Background
North Palm Motors, doing business as Napleton’s Car Rental Center, operated a Florida car-rental business and maintained a confidential web-based customer list containing contact, reservation, and other customer information. Its former manager, Richard Boyce, and two employees helped establish Auto Rentals of the Palm Beaches while still associated with Napleton. Auto Rentals used the same reservation-system provider and generated substantial business without marketing or an established customer base.
After Napleton sued, the circuit court found that Boyce and the two employees knowingly misappropriated Napleton’s customer list and that Schumacher Automotive, Charles Schumacher, and George Bengston had reason to know of the misappropriation. Following an eleven-day bench trial, the court awarded $864,000 in disgorgement damages jointly and severally, but denied actual-loss damages, fees against the Schumacher defendants, and punitive damages.
The Court’s Holding
The Fourth District largely affirmed. Competent, substantial evidence supported liability against the Schumacher defendants as subsequent acquirers under Florida’s Uniform Trade Secrets Act: they had reason to know the customer information was misappropriated, given Boyce’s dual employment, Auto Rentals’ early revenue without marketing or a website, and customer confusion over charges. The court also upheld joint and several liability for trade-secret disgorgement damages.
The court affirmed the denial of attorney’s fees against the Schumacher defendants and punitive damages against all defendants. Although the Schumacher defendants had reason to know of misappropriation, the trial court could credit testimony that they believed Napleton was closing and find their conduct was not willful and malicious. The court also upheld the zero award for actual loss because the trial court could reject both damages experts and find no non-speculative causal link between the misappropriation and Napleton’s claimed losses.
The court reversed only the amount of disgorgement. Napleton’s expert linked 85%—but not all—of Auto Rentals’ reservations and profits to Napleton customers. Because no competent, substantial evidence tied the remaining 15% to the misappropriated customer list, the court reduced the award from $864,000 to $734,400.
Key Takeaways
- A subsequent recipient of a trade secret may be liable when it has reason to know the secret was acquired through improper means.
- FUTSA disgorgement must be supported by evidence tying the recovered profits to the misappropriation.
- Willful and malicious misappropriation is a higher standard than liability based on reason to know, and fees and punitive damages remain discretionary.
Why It Matters
The decision distinguishes ordinary FUTSA liability from the heightened misconduct required for fee shifting and exemplary damages. It also confirms that courts may impose joint and several liability for a single trade-secret injury while requiring a non-speculative evidentiary basis for the amount disgorged.