BOEING COMPANY v. SIERRACIN CORPORATION

Citation Codes

Equivalent Citations

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Docket Number

Nos. 17022-8-I; 17113-5-I; 17063-5-I.

Attorney(S)

Perkins Coie and Thomas L. Boeder, for Boeing Company. Culp, Dwyer, Guterson Grader and Jerry R. McNaul, for Sierracin Corporation. Graham Dunn and James L. Magee, for respondent Libbey-Owens-Ford.

Judges

RINGOLD, A.C.J. (concurring)
GROSSE, J.

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Smart Summary

Factual and Procedural Background

Boeing sued Sierracin for breach of contract, misuse of Boeing’s cockpit-window drawings and specifications, and violations of the Uniform Trade Secrets Act. Sierracin counterclaimed for antitrust violations. A jury awarded damages to both parties, and the trial court entered a permanent injunction prohibiting Sierracin from using Boeing’s data in manufacturing the windows or obtaining a Product Manufacturing Authorization. [1][2][3]

The trial court initially granted Sierracin a 120-day period to obtain an independent authorization through reverse engineering, while requiring royalty payments to Boeing. After Sierracin failed to obtain the authorization, it sought a stay of the injunction. A court commissioner permitted supersedeas as of right. Boeing moved to modify that ruling. [4][3]

The Court of Appeals modified the commissioner’s ruling and remanded for the trial court to determine appropriate security. [5][6]

Legal Issues Presented

Whether an injunction prohibiting the use of a trade secret is a decision “affecting property” subject to supersedeas as a matter of right under RAP 8.1(b)(2). [7][8]
Whether the appellate court should stay the injunction under RAP 8.3 based on the appeal’s debatable issues, the equities, and the need to preserve the fruits of a successful appeal. [9][10]
What bond or other security should be required as a condition of the stay. [11][12]

Arguments of the Parties

Sierracin’s Arguments

The appellate court had authority to issue a stay under RAP 8.3. [13]
The injunction should be stayed because it would force Sierracin out of business. [13]
The injunction was subject to supersedeas as a matter of right under RAP 8.1. [13]

Boeing’s Arguments

An injunction should be stayed only in extraordinary circumstances. [13]
Sierracin’s claimed economic or commercial disadvantage did not constitute such a circumstance. [13]

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Purser v. Rahm, 104 Wn.2d 159, 702 P.2d 1196 (1985)	A stay may issue when the appeal presents debatable issues and the stay is necessary to preserve the fruits of a successful appeal.	The court relied on this principle in granting Sierracin a stay. [10][11]
Kennett v. Levine, 49 Wn.2d 605, 304 P.2d 682 (1956)	Supports the standard governing discretionary supersedeas under RAP 8.3.	The court cited it as authority for evaluating debatable appellate issues and preservation of appellate relief. [10]
Shamley v. Olympia, 47 Wn.2d 124, 286 P.2d 702 (1955)	When potential harm would destroy the fruits of a successful appeal, relief should be granted unless the appeal is totally meritless.	The court used this sliding-scale principle in assessing the consequences of leaving the injunction in effect. [10]
State ex rel. Pioneer Mining Ditch Co. v. Superior Court, 108 Wn. 183, 186, 183 P. 74 (1919)	If appellate delay causes harm that can be compensated by a bond, supersedeas should be granted.	The court concluded that Boeing’s injury could be measured monetarily and therefore could be protected through security. [11]

Court's Reasoning and Analysis

RAP 8.1 permits supersedeas as of right for money judgments and decisions affecting property. The court determined that the injunction did not qualify because prohibiting the use of a trade secret was not a decision affecting property within the meaning of RAP 8.1(b)(2). Treating the injunction as property-related merely because trade-secret protection involves property rights would rely on unnecessary abstractions and disregard the rules’ stated purpose. [14][15][16][17][8]

Because RAP 8.1 did not apply, authority to stay the injunction rested exclusively with the appellate court under RAP 8.3. That rule permits relief when the equities support it, the appeal presents debatable issues, and the stay is necessary to preserve the practical benefits of a successful appeal. [17][18][8][10]

The court found that without a stay Sierracin would probably be forced out of the cockpit-window business during the appeal. Although Boeing would also suffer harm from the stay, that harm could be measured financially. Applying the equitable, sliding-scale approach, the court concluded that security could protect Boeing while preserving Sierracin’s ability to benefit from a successful appeal. [10][11]

Because the case was complex, the appellate record was incomplete, and the trial judge was more familiar with the parties’ circumstances, the court remanded for determination of the appropriate bond or other security. [12]

Judge Ringold concurred in the result of staying the injunction under RAP 8.3 but would have denied Boeing’s motion to modify the commissioner’s ruling. She viewed the injunction as incidental to Boeing’s primary trade-secret claim and agreed that a monetary supersedeas adequately protected Boeing. [19][20][21]

Holding and Implications

HOLDING: The injunction was not subject to supersedeas as a matter of right under RAP 8.1 because it was not a decision affecting property. Nevertheless, the appellate court granted a discretionary stay under RAP 8.3 because Sierracin showed debatable appellate issues and a substantial risk that the appeal’s benefits would otherwise be lost. [8][11]

The commissioner’s ruling was modified, and the matter was remanded for the trial court to set the required bond or other security. The direct effect was to preserve the injunction’s suspension during review while protecting Boeing through appropriate security; the opinion discusses no additional broader consequences beyond this disposition. [12][6]

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THE BOEING COMPANY, Appellant, v. SIERRACIN CORPORATION, ET AL, Respondents. SIERRACIN CORPORATION, ET AL, Appellants,

[1] Supersedeas — As Matter of Right — Decision Affecting Property — Trade Secrets. For purposes of RAP 8.1(b)(2), which provides for supersedeas as a matter of right for decisions affecting property, injunctive action to prohibit the use of a trade secret is not a decision affecting property.

[2] Supersedeas — Discretion of Court — Elements. Supersedeas should be granted by an appellate court under RAP 8.3 when, considering the equities of the situation, a party has shown that there are debatable issues to be appealed and that the stay is necessary to preserve the fruits of a successful appeal.

RINGOLD, A.C.J., concurs by separate opinion.

GROSSE, J.

This matter comes before the court on Boeing's motion to modify a commissioner's ruling permitting Sierracin Corporation and Sierracin Glass Transparencies, Inc. (hereinafter collectively Sierracin) to supersede, as of right, an injunction entered against them for violations of the Uniform Trade Secrets Act. For reasons set forth below, we modify the ruling.

Boeing sued Sierracin claiming that Sierracin's use of Boeing's drawings and specifications for cockpit windows breached a confidential relationship and contract with Boeing and violated the Uniform Trade Secrets Act, RCW 19.108. Sierracin counterclaimed alleging violations of antitrust laws. The damages issues were tried to a jury which awarded damages to both parties. The trial court issued a permanent injunction against Sierracin's use of Boeing's data in the production of the windows or in any application to the Federal Aeronautics Administration for a Product Manufacturing Authorization (PMA), without which the products cannot be sold. The trial court stayed the injunction to allow Sierracin a 120-day grace period within which it was to obtain a PMA based on specifications and drawings other than Boeing's. Sierracin had indicated that they could obtain such a PMA without Boeing data through a process known as reverse engineering. During the grace period, Sierracin was ordered to pay Boeing a royalty on window sales. The 120-day period has lapsed and Sierracin has been unable to obtain an independent PMA despite continued efforts to do so. Thus, Sierracin moved this court for an order staying the injunction.

Sierracin contends that the appellate court has authority to issue a stay under RAP 8.3 and that a stay should be issued because the injunction will force Sierracin out of business. It also contends that the injunction must be stayed as a matter of right under RAP 8.1. Boeing contends that only in extraordinary circumstances should an injunction be stayed, and that Sierracin's claim of economic or commercial disadvantage is not such a circumstance.

RAP 8.1 reads in pertinent part as follows:

(b) Supersedeas by Bond or Other Security. Except when prohibited by statute, a party may supersede the enforcement of a money judgment or decision affecting property by filing a supersedeas bond . ..

(Italics ours.) RAP 8.1(b). RAP 8.1(a) indicates that supersedeas by the trial court is in addition to the other means of delaying enforcement of a judgment contained in CR 62(a), (b), and (h). Those means are not applicable here but include the automatic 5-day stay after entry of a judgment, stays pending motions under CR 50, 52(b), 59, 60, and stays in cases involving multiple claims or parties under CR 54(b).

RAP 8.1 provides for supersedeas as of right for money judgments and for decisions affecting property:

If the decision determines the disposition of property in controversy, or if the property is in the custody of the sheriff, or if the proceeds of the property or a bond for its value are in the custody or control of the court, the amount of the supersedeas bond shall be fixed at such sum only as will secure any money judgment plus the amount of loss which a party may be entitled to recover as a result of the inability of the party to enforce the judgment during review.

RAP 8.1(b)(2).

The Comment to the rule indicates that RAP 8.1 was intended to supersede CR 62(c), (d), (e), (f), and (g) and that thereafter "[t]he authority to suspend, modify, restore, or grant an injunction after acceptance of review should rest solely with the appellate court." Comment, RAP 8.1, 3 Washington Court Rules Annotated (1977). The comments further clarify that if a decision is not among those supersedable of right under RAP 8.1 then supersedeas is only available at the discretion of the appellate court. [1] RAP 8.3 governs the exercise of such discretion:

Except when prohibited by statute, the appellate court has authority to issue orders, before or after acceptance of review, to insure effective and equitable review, including authority to grant injunctive or other relief to a party. The appellate court will ordinarily condition the order on furnishing a bond or other security. A party seeking the relief provided by this rule should use the motion procedure provided in Title 17.

Therefore, the issue is whether the decision in the instant matter enjoining Sierracin from manufacturing under a PMA obtained with Boeing data can be classified as one "affecting property." We do not believe that it can be so classified. To construe RAP 8.1(b)(2) to include the injunctive relief granted herein, i.e., prohibiting use of a trade secret, as "affecting property" because that relief involves an aspect of "property rights" would require the making of unnecessary abstractions from archaic principles of property law, and ignore the intent of the rules as that intent is expressed in the rules themselves and in the comments thereto. We hold that the authority to stay this injunction pending appeal rests solely with the appellate court under RAP 8.3 and that RAP 8.1 has no application to the trial court's decision in this case.

[2] RAP 8.3 allows us to stay an injunction if the movant can demonstrate that debatable issues are presented on appeal and that the stay is necessary to preserve the fruits of the appeal for the movant after considering the equities of the situation. Purser v. Rahm, 104 Wn.2d 159, 702 P.2d 1196 (1985); Kennett v. Levine, 49 Wn.2d 605, 304 P.2d 682 (1956). In actual application of this theory, courts apply a sliding scale such that the greater the inequity, the less important the inquiry into the merits of the appeal. Indeed if the harm is so great that the fruits of a successful appeal would be totally destroyed pending its resolution, relief should be granted, unless the appeal is totally devoid of merit. See Shamley v. Olympia, 47 Wn.2d 124, 286 P.2d 702 (1955). Consideration of the equities of the situation may also require conditioning the stay on the posting of a bond or the provision for some other form of security.

We hold that a supersedeas or stay of this injunction should be granted. Sierracin has made the requisite showing that there are debatable issues on appeal and that the stay is necessary to preserve for Sierracin the fruits of a successful appeal. Purser v. Rahm, supra. We are convinced that without the stay, Sierracin would most probably be forced out of the cockpit window business at some time during the pendency of the appeal. We are equally convinced that a stay of the injunction will adversely affect Boeing but that the adverse effect can be measured in terms of a monetary amount. If the harm occasioned by the appellate delay can be met by a bond, supersedeas should always be granted. See State ex rel. Pioneer Mining Ditch Co. v. Superior Court, 108 Wn. 183, 186, 183 P. 74 (1919).

Because of the complexity of this case, the present lack of a record of the proceedings below and the far greater familiarity of the trial judge with the circumstances of the parties, we remand this case to the trial court to determine the amount of a bond or, if a bond is not appropriate, the nature of other security that should be provided.

The commissioner's ruling is modified and the cause remanded for further proceedings in accordance with this opinion.

WILLIAMS, J., concurs.

RINGOLD, A.C.J. (concurring)

I concur in the result staying the injunction in accord with RAP 8.3 but would deny the motion to modify the commissioner's ruling.

As I view the record before us, Boeing's request for injunctive relief under RCW 19.108.020(1) and the court's general equity powers, was incidental to the primary action against Sierracin for wrongfully using Boeing's trade secrets. The jury awarded: to Boeing $1,635,333 for damages caused by Sierracin's action; to Sierracin, $1,062,442 for damages caused by Boeing's antitrust violations.

I agree with the commissioner that RAP 8.1(b) is applicable as a "decision affecting property." A supersedeas requiring a monetary response is adequate here to protect every Boeing interest concerned.