08-2762 | Omnilex

Texte intégral

08-2762-bk
In re Dana Corporation:
Jasco Tools, Inc.
v. Dana Corporation

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

August Term, 2008

(Argued: January 15, 2009

Decided: July 31, 2009)

Docket No. 08-2762-bk

IN RE: DANA CORPORATION,

Debtor,

JASCO TOOLS, INC.,

Appellant,

\- V. -

DANA CORPORATION,

Appellee.

Before: KEARSE, HALL, and LIVINGSTON, Circuit Judges.

Appeal from a judgment of the United States District Court
for the Southern District of New York, Richard M. Berman, Judge,
affirming decision of bankruptcy court granting summary judgment
in favor of debtor-appellee despite the existence of factual
disputes and despite the request by creditor-appellant for
compliance with a 2005 discovery request, see In re Dana Corp.,
No. 06-10354, 2007 WL 3376882 (Bankr. S.D.N.Y. Nov. 6, 2007) .
Vacated and remanded.

ALEXANDER GEIGER, Rochester, New York
(Geiger & Rothenberg, Rochester, New
York, on the brief) , for Appellant.

WILLIAM G. GANDY, McLean, Virginia
(Wilson, Elser, Moskowitz, Edelman &
Dicker, McLean, Virginia, on the
brief) , for Appellee.

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KEARSE, Circuit Judge:

Jasco Tools, Inc. ("Jasco"), appeals from a judgment of
the United States District Court for the Southern District of New
York, Richard M. Berman, Judge, affirming a decision of the United
States Bankruptcy Court for the Southern District of New York,
Burton R. Lifland, Judge, which granted summary judgment in favor
of debtor-appellee Dana Corporation ("Dana") and disallowed
Jasco's claim in the bankruptcy proceeding, see In re Dana Corp.,
No. 06-10354, 2007 WL 3376882 (Bankr. S.D.N.Y. Nov. 6, 2007)
("Bankruptcy Court Decision" or "Decision"). On this appeal,
Jasco contends principally (1) that several of the bankruptcy
court's procedures leading to summary judgment were

inappropriate, (2) that the court should have granted Jasco's
request for additional discovery before resolving the summary
judgment motion, and (3) that the existence of genuine issues of
material fact should have prevented the granting of summary
judgment in Dana's favor. Finding merit principally in Jasco's
second and third contentions, we vacate the judgment and remand
for further proceedings.

# I. BACKGROUND

Dana is a purveyor of modules, systems, and components for
original equipment manufacturers in the automotive industry; Jasco
is a precision machining company. Until December 31, 2000, Jasco
and Dana or Dana's predecessor-in-interest were parties to an

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agreement pursuant to which Jasco agreed to manufacture, and Dana
agreed to purchase, precision-machined parts for Dana's heavy axle
and brake business (the "Purchase Agreement" or "Agreement") .
According to Eugene W. Baldino, who was Jasco's chief executive
officer after May 31, 1999, " [t]he annual volume of business
between Jasco and [Dana], pursuant to the Purchase Agreement, was
approximately $24 million." (Declaration of Eugene W. Baldino
dated September 19, 2007 ("Baldino Decl. " or "Declaration"), ( 4.)
According to Adam Haybach, Dana's purchasing manager for the parts
in question during the relevant period, this "was one of the
largest contracts Dana had with any of its suppliers." (Affidavit
of Adam Haybach dated January 4, 2002 ("Haybach Aff . ") , ( 3.)

The Agreement provided that the parties would, in the
second quarter of 1999, seek to negotiate an extension of the
Agreement's term beyond 2000. Jasco's claim against Dana's
bankruptcy estate arises out of the manner in which the Purchase
Agreement ended, focusing in particular on events in the summer of
1999 that culminated in Dana's contracting with a Jasco
competitor, Nationwide Precision Products Corporation
("Nationwide") , to supply the parts previously supplied by Jasco.
The following description of the events is drawn principally from
documents submitted to the bankruptcy court, including Baldino's
Declaration and the exhibits attached to it, consisting chiefly of
records, affidavits, and deposition excerpts obtained in a state-
court action brought by Jasco against Dana, Nationwide, and three

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former Jasco employees for, inter alia, breach of contract, unjust

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enrichment, tortious interference with contract, and
misappropriation of Jasco trade secrets. We describe the record
in the light most favorable to Jasco, the party against which the
bankruptcy court granted summary judgment.

## A. The Events of 1999

Until the summer of 1999, three Jasco employees were
responsible for all aspects of Jasco's performance of its contract
with Dana: Jasco president Gary Rogers, Charles "Chuck" Zicari, a
regional sales manager, and Sean Convertino, an engineering and
quality assurance manager. Rogers was "Dana's primary contact
person at Jasco." (Haybach Aff. [ 4.) Rogers retired from Jasco
effective May 31, 1999, at the age of 50. The timing of his
retirement was not of his own choosing. (See Deposition of Gary
Rogers at 47-48.) According to Jasco, "Rogers took numerous
confidential documents when he left Jasco." (Baldino Decl. | 11.)

Zicari resigned from Jasco on July 9; Convertino resigned
from Jasco on July 16. During the week after Zicari left Jasco,
while Convertino was still there, Convertino told Zicari he had
computer files containing Jasco information as to the processes,
costs, and budgets for the parts made for Dana. (See Deposition
of Sean Convertino ("Convertino Dep. ") at 84-87.) Zicari told
Convertino that "it would be helpful for competitive reasons to
have that information available after [Convertino's] departure. "
(Id. at 87-88.) Thus, " [w]hen Mr. Convertino left Jasco, he
retained information from Jasco on his personal computer such as

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machining cycle times, pricing information, and a list of machines
required for performance under the Agreement, " Bankruptcy Court
Decision, 2007 WL 3376882, at *1.

The files taken by Convertino contained information that
had, "over a number of years, " been "developed by [Convertino] as
well as other employees at Jasco." (Convertino Dep. at 89; see
id. ("I didn't develop it singularly") .) The information was
nonpublic (see id. ) and was "proprietary to Jasco" (id. at 290) .
Convertino testified, "I felt it was unethical I had left with
Jasco's information." (Id. at 1740.) One reason Convertino took
the files was that he had "some animosity" toward Jasco. (Id. at
44.)

Convertino's other reason was that the files "contained
all of the financials and manufacturing process outlines" (id. at
89), including "speed and feed calculations for moving materials"
(id. at 44), making it "very helpful in estimating manufacturing
processes" and " [p] roduc [ing] cost estimates" (id. at 44-45; see
also Baldino Decl. | 20 (the computer disk that Convertino took
with him "contained some 4000 pages of technical details about
Jasco's manufacturing processes with respect to the Dana
parts") ). Convertino had in mind that the data "would be a
benefit to Chuck and myself if we started up a business"
(Convertino Dep. at 1740), or "useful to someone else trying to
compete with Jasco" (id. at 44-45). He took all the Jasco data he
thought would be of use (see id. at 1738-40) if they wanted to "go

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after the Dana business" " [w]ith some other company" (id. at
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1739).

On August 9, 1999, Convertino became an employee of
Nationwide; on August 16, 1999, Zicari became an employee of
Nationwide. "In his new position at Nationwide, Mr. Zicari played
a role in soliciting the Dana business [,] and Mr. Convertino
helped prepare Nationwide's proposal to Dana." Bankruptcy Court
Decision, 2007 WL 3376882, at *1. Dana soon agreed to replace
Jasco with Nationwide as its post-2000 supplier, sending

Nationwide a December 20, 1999 letter of intent stating the
expectation that the contract with Nationwide would be finalized
by the end of January 2000. (See Baldino Decl. Exhibit J.) In
February 2000, Convertino received from Nationwide a raise in
salary, the promise of another 9% raise at the beginning of 2001,
a bonus of $20, 000, and the promise of an additional $22, 000 bonus
to be paid in 2001, for "his involvement in securing the Dana
Contract." (Baldino Decl. Exhibit K (February 29, 2000 memorandum
from Ron Ricotta, Nationwide's president and chief executive
officer, to "The Personnel File of Sean Convertino") .)

The Dana management team responsible for purchasing the
items covered by the Purchase Agreement with Jasco consisted of
purchasing manager Haybach, his boss Paul E. Blanchard, who was
the general purchasing manager for Dana's heavy truck group, and
Robert A. Buss, a purchasing product analyst who reported to
Haybach. (See Deposition of Adam Haybach ( "Haybach Dep. ") at 74,

110.)
With respect to the contention that Dana knew of and

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encouraged the misappropriation of Jasco's confidential and
proprietary information, Jasco "obtained telephone records showing
dozens of phone calls between and among Rogers, Zicari, Haybach,
and Buss throughout June, July, and August of 1999." (Baldino
Decl. | 13 n.2.)

Buss, in his state-court deposition, testified that he had
no reason to have contact with Rogers after Rogers retired (see
Deposition of Robert A. Buss ("Buss Dep. ") at 92) and that in
fact he did not have any conversations with Rogers after May 31
(see id. at 88, 91). The telephone company records, however,
indicate that Rogers called Buss several times in the days and
weeks following his May 31 retirement from Jasco, and that calls
on June 7 and August 12 lasted 30 minutes and 25 minutes,
respectively. (See Baldino Decl. 1 32.) When confronted with the
records, Buss acknowledged that the telephone number called was
his number at Dana but testified that he had no recollection of
the calls. (See Buss Dep. at 88-89, 91.)

The telephone calls principally relied on by Jasco,
including those from Rogers to Buss, as well as several from
Zicari to Buss or Haybach, occurred on the following dates:

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June 4

Rogers

called

Buss

June 7

Rogers

called

Buss; they spoke for 30 minutes

June 29

Zicari

called

Haybach

July 1

Zicari

called

Haybach

July 6

Zicari

called

Buss

July 6

Zicari

called

Haybach

July 13

Zicari

called

Haybach

July 13

Zicari

called

Buss

July 16

Zicari

called

Buss

August 12

Rogers

called

Buss; they spoke for 25 minutes

August 12

Rogers

then immediately called Zicari; they

spoke

for 13% minutes

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August 12 Zicari then immediately called Nationwide

August 20
Zicari called Buss

August 20
Zicari called Buss again

(See Baldino Decl. (1 32-40.) In late August, Zicari called
Jeffrey Nuccitelli, Nationwide's vice president for sales, to
inform him that Nationwide had "an opportunity with Dana. "
(Deposition of Jeffrey Nuccitelli ( "Nuccitelli Dep. ") at 110.) An
October 6, 1999 memorandum by Nuccitelli and Ricotta, stating that
" [w]e now have a very precise list of the active part numbers and
the annual forecasts" (apparently a reference to information that
Nationwide had recently received directly from Dana pursuant to a
Haybach instruction to Buss), described the "Dana Opportunity" as
"an opportunity to generate $25M in sales with no acquisition
costs." (Baldino Decl. Exhibit J.)

On September 30, Haybach had instructed Buss to "pull a
print/quote package for all Jasco parts for Nationwide/Zicari."
(E-mail from Haybach to Buss dated September 30, 1999.) Haybach's
e-mail stated, inter alia, that Zicari had "verbally committed to
a 10% price reduction from Jasco's 1/1/2000 pricing." (Id. )
After several subsequent meetings between employees of Dana and
employees of Nationwide, including Haybach, Buss, Zicari, and
Convertino, Nationwide submitted to Dana a detailed written
proposal, addressed to Blanchard, dated November 26, 1999. (See
Baldino Decl. || 14-15; id. Exhibits D, E, F.) Nationwide's
November 26 proposal included a detailed price list for
approximately 130 different parts (see Baldino Decl. | 16; id.

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Exhibit F) , on which Nationwide "undercut Jasco's price on every

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part by exactly 10 percent" (Baldino Decl. 1 24 (emphasis in
original) ) .

With respect to negotiations for an extension of the
Purchase Agreement with Jasco, Haybach and Buss met with Jasco on
December 3, 1999. The parties' descriptions of that meeting
diverge. According to Baldino, he

presented Jasco's proposal for the renewal period,
which sought modest increases over the life of the
extension term. In response, Adam Haybach simply
told me that Dana was looking for a price reduction,
and that unless Jasco cut its prices across the
board, we had nothing to talk about. The next thing
we heard from Dana was a phone call, on or about
December 20, 1999, telling us that Dana had decided
not to renew the Purchase Agreement with Jasco.

(Baldino Decl. | 18 (emphasis added) .) According to Haybach, Dana
was anticipating a proposal for modest price increases and Haybach
was "stunned" when, "at the December 3, 1999 meeting, Mr. Baldino
demanded a very substantial across the board price increase that
was far in excess of what Dana could reasonably accept." (Haybach
Aff. 11 12, 9.)

Haybach and Blanchard submitted affidavits in Jasco's
state-court action stating that it was only after that December 3
meeting with Jasco that Dana had contact with Nationwide. (See
Haybach Aff. 11 13-14 ("upon receiving Mr. Baldino's response, I
sought potential new suppliers to begin work upon expiration of
the Dana/Jasco contract, " and "[i]n that regard, Dana contacted
Nationwide" (emphases added) ) ; Affidavit of Paul Blanchard dated
October 3, 2001, 1 5 ("Jasco requested an unacceptable price
increase for the contract extension which caused Dana to

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investigate other sources to provide the necessary work, " and Dana
received the favorable Nationwide proposal " [d]uring that search"
(emphases added) ) .) As indicated above, however, Haybach had
informed Buss by e-mail on September 30 of Nationwide's oral offer
to supply the parts at a 10% discount; and Nationwide's written
proposal confirming that 10% discount, addressed to Blanchard, was
given on November 26. (See also Haybach Dep. at 101 ("Q. You
received the quotation from Nationwide before you received the
pricing direction from Jasco? A. Yes. ") .)

## B. Jasco's Action in State Court

In 2001, Jasco commenced suit in New York State Supreme
Court against Rogers, Zicari, and Convertino, alleging that they
had engaged in concerted action to divert Dana's business from
Jasco to Nationwide, resulting in Jasco's loss of business with
Dana after the Purchase Agreement's five-year term expired.
Jasco asserted causes of action for, inter alia, breach of
fiduciary duty and misappropriation of Jasco's confidential
business information. Jasco eventually settled its claims against
Convertino; the Supreme Court granted summary judgment dismissing
the claims against Rogers and Zicari, a decision that was reversed
on appeal " [b]ecause only minimal discovery had been conducted
prior to the motions," Jasco Tools, Inc. v. Rogers, 303 A.D.2d
944, 946, 757 N.Y. S.2d 651, 653 (4th Dep't 2003) ( "Jasco I") .

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In July 2002, Jasco brought suit against Dana and
Nationwide; after Jasco I reinstated Jasco's action against Rogers

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and Zicari, the two actions were consolidated (the "Lawsuit") .
Jasco asserted causes of action against Dana for, inter alia,
breach of agreement to negotiate in good faith, misappropriation
of trade secrets, and unjust enrichment, and sought $20 million in
damages. The parties proceeded with discovery; from Dana, Jasco
took three depositions, lasting a total of five days, and received
responses to interrogatories and two document demands.

Jasco ultimately settled its claims against Zicari and
Nationwide; and the Supreme Court again granted summary judgment
in favor of Rogers, a decision that was again reversed by the
Appellate Division because Jasco's discovery had not been
completed, see Jasco Tools, Inc. v. Rogers, 45 A.D.3d 1296, 844
N.Y. S. 2d 810 (4th Dep't 2007) ("Jasco III") , reversing Jasco
Tools, Inc. v. Rogers, Index No. 4948/01 Amended Decision and
Order, at 9, 10 (N.Y. Sup. Ct. Monroe Co., August 14, 2006)
("Jasco II"). In the meantime, the Lawsuit remained pending
against Dana; in December 2005, Jasco served on Dana a third
notice to produce documents ("Third Document Demand") .

In March 2006, Dana and 40 of its subsidiaries
(collectively "Dana" or the "Debtors") filed in the bankruptcy
court a petition for reorganization under Chapter 11 of the
United States Bankruptcy Code, 11 U.S.C. §§ 1101-74. Dana had not
produced any documents in response to Jasco's Third Document
Demand, objecting on various grounds; and the effect of Dana's
Chapter 11 petition was to stay the proceedings against Dana in
Jasco's state-court action, see 11 U.S.C. § 362 (a) (1) .

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C. Proceedings in the Bankruptcy Court

In September 2006, based on the causes of action asserted
against Dana in the pending state-court action, Jasco filed in the
bankruptcy court a $20 million proof of claim (the "Claim")
against Dana's estate. On August 31, 2007, Dana filed an
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objection, seeking an order "disallowing and expunging the Jasco
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Claim." (Objection of Debtors and Debtors in Possession Seeking
To Disallow Claim of Jasco Tools, Inc. ("Dana Objection" or
"Objection"), [ 16.) Noting that Rule 56 of the Federal Rules of
Civil Procedure is applicable to contested claims in bankruptcy
proceedings, see Fed. R. Bankr. P. 7056, Dana asserted that there
was no genuine dispute as to any material fact and that Dana was
entitled to summary judgment dismissing the Jasco Claim. (See
Dana Objection (1 19-20.) It contended that although Jasco's
theory was that Dana had conspired with Rogers, Zicari, and
Convertino to, inter alia, misappropriate Jasco's trade secrets
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and unjustly enrich itself, Jasco had failed, even after nearly
four years of discovery, to turn up any evidence of a conspiracy
to which Dana was a party or any evidence that Dana had knowledge
of the alleged theft of Jasco's trade secrets. (See id.
21 11 30-33.)

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Responding to the Dana Objection on September 20, 2007,
Jasco contended, inter alia, that additional discovery was needed,
pointing out that Dana had never provided any documents in
response to Jasco's Third Document Demand (which was attached to

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the Baldino Declaration as Exhibit P), which Jasco described as
seeking "only a handful of documents" (Response to Debtors'
Objection to Claim of Jasco Tools, Inc. ("Jasco Response" or
"Response"), ( 8) . Jasco's Response also stated that it had been
made clear to counsel for Dana, both before and since
the bankruptcy filing, [that] Jasco needs some
additional limited discovery in the underlying
action, such as the deposition of one or two
additional Dana employees, before the case is ready
either for a dispositive motion or a plenary trial,
if necessary.

13\. The bottom line is that Dana has refused to
provide some basic documents necessary to demonstrate
Dana's culpability in the underlying action and to
rebut Dana's allegations in its summary judgment
motion. Facts essential to justify Jasco's
opposition to any summary judgment motion by Dana
cannot now be presented by Jasco, because Dana
refuses to turn over documents within its possession
and control necessary to rebut Dana's allegations.

14\. Therefore, to the extent that the instant
Objection is the equivalent of a summary judgment
motion, the Objection must be denied, pursuant to
Rule 56 (f) of the Federal Rules of Civil Procedure,
made applicable hereto by Rule 7056 of the Federal
Rules of Bankruptcy Procedure.

(Id. 11 11, 13-14; see also id. | 10 ("Dana has never produced a
single document in response to Jasco's Third [Document Demand],
which has been pending since December 27, 2005.") .)

As discussed further in Part II.A.1. below, Jasco also
contended that Dana's motion for summary judgment should be denied
on the merits, arguing that there were genuine issues of material
fact to be tried as to each of Jasco's causes of action against
Dana, and pointing out that the existence of such a genuine issue
as to even one of Jasco's causes of action sufficed to defeat

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Dana's request that the Jasco Claim be dismissed as a matter of
law. (See Jasco Response (1 15-43.)

Accompanying the Jasco Response was Baldino's September
19, 2007 Declaration, parts of which are quoted in Part I.A.
above. Baldino stated that " [o]f all the defendants in the state
court action, Dana has been the least forthcoming during the
discovery process" (Baldino Decl. [ 41) and that "Dana employees
submitted a number of affidavits to the state court that
subsequent testimony and documentation has proven to be perjured"
(id. [ 42) . Examples given by Baldino included the state-court
affidavits of Haybach and Blanchard (quoted in Part I.A. above)
stating that they had begun seeking a new supplier for the parts
covered by the Purchase Agreement only after the breakdown of
negotiations between Dana and Jasco on December 3, 1999, whereas
documents reveal (a) that in fact Haybach had instructed Buss to
send bid materials to Nationwide on September 30, 1999, informing
Buss that Nationwide orally, through Zicari, had already promised
a 10% discount from Jasco prices; and (b) that Nationwide had
given its written proposal to Dana, addressed to Blanchard, on
November 26, 1999. (See id. 11 45-49; id. Exhibits C, D, F.)

In addition, the Baldino Declaration attached copies of
Haybach's personal calendar for October and November, which
revealed several face-to-face meetings between Dana and Nationwide
prior to December 3. (See Baldino Decl. Exhibit D.) At one of
the November meetings, Nationwide, represented by Ricotta,
Nuccitelli, Zicari, and Convertino, made a "PowerPoint" slides

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The
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presentation to Dana. (See Baldino Decl. Exhibit E. )
presentation stated, inter alia, that Nationwide "has assessed
this program with employees who have been intimately knowledgeable
with this program"; that Nationwide's goal was to " [s]ave Dana an
average of $1 million, net per year"; and that Nationwide's
" [e]stimates of current machining cycles (costs) were based on
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review of representative prints as well as past experience with
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program [.]" (Id. (emphases added) .) Baldino characterized these
9 statements as to Nationwide's knowledge and experience

as
"bragg [ing] " (Baldino Decl. [ 21) and pointed out that Nationwide
"had almost no prior experience machining these types of cast
iron parts" (id. [ 19) .

Baldino also observed that Buss, at his deposition, denied
having any contact with Rogers after Rogers retired from Jasco,
that that denial was belied by the records of calls by Rogers that
Jasco had obtained from the telephone company, and that, when
confronted with the records and asked about his lengthy
conversations with Rogers, Buss stated that he did not remember
the calls. (See id. 1| 31-32, 51.) Pointing out that at the time
of Dana's bankruptcy filing Dana had failed to provide any
documents in response to Jasco's Third Document Demand, Baldino
stated that, " [g]iven the tendency of Dana employees to lie under
oath, as demonstrated by their affidavits, and given their
forgetfulness, as demonstrated at their depositions, it is
absolutely vital to obtain Dana's paper and electronic records to
demonstrate what actually happened." (Id. [ 52.)

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Dana submitted a reply to Jasco's Response to Dana's

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Objection, reiterating many of the arguments made in the Dana
Objection. (See Reply in Support of the Objection of [Dana]
Seeking To Disallow Claim of Jasco Tools, Inc. ("Dana Reply, "
"Reply, " or "Debtors' Reply"), (1 1-28.) It stated, inter alia,
that

[t]he Jasco Claim seeks an unproven and unwarranted
sum of $20 million because Jasco is upset with a
decision by Dana seven years ago to let the parties'
Purchase Agreement expire under its terms and
resource the business with a new supplier. . . .
Jasco's response . . . fails to rebut the arguments
raised in Dana's Objection and seeks to delay a
decision by a contrived request for more time to
conduct further, unnecessary discovery

(Dana Reply | 1 (emphasis in original) ). Attaching excerpts from
the depositions of Zicari and Nationwide's president Ricotta, the
Dana Reply argued that

Jasco failed to put forth any evidence to support its
purely speculative accusation that Dana knew that
Nationwide, through Messrs. Convertino or Zicari,
misappropriated Jasco's trade secrets. The reason
for this omission is simple: each of the principal
witnesses denied knowledge of anyone ever telling
Dana of the alleged conversion. Mr. Zicari denied
ever advising Dana that "anyone from Nationwide was
using stolen information from Jasco to put together
the bid that Nationwide ultimately presented. "

(Zicari Dep., Reply Ex. A at 620-1.) Mr. Convertino
also denied ever telling anyone at Dana that
Nationwide prepared its bid using stolen information
from Jasco. (Convertino Dep., Obj. Ex. I at
1764-1765.) .... Mr. Haybach from Dana also
testified that no one ever informed him of the use of
stolen information in Nationwide's bid. (Haybach
Dep., Obj. Ex. G at 526-527.) In short, Jasco offers
no evidence connecting Dana to the alleged conspiracy
because none exists.

(Dana Reply | 9 (emphases added) ; see also id. | 13 ( "Nationwide's
president, Ronald Ricotta, testified that Nationwide could offer a

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10% price cut without the benefit of allegedly stolen information.
(Ricotta Dep., Reply Ex. C at 149-152.) " (emphasis in Reply) ) .)

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The Dana Reply also stated, inter alia, that " [i]n its
Response, Jasco never attempts to explain why, after having nearly
four years to conduct discovery in the underlying Lawsuit, it has
not had a sufficient opportunity to present its case" (Dana Reply
1 25), and described Jasco's claim of need for additional
discovery as "contrived" (id. | 27). The Reply attached the as-
of-then-unreversed decision of the state court in Jasco II, which
had granted summary judgment to Rogers with the statement that
Jasco's contention that it needed additional discovery "rings
hollow in view of the Nationwide employees and representatives"
already deposed, Jasco II at 10.
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An initial status conference on the Dana Objection to the
Jasco Claim was held on October 17, 2007, and the bankruptcy court
scheduled argument on Dana's summary judgment request for October
31, 2007. The court noted that in an October 15, 2007 letter,
Jasco had, inter alia, complained of insufficient notice that the
Dana Objection itself was to be treated as a summary judgment
motion and of Dana's failure to provide a separate statement, as
required by Local Bankruptcy Rule 7056-1 (b), setting out the
material facts that Dana contended were not genuinely in dispute.
The court ordered Dana to file such a statement on October 24,
2007; and it ordered Jasco to file -- on the same date -- a statement
of material facts that it contended were genuinely in dispute.
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(See Bankruptcy Court Hearing Transcript, October 17, 2007, at

94-97.) Although the court told Jasco's counsel, "if you want
further time to submit the counter designation and augment your
papers on a very brief basis, I'm perfectly happy to do that" (id.
at 94), it ultimately stated to Dana's counsel that "within one
week I expect that there will be a [7056-1] statement served, " and
that Jasco's Rule 7056-1 statement should be filed "promptly
thereafter, although [Jasco's counsel] probably doesn't need to
see [Dana's] before he comes up with his own, because those
statements are really parochial in form and type" (id. at 97) .

Dana and Jasco submitted their Rule 7056-1 statements on
October 24, 2007. Jasco, in addition to narrating the facts that
it contended were genuinely in dispute (see Rule 7056-1 (c)
Statement of Jasco Tools, Inc., 11 3-6), made a blanket denial of
all material facts asserted in Dana's Rule 7056-1 statement (see
id. [ 1), complaining that the order that both parties' Rule
7056-1 statements be submitted simultaneously left Jasco "no
choice but to assert that each material fact set forth in Dana's
Statement is in fact controverted" (id. | 1 n.1). The summary
judgment motion was argued as scheduled on October 31.

## D. The Grant and Affirmance of Summary Judgment Against Jasco

In its November 6, 2007 Decision, the bankruptcy court
denied Jasco's request for additional discovery and granted Dana's
motion for summary judgment. In denying discovery, the court
stated principally as follows :

Prior to the chapter 11 petition date, the parties
had nearly four years to conduct discovery. Since

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the petition date, the Lawsuit has been stayed as to
Dana, but Jasco and the remaining defendants,
Nationwide and Messrs. Rogers and Zicari, continued
to conduct depositions. The State Court severed
Jasco's claim against Mr. Rogers from Jasco's claim
against Dana. Ultimately Mr. Roger [s] successfully
moved for summary judgment, and Jasco settled with
Nationwide and Messrs. Zicari and Convertino. On
September 15, 2006, Jasco filed its proof of claim in
this Court.

Jasco claims it needs more discovery before the
case is ready for a dispositive motion. However,
before the Jasco Lawsuit was stayed, Jasco had nearly
four years to conduct discovery. The discovery
efforts included 18 depositions, some lasting for
several days. Among them Jasco deposed three Dana
employees, taking five days to do so. In addition
Dana responded to interrogatories and two notices to
produce providing voluminous documentation.

Bankruptcy Court Decision, 2007 WL 3376882, at *2, *4. The
bankruptcy court noted that Jasco's contention that it needed
additional discovery had been rejected by the state court in
Jasco II as speculative, and the bankruptcy court adopted that
view:

Jasco made a similar argument in response to Mr.
Rogers' [s] motion for summary judgment in the Lawsuit
in July 2006, claiming that it needed to conduct in
excess of a dozen depositions of Nationwide employees
and depositions of Mr. Roger [s]'s wife and
girlfriend. The State Court found that Jasco's cry
for additional discovery "rings hollow" concluding
that Jasco "offers nothing but mere hope and
speculation" that additional discovery would reveal
evidence to prove the alleged conspiracy. See Jasco
Tools, Inc. v. Rogers, Index No. 4948/01 Amended
Decision and Order, at 9, 10 (N.Y. Sup. Ct. August
14, 2006) . I find similarly that Jasco's continuing
requests for discovery at this stage are meritless.

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Bankruptcy Court Decision, 2007 WL 3376882, at *5 (emphases
41 added) .

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In finding that there were no genuine issues of material
fact to be tried as to Jasco's claim that Dana had breached the
agreement to negotiate in good faith with respect to a possible
extension of the Purchase Agreement, the bankruptcy court stated,
inter alia, that "a mere agreement to agree is unenforceable, " id.
at *5 (internal quotation marks omitted), and that Dana had
"listed Jasco as one of its worst suppliers in terms of product
non-conformities during its performance of the Agreement and thus
it made perfect sense for Dana to consider its alternatives, " id.
at *6. In finding that there was no evidence to support Jasco's
contention that Dana was a party to a conspiracy to misappropriate
Jasco trade secrets and to unjustly enrich the coconspirators, the
court stated as follows :

Jasco's claim is based upon an alleged
conspiracy between Dana and Nationwide and Messrs.
Rogers, Zicari and Convertino to steal and use Jasco
information in order to replace Jasco with Nationwide
as the supplier to Dana. However, despite the
allegations with respect to Nationwide and Jasco's
former employees, there is no evidence connecting
Dana to the alleged conspiracy. The fact that Dana
knew that Messrs. Zicari and Convertino became
Nationwide employees is not probative of a conspiracy
or proof of trade secret misappropriation.
Nationwide's employment of individuals who had worked
with Dana and knew Dana's business is conduct
consistent with permissible business competition.

See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 597 and n.21 . . . (1986)
("conduct that is as consistent with permissible
competition as with illegal conspiracy does not,
without more, support even an inference of
conspiracy. " ) [ . ]

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Mr. Baldino's affidavit claiming that Nationwide
bragged to Dana about information it had stolen from
Dana is not based upon personal knowledge. The
PowerPoint presentation stating that Nationwide had
employees who were "intimately knowledgeable with

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[the Dana] program" simply acknowledges the fact that
experienced former Jasco employees would be involved
with a Nationwide-Dana relationship. An employee's
knowledge and experience is not considered a trade
secret .

Bankruptcy Court Decision, 2007 WL 3376882, at *7 (quoting
Baldino Decl. Exhibit E) (emphases ours) . The bankruptcy court
also agreed with the Jasco II court's assessment of the evidence,
stating,

[s]imilarly, as the State Court found in granting
summary judgment in favor of Mr. Rogers [in
Jasco II], the evidence of telephone calls between
former Jasco employees and Dana employees "does not
(even given every available inference that might
justifiably be drawn in favor of the plaintiff)
salvage plaintiff's position. "

Bankruptcy Court Decision, 2007 WL 3376882, at *7 (quoting
Jasco II at 5) .

On November 9, 2007, three days after the bankruptcy court
issued its Decision, Jasco II was reversed. The Appellate
Division stated that

because plaintiff established that discovery has yet
to be completed, Supreme Court erred in granting the
subsequent motion of Rogers in part, granting Rogers
summary judgment dismissing the complaint against him
. . . ; see generally CPLR 3212 [f] ). Indeed,
plaintiff established that it requires further
document discovery and must depose or complete the
depositions of additional witnesses.

Jasco III, 45 A.D.3d at 1296-97, 844 N.Y.S.2d at 811 (emphasis
added) .

On November 16, 2007, the bankruptcy court entered its
Order Disallowing Claim of Jasco Tools, Inc. [and denying other
requested relief not relevant here] ("November 16 Order" or
"Order"), stating that Jasco's Claim "is disallowed and expunged

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in its entirety, " id. at 3. The Order stated that the court had
reviewed, inter alia, "the Objection, the Jasco Response, the
Debtors' Reply, the [Jasco] October 15th Letter, the Debtors'
Statement of Undisputed Facts, [and] Jasco's Statement of
Undisputed [sic] Facts, " and that the court had
determined that the legal and factual bases set
forth in the Objection, the Debtors' Reply, [and] the
Debtors' Statement of Undisputed Facts and the

Hearing establish just cause for the relief granted
herein.

Id. at 2 (emphases added) .

Jasco appealed to the district court, arguing the merits
of the bankruptcy court's Decision and pointing out that Jasco II,
on which the Decision in part relied, had been reversed. In an
Order dated May 9, 2008 ("District Court Order"), the district
court affirmed the bankruptcy court's Decision. With respect to
Jasco's request for discovery, the district court ruled that

Jasco has not shown that the Bankruptcy Court abused
its discretion in concluding that additional
discovery "at this stage [is] meritless, " as "Jasco
had [had] nearly four years to conduct discovery, "
during which Jasco took "18 depositions" and received
"voluminous documentation" from Dana.

Id. at 5-6 (quoting Bankruptcy Court Decision, 2007 WL 3376882,
at \*4 -\* 5) . The district court did not mention that only three of
the 18 depositions were taken of employees of Dana. As to the
merits, the district court found no error, quoting the Decision's
rationale. See, e.g., District Court Order at 6-7.

This appeal followed.

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## II. DISCUSSION

On appeal, Jasco argues principally that summary judgment
was inappropriate because Jasco should have been allowed to
complete discovery of Dana and because there were genuine issues
of fact to be tried. Jasco also protests the bankruptcy court's
procedures leading to the grant of summary judgment, contending
(a) that treating the Dana Objection as a motion for summary
8 judgment allowed Dana to get away with a "bait and switch
procedure" (Jasco brief on appeal at 7, 25); (b) that giving the
parties only two weeks from the date of the initial status
conference "to argue the non-existent summary judgment motion"
denied Jasco due process (id. at 7, 26, 27) ; (c) that allowing
Dana to move for summary judgment without a supporting
" [a] ffidavit" or "other sworn statement, " and without "evidence in
admissible form, " ignored the requirements for summary judgment
(id. at 29) ; and (d) that requiring that the Rule 7056-1
statements be served simultaneously made it impossible for Jasco
actually to respond to Dana's assertions as to what facts were not
genuinely in dispute (see id. at 26-27) .

On an appeal from the district court's affirmance of a
bankruptcy court's order, we review the decision of the bankruptcy
court independently, assessing its conclusions of law de novo and
its factual findings for clear error. See, e.g., In re Wireless
Data, Inc., 547 F.3d 484, 492 (2d Cir. 2008) ; In re First Central
Financial Corp., 377 F.3d 209, 212 (2d Cir. 2004). The bankruptcy

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court's discretionary rulings with regard to such matters as
scheduling and continuances are reviewed for abuse of discretion.
See, e.g., In re Lehal Realty Associates, 101 F.3d 272, 276 (2d
Cir. 1996) . An abuse of discretion may consist of an error of
law or a clearly erroneous finding of fact, see, e.g., Cooter &
Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990), or a decision
that, "though not necessarily the product of a legal error or a
clearly erroneous factual finding[, ]cannot be located within the
range of permissible decisions, " Zervos v. Verizon New York, Inc.,
252 F.3d 163, 169 (2d Cir. 2001) .

For the reasons that follow, we find merit in Jasco's
principal contentions, i.e., that Jasco should have been allowed
additional discovery and that on the present record, viewed in
the light most favorable to Jasco, summary judgment dismissing at
least one of Jasco's causes of action was inappropriate. We pause
first, however, to address Jasco's other procedural complaints, in
which we find limited merit.

## A. Jasco's Challenges to the Summary Judgment Procedures

## 1. The Claimed Summary Judgment Surprise

Jasco argues that Dana's use of its Objection to seek
judgment as a matter of law without filing a separate summary
judgment motion constituted a "bait and switch procedure" that
disadvantaged Jasco because Jasco did not understand that it was
responding to a summary judgment motion, rather than merely being

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given notice that Dana would move for summary judgment in the
future. (Jasco brief on appeal at 7, 25-26.) We are unpersuaded.
Although Dana's Objection was not labeled a motion for
summary judgment and was not accompanied by a separate statement
of undisputed facts as required by S.D.N.Y. Bankr. R. 7056-1 (b) ,
the Objection explicitly requested summary judgment. It set out
the criteria for granting a motion for summary judgment (see Dana
Objection [ 19), citing Celotex Corp. v. Catrett, 477 U.S. 317
(1986), and Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)
("Liberty Lobby"), and stated that " [flor the reasons set forth
below, the Debtors are entitled to summary judgment in their
favor" (Dana Objection | 20 (emphasis added) ). There followed a
section entitled "III. Material Undisputed Facts of the Jasco
Claim, " followed by Dana's assertions as to the facts surrounding
the Purchase Agreement (see id. [[ 21-22), the December 1999
negotiations for an extension of that Agreement (see id.
11 23-24), the actions of Rogers, Zicari, and Convertino (see id.
11 25-26) , the bid by Nationwide (see id. [[ 27-29), and the
discovery conducted in Jasco's state-court action (see id.
11 30-33) . These paragraphs were followed by a section entitled

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"IV. Dana's Summary Judgment Arguments, " with paragraphs

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repeatedly asserting, inter alia, that Dana had never been told
that Nationwide was using or had used Jasco trade secrets, and
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that Jasco lacked evidence to prove its causes of action (see id.
25 11 34-58) . Dana's Objection repeatedly stated that Dana was

seeking "summary judgment" (e.g., 11 19, 20, 59, 60) or "judgment
as a matter of law" (e.g., [| 6, 63) .

The fact that the Dana Objection itself requested summary
judgment was not lost on Jasco. To be sure, Jasco's Response
began with protests (a) against Dana's effort to have Jasco's
$20 million Claim summarily dismissed without, as required by an
earlier procedural order of the bankruptcy court ("Procedural
Order"), submitting an " 'affidavit, declaration or verification in
support of the relief requested'" (Jasco Response 11 2-3 (quoting
Procedural Order) ), and (b) against Dana's efforts to cut off
Jasco's right to discovery despite Dana's failure to produce any
documents pursuant to Jasco's outstanding Third Document Demand,
which had been pending in the state-court action since 2005 (see,
e.g., Jasco Response (1 5-13). But the next 30 paragraphs of the
Jasco Response addressed the merits of Dana's request for summary
judgment.

First, Jasco stated that Dana's request for relief should
be denied pursuant to Fed. R. Civ. P. 56 (f) (dealing with the need
for discovery) "to the extent that the instant Objection is the
equivalent of a summary judgment motion." (Id. | 14.) There
followed a section entitled "Dana's Motion for Summary Judgment
must be Denied on the Merits, " with a discussion of the legal
standard for granting summary judgment (see id. ( 15) -- quoting a
case citing Celotex and Liberty Lobby -- and an introductory
paragraph stating that

[t]here are four different causes of action alleged
against Dana in the underlying state court action.

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As will be shown below, Dana is not entitled to
summary judgment with respect to any of these four
causes of action. Of course, as long as any one
cause of action survives Dana's summary judgment
motion, the Debtors' Objection must be dismissed

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(Jasco Response | 16 (emphases added) ). The ensuing paragraphs
discussed the substantive law governing, and the evidence to
support, Jasco's breach of contract cause of action (see id.
11 17-29), its trade secret misappropriation cause of action (see
id. 11 31-34), its unjust enrichment cause of action (see id.
11 36-38), and its cause of action for prima facie tort (see id.
11 40-42) . As to these claims, Jasco concluded that :

[a]t a minimum, there are genuine issues of material
fact concerning Dana's alleged breach of contract
which require denial of Dana's motion for summary
judgment upon this cause of action

(id. | 30) ;

[a]t a minimum, the facts set forth in the Baldino
Declaration and in the Exhibits annexed thereto raise
genuine issues of material fact concerning Dana's
[trade secret misappropriation], which require denial
of Dana's motion for summary judgment upon this cause
of action

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[a]t a minimum, there is a genuine issue of material
fact concerning Dana's unjust enrichment, which
requires denial of Dana's motion for summary judgment
upon this cause of action

(id. [ 39) ; and

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[a]t a minimum, the facts raise genuine issues of
material fact concerning Dana's actions which
require denial of Dana's motion for summary judgment
upon [Jasco's prima facie tort] cause of action

(id. 1 43). We conclude that Jasco's contention that it was
disadvantaged in responding to Dana's Objection because it

believed that that Objection was not a summary judgment motion but
only a precursor to such a motion is meritless.

## 2. The Claimed Denial of Due Process

Nor is there merit in Jasco's contention that the
bankruptcy court's scheduling of oral argument on Dana's summary
judgment motion, to take place just two weeks after the initial
status conference, denied Jasco due process. Rule 56 of the
Federal Rules of Civil Procedure, which "applies in adversary
proceedings" in the bankruptcy court, Fed. R. Bankr. P. 7056,
allows a motion for summary judgment to be served "10 days before
the day set for the hearing." Fed. R. Civ. P. 56 (c). Given (a)
that the Dana Objection explicitly requesting summary judgment was
served on Jasco on August 31, 2007, (b) that Jasco responded in
detail on September 20, (c) that the bankruptcy court made it
clear beyond peradventure at the October 17 status conference that
the court was treating Dana's Objection as a summary judgment
motion, (d) that the October 31 date for the hearing on the motion
was announced at that October 17 conference, and (e) that the
hearing was held on October 31, Jasco's due process argument
borders on the frivolous.

## 3. The Absence of Affidavits

Jasco also complains that the bankruptcy court allowed
Dana to move for summary judgment without the support of an
affidavit, declaration, or other sworn verification.
The
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requirement for such a sworn statement -- which Dana asked the
bankruptcy court to waive, in light of the fact that Dana
supported most of its factual allegations with citations to
depositions, i.e., to sworn testimony (see Dana Objection ( 65) --
was included in the bankruptcy court's Procedural Order. Rule 56,
however, imposes no such requirement. It provides that a party
against which relief is sought may move for summary judgment "at
any time, with or without supporting affidavits." Fed. R. Civ. P.
56 (b) (emphasis added) . Thus, in Celotex, the Supreme Court found
that as to a summary judgment motion based on the absence of
evidence to prove an element of an opponent's cause of action,
there is "no express or implied requirement in Rule 56 that the
moving party support its motion with affidavits or other similar
materials, " 477 U.S. at 323; "where the nonmoving party will bear
the burden of proof at trial on a dispositive issue, a summary
judgment motion may properly be made in reliance solely on the
pleadings, depositions, answers to interrogatories, and admissions
on file, " id. at 324 (internal quotation marks omitted) .

In support of its contention that Jasco possessed no proof
that Dana had participated in the alleged conspiracy to use
Jasco's misappropriated trade secrets, Dana relied principally on
deposition excerpts that it attached to its Objection. Reliance
on such sworn statements -- though they do not warrant the granting
of the motion if there is a question as to the weight to be given
them or as to the witnesses' credibility (see Part II. C.2. below) -
-was not foreclosed by Rule 56; and the bankruptcy court had

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discretion, as to which we see no abuse here, to relax the sworn-
statement requirement set out in its Procedural Order.

4\. The Requirement for Simultaneous Rule 7056-1 Statements

We find greater merit in Jasco's contention that it was
inappropriate for the bankruptcy court to order that Jasco and
Dana serve their Rule 7056-1 statements simultaneously. The
purpose of the summary judgment mechanism is to allow the prompt
resolution of actions in which there is no genuinely disputed
issue as to any material fact. In aid of this purpose, the
pertinent local rule provides that a party moving for summary
judgment must annex to its motion "a separate, short, and concise
statement, in numbered paragraphs, of the material facts as to
which the moving party contends there is no genuine issue to be
tried." S.D.N.Y. Bankr. R. 7056-1 (b). One purpose of requiring
the movant to submit such a statement is to provide its opponent
with notice as to the moving party's factual contentions. Another
is to provide a precise framework for responses that will reveal
to the court which material facts are, and which are not, actually
in dispute. In aid of the latter purpose, the local rule requires
a party opposing summary judgment to include a statement with
"correspondingly numbered paragraph [s] responding to each numbered
paragraph in the statement of the moving party," id. Rule
7056-1 (c) ; and it provides that each assertion by the moving party
in its Rule 7056-1(b) statement that is not "specifically
controverted by a correspondingly numbered paragraph in the

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statement required to be served by the opposing party" as provided
by Rule 7056-1 (c) "shall be deemed admitted, " id. Rule 7056-1 (d) .

In the present case, the bankruptcy court ordered the
simultaneous service of Rule 7056-1 statements, stating that
Jasco did not need to see Dana's Rule 7056-1 statement before
serving its own because Dana's Objection and Jasco's Response had
expounded at length on the parties' respective positions as to why
summary judgment was or was not appropriate. But while Jasco may
not have needed further notice as to Dana's positions, the order
for simultaneous service of the Rule 7056-1 statements made it
impossible for Jasco to "respond []" point-by-point as required by
Rule 7056-1 (c), and Jasco therefore sought to protect itself
against any inadvertent "deemed admi [ssion] " pursuant to Rule
7056-1 (d) by stating a wholesale denial of all of Dana's
assertions. The result of the court's order was an exercise that,
contrary to the purpose of Rule 7056-1, was of no apparent benefit
to the parties and disserved the interest of the court in
achieving specific identification of any factual issues that were
not really in dispute.

We would be inclined to view the error of requiring the
simultaneous service of the Rule 7056-1 statements as harmless if
there were no indication that the bankruptcy court deemed any Dana
assertion admitted for lack of the requisite Jasco Rule 7056-1 (c)
response. However, while the Bankruptcy Court Decision did not
state that it deemed any of Dana's assertions admitted by Jasco,
the court's November 16 Order ruled that Dana's right to summary

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judgment was "establish [ed] " by "the legal and factual bases set
forth in the [Dana] Objection, the [Dana] Reply, [and] the [Dana]
Statement of Undisputed Facts." Bankruptcy Court November 16
Order at 2 (emphasis added). Since it is not clear how the
bankruptcy court could validly have considered the facts to have
been "established" by Dana's assertions, given that Jasco denied
them, it is not clear that Jasco was not prejudiced by the
bankruptcy court's order that the Rule 7056-1 statements be served
simultaneously.

In any event, we view the bankruptcy court's conclusion --
i.e., that Dana's submissions established facts that demonstrated
its entitlement to dismissal of all of Jasco's causes of action as
a matter of law -- as an aspect of the court's flawed application of
well established summary judgment principles, which we discuss in
Part II.C. below.

## B. Jasco's Request for Additional Discovery

Rule 56 provides that if a party opposing a summary
judgment motion shows by affidavit that, for specified reasons, it
cannot present facts essential to justify its opposition, the
court may, inter alia, deny the summary judgment motion or order a
continuance to allow the opposing party to obtain affidavits, take
depositions, or conduct other discovery that is material to its
opposition to the motion. See Fed. R. Civ. P. 56 (f) ; see, e.g.,
Paddington Partners v. Bouchard, 34 F.3d 1132, 1137 (2d Cir.
1994). A court plainly has discretion to reject a request for

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discovery if the evidence sought would be cumulative or if the
request is based only on "speculation as to what potentially could
be discovered, " id. at 1138; and a bare assertion that the
evidence supporting plaintiff's allegations is in the hands of the
moving party is insufficient to justify the denial of summary
judgment, see id. But a party against which summary judgment is
sought must be afforded "a reasonable opportunity to elicit
information within the control of his adversaries." Quinn v.

9 Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.
1980) ("Quinn") (summary judgment should not be granted against
nondilatory party who has been "denied reasonable access to
potentially favorable information") .

In the present case, Jasco sought compliance with its
outstanding document demand in order to be able to respond more
fully to Dana's contention that Dana had no knowledge of the
misappropriation of Jasco's trade secrets. The bankruptcy court
rejected that request, stating that, despite the fact that Jasco
had had nearly four years to conduct discovery in the state-court
action, see Bankruptcy Court Decision, 2007 WL 3376882, at *4,
"there is no evidence connecting Dana to the alleged conspiracy, "
id. at *7. The court stated that Jasco had taken 18 depositions,
including three of Dana employees; that Dana had responded to
interrogatories and two notices to produce, providing voluminous
documentation; and that Jasco had made a request for additional
discovery in the state-court action in opposition to a summary
judgment motion by Rogers, a request that the state court found

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"'r [ang] hollow, '" viewing it as being based on "'nothing but mere
hope and speculation' that additional discovery would reveal
evidence to prove the alleged conspiracy," id. at *5 (quoting
Jasco II at 10). The bankruptcy court stated that its own
conclusion was "similar []." Bankruptcy Court Decision, 2007 WL
3376882, at *5. Dana, in addition to endorsing the bankruptcy
court's rationale, contends that we should reject Jasco's
challenge to the denial of discovery on the grounds that Jasco
failed to submit a Rule 56 (f) affidavit in support of its
discovery request (see Dana brief on appeal at 16-17) and "failed
to identify the individuals it wished to depose or explain how
these depositions would impact the material legal issues in this
case" (id. at 16). We conclude that none of these rationales
permitted the grant of summary judgment in the face of Jasco's
request for discovery.

First, the bankruptcy court's intimation that Jasco had
conducted extensive discovery in the state-court action failed to
focus sufficiently on the discovery that had been obtained from
Dana. Discovery from parties other than Dana could have elicited
evidence that Dana was a knowing participant in a tortious
misappropriation or use of Jasco trade secrets; but when the state
of a defendant's knowledge is a material issue, discovery from
others may well not be an adequate substitute for depositions of
the defendant who professes ignorance. As to Dana itself, as the
bankruptcy court noted, Jasco had taken only three depositions,
consuming a total of only five days. With respect to a suit

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seeking $20 million in damages for, inter alia, an alleged trade
secret misappropriation conspiracy -- hardly a fanciful allegation,
given Convertino's sworn statements, see Parts I.A. above and
II.C.1. below -- in which, given the documents in the record, Dana
could be found to have taken part in various ways and at various
times, see, e.g., Bichler v. Eli Lilly & Co., 55 N.Y.2d 571, 580,
450 N. Y. S.2d 776, 780 (1982) (on a concerted action theory, a
joint tort-feasor may be held liable for furthering a common plan
or design to commit a tort if it knowingly "lend [s] aid or
encouragement to the wrongdoer, or ratif [ies] and adopt [s] [the
tortfeasor's] acts done for [its] benefit" (internal quotation
marks omitted) ), five days of depositions cannot reasonably be
viewed as extensive.

Second, the various discovery methods are more
complementary than fungible. For example, documents or
interrogatory answers may help to identify persons with knowledge
of the pertinent events, so that those persons may be deposed;
depositions, at which there can be cross-examination, may serve to
clarify statements in documents that are ambiguous; and deposition
testimony may be shown to have been false after documentary
evidence is obtained. No one type of discovery is necessarily an
adequate substitute for another. Here, where Jasco's trade secret
misappropriation cause of action against Dana is based on an
alleged conspiracy, a type of agreement that is by its nature
secretive, responses to interrogatories and document demands do
not necessarily obviate the need for depositions of persons

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believed to have knowledge relevant to the alleged secret
agreement .

The bankruptcy court gave no explanation as to why Jasco's
prior discovery of Dana sufficed. The Decision contained no
substantive comparison of what had been produced with what is now
requested and no finding that Jasco's Third Document Demand sought
information that was cumulative or that it was otherwise unduly
burdensome. Nor was there a finding that Jasco's discovery
request was dilatory -- a finding that would have been untenable,
given that the document demand Jasco seeks to pursue was served in
December 2005 and that its pursuit was stalled by Dana's March
2006 bankruptcy petition. And to the extent that the bankruptcy
court's adoption of the Jasco II court's view -- i. e., that Jasco's
discovery requests were based on "'nothing but mere hope and
speculation'" -- may be deemed a ruling that Jasco's request called
for documents that were not reasonably calculated to lead to
admissible evidence, see Fed. R. Civ. P. 26 (b) (1), the bankruptcy
court's reliance on Jasco II is doubly flawed. First, Jasco II
was reversed (after issuance of the bankruptcy court's Decision,
but prior to the issuance of the November 16 Order dismissing
Jasco's Claim) . Second, the Jasco II court was dealing with
Jasco's proposed depositions of Nationwide employees, Zicari's
wife and father-in-law, and Rogers's wife and girlfriend, see
Jasco II at 10, not with the Third Document Demand or any other
request for discovery from Dana.

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Finally, we reject the additional arguments advanced by

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Dana. First, its contention that we should affirm the denial of
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discovery on the ground that Jasco failed to submit a Rule 56 (f)
affidavit exalts form over substance. Jasco's Response to Dana's
Objection was accompanied by the Baldino Declaration. As that
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Decl. ( 54), it was plainly the equivalent of an affidavit.

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Second, although not labeled a "Rule 56 (f)" affidavit, the
Declaration gave specific reasons for Jasco's need for discovery.
It stated that Dana had refused to comply with Jasco's outstanding
document demand -- which was attached to the Declaration as
Exhibit P -- and that Jasco needed to obtain the requested documents
from Dana in light of the instances in which Dana employees had
"lie [d] under oath, as demonstrated by their affidavits, and given
their forgetfulness, as demonstrated at their depositions." (Id.
[ 52.) Finally, although Dana argues that Jasco "failed to
identify the individuals it wished to depose or explain how these
depositions would impact the material legal issues in this case"
(Dana brief on appeal at 16), Jasco's counsel had informed Dana's
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project" "that is the subject of this lawsuit," and that Jasco
needed responses to 11 11-13 of the Third Document Demand in order
to identify those persons (Baldino Decl. Exhibit O). In sum, the

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Baldino Declaration -- that Jasco wanted to depose "one or two" of
the Dana employees who were "most centrally involved in the

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Baldino Declaration sufficed as an affidavit providing the
information contemplated by Rule 56 (f) .

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Given, inter alia, the scant extent of the depositions
conducted of Dana employees, the dearth of analysis by the
bankruptcy court of the 2005 Third Document Demand, the bankruptcy
court's reliance on Jasco II which concerned discovery only of
parties other than Dana, the sworn statements by Convertino
indicating that a trade secret misappropriation conspiracy
existed, the evidence of false and questionable sworn statements
by Dana employees as to the origin of Dana's dealings with
Nationwide, and the fact that any attempt by Jasco to compel
compliance with its December 2005 discovery request was foreclosed
by Dana's March 2006 bankruptcy filing, we conclude that the
bankruptcy court's denial of Jasco's discovery request was not
within the range of permissible decisions.

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## C. The Misapplication of Summary Judgment Principles

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Finally, we conclude that even without discovery of
additional evidence, the record as it stands was sufficient to
preclude the entry of summary judgment dismissing and expunging
the Jasco Claim. " [S]ummary judgment is a useful device for
unmasking frivolous claims and putting a swift end to meritless
litigation" -- when "properly employed." Quinn, 613 F.2d at 445. A
motion for summary judgment may properly be granted -- and the grant
of summary judgment may properly be affirmed -- only where there is
no genuine issue of material fact to be tried, and the facts as to

which there is no such issue warrant judgment for the moving party
as a matter of law. See Fed. R. Civ. P. 56 (c) ; see, e.g., Madonna
v. American Airlines, Inc., 82 F.3d 59, 61 (2d Cir. 1996). The
function of the district court in considering the motion for
summary judgment is not to resolve disputed questions of fact but
only to determine whether, as to any material issue, a genuine
factual dispute exists. See, e.q., Liberty Lobby, 477 U.S. at
249-50. " [W] hen the party against whom summary judgment is sought
comes forth with affidavits or other material obtained through
discovery that generates uncertainty as to the true state of any
material fact, the procedural weapon of summary judgment is
inappropriate." Quinn, 613 F.2d at 445. Summary judgment is
inappropriate when the admissible materials produced in opposition
to the summary judgment motion "make it arguable" that the claim
has merit. Id. Thus, Rule 56 authorizes summary judgment only
"where the moving party is entitled to judgment as a matter of
law" on the basis that "no genuine issue remains for trial"
because "it is quite clear what the truth is." Poller v.
Columbia Broadcasting System, Inc., 368 U.S. 464, 467 (1962)
(internal quotation marks omitted) .

The principles governing a court's assessment of whether
a genuine issue of material fact exists are the same whether that
question arises in the context of a motion for summary judgment or
of a motion for judgment as a matter of law during or after trial,
see, e.g., Liberty Lobby, 477 U.S. at 250-51; Eastman Machine Co.
v. United States, 841 F.2d 469, 473-74 (2d Cir. 1988), and these

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principles are well established. In considering whether there is
sufficient evidence to create a genuine issue of fact, the
district court may not properly consider the record in piecemeal
fashion, giving credence to innocent explanations for individual
strands of evidence; rather, it must "review all of the evidence
in the record, " Reeves v. Sanderson Plumbing Products, Inc., 530
U.S. 133, 150 (2000) (discussing propriety of judgment as a matter
of law after trial) . "In doing so, however, the court must draw
all reasonable inferences in favor of the nonmoving party, and it
may not make credibility determinations or weigh the

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evidence.
'Credibility determinations, the weighing of the

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evidence, and the drawing of legitimate inferences from the facts
are jury functions, not those of a judge. '" Id. at 150-51
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(quoting Liberty Lobby, 477 U.S. at 255 (discussing propriety of
summary judgment) ) (emphases ours) ; see, e.g., Agosto v. INS, 436
U.S. 748, 756 (1978) ("a district court generally cannot grant
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summary judgment based on its assessment of the credibility of the
evidence presented") ; Continental Ore Co. v. Union Carbide &
Carbon Corp., 370 U.S. 690, 696 (1962) (in reviewing a directed
verdict, court of appeals must "view the evidence in the light
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most favorable to [the party against which the verdict was
directed] and give [that party] the benefit of all inferences
which the evidence fairly supports, even though contrary
inferences might reasonably be drawn"). "Where an issue as to a
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material fact cannot be resolved without observation of the
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demeanor of witnesses in order to evaluate their credibility,

summary judgment is not appropriate." Fed. R. Civ. P. 56 (e)
Advisory Committee Note (1963) .

In reviewing the record as a whole, "the court should give
credence to the evidence favoring the nonmovant as well as that
'evidence supporting the moving party that is uncontradicted and
unimpeached, at least to the extent that that evidence comes from
7 disinterested witnesses. '" Reeves, 530 U.S. at 151 (quoting 9A
C. Wright & A. Miller, Federal Practice and Procedure § 2529 (2d
ed. 1995), at 300). But a jury is free to believe part and
disbelieve part of any witness's testimony, see, e.g., Fiacco v.
City of Rensselaer, 783 F.2d 319, 325 (2d Cir. 1986), cert.
denied, 480 U.S. 922 (1987); United States v. Gleason, 616 F.2d 2,
15 (2d Cir. 1979), cert. denied, 444 U.S. 1082 (1980), and the
court considering a summary judgment motion "must disregard all
evidence favorable to the moving party that the jury is not
required to believe, " Reeves, 530 U.S. at 151 (emphasis added) .

Our review of the record persuades us that these
principles were not properly applied in the present case.
Although the parties debate their application with respect to each
of Jasco's four causes of action against Dana, we need discuss no
more than one, since if any one of Jasco's causes of action could
not properly be summarily dismissed, Dana's Objection to the
Jasco Claim should have been rejected. We will thus limit our
discussion to the alleged conspiracy, or concerted action, to
misappropriate Jasco's trade secrets, the cause of action that
presents one of the clearest factual disputes.

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Confidential proprietary data relating to pricing, costs,
systems, and methods are protected by trade secret law. See
generally Lehman v. Dow Jones & Co., 783 F.2d 285, 298 (2d Cir.
1986) . Under New York law, which governs Jasco's cause of action
for the misappropriation of its trade secrets, a plaintiff may, on
a theory of concerted action, recover damages from a defendant
that was one of a group of entities if at least one of those
entities committed a tort in pursuance of a common plan or design,
see, e. g., Rastelli v. Goodyear Tire & Rubber Co. , 79 N. Y. 2d 289,
295, 582 N.Y.S.2d 373, 375 (1992), and the defendant knew the
wrongful nature of the primary actor's conduct and intended to
assist in or profit from the commission of the tort, see, e. g.,
id .; National Westminster Bank USA v. Weksel, 124 A.D.2d 144, 147,
511 N. Y. S.2d 626, 628-29 (1st Dep't), appeal denied, 70 N.Y.2d
604, 519 N. Y.S. 2d 1027 (1987) . Such liability may also be imposed
on one who encourages the commission of a tort or who, knowing of
a tort committed for its benefit, ratifies it:

Concerted action liability rests upon the
principle that " [a]ll those who, in pursuance of a
common plan or design to commit a tortious act,
actively take part in it, or further it by
cooperation or request, or who lend aid or
encouragement to the wrongdoer, or ratify and adopt
his acts done for their benefit, are equally liable
with him" (Prosser, Torts [4th ed], § 46, at p 292;
see, also, Restatement, Torts 2d, § 876). An
injured plaintiff may pursue any one joint tort-
feasor on a concerted action theory

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Bichler v. Eli Lilly & Co., 55 N. Y.2d at 580-81, 450 N.Y.S.2d at
780 (emphases added) .

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Dana argues that Jasco has "manufactured an elaborate
conspiracy theory" (Dana brief on appeal at 1 (emphasis added) ) ,
endorsing the bankruptcy court's conclusion that "there is no
evidence connecting Dana to the alleged conspiracy, " Bankruptcy
Court Decision, 2007 WL 3376882, at *7. We have two difficulties
with this conclusion. First, Dana itself stated to the bankruptcy
court that " [t]he reason" for the lack of direct evidence of
Dana's knowledge of the misappropriation was "simple: each of the
principal witnesses denied knowledge of anyone ever telling Dana
of the alleged conversion." (Dana Reply | 9 (citing testimony by
Convertino, Zicari, and Haybach) (emphasis ours) .) But

Convertino, Zicari, and Haybach, accused of participating in, or
knowingly encouraging or ratifying, the misappropriation of
Jasco's trade secrets, were hardly disinterested witnesses. Of
course, the fact that their denials were self-serving does not
mean that such testimony would not be admissible at trial; the
self-serving nature of a witness's statements goes to the
statements' weight, not to their admissibility. See, e.g., St.
Pierre v. Dyer, 208 F.3d 394, 405 (2d Cir. 2000) ; United States v.
Lawal, 736 F.2d 5, 8 (2d Cir. 1984). But the weighing of such
statements is a matter for the finder of fact at trial, "not the
prerogative of the court on a motion for summary judgment." St.

Pierre v. Dyer, 208 F.3d at 405.

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Second, the denials by Convertino, Zicari, and Haybach of
knowledge on the part of Dana could not justify the entry of
summary judgment because it is well established that " ' [b]oth the

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existence of a conspiracy and a given defendant's participation in
it with the requisite knowledge and
intent may be
established through circumstantial evidence, '" United States v.
Huezo, 546 F.3d 174, 180 (2d Cir. 2008) (quoting United States v.
Stewart, 485 F.3d 666, 671 (2d Cir. 2007) ). Circumstantial
evidence may permit a factfinder to infer that a witness had
knowledge of a particular fact despite his testimonial denial of
knowledge. See, e.g., Smith v. California, 361 U.S. 147, 154
(1959) .

The bankruptcy court, in support of its conclusion that
there was "no evidence connecting Dana to the alleged conspiracy, "
stated that " [t]he fact that Dana knew that Messrs. Zicari and
Convertino became Nationwide employees is not probative of a
conspiracy or proof of trade secret misappropriation, " Bankruptcy
Court Decision, 2007 WL 3376882, at *7. But in focusing on the
sole facts that Nationwide hired Zicari and Convertino and that
Dana knew of those hirings, the court surely viewed the record in
piecemeal fashion and ignored other evidence favorable to Jasco,
for there was both (1) direct evidence that trade secrets were in
fact misappropriated and that a conspiracy to misappropriate them
existed, and (2) circumstantial evidence from which it could be
inferred that Dana knew of the trade secret misappropriation
conspiracy and encouraged or ratified the misappropriation.

1\. Direct Evidence of the Existence of Conspiracy

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As to the existence of a conspiracy, two opinions of the
state courts cited evidence from Convertino himself, a member of
the conspiracy. In Jasco II, submitted by Dana with its Reply to
Jasco's Response to Dana's Objection, the state court quoted a
Convertino affidavit describing the commencement of his tortious
collaboration with Zicari and Rogers:

[ 14. In approximately April of 1999, while all
three of us were still employees of Jasco, Chuck
Zicari approached me, told me that he was thinking of
starting his own business in Kentucky, in competition
with Jasco, and asked me whether I was interested in
joining him. . . . He also told me that Gary Rogers
was helping him.

1 15. . . . Chuck told me . . . that while Gary was
still at Jasco, he went into Chuck's personnel file
and removed from it Chuck's signed Non-Compete
Agreement and that he believed it was destroyed, thus
enabling Chuck to carry forward with this plan.

Jasco II at 2-3 (second emphasis in Jasco II; other emphases
ours) . And the Appellate Division in Jasco I stated that
" [a]ccording to Convertino, Rogers aided the efforts of
Convertino and Zicari by providing them with documents while he
was still employed by plaintiff." 303 A.D.2d at 945, 757
N. Y. S. 2d at 653 (quoted in Jasco II at 1) .

Further, as described in Part I.A. above, Zicari knew that
Convertino had computer records containing Jasco data as to,
inter alia, the materials, manufacturing processes, pricing, and
costs for all of the parts Jasco was selling to Dana. In the last
week of Convertino's employment with Jasco, Zicari, who had just
left Jasco, told Convertino that "it would be helpful for
competitive reasons to have that information available after

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[Convertino's] departure." (Convertino Dep. at 87-88.)
Accordingly, Convertino, who had "some animosity" toward Jasco
(id. at 44), took with him all the Jasco data that he thought
would be useful to himself and Zicari (see id. at 1738-40; see
also id. at 44-45) "to go after the Dana business" " [w]ith some
other company" (id. at 1739). Convertino testified that the
information he took had been developed in part by "other employees
at Jasco" "over a number of years" (id. at 89); that it was
nonpublic information (see id.) that was "proprietary to Jasco"
(id. at 290) ; and that he knew "it was unethical" to take it (id.
11 at 1740) .

Moreover, Convertino indicated -- with some apparent
reluctance -- that Nationwide must have known he used confidential
and proprietary information belonging to Jasco in order to prepare
Nationwide's bid to Dana:

Q. Now, did Messrs. Ricotta and Nuccitelli
understand that you were giving them proprietary
information belonging to Jasco?

A. They were very concerned whether or not I
had signed a no-compete clause or confidentiality
agreement .

Q. Again, the question is, were they aware that
you were providing to them proprietary information
that you had taken from Jasco?

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A. They knew that I was using my experience as
a basis of coming up with estimates for them.

Q. Did they know that you had actual documents
that you had taken from Jasco?

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A. I would have to say yes, because I provided
them with the cost breakdown and quantities that I
faxed to Chuck Zicari. I couldn't have had those
without taking documents from Jasco.

(Convertino Dep. at 290-91 (emphases added) . )

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Thus, the record contains evidence from a confessed
coconspirator that would permit a jury to find that Jasco trade
secrets were misappropriated, that there existed a trade secret
misappropriation conspiracy of which at least Rogers, Zicari, and
Convertino were members, and that the conspiracy was joined by
Nationwide.

## 2. Circumstantial Evidence that Dana Had a Culpable Role

The record also contains circumstantial evidence from
which a jury could permissibly infer that Dana had knowledge of
the theft, and/or the planned theft, of Jasco trade secrets as
early as the summer of 1999 and that, either at that time or
thereafter, Dana agreed to -- and eventually did -- knowingly take
advantage of that misappropriation in order to lower its
purchasing costs by many millions of dollars (see Haybach Dep. at
447-49 (the combined effect of Dana's rejection of the Jasco
proposed price increases (more than $8 million) and its
acceptance of the Nationwide price reductions ($7.4 million) was
to save Dana nearly $15.5 million) ) .

As to the events in the summer of 1999, preceding
Nationwide's offers, the evidence described in Parts I.A., I.C.,
and II.C.1. above, taken in the light most favorable to Jasco,
includes the following. Rogers was forced to retire as Jasco's

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president on May 31; before leaving, he began helping Zicari to
prepare to compete with Jasco, by removing Zicari's non-compete or
confidentiality agreement from Jasco's locked personnel files and
destroying it, and by providing Zicari and Convertino with other
documents. Rogers had been "Dana's primary contact person at
Jasco" (Haybach Aff. [ 4); but after his retirement, Buss had no
legitimate business reason to speak with him. Yet, in June,
within the first week after Rogers involuntarily retired, he
repeatedly called Buss; one of their telephone conversations
lasted 30 minutes. Buss categorically denied ever speaking to
Rogers after Rogers's retirement; and when confronted with
telephone company records showing such calls, Buss testified that
he had no recollection of those calls. Additional telephone
company records show an August 12 sequence in which Rogers again
called Buss and they conversed for 25 minutes; Rogers immediately
thereafter called Zicari, with whom he conversed for 13% minutes;
and Zicari then immediately called Nationwide. Zicari went to
work for Nationwide on August 16. In late August, Zicari called
Buss twice and thereafter called Nuccitelli to tell him that
Nationwide had "an opportunity with Dana" (Nuccitelli Dep. at
110). As with respect to the telephone calls from Rogers in June,
Buss professed to have no recollection of his 25-minute telephone
conversation with Rogers in August.

The bankruptcy court found that the telephone records
provided no support for Jasco's claims, but that assessment
plainly did not view this evidence in the light most favorable to

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Jasco. A jury could easily believe, in light of the telephone
records, that Buss's denial of any contact with Rogers after
Rogers's retirement was untruthful. And, as "the factfinder is
entitled to consider a party's dishonesty about a material fact as
affirmative evidence of guilt," Reeves 530 U.S. at 147 (internal
quotation marks omitted), the jury could also infer (a) that
Buss's denial and his assertion that he does not remember the
calls from Rogers are designed to conceal the subject matter of
those conversations, and (b) that the conversations concerned
precisely what actually occurred: that Zicari's and Convertino's
planned or eventuated theft of Jasco trade secrets would benefit
Dana by allowing it to receive a 10% discount from the prices
charged by Jasco if Dana would replace Jasco with another company
employing Zicari and Convertino.

We note that both Buss and Haybach admitted that they had
received calls from Zicari; they stated that the subject was
Zicari's plan to start his own company and his hope to solicit
business from Dana. Buss testified that he did not recall
precisely when he received such a call; Haybach stated that he
received such calls " [a]fter Mr. Zicari left Jasco, and before he
began with Nationwide"; and Haybach denied that these
conversations related to "the renewal of the Jasco contract. "
(Haybach Aff. 1 20; see Buss Dep. at 92.) Any such denials by
Haybach or Buss as to the contents of their many July and August
conversations with Zicari (see, e.g., Part I.A. above) are, of
course, subject to credibility assessments by a factfinder, which

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would not be required to believe the denials. But in any event,
we have seen nothing in the record before us that even attempts to
provide an innocent explanation for Zicari's calls to Buss on
August 20, i.e., after he had abandoned his plan to start his own
business and had gone to work for Nationwide, and shortly before
he called Nuccitelli to say that Nationwide had an opportunity
with Dana.

As to Nationwide's proposals in the fall of 1999, the
bankruptcy court ruled that Nationwide's PowerPoint presentation
to Dana -- which stated, inter alia, that Nationwide had employees
who were " 'intimately knowledgeable with [the Dana] program, '"
Bankruptcy Court Decision, 2007 WL 3376882, at *7 (quoting Baldino
Decl. Exhibit E) -- did not convey to Dana any sense that Nationwide
14 had access to Jasco trade secrets but instead "simply
acknowledge [d] the fact that experienced former Jasco employees
would be involved with a Nationwide-Dana relationship, " Bankruptcy
Court Decision, 2007 WL 3376882, at *7. We have difficulties with
this ruling as well. First, it is a finding of fact. On a motion
for summary judgment, the court is to identify factual issues, not
to resolve them. Second, this finding did not evaluate the
statements by Nationwide either in light of the record as a whole
or in the light most favorable to Jasco. As a whole and in that
light, the record contains evidence that Nationwide had almost no
prior experience in machining the types of parts Dana was buying
from Jasco; that Convertino took confidential and proprietary data
belonging to Jasco with him to Nationwide in order to facilitate

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competition against Jasco; that Convertino knew it was unethical
for him to take that information; that barely six months after
Convertino's arrival at Nationwide, as soon as the Dana contract
was secured, Nationwide gave and promised Convertino substantial
salary raises, plus bonuses totaling $44, 000, i.e., in excess of
60% of his Nationwide starting salary, as a reward for "his
involvement in securing the Dana Contract" (Baldino Decl. Exhibit
K) ; and that Convertino testified he "would have to say" that
Nationwide knew he had proprietary Jasco documents that he was
using to help prepare the Nationwide proposal to Dana (Convertino
Dep. at 291). Persons engaged in wrongful activity frequently use
coded language to convey meanings that are not intended to be
understood by outsiders. In light of the record as a whole, the
import of the assurances to Dana that Nationwide had employees who
were "intimately knowledgeable" about the parts in question, with
"past experience with [the] program" (Baldino Decl. Exhibit E), is
a matter for assessment by the finder of fact. The factfinder of
course will not be required to view the evidence in the light most
favorable to Jasco; but since the factfinder is permitted to do
so, the bankruptcy court was not allowed to grant summary judgment
based on its own view that the Nationwide PowerPoint statements
were simply innocuous.

Dana, in arguing to the bankruptcy court that there was no
evidence that Dana knew the Nationwide bid contained, or was
prepared using, Jasco trade secrets, repeatedly cited testimony by
Haybach (see Dana Objection 11 32, 44; Reply [ 9), that Haybach

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did not "have any inkling that Nationwide personnel had stolen
confidential or proprietary information from Jasco" (Haybach Dep.
at 526-27) . Yet Haybach also asserted that at no time prior to
awarding Nationwide the contract to succeed Jasco did Dana inform
5 Nationwide of the prices that Jasco was charging. (See Haybach
Dep. at 457, 493-94 ("I d[id] not, and I am reasonably assured
that none of our people would do that" because it would have been
"bad-bad, " "not right, " "not ethical, " "not fair") .) If the jury
credits this assertion that Nationwide did not learn Jasco's
prices from Dana, the jury may well infer that, far from having no
inkling that Zicari and Convertino had stolen Jasco trade secrets,
Haybach, Blanchard, and Buss must have known to a certainty that
Nationwide was using such stolen trade secrets, given that
Nationwide quoted to Dana a price that was exactly 10% less than
Jasco's price for each and every one of the 130 parts. Such an
inference as to Dana's knowledge could lead to a finding that, in
entering into the agreement with Nationwide, Dana ratified and
adopted the theft of Jasco's confidential and proprietary
information.

Further, in assessing the credibility of the Haybach
testimony relied on by Dana for the proposition that Dana had no
knowledge that Nationwide was using or had used confidential
information belonging to Jasco (Dana did not cite to denials by
any other Dana employee as to such knowledge), the jury would
also be entitled to take into account Buss's implausible denial of
any recollection of his lengthy conversations with Rogers and the

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fact that Haybach and Blanchard made false statements in their
state-court affidavits (quoted in Part I.A. above) as to the
origin of Dana's contact with Nationwide. The representations by
Haybach and Blanchard that Dana did not have contact with
Nationwide until after December 3 were squarely contradicted by,
inter alia, (a) Haybach's September 30 e-mail stating that Zicari
had already "verbally committed to a 10% price reduction from
Jasco's 1/1/2000 pricing" and instructing Buss to send Nationwide
bidding materials (Baldino Decl. Exhibit C) ; (b) Haybach's
personal calendar entries showing four meetings with Nationwide in
October and November (see id. Exhibit D) ; and (c) the November 26
written confirmation from Nationwide addressed to Blanchard (see
id. Exhibit F) .

Finally, we note that the bankruptcy court found that
"Nationwide's employment of individuals who had worked with Dana
and knew Dana's business [wa]s conduct consistent with permissible
business competition, " citing the statement in Matsushita Electric
Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986), that
"conduct that is as consistent with permissible competition as
with illegal conspiracy does not, without more, support even an
inference of conspiracy, " id. at 597 n.21. Bankruptcy Court
Decision, 2007 WL 3376882, at *7. We have considerable difficulty
with the bankruptcy court's finding and its reliance on
Matsushita. First, Matsushita, unlike Jasco's state-court action,
involved antitrust claims, and the Matsushita Court noted that

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"antitrust law limits the range of permissible inferences from
ambiguous evidence in a [Sherman Act] § 1 case, " 475 U.S. at 588.

Second, the context of the Matsushita Court's reference to
conduct that is "as consistent with permissible competition as
with illegal conspiracy" was the allegation that Japanese
manufacturers who were in competition with each other, had entered
into a predatory pricing scheme in which they would sell their
products below cost in the United States in order to drive
competing American manufacturers out of business. Given that such
a scheme would entail sure and immediate losses -- with only a
speculative hope of future profits that might not be achievable
without resort to price-fixing or some other surely actionable
anticompetitive conduct -- the Supreme Court found that the scheme
alleged was inherently implausible. The Court stated that "if the
factual context renders [the plaintiffs'] claim implausible -- if
the claim is one that simply makes no economic sense -- [the
plaintiffs] must come forward with more persuasive evidence to
support their claim than would otherwise be necessary."
Matsushita, 475 U.S. at 587 (emphasis added) ; see id. at 597-98
(remanding for consideration of whether there was sufficiently
unambiguous evidence to permit a jury to find that the defendants
conspired as alleged "despite the absence of any apparent motive, "
in order to engage in conduct that was "economically senseless") .

The Matsushita discussion has little resonance here.
Jasco's claim of trade secret misappropriation does not allege
economically senseless parallel actions by persons competing with

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each other. Rather it charges collaborative action by, inter
alia, (a) a buyer that saved more than $15 million on its
purchases (see Haybach Dep. at 447-49), (b) a seller that
"generate [d] a $2M bottom line" from "$25M in sales with no
acquisition costs" (Baldino Decl. Exhibit J (Nationwide internal
memorandum of Ricotta and Nuccitelli dated October 6, 1999,
at 2) ), and (c) a disgruntled former Jasco employee who, by reason
of his theft of Jasco trade secrets, received many thousands of
dollars in salary increases and bonuses (see Convertino Dep.
at 44; Baldino Decl. Exhibit K) .

Finally, Matsushita stated that an inference of conspiracy
is not supported by mere proof of conduct that is as consistent
with permissible competition as with illegal conspiracy, "without
more." 475 U.S. at 597 n.21. The record described above,
including the direct evidence as to the existence of a trade
secret misappropriation conspiracy and the use of Jasco trade
secrets demonstrably profiting at least Convertino, Nationwide,
and Dana, and the circumstantial evidence from which Dana's
knowledge, encouragement, ratification, and adoption of the theft
and use of Jasco trade secrets could be inferred, surely provided
the Matsushita "more. "

# CONCLUSION

We have considered all of Dana's arguments on this appeal
and have found in them no basis for affirming the grant of summary

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judgment dismissing and expunging Jasco's Claim. The judgment of
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the district court and the November 16, 2007 Order of the
bankruptcy court are vacated, and the matter is remanded for
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further proceedings not inconsistent with this opinion.

August Term, 2008 Argued: January 15, 2009 Decided: July 31, 2009 Docket No.… v. - Dana Corporation

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