From Misappropriation to Monetization:
Utah Supreme Court Demands a Provable Causal Link between Trade-Secret Theft and Damages

Introduction

In Feller Behavioral Health PLLC & Kelly Feller v. Military & Veteran Counseling Center, LLC d/b/a Freedom Counseling, 2025 UT 33, the Utah Supreme Court dismantled a partial summary-judgment award that had found trade-secret liability as a matter of law. The Court held that—even where misappropriation appears undisputed—a plaintiff under Utah’s Uniform Trade Secrets Act (UTSA) must present admissible, non-speculative evidence tying the alleged misuse of confidential information to a cognizable measure of damages.

The decision is significant for three interconnected reasons:

1. It between misappropriation and actual loss or unjust enrichment under § 13-24-4(1).
2. It confirms that an absence of a viable damages theory justifies summary judgment in favor of the defendant—even where liability elements (existence of a trade secret and conduct amounting to misappropriation) might otherwise be supported.
3. It offers on how district courts must articulate reasons when granting or denying multi-ground summary-judgment motions, echoing Utah R. Civ. P. 52(a)(6).

Case Background

• Parties: Freedom Counseling (plaintiff/appellee), a behavioral-health clinic; Feller Behavioral Health (FBH) and its executive director Dr. Kelly Feller (defendants/appellants).
• Facts: Four therapists left Freedom Counseling for FBH. During recruitment, Dr. Feller requested and received client lists—including names, birthdates, insurance carriers, and member ID numbers—information covered by the therapists’ confidentiality agreements with Freedom Counseling.
• Plaintiff’s Claim: FBH’s receipt and alleged use of that information constituted misappropriation of trade secrets, causing Freedom Counseling financial collapse.
• District Court Ruling: Partial summary judgment for Freedom Counseling on liability; exemplary-damages question reserved for trial. FBH’s summary-judgment motion (arguing evidentiary deficiencies, especially on damages) was denied.
• Appeal: FBH obtained interlocutory review; the Supreme Court ultimately recalled the case.

Summary of the Judgment

The Supreme Court (Justice Pohlman, joined by Justices Petersen & Hagen and Judges Christiansen Forster & Orme) reversed both aspects of the lower-court ruling:

1. Reversal of Denial of FBH’s Motion: Freedom Counseling failed to present any legally sufficient evidence that its claimed losses were caused by FBH’s alleged misuse of the client information. Under Salo v. Tyler, that failure entitled FBH to judgment as a matter of law.
2. Collateral Reversal of Plaintiff’s Partial Victory: Because the damages element collapsed, the earlier finding of liability could not stand. Liability and damages are inseparable elements of a trade-secret claim, and the absence of damages extinguishes the cause of action.

Detailed Analysis

A. Precedents Cited and Their Influence

1. USA Power, LLC v. PacifiCorp, 2010 UT 31
   – Identified three elements for trade-secret misappropriation: (1) existence of a trade secret, (2) breach of a duty limiting disclosure, (3) use that injures the claimant. The Court leaned heavily on this formulation to anchor its insistence on an injury/damages showing.
2. Salo v. Tyler, 2018 UT 7
   – Clarified that a defendant moving for summary judgment meets its burden by showing the plaintiff lacks a legally sufficient evidentiary basis on an essential element. Here, that element was damages.
3. Heslop v. Bear River Mutual Ins., 2017 UT 5
   – Distinguished reasonable inferences from speculation; the Court relied on Heslop to dispose of plaintiff’s proposed causal inference as speculative.
4. Clegg v. Wasatch County, 2010 UT 5
   – Defined summary-judgment standards; cited for the principle that reasonable jurors must be able to reach only one conclusion in order for summary judgment to issue.
5. Additional procedural or evidentiary citations (Fitzgerald v. Spearhead Investments, Suarez v. Grand County, University of Utah v. Tullis) were referenced for summary-judgment mechanics or standard-of-review points.

B. The Court’s Legal Reasoning

1. Elemental Necessity of Damages
   The UTSA (§ 13-24-4) expressly conditions recovery on damages caused by misappropriation. Thus, damages are not merely a remedy—they are a constituent element of the prima facie case.
2. Plaintiff’s Moving Target
   • Original Pleading: focused on FBH’s gain (streamlined onboarding, higher compensation decisions, etc.).
   • Litigation Pivot: expert report and deposition testimony emphasized plaintiff’s lost profits.
   The Court observed that neither theory was supported by evidence establishing a causal chain from FBH’s possession of client data to either FBH’s enrichment or plaintiff’s loss.
3. Absence of Causal Proof
   • No evidence that FBH used personal client details to contact or solicit patients.
   • Clients followed therapists voluntarily; their departures were thus attributable to therapist migration, not to any trade-secret use.
   • FBH’s hiring of therapists hinged on aggregate data (number of patients per insurer and credentialing status), which could be obtained without disclosing protected personal identifiers.
   Hence, a damages framework resting on loss of clients was speculative.
4. Reasonable Royalty Rejected by Silence
   The Court implicitly noted that Freedom Counseling did not pursue—or at least did not evidence—a reasonable-royalty alternative. The opinion leaves open the possibility that such a theory, if timely raised and supported, might salvage a damages claim even absent proof of actual loss.
5. Procedural Reminder to Trial Courts
   The opinion chastises the district court for incorporating [the] winning party’s arguments across the board rather than issuing its own analytic statement as Rule 52(a)(6) requires.

C. Potential Impact on Future Litigation

• Heightened Evidentiary Vigilance: Plaintiffs must marshal concrete damages evidence concurrent with liability evidence. Expert reports should map the causal chain in detail, not merely calculate apparent economic swings.
• Strategic Use of Rule 56: Defendants accused of trade-secret misappropriation now have a clear roadmap for obtaining early dismissal—attack the damages element first.
• Choice of Remedy: Counsel should evaluate reasonable royalty models where actual-loss proof is tenuous. Failure to plead or support a fallback royalty theory could be fatal.
• Employee-Mobility Cases: The decision delineates between information that legitimately helps a prospective employer assess a therapist’s book of business (aggregate counts and credentialing) versus personal identifiers. Plaintiffs must show that it was the latter that drove hiring decisions or client poaching.
• Judicial Economy: Trial courts may feel emboldened to grant summary judgment in similar UTSA cases to prevent protracted damages trials where causation is facially deficient.

Complex Concepts Simplified

Trade Secret (UTSA § 13-24-2(4))

Information that (a) derives independent economic value from not being generally known or readily ascertainable, and (b) is subject to reasonable efforts to maintain secrecy.

Misappropriation (§ 13-24-2(2))

Acquisition, disclosure, or use of a trade secret by someone who knows, or has reason to know, that the information was obtained improperly or under a duty of confidentiality.

Actual Loss vs. Unjust Enrichment (§ 13-24-4(1))

Actual loss = plaintiff’s diminished profits or expenses incurred because of the theft.
Unjust enrichment = defendant’s gains that were not already captured in plaintiff’s loss calculation.

Reasonable Royalty (§ 13-24-4(1))

An alternative measure where courts impose a hypothetical license fee the defendant would have paid for lawful use.

Summary Judgment (Rule 56)

A procedural device allowing courts to decide a case without trial when no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law.

Conclusion

Feller Behavioral Health v. Military & Veteran Counseling Center is now Utah’s leading authority on the indispensability of a provable causal bridge between misappropriation and damages in trade-secret litigation. The ruling teaches three core lessons:

1. Pleading misappropriation is not enough; plaintiffs must substantiate how the defendant’s use of a secret produced quantifiable harm.
2. Speculative inferences—no matter how intuitively appealing—will not defeat a defendant’s properly supported summary-judgment motion.
3. District courts must clearly articulate their reasoning, especially where multiple independent grounds for summary judgment are urged.

By demanding rigorous proof of causation, the Utah Supreme Court fortifies UTSA’s remedial architecture and signals a judiciary increasingly wary of trade-secret claims that conflate employee mobility with misappropriation. Going forward, litigants should view damages evidence as the linchpin—not the afterthought—of any trade-secret strategy.