IUTSA does not preempt a civil RICO claim

Wednesday, October 8, 2008 by Bose Archives

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In this interlocutory appeal, AGS Capital Corporation, Inc., AGS Capital, LLC (collectively "AGS"), Fast Tek Group, LLC ("Fast Tek"), Superior Metal Technologies, LLC ("Superior Metal"), Alan G. Symons, Scott A. Weaver, Anthony Roark, and Chan Chanthaphone (collectively "Appellants") appeal the trial court’s grant of preliminary injunction to Product Action International, LLC ("Product Action").  The Appellants raise numerous issues, which we reorder and restate as:


(1) Whether Indiana’s Uniform Trade Secrets Act preempts Product Action’s claim under Indiana’s Racketeer Influenced and Corrupt Organizations ("RICO") statute;
(2) Whether the trial court’s ruling that Product Action established a prima facie case that the Appellants misappropriated trade secrets was clearly erroneous;
(3) Whether the trial court’s ruling that Product Action established a prima facie case that the Appellees violated Indiana’s RICO statute was clearly erroneous;
(4) Whether the trial court’s finding that Fast Tek and AGS are "alter egos" is clearly erroneous;
(5) Whether the trial court erred in concluding that Product Action would suffer irreparable harm without an injunction;
(6) Whether the preliminary injunction is overbroad; and
(7) Whether the $2000 injunction bond to be posted by Product Action is unreasonably low.


Conclusion
(slip op. at 38):  In sum, we hold that IUTSA does not preempt a civil RICO claim because such a claim is an additional punishment made available by our General Assembly for particular schematic violations of Indiana’s criminal law. Product Action presented a prima facie case under IUTSA and RICO, supporting the trial court’s imposition of a preliminary injunction. We also affirm the trial court’s alter ego determination as to AGS and Fast Tek. While the majority of the terms of the preliminary injunction are not overbroad, the provision prohibiting the participation of AGS, Symons and Weaver in the operation of Fast Tek is overbroad. Accordingly, we reverse that particular provision of the preliminary injunction and affirm the remaining provisions. We reverse the award of attorney’s fees to Product Action as the prevailing party has yet to be determined by a trial on the merits. Finally, the Appellants have not carried their burden to establish that the injunction bond is inadequate.  Affirmed in part, reversed in part, and remanded for further proceedings.


BAKER, C.J., concurs.


VAIDIK, J., concurs in part and dissents in part with opinion:  "I respectfully concur in part and dissent in part . . . I write to express my disagreement with the majority’s conclusions regarding whether the duration of the preliminary injunction issued by the trial court is overbroad and whether the $2000 injunction bond is unreasonably low . . . "

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