied.
Id. § 6; see also Gordon, 602 A.2d at 538.
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Here, Frappa’s employment relationship with Sire was negoti-
ated, consummated, performed, and terminated entirely in Italy.
Frappa claims he was domiciled in Rhode Island at the time of any
alleged breach. (See Defs.’ Resp. to PSUF ¶ 34, ECF No. 169-3.)
But he remains an Italian citizen, and if the place of negotiation
and the place of performance are the same, the law of that juris-
diction presumptively applies. See Restatement (Second) of Con-
flict of Laws § 188(3) (Am. Law Inst. 1971). Applying Rhode Island
law arguably would be easier, however doing so would upset the
“justified expectations” of the parties and inject unpredictabil-
ity into a defined relationship. See id. § 6(d)-(e), (g). It is
also hard to fathom what interest Rhode Island could have in reg-
ulating an Italian company’s relationship with its Italian ex-
employee. Id. § 6(c).
As a practical matter, the same outcome would result from
Rhode Island’s interest-weighing analysis for tort-based claims.
See Harodite Indus., 24 A.3d at 534 (listing Restatement fac-
tors).12 The conduct causing the alleged breach – the Defendants’
alleged misappropriation of Alifax’s trade secrets – occurred in
12 Such factors include: “(1) The place where the injury oc-
curred, (2) the place where the conduct causing the injury oc-
curred, * * * (3) the domicile, residence, nationality, place of
corporation and place of business of the parties, and (4) the place
where the relationship, if any, between the parties is centered.”
Id. at 526 (quotation marks omitted).
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Rhode Island. See Magnum Def., Inc. v. Harbour Grp. Ltd., 248 F.
Supp. 2d 64, 69 (D.R.I. 2003) (finding that misappropriation takes
place where the defendants’ misused confidential information).
But the place of injury was Italy. See Restatement (Second) of
Conflict of Laws § 145 cmt. f (Am. Law Inst. 1971). Furthermore,
while the various domiciles, residences, places of business and
incorporation of the parties weigh equally, Italy is plainly the
center of the relationship. Frappa worked in that country for
Sire, and later its parent Alifax, for more a decade. All material
aspects of his employment – including his acquisition of the al-
leged trade secrets or confidential information – occurred in It-
aly.
Tort-related policy considerations do not change the out-
come.13 Applying Rhode Island law would be simpler, but less
foreseeable. The Court also does not believe that Rhode Island
clearly follows a “better rule.” See Harodite Indus., 24 A.3d at
526. And Italian law does not, as Alcor argues, infringe on
important Rhode Island policy prerogatives by altering a Rhode
Island employee’s fiduciary duties. (See Defs.’ Opp’n 9.) When
13 As with analysis for contract-based claims, relevant con-
siderations include “(1) predictability of result; (2) maintenance
of interstate and international order; (3) simplification of the
judicial task; (4) advancement of the forum's governmental inter-
ests; and (5) application of the better rule of law.” Harodite
Indus., 24 A.3d at 526 (quotation marks omitted).
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the alleged duty arose, Frappa was employed in Italy, not Rhode
Island. Finally, it should not come as a great surprise to Frappa
or Alcor that the confidentiality obligations of an Italian com-
petitor’s ex-employee arising from the former employment relation-
ship performed exclusively in Italy would be interpreted under
Italian law.
Based on the foregoing analysis, the Court finds that Italian
law will govern Count III.
B. Count II: Trade Secret Misappropriation
1. Can Italian Law Govern Frappa’s Duty of Secrecy?
In Count II, Alifax alleges that Alcor and Frappa violated
the Rhode Island Uniform Trade Secrets Act (“RIUTSA”), R.I. Gen.
Laws § 6-41-1 et seq., by misappropriating its trade secrets.
Misappropriation is defined to include the acquisition of a trade
secret “by a person who knows or has reason to know that the trade
secret was acquired by improper means.” Id. § 6-41-1(2)(i). “Im-
proper means” include a “breach or inducement of a breach of a
duty to maintain secrecy.” Id. at § 6-41-1(1). RIUTSA also
prohibits disclosure or use of another’s trade secret without con-
sent by a person who (1) used “improper means” to acquire it, or
(2) “knew or had reason to know” that the trade secret was
“[d]erived from or through a person who owed a duty to the person
seeking relief to maintain its secrecy.” Id. § 6-41-1(2)(ii)(B).
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The statute does not enumerate the possible sources of a defend-
ant’s “duty to maintain secrecy.”
Alifax theorizes that Frappa’s duty for RIUTSA purposes arose
from his employment relationship with the company. (See Pl.’s Reply
in Supp. of Its Mot. for Partial Summ. J. (“Pl.’s Reply”) 3-4, ECF
No. 173.) Thus, Alifax contends that the Italian law bearing on
Count III would also serve to define the substance of this single
element of its RIUTSA claim.
The Defendants dismiss out of hand the idea that Italian law
could supply such a duty here. Instead, they argue that where
Alifax has sued a Rhode Island corporation under a Rhode Island
statute, Rhode Island law must define any duty of secrecy. This
interpretation, however logical, conflicts with RIUTSA’s plain
language. The statute’s text is broad; it does not impose limits
on the source of the duty of secrecy. For example, a duty may
arise from an express contract. See, e.g., Roton Barrier, Inc. v.
Stanley Works, 79 F.3d 1112, 1118 (Fed. Cir. 1996) (holding con-
fidentiality agreement created a duty to maintain secrecy under
Illinois Trade Secret Act). Or a duty may be implied by law based
on the parties’ relationship. See Kamin v. Kuhnau, 374 P.2d 912,
919 (Or. 1962) (holding confidentiality agreement could be implied
in fact); Aerospace Am., Inc. v. Abatement Techs., Inc., 738 F.
Supp. 1061, 1071 (E.D. Mich. 1990) (holding confidential relation-
ship may give rise to “‘confidential’ or ‘fiduciary’ duty by
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operation of law” in trade secret misappropriation action). And
finally, a duty may be established by statute or by common law.
See Union Pac. R.R. Co. v. Mower, 219 F.3d 1069, 1073-76 (9th Cir.
2000) (holding state statute imposing duty of confidentiality
could have been source of defendant’s obligation to his former
employer); Gen. Reinsurance Corp. v. Arch Capital Grp., Ltd., No.
X05CV074011668S, 2007 Conn. Super. LEXIS 2629, at *27 (Conn. Super.
Ct. Oct. 17, 2007) (finding Connecticut law imputes a duty to
refrain from disclosing trade secret information even in the ab-
sence of a specific agreement).
It indeed would be odd for the law of Rhode Island – a ju-
risdiction neither Alifax nor Frappa had any connection to before
August 2011 – to define a duty arising during Frappa’s employment
in Italy. Alcor cites no authority holding that the law of another
jurisdiction, if applicable, cannot be the source of a defendant’s
confidentiality obligations under RIUTSA. And while Alifax’s ci-
tations are also thin, the Court finds no persuasive justification
for Alcor’s narrower interpretation. Such an outcome would be
inconsistent with RIUTSA’s liberal terms, the diverse sources of
parties’ duties of secrecy reflected in case law, and one of the
broad motivating policies of trade secret law: “the maintenance of
standards of commercial ethics.” See Uniform Trade Secrets Act §
1 cmt. (1985) (quoting Kewanee Oil Co. v. Bicron Corp., 416 U.S.
470 (1974)).
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Neither party has provided a true choice-of-law analysis re-
garding the “breach of duty” element of Count II. It is clear,
however, the “circumstances giving rise to a duty to maintain [the]
secrecy,” R.I. Gen. Laws § 6-41-1(2)(ii)(B)(III), of Alifax’s con-
fidential information would be the same circumstances creating a
duty under Count III, i.e., Frappa’s employment relationship with
Sire. Count III and the “duty” element of Count II thus should
rise or fall together. And as explained at length above, under
the circumstances of this case, Frappa’s duty of confidentiality
to Alifax is governed by the law of Italy.
2. The “Reasonableness” of Alifax’s Conduct
Alifax has also asked the Court to find that Italian law shall
govern whether Alifax’s efforts to maintain the secrecy of its
trade secret information were “reasonable under the circum-
stances.” R.I. Gen. Laws § 6-41-1(4). The Court declines to do
so. As Alcor argues, whether Alifax’s conduct was reasonable is
fundamentally a question of fact. See, e.g., Spottiswoode v.
Levine, 730 A.2d 166, 175 n.7 (Me. 1999) (listing facts bearing on
reasonableness of efforts to maintain secrecy); Furmanite Am.,
Inc. v. T.D. Williamson, Inc., 506 F. Supp. 2d 1134, 1141 (M.D.
Fla. 2007) (stating whether a party took reasonable steps to pro-
tect trade secrets is a “fact-intensive” question). There is no
choice of law to be made regarding this issue.
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C. The Applicable Law of Italy
Having resolved the choice-of-law question, the Court now
must construe the baroque mosaic of Italian law, the substance of
which is disputed. The Court is not obliged to make such a de-
termination at this stage. Nevertheless, the Court believes this
is a suitable point to provide the parties with guidance concerning
the substance of the law that will apply at trial.14
A ruling on the substance of foreign jurisprudence is treated
as a question of law. See Fed. R. Civ. P. 44.1. Native practi-
tioners have commented that Italian employment law “could be de-
fined as an unicum in the European panorama, consisting of an
exceptional complexity of laws different from any other . . .”
Carrado Cardarello and Marco Musella, Employment Law Practices and
Trends in Italy, in Employment Law Client Strategies in Europe,
2010 WL 4735528, at *1 (2011). The Court has thus drawn on a
multitude of materials from the best available sources to aid its
analysis. See Bodum USA v. La Cafetiere, Inc., 621 F.3d 624, 628
(7th Cir. 2010).
14 The Court’s interpretation of Italian law as stated in this
ruling is firm; the parties should treat it as such. Nevertheless,
given the manifest complexity of this task, the Court reserves the
right to depart from its present interpretation (with notice to
the parties) if, by the time of trial, it believes there is a sound
basis to do so.
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Included among these materials were the declarations of the
parties’ experts, who reach differing conclusions about the obli-
gations imposed under Italian law. (See generally Toffoletto
Decl., ECF No. 157; Lanzavecchia Decl., ECF No. 169-7; Toffoletto
Rebuttal Decl., ECF No. 189-1.) But as the Ninth Circuit has
emphasized, expert testimony about foreign laws “is not an invar-
iable necessity” and “judges may reject even the uncontradicted
conclusions of an expert witness and reach their own decisions
. . . .” Pazcoguin v. Radcliffe, 292 F.3d 1209, 1216 (9th Cir.
2002), as amended on denial of reh’g and reh’g en banc, 308 F.3d
934 (9th Cir. 2002) (quotation marks omitted). Foreign law ex-
perts’ opinions are thus entitled to whatever weight the Court
finds they deserve. See, e.g., Fahmy v. Jay-Z, 788 F. Supp. 2d
1072, 1076 (C.D. Cal. 2011).
While helpful, neither parties’ expert provided a comprehen-
sive explanation of the Italian legal framework or the propositions
of law disputed here. The Court consequently has conducted inde-
pendent research to address unanswered questions, refine its un-
derstanding of the disputed principles, and evaluate the soundness
of the proffered opinions. See Bodum USA, 621 F.3d at 628; Carey
v. Bahama Cruise Lines, 864 F.2d 201, 205 (1st Cir. 1988) (“Federal
Rule of Civil Procedure 44.1 empowers a federal court to determine
foreign law on its own . . . ”). The Court’s determination is
thus informed by a wide array of sources.
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1. The Italian Civil Law System
First things first: Italy is a civil-law nation. Unlike a
common law system, “the responsibility for establishing the frame-
work of the legal order rests solely with legislative, executive
and administrative authorities . . . . Legal rules or doctrines
are not formulated by the courts, and judicial decisions do not
create rules of law.” Manos v. Trans World Airlines, Inc., 324 F.
Supp. 470, 485 (N.D. Ill. 1971). There is no “formal rule of
precedent,” hence decisional law is of secondary importance. Car-
lin Am., Inc., 2016 WL 7507757 at *9 (quoting Douglas L. Parker,
Standing to Litigate “Abstract Social Interests” in the United
States and Italy: Reexamining “Injury in Fact,” 33 Colum. J.
Transnat’l L. 259, 275 (1995)); see also King v. Cessna Aircraft
Co., No. 03-20482-CIV, 2010 WL 5253526, at *10 (S.D. Fla. Sept.
13, 2010), R & R adopted in part, No. 0320482-CIV, 2010 WL 5173152
(S.D. Fla. Dec. 14, 2010); Manos, 324 F. Supp. at 485. The rulings
and commentaries of Italian authorities may nonetheless carry per-
suasive weight, particularly if primary sources of law are silent.
See Carlin Am., Inc., 2016 WL 7507757 at *9; King, 2010 WL 5253526
at *10; Manos, 324 F. Supp. at 485; see also John Henry Merryman,
The Italian Style III: Interpretation, 18 Stan. L. Rev. 583, 608
(1966) (finding value of judicial interpretation increasingly rec-
ognized).
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Within this framework, the Court agrees with the parties’
experts that there are three sources that inform Frappa’s alleged
duty of confidentiality to Alifax: (1) Civil Code Article 2105;
(2) the NCBA; and (3) Civil Code Article 2598.
a. Article 2105
Entitled “Duty of Loyalty,” Article 2105 states:
An employee cannot engage in business, either
for his own account or for the account of third
parties, in competition with his employer, nor
divulge information pertaining to the organi-
zation or the methods of production of the
enterprise, nor use it in a manner which may
be prejudicial to the enterprise.
C.c. 2105. It is undisputed that these loyalty obligations are
enforceable during the employment relationship. See Toffoletto
Decl. ¶ 11; Lanzavecchia Decl. ¶¶ 9-10; see also Emanuele
Menegatti, The Choice of Law in Employment Contracts’ Covenants
Not to Compete Under the Italian Legislation, 31 Comp. Lab. L. &
Pol’y J. 799, 802 n.12 (2010). Authorities are divided, however,
over whether Article 2105’s duty of non-disclosure applies post-
employment. See Toffoletto Rebuttal Decl. ¶ 8; Lanzavecchia Decl.
¶¶ 12-14; see also Mario Franzosi, Italy: Employer-Employee Rela-
tions, in 2 Trade Secrets Throughout the World § 22:11 (2018)
(“Some writers believe that the duty of good faith . . . continues
beyond the employment term.”); Marco Biagi, Employee Loyalty in
Italian Labor Law, 20 Comp. Lab. L. & Pol’y J. 249, 254 n.21
(1999) (“[S]ome interpreters agree that unless a special agreement
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is concluded . . . the sect. 2105 provisions are not in effect
after the termination of the working relationship.”).
The Court is persuaded that Article 2105’s duty of non-dis-
closure is extinguished at the end of employment. See Manos, 324
F. Supp. at 485-89 (resolving unsettled question of Italian law
to determine liability). The Court’s construction is guided by
Civil Code Article 12.15 First, Article 2105’s text plainly states
that its conditions are those of “[a]n employee.” C.c. 2105.
This limitation is consistent with Article 2125, whereby “any
agreement which intends to restrict the activities of an employee
during the time subsequent to the termination of the employment
contract is void” unless specific limits on time, place, scope
and compensation are satisfied. C.c. 2125. It is also consistent
with at least three rulings from Italy’s Supreme Court. See
Franzosi, supra, at 2 (citing Cass., sez. lav., 13 novembre 1972,
15 Article 12, “Interpretation of statutes,” instructs:
In applying statutes no other meaning can be
attributed to them than that made clear by the
actual significance of the words, according to
the connection between them, and by the leg-
islative intent. If a controversy cannot be
decided by a precise provision, consideration
is given to provisions that regulate similar
cases or analogous matters; if the case still
remains in doubt, it is decided according to
the general principles of the legal order of
the State.
C.c. 12, in 1 Italian Civil Code and Complementary Legislation,
ch. II, art. 12 (Susanna Beltramo, trans. 2012).
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n. 1156, Giur. it. 1976); Biagi, supra, at 251-52 (citing Cass.,
sez. lav., 3 febbraio 1986, Giur. it. 1986, 478); Lanzavecchia
Decl. ¶ 13 (citing Cass., sez. lav., 6 marzo 1985, n. 3301, Giur.
it. 1986, 23). The weight of other persuasive authority favors
limiting Article 2105 to the duration of employment as well. See
Lanzavecchia Decl. ¶ 12 (citing commentaries); Biagi, supra, at
254 n.21 (citing cases holding Article 2105’s provisions ineffec-
tive after termination).
The Court therefore finds that Article 2105 does not impose
any post-employment duty on Frappa concerning his use or disclo-
sure of Alifax’s confidential information.
b. The NCBA
The NCBA for the mechanical engineering industry is the focal
point of Alifax’s arguments. The agreement is incorporated by
reference in Frappa’s 2002 hiring letter. (PSUF Ex. A at 2.) The
relevant section of the agreement states that employees
must maintain absolute secrecy regarding the
interest of the company; furthermore, they
shall not profit, to the detriment of the em-
ployer, from what is the object of their du-
ties in the company . . . nor abuse, after
terminating the employment relationship and as
a form of unfair competition, information ob-
tained during their period of employment.
(PSUF Ex. D at 5, ECF. No. 155-4, (emphasis added).) The parties
disagree whether the hiring letter “applied beyond its express
terms” or whether Frappa understood so-called “standard terms”
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applied to his position.16 (See, e.g., Defs.’ Resp. to PSUF ¶
15.)
Whether the NCBA governed Frappa’s employment is of course
not a question of fact, but of law.17 In Italy, collective bar-
gaining agreements are the “principal instrument for determining
the terms and conditions of employment.” Piergiovanni Mandruzzato
& Sara Bittolo, Italy, in 1A International Labor and Employment
Laws 6-73 (4th ed. 2014). Depending on the industry, collective
agreements may exist at the national, regional, and company levels.
Id. at 6-69. National collective bargaining agreements are nego-
tiated between industry-wide labor unions and employer associa-
tions. Id. at 6-70.
Italian courts have extended collective agreements to cover
all workers of any employer-member of a signatory industry asso-
ciation. Id. at 6-73 (citing Cass., 1 Sept. 1995, No. 9231). A
non-member employer may nevertheless be bound to a collective
agreement if the employer applies the agreement by its own initi-
ative or incorporates it into an individual contract at the time
16 Mr. Toffoletto’s declaration refers to an alleged June 1,
2004, employment contract between Alifax and Frappa. (See Toffo-
letto Decl. ¶ 20.) No such contract appears in the record before
the Court, nor is it referenced in the parties’ motion papers.
The Court’s analysis is not premised on the existence or applica-
bility of such a document.
17 Neither parties’ expert offered significant guidance con-
cerning this preliminary issue.
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of hire. Id. at 6-74 (citing Cass., 17 luglio 1987, n. 6306; 5
marzo 1992, no. 2664; Cass., 17 novembre 1990, no. 10581). As at
least one authority has concluded, it is “quite difficult” for a
business “to avoid applying the terms and conditions of collective
agreements concluded on a national and regional level . . . .”
Id. at 6-75.
There is no record evidence concerning whether Sire or Alifax
was a member of an employer association that signed the NCBA. But
the declaration of Alcor’s expert implies that was the case, which
accords with the unrebutted assertion of Giovanni Duic, Sire’s
managing director, that the NCBA was “applicable to Sire’s indus-
try.” (Duic Aff. ¶ 7, ECF No. 165.) Regardless, the NCBA was
incorporated into Frappa’s initial hiring letter. An Italian
Court would therefore likely conclude that Sire and Frappa adopted
the agreement’s provisions by their own initiative. See
Mandruzzato & Bittolo, supra, at 6-74.
What remains is how to interpret the emphasized language
above. Here, the Court’s interpretation is guided by Italy’s
codified rules for construing contracts. See Pignoloni v. Gal-
lagher, No. 12-CV-3305 (KAM)(MDG), 2012 WL 5904440, at *23–24
(E.D.N.Y. Nov. 25, 2012), aff’d, 555 F. App’x 112 (2d Cir. 2014)
(listing cannons of construction under the Italian Civil Code);
Filipp Andrea Chiaves, An Introduction to the Law of Contracts in
Italy, 1 Global Jurist Topics [i], 8 (2001). These rules apply
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equally to collective agreements. See Mariella Magnani, The Role
of Collective Bargaining in Italian Labor Law, 7 E-Journal of
Int’l and Comp. Lab. Studies 8 (2008).
Alifax asserts that the NCBA imposes a duty on a former em-
ployee to keep confidential “essentially all information” about an
ex-employer’s business learned during employment. (Pl.’s Mot. 11.)
Although its expert does not articulate the contours of a specific
interpretation, he urges the Court to use a “common sense” con-
struction of “unfair competition” rather than a “technical legal
definition” such as that provided by Article 2598.18 (Toffoletto
Rebuttal Decl. ¶¶ 2-3.)
Such an interpretation is boundless. It suggests an Italian
court would enforce a duty of secrecy on an ex-employee that is
indefinite both in scope and duration. This is incompatible with
the Italian Supreme Court’s holdings that technical know-how ac-
quired while working for an ex-employer may be used in future
employment. See Franzosi, supra, at 2-4. It would also be contrary
to Article 1366, which requires every contract to be interpreted
“in good faith.” The proposed construction would place a more
stringent burden on former employees than current employees. See
C.c. 2105.
18 Neither Alifax nor Alcor have cited any authority inter-
preting the phrase “unfair competition” as used in the NCBA or in
any other analogous agreement.
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The Court finds that a narrower reading is more likely con-
sistent with the subjective intent of the parties. See C.c. 1362;
Chiaves, supra, at 8. Alcor’s expert directs the Court to Article
2598, which provides a codified definition of unfair competition:
Subject to the provisions concerning the pro-
tection of distinctive signs and patent
rights, acts of unfair competition are per-
formed by whoever: . . . (3) avails himself
directly or indirectly of any other means
which do not conform with the principles of
correct behavior in the trade and are likely
to injure another’s business.
C.c. 2598. It is widely agreed that this provision prohibits ex-
employees from using an employer’s confidential information in
subsequent employment. See Franzosi, supra, at 2-3 (and cases
cited therein); see also Toffoletto Rebuttal Decl. § 12; Lanzavec-
chia Decl. ¶ 16. As stated by the Italian Supreme Court:
The use by an ex-employee, in later employ-
ment, of processes which are confidential and
owned by his ex-employer (and known by the ex-
employee because of his previous experience
and because of his position as an ex-employee)
constitutes activity which is not profession-
ally correct behavior.
Franzosi, supra, at 2. Article 2598 does not prohibit an ex-
employee from using experience or technical know-how developed on
the job in future positions. See Franzosi, supra, at 2-4 (citing,
e.g., Cass., sez. lav., 13 novembre 1972, n. 1156, Guir it. 1976
; Corte di Appello, 27 maggio 1977; Corte di Appello, 24 gennaio
1973).
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The Court agrees with Alifax’s expert that the NCBA does not
expressly refer to Article 2598 and that some degree of redundancy
may be injected into the agreement by interpreting “unfair compe-
tition” in accord with that provision. It is not, however,
“senseless.” (Toffoletto Rebuttal Decl. ¶ 3.) Article 2598 ap-
plies only to “entrepreneurs” who are competitors. See, e.g.,
Mario Franzosi, Italy: Overview, in 2 Trade Secrets Throughout
the World § 22:2; Paulo Auteri, Brief Report on Italian Unfair
Competition Law, in Law Against Unfair Competition: Towards a New
Paradigm In Europe? 152 (2007) (“According to the prevailing opin-
ion, unfair competition law only applies to competitive activities
that are committed by one entrepreneur to harm another competi-
tor.”); (Toffoletto Decl. ¶ 18). Thus, by definition, Article
2598’s ban on unfair competition can only apply post-employment.
The NCBA creates a similar duty that only arises “after terminat-
ing the employment relationship” (PSUF Ex. D at 5, (emphasis
added)).19 There is no incongruity.
Civil Code Article 1371 provides additional guidance. If
other criteria have failed to establish a satisfactory meaning,
Article 1371 instructs that an agreement should be construed to
balance the parties’ opposing interests. C.c. 1371. Taken
19 It is self-evident that Article 2105, despite its limited
applicability, also demonstrates an overarching concern with the
disclosure of an employer’s proprietary information.
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together, Article 2598, Article 2105, and the rulings of the Ital-
ian Supreme Court demonstrate an unmistakable desire to safeguard
the confidential and proprietary information of employers from
unfair exploitation.20 The Court accordingly finds that Frappa
owes Alifax, which now stands in Sire’s shoes, a post-employment
duty of loyalty prohibiting the disclosure or use of Alifax’s
confidential or proprietary information in a manner that was likely
to injury Alifax’s business. This duty does not encompass Frappa’s
professional skills or technical know-how, even if acquired or
improved during his work for Sire.21
D. Postscript On Rhode Island Law
As explained above, based on the fundamentally contractual
nature of Frappa’s duty, the Court believes it is obliged to apply
Italian law. See DeCesare, 852 A.2d at 481; Matarese, 305 A.2d
at 118 n.4; see also Restatement (Second) of Conflict of Laws §
188 (Am. Law Inst. 1971); 15A Corpus Juris Secundum Contracts §
13. A short codicil on Rhode Island law is nevertheless warranted
20 The sections of the Italian Penal Code punishing the dis-
closure of secret information cited by Mr. Toffoletto do not pro-
vide useful guidance for interpreting the civil code provisions at
issue here. Similarly, Article 2043 of the Civil Code creates a
cause of action analogous to a tort, but does not appear to be a
source of Frappa’s duty of loyalty.
21 Although the analysis of Alcor’s expert seems to suggest
otherwise, Alifax does not appear to contend that Article 2598, in
and of itself, can be a source of Frappa’s duty of confidentiality.
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to demonstrate that, but for these rules, applying local law would
not result in a substantially different outcome.22
The Rhode Island Supreme Court has long held that employees
owe their employers a fiduciary duty of loyalty during their em-
ployment. See Rego Displays, Inc. v. Fournier, 379 A.2d 1098,
1101 (R.I. 1977). This duty prohibits employees from competing
with their employer by soliciting customers for personal gain.
See id.; see also Baris v. Steinlage, No. C.A. 99-1302, 2003 WL
23195568, at *22 (R.I. Super. Ct. Dec. 12, 2003). It also bars an
employee privy to secret or proprietary information from abusing
his employer’s trust by breaching such confidences. See Rego Dis-
plays, 379 A.2d at 1101; Abbey Med./Abbey Rents, Inc. v. Mignacca,
471 A.2d 189, 193 (R.I. 1984).
When the employment relationship ends, the employee’s “right
to entrepreneurial freedom” is restored. Rego Displays, 379 A.2d
at 1100. This right is not, however, absolute. Rhode Island will
enforce reasonable non-competition agreements. See, e.g., Dura-
pin, Inc. v. Am. Prods., Inc., 559 A.2d 1051, 1053 (R.I. 1989).
Even absent an express agreement, a former employee has a duty as
a matter of law not to use or disclose confidential information
22 Alcor argues that the Court should bypass the choice-of-
law issue based on its narrower interpretation of Italian law.
(See Defs.’ Opp’n 10-11.) Both parties, however, neglect explain
the nature and scope of an ex-employee’s duty of confidentiality
to a former employer under Rhode Island law.
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acquired by virtue of occupying a position of confidence with a
former employer. See Long v. Atl. PBS, Inc., 681 A.2d 249, 254
n.7 (R.I. 1996) (citing, e.g., Comedy Cottage, Inc. v. Berk, 495
N.E. 2d 1006, 1011 (Ill. App. Ct. 1986)); J.B. Prata, Ltd. v.
Bichay, 468 A.2d 266, 268 (R.I. 1983); Callahan v. R.I. Oil. Co.,
240 A.2d 411, 413 (R.I. 1968) (“[A]n employer is entitled to eq-
uitable protection against the competitive use of confidential and
secret information obtained as a result of the trust and confidence
of previous employment . . .” (quoting Carl A. Colteryahn Dairy,
Inc. v. Schneider Dairy, 203 A.2d 469, 471 (Pa. 1964)).
The Rhode Island Supreme Court’s ruling in J.B. Prata is
illustrative, if brief. The plaintiff in that action sought an
injunction prohibiting its former employees from soliciting its
customers. J.B. Prata, 468 A.2d at 267. Neither defendant had an
employment contract or non-competition agreement. Id. The Court
nevertheless affirmed the order enjoining solicitation, holding:
[P]laintiff established that defendants were
employed by plaintiff, acquired certain in-
formation while so employed, and then left
plaintiff to work for a competitor. In addi-
tion, the trial court specifically found that
the information defendants acquired was ac-
quired as a direct result of the confidential
relationship that existed between plaintiff
and both defendants. . . . If unrebutted, this
evidence would satisfy the burden of proof re-
quired for having a permanent injunction im-
posed.
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Id. at 268; see also Dryvit Systems, Inc. v. Healy, No. C.A. KC
89-45, 1989 WL 1110572, *6 (R.I. Super. Ct. Apr. 26, 1989) (de-
clining to enforce non-compete but issuing TRO as the court “rec-
ognize[d] a legitimate interest in the [employer] not to have
confidential information and trade secrets exploited by the [ex-
employee].”)
Rhode Island’s implied post-departure duty is not all-encom-
passing. See Colonial Laundries v. Henry, 138 A. 47, 48 (R.I.
1927) (“[A]ll knowledge acquired by the employee is not of a con-
fidential nature.”). Moreover, the case law shows that such a
duty only arises in limited circumstances: the employment rela-
tionship must be one of “trust and confidence.” Callahan, 240
A.2d at 413; see, e.g., Long, 681 A.2d at 254 n.7 (affirming
judgment in part as defendant did not, among other things, breach
“fiduciary confidences” gained from former position through post-
departure solicitation); J.B. Prata, 468 A.2d at 267; Colonial
Laundries, 138 A. at 48. Although the contours of Rhode Island’s
implied duty differ slightly in form, its scope is fundamentally
congruent with the duty under Italian law arising from Frappa’s
employment relationship.
IV. Conclusion
For the foregoing reasons, Alifax’s Motion for Partial Sum-
mary Judgment on Counts II and III of the Second Amended Complaint
(ECF No. 154) is GRANTED. The substantive law of Italy shall be
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applied to the “breach of a duty to maintain secrecy” element of
Count II and all of Count III, and that law shall be interpreted
as set forth above.
IT IS SO ORDERED.
William E. Smith
Chief Judge
Date: January 8, 2019
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