anderson paper opening brief

Appellant’s Opening Brief – p. i

No. 60919-0

COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION ONE ______________________________________________________ ______________________________________________________

ANDERSON PAPER & PACKAGING, INC.,

Appellant, v.

RICK JOHNSON, THE GREAT LITTLE BOX COMPANY, INC., and THE GREAT LITTLE BOX COMPANY, LTD.,

Respondents. ______________________________________________________ ______________________________________________________

ON APPEAL FROM THE SUPERIOR COURT OF THE STATE OF WASHINGTON FOR WHATCOM COUNTY

No. 07-2-01006-4 ______________________________________________________ ______________________________________________________

APPELLANT’S OPENING BRIEF

______________________________________________________ ______________________________________________________

JEFFREY B. TEICHERT TEICHERT LAW OFFICE, PC

4164 Meridian Street Suite 405

Bellingham, WA 98226

(360) 594-4321

Appellant’s Opening Brief – p. ii

TABLE OF COTETS

A. ASSIGNMENTS OF ERROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 B. HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 C. ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

1. A Superior Court Decision Granting A Motion For Summary

Judgment Is Reviewed De Novo . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2. The Superior Court Erred By Dismissing Anderson Paper’s Non-

Compete Claims Because The Non-Compete Agreement Was Made At The Outset Of The Employment And Formalized In Writ-ing Several Months Later. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

3. It Was Error For The Superior Court To Order Sanctions In The Amount Of $24,348 For Copying A File Copy Of A Letter On A More Recent Letterhead Before Submitting It To The Court. . . . 13

4. It Was Error For The Superior Court To Dismiss Anderson Paper’s

Trade Secret Claims Against All Parties As An Alternative Rem-edy For Copying A File Copy Of A Letter On To A More Recent Letterhead Before Submitting It To The Court. . . . . . . . . . . . . . . 17

E. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Appellant’s Opening Brief – p. iii

TABLE OF AUTHORITIES

Page

WASHIGTO CASES Biggs v. Vail, 124 Wn.2d 193, 197, 876 P.2d 448 (1994). . . . . . . . . . . . . . . .13-15 Conom v. Snohomish County, 155 Wn.2d 154, 163, 118 P.3d 344 (2005). . . . . . . . . . . . . . . . . .18 Cooke v. Burgner, 93 Wn. App. 526, 527, 969 P.2d 127 (1999) . . . . . . . . . . . . . . . . 13

Copier Specialists v. Gillen, 76 Wn. App. 771, 774 (1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

In re Guardianship of Lasky, 54 Wn. App. 841, 851, 776 P.2d 695 (1989) . . . . . . . . . . . . . . . . 15 Just Dirt, Inc. v. Knight Excavating, Inc., 138 Wn. App. 409, 418, 157 P.3d 431 (2007). . . . . . . . . . . . . . . 15 Knight v. McDaniel, 37 Wn. App. 366, 368 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Labriola v. Pollard Group, Inc., 152 Wn.2d 828, 832-33 (2004). . . . . . . . . . . . . . . . . . . . . . . . . 9-11 MacDonald v. Korum Ford, 80 Wn. App. 877, 892 (1996). . . . . . . . . . . . . . . . . . . . . . . . . .14-15 Miller v. Badgley, 51 Wn. App. 285, 304, 753 P.2d 530 (1988). . . . . . . . . . . . . . . . .14 (owogroski Insurance, Inc. v. Rucker, 137 Wn.2d 427, 440, 971 P.2d 936, 943 (1999) . . . . . . . . . . .17 n.1 Reid v. Dalton,

Appellant’s Opening Brief – p. iv

124 Wn. App. 113, 120 (2004) . . . . . . . . . . . . . . . . . . . . . . . .17 n.1 Rhinehart v. Seattle Times, 59 Wn. App. 332, 341, 798 P.2d 1155 (1990). . . . . . . . . . . . . . . .16

Wash. Pub. Trust Advocates v. City of Spokane, 120 Wn. App. 892, 898, 86 P.3d 835 (2004) . . . . . . . . . . . . . 17 n.1

FEDERAL CASES

Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 879 (5th Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . 14

RULES AD STATUTES

CR 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-9,13-19 RCW 19.108.010(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 n.1

Appellant’s Opening Brief – p. 1

A. ASSIGMETS OF ERROR

1. Was it error for the Superior Court to grant summary dismissal of a company’s non-compete, where the terms of the non-compete agreement were agreed to at the outset of the employment relation-ship but not executed in writing until several months later?

2. Was it error for the Superior Court to order the plaintiff to pay all of the defendant’s attorney fees, in the amount of $24,348, for copying a file copy of a letter on a more recent letterhead before submitting it to the court?

3. Was it error for the Superior Court to dismiss plaintiff’s trade se-

cret claims with prejudice, even against unrelated defendants, as an alternative sanction for copying a file copy of a letter on a more re-cent letterhead before submitting it to the court?

B. HISTORY

This case centers on the Respondents’ use of confidential company

information acquired during the Respondent Rick Johnson’s employment

at the Appellant Anderson Paper & Packaging, Inc. (“Anderson Paper”) to

solicit Anderson Paper’s customers after leaving to work for the Respon-

dents The Great Little Box Company (“GLBC”).

On April 20, 2007, the Respondent Rick Johnson resigned his posi-

tion as a sales representative at Anderson Paper effective immediately.

(Declaration of Rick L. Anderson (“Anderson Dec.”), ¶ 5, Attachment

(“Att.”) 1, Clerk’s Papers (“CP”), Sub No. 4). Prior to his resignation, Mr.

Johnson worked for Anderson Paper during two separate stints of em-

ployment. The first of these began in 1994 and ended in 1998 when Mr.


Johnson left to work for Strandpac, a competitor of Anderson, in 1998.

(Id. ¶ 4.) Mr. Johnson’s second stint began in 2002 and ended in 2007.

(Id. ¶ 4.)

During Mr. Johnson’s first stint at Anderson Paper, it is not clear

whether he signed a non-compete agreement. (Third Declaration of Rick

L. Anderson (“Anderson 3d Dec.”) ¶ 12, CP Sub No. 29.) However, it is

clear that he was presented with a non-compete agreement to sign and

that, during his first stint with Anderson Paper, he became aware of

Anderson Paper’s non-compete and trade secret policies. Id. These poli-

cies were well known to all Anderson Paper employees during Mr. John-

son’s first stint. Id. At some point during his first stint, Mr. Johnson re-

ceived a copy of the employee manual (id. ¶ 15) which requires that:

All employees who start at Anderson Paper & Packaging Company will sign a non-compete clause. This clause is a legally binding document which protects Anderson Paper & Packaging Company from employees taking confidential and customer information to a competitor.

(Anderson Dec., Att. 3 at 4, CP Sub No. 4 (emphasis supplied).) The

manual further provides that:

Each employee is responsible for safeguarding confidential information obtained in connection with his or her em-ployment. In the course of your work, you may have ac-cess to confidential information regarding the company, its suppliers or its customers. It is your responsibility to in no way reveal or divulge any such information unless it is nec-essary for you to do so in the performance of your duties.


Access to information should be on a “need-to-know” basis and must be authorized by your manager. Any breach of this policy will not be tolerated and the company may take legal action.

(Id., Att. 3 at 8 (emphasis supplied).) When Mr. Johnson worked for

Anderson Paper during his first stint, he understood that these were the

established policies of the company and may have left the company over

that issue. (Declaration of Michael D. Murphy (“Murphy Dec.”) ¶ 4, CP

Cub. No. 18D.)

When Mr. Johnson left Anderson Paper the first time, he went to

work for Strandpac. His activities in soliciting Anderson Paper’s custom-

ers cost Anderson Paper approximately $1,000,000 a year until he re-

turned. (Id. ¶ 5.) When Mr. Johnson and another Strandpac employee

left Strandpac and returned to Anderson Paper, it effectively put Strandpac

out of business. Id.

When Mr. Johnson returned, Anderson knew full well that it could

not afford to give Mr. Johnson access to company secrets again without a

non-compete and trade secret agreement. (Id. ¶ 6.) A series of negotia-

tions took place in which Mr. Johnson received, among other things, a

signing bonus of between $7,500 and $10,000 in exchange for a promise

to sign a non-compete and trade secret agreement. (Anderson 3d Dec. ¶¶

14-15, CP Sub No. 29.) Mr. Anderson later testified that he could not af-


ford the risk of hiring salespeople without non-compete and trade secret

agreements because of the large amount of confidential company informa-

tion that they are privy to. Id. All Anderson Paper employees without ex-

ception are required to sign a non-compete and trade secret agreement. Id.

The non-compete and trade secret policy was again made clear to

Mr. Johnson during negotiations for him to rejoin the company. Id. How-

ever, because of an oversight, the non-compete and trade secret agreement

was not executed in writing at that time. Id. The agreement was formal-

ized in writing eleven months later. (Anderson Dec., Att. 2, CP Sub No.

4.) Although Mr. Johnson had agreed to sign the non-compete and trade

secret agreement at the outset (Third Declaration of Bob Cline ¶ 20, CP

Sub No. 28), Anderson Paper gave Mr. Johnson additional accounts to

service in order to earn higher commissions as a further inducement to

honor his commitment to sign the agreement. (Anderson 3d Dec. ¶ 14, CP

Sub No. 29.)

Mr. Johnson left Anderson Paper on April 20, 2007 to work for

GLBC, effective immediately. (Anderson Dec. ¶ 5, CP Sub No. 4.) Mr.

Johnson’s inside sales representative, Jennifer Graham, left her position at

the exact same time, claiming that she had cancer and needed to concen-

trate on her treatment. (Second Declaration of Rick Anderson ¶¶14-15,

Att. 7, CP Sub No. 13.) In fact, it later came to light that Ms. Graham was


telling falsehoods to cover the fact that she was also going to work for

GBLC. (Id. ¶¶ 17-18.)

In a telephone conversation with Anderson’s Vice-President, Bob

Cline subsequent to his resignation, Mr. Johnson said, “I’m going to be

able to work out of my home [in Everson] and I’ll be working in What-

com, Skagit and Island Counties.” (Declaration of Bob Cline (“Cline

Dec.”) ¶ 18, CP Sub No. 3.) Working for a competitor of Anderson in

Whatcom and Skagit Counties would plainly be a violation of the non-

compete agreement, whether or not Mr. Johnson attempted to solicit

Anderson’s customers. (Anderson Dec., Att. 2, CP Sub No. 4.)

In a meeting with Mr. Johnson two days following his resignation,

Mr. Johnson refused to promise that he would not violate his non-compete

agreement. Rick Anderson and Bob Cline testified to the conversation as

follows:

During that meeting, Mr. Cline and I discussed with Mr. Johnson that we would have to pursue the matter in court if he took the job with GLBC because of the non-compete agreement. Mr. Johnson did not take the opportunity to clarify that he would not violate the non-compete agree-ment. It was implicitly understood by all participants in the conversation that Mr. Johnson would be violating the non-compete agreement. However, he said that he had talked to his attorney and had been reassured that he had nothing to worry about. In the context of the conversation we were having, this clearly meant that he felt that he would not be limited by the agreement and intended to violate it.


(Anderson Dec. ¶ 17, CP Sub No. 4; Cline Dec. ¶ 17, CP Sub No. 3.) In

a telephone call the next day, Mr. Cline attempted to get Mr. Johnson to

assure him that he would not violate his trade secret agreement. Mr.

Johnson refused to do so. Mr. Cline testified as follows:

Mr. Johnson then told me that he would be starting work for GLBC on Monday. He also said, “I’ll see you out in the field,” which, in the context of our conversation, meant that he would occasionally see me when we were calling on the same customers. I then told him that I hoped that he would not be calling on Anderson’s existing customers be-cause it would “get really ugly” and that we would have to take him to court to enforce the non-compete agreement. Mr. Johnson replied, “you guys have to do what you’ve got to do, and I’m going to do what I have to do.” In the con-text of the conversation I understood him to mean that what he had “to do” was to go to work for GLBC and solicit Anderson’s customers.

(Cline Dec. ¶ 18, CP Sub No. 3.) By these statements, Mr. Johnson

plainly expressed the intention to violate his non-compete/trade secret

agreement by working for a competitor in Anderson’s region and solicit-

ing Anderson’s customers.

Based on the foregoing concerns, on April 26, 2007, Anderson Pa-

per filed a lawsuit against Mr. Johnson and a motion for a temporary re-

straining order and preliminary injunction. (Summons and Complaint for

Injunctive Relief, CP Sub No. 1; Motion for Temporary Restraining Order

and Preliminary Injunction, CP Sub No. 5.) On May 11, 2007, the Supe-

rior Court denied Anderson Paper’s motion for a temporary restraining


order prohibiting the solicitation of Anderson Paper’s customers, but fash-

ioned a weak injunction that prohibited Mr. Johnson from utilizing his in-

sider information when contacting Anderson Paper’s customers:

Johnson may not utilize confidential information that John-son obtained while at Anderson Paper about individual agreements, contracts, offers, sales, invoices, billing, pric-ing information, delivery schedules and discounts unless a third party voluntarily provides the information to Johnson.

(Order Denying Anderson Paper & Packaging, Inc.’s Motion for Injunc-

tive Relief, CP Sub No. 20.) On May 25, 2007, Mr. Johnson moved for

partial summary judgment dismissing Anderson Paper’s non-compete

claims. (CP Sub No. 22.) The Superior Court granted the motion on June

22, 2007. (CP Sub No. 41.)

On July 30, 2007, Mr. Johnson moved for dismissal based on CR

11, claiming that Anderson Paper’s President had improperly altered a let-

ter before submitting it to the Court. (CP Sub No. 46.) Mr. Anderson tes-

tified on the matter as follows:

When I made a copy of the Letter for this lawsuit, I copied it on to my current letterhead. At the time, I did not be-lieve that there was anything misleading or deceptive in do-ing so since the Letter was official company business. I copied it on letterhead because I believed that I had done so at the time I gave the letter to Mr. Johnson. However, I honestly do not remember that for certain. When I made the copy of the Letter for this litiga-tion, I used the original letter in Mr. Johnson’s file, which was not on letterhead. As I said in a preceding paragraph, I believed that I had originally copied the letter on the letter-


head that I was using at that time in order to give that copy to Mr. Johnson on letterhead.

(Fourth Declaration of Rick L. Anderson (“Anderson 4th Dec.”) ¶¶ 8-9, CP

Sub No. 54 (emphasis supplied).) Mr. Anderson apparently copied the

original letter on to letterhead before he gave it Mr. Johnson and, there-

fore, re-copied it on to letterhead for this litigation to make the copy more

like the original.

Notwithstanding Mr. Anderson’s explanation, the Court gave Mr.

Johnson a Judgment against Anderson Paper to pay all of Mr. Johnson’s

attorney fees up that time ($24,348) as sanctions, and ordered that all of

Anderson Paper’s claims against all defendants would be dismissed with

prejudice if Anderson Paper did not pay the sanctions by November 26,

2007. (CP Sub No. 68-69.) Due to financial difficulties, Anderson Paper

could not meet the deadline, nor pay the ordered amount by the date set

for the court to hear Anderson Paper’s motion to certify issues for appeal.

(Fifth Declaration of Rick Anderson ¶¶ 4-5, CP Sub No. 78.) When

Anderson Paper’s inability to pay became clear, Anderson Paper moved

the court to certify the CR 11 sanctions and the summary dismissal of

Anderson’s non-compete claims for immediate appeal, and moved for re-

lief from judgment to permit Anderson to secure the judgment pending

appeal with a bond instead of a cash payment. (CP Sub No.’s 72-73, 79-


80.) The court rejected these reasonable requests and dismissed all of

Anderson Paper’s claims, including the claims against GLBC, which was

not affected in any way by the sanctioned activity. (CP Sub No. 94.)

C. ARGUMET

1. A Superior Court Decision Granting A Motion

For Summary Judgment Is Reviewed De ovo

The issues before the court involve questions of law and the standard of review on appeal is de novo. (ationwide Mu-

tual Fire Ins. Co. v. Watson, 120 Wn.2d 178, 195, 840 P.2d

851 (1992). When reviewing an order of summary judg-ment, the court engages in the same inquiry as the trial court. Marincovich v. Tarabochia, 114 Wn.2d 271, 274,

787 P.2d 562 (1990). A summary judgment motion can be granted only when no genuine issue as to any material fact exists, and the moving party is entitled to judgment as a matter of law. Id. The court must consider the facts in the light most favorable to the nonmoving party, and the mo-tion should be granted only if reasonable persons could reach only one conclusion. Id.

Labriola v. Pollard Group, Inc., 152 Wn.2d 828, 832-33 (2004). This ar-

gument will demonstrate that the relevant facts related to Anderson Pa-

per’s non-compete claims were disputed from the beginning and that

summary judgment was completely improper.

2. The Superior Court Erred By Dismissing Ander-

son Paper’s on-Compete Claims Because The

on-Compete Agreement Was Made At The

Outset Of The Employment And Formalized In

Writing Several Months Later

Restraint has been held necessary to protect a business


from the unfair advantage a former employee may have by reason of personal contact with the employer's patrons or customers, acquisition of information "as to the nature and character of the business and the names and requirements of the patrons or customers" during his or her employment.

Copier Specialists v. Gillen, 76 Wn. App. 771, 774 (1995). This principle

is the central theme of this case. Testimony established that Mr. Johnson

agreed at the outset of his employment to sign a non-compete agreement,

that he accepted consideration in return for that promise, and that he sim-

ply failed to perform his obligation to sign the non-compete for eleven

months thereafter. (Anderson 3d Dec. ¶¶ 12-15, CP Sub No. 29.) Further

evidence proves that Mr. Johnson was given additional accounts and,

thereby, greater opportunity for commissions as an inducement to belat-

edly sign the agreement. (Anderson 3d Dec. ¶ 15, CP Sub No. 29.) Mr.

Johnson, of course, disputed this position. However, the varying positions

of the parties results in a dispute of material fact warranting a trial.

The Superior Court made its decision in reliance on Labriola v.

Pollard Group, Inc., 152 Wn.2d 828 (2004). However Labriola Court

framed the issue as follows:

In this case we consider whether there was consideration for the formation of a valid noncompete agreement signed by an employee, five years after he was hired, when the employer offered no other additional benefits or promises to the employee.

Id. at 830. The Labriola Court considered a situation where the employer


demanded a non-compete agreement five years into the relationship,

which had not been agreed to at the outset and was not supported by new

consideration. That is not the situation in the present case. “The general

rule in Washington is that consideration exists if the employee enters into

a noncompete agreement when he or she is first hired.” Id. at 794. The

Labriola Court further held that:

Employer simply promised to perform what he promised Employee in the original 1997 employment agreement in exchange for Employee taking on the additional promise to not compete against the Employer for three years within a 75 mile radius of Tacoma.

Id. at 796 (emphasis supplied). In the present case, there was no “addi-

tional promise” by Mr. Johnson that had not been agreed at the outset.

Mr. Johnson had worked at Anderson Paper before and was well-aware

of its non-compete and trade secret policies. Furthermore, the non-

compete agreement was discussed and agreed to at the outset and Mr.

Johnson simply took his time in executing it, perhaps deliberately.

Whether or not the Superior Court believed this evidence, the testimony

that Mr. Johnson had agreed to the non-compete at the outset of his em-

ployment made it a proper subject for trial where the evidence could be

weighed by the jury. It should not have been decided in a summary pro-

ceeding. In another case, even where the non-compete had not been dis-

cussed in employment negotiations, it was enforced where the employee


agreed to it soon after the employment began and continued in employ-

ment for three years:

Although the parties did not discuss the covenant during

employment negotiations, McDaniel and Hallstrom know-ingly signed the agreement on the first day of work, made no further protest, and were continuously employed and trained for approximately the next 3 years.

Knight v. McDaniel, 37 Wn. App. 366, 368 (1984) (emphasis supplied).

Anderson Paper’s case is even stronger than the Knight plaintiff’s case

because the covenant was discussed and emphasized during negotiations.

Mr. Johnson came into negotiations having already worked a previous

four-year stint with Anderson Paper and knowing full well that Anderson

Paper had a non-compete and trade secret policy. Mr. Johnson went on to

work for Anderson Paper for five years after signing the non-compete,

continuing to acquire confidential company information without any sug-

gestion that he did not intend to honor the agreement.

Even if the non-compete had not been anticipated at the outset, a

“noncompete agreement entered into after employment will be enforced

if it is supported by independent consideration.” Id. at 794. When

Anderson Paper realized that Mr. Johnson had not yet executed the

agreement, it induced him to honor his promise by agreeing to additional

consideration in the form of additional accounts to service, resulting in

more income. “Independent consideration may include increased wages,


a promotion, a bonus, a fixed term of employment, or perhaps access to

protected information.” Id. Being assigned even more accounts (and

therefore more commissions) and given access to the privileged informa-

tion related to those accounts clearly falls within the definition of inde-

pendent consideration. Whether or not the Superior Court believed the

evidence, the testimony that Mr. Johnson was provided with additional

accounts to induce his belated signing of the non-compete agreement cre-

ates a dispute of material fact that made summary judgment entirely in-

appropriate.

3. It Was Error For The Superior Court To Order

Sanctions In The Amount Of $24,348 For Copy-

ing A File Copy Of A Letter On A More Recent

Letterhead Before Submitting It To The Court

The standard of review for Rule 11 cases is “abuse of discretion.”

Biggs v. Vail, 124 Wn.2d 193, 197, 876 P.2d 448 (1994). This Court has

held that where a plaintiff had “signed and filed an unsupported, and un-

supportable, statement of issues” that, in order to avoid 20/20 hindsight,

“the trial court must conclude that the claim clearly has no chance of suc-

cess” in order to grant Rule 11 sanctions. Cooke v. Burgner, 93 Wn. App.

526, 527, 969 P.2d 127 (1999).

Where CR 11 sanctions are appropriate, the law of Washington

also provides that the Court “should impose the least severe sanction nec-


essary to carry out the purpose of the rule.” Id.; Miller v. Badgley, 51

Wn. App. 285, 304, 753 P.2d 530 (1988). Furthermore, appellate review

should be more rigorous where the sanctions are substantial.

If the sanctions imposed are substantial in amount, type, or effect, appellate review of such awards will be inherently more rigorous; such sanctions must be quantifiable with some precision.

MacDonald v. Korum Ford, 80 Wn. App. 877, 892 (1996) (emphasis sup-

plied) (quoting Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 879 (5th

Cir. 1988)). The sanctions in the present case were more than $24,000 and

ultimately resulted in the dismissal of claims unrelated to the sanctioned

conduct. The Court did not attempt to limit the sanction, but imposed a

blanket sanction covering all of Mr. Johnson’s attorney fees to date and an

order that all of Anderson’s claims be dismissed if the sanction in excess

of $24,000 was not paid within sixty days. “CR 11 is not meant to act as a

fee shifting mechanism, but rather as a deterrent to frivolous pleadings.”

Biggs, 124 Wn.2d at 197. Mr. Anderson testified that he thought that he

had originally copied the letter on to the letterhead at the time he wrote it,

and that he was simply copying it on to letterhead again to make it like the

original. (Fourth Declaration of Rick Anderson ¶¶ 8-9, CP Sub No. 44.)

While this is not what the rules of evidence require, a fine of over $24,000

is an excessive penalty for copying a document on company letterhead


that was originally on company letterhead—albeit a different version.

The Supreme Court has held that, “[s]hould a court decide that the

appropriate sanction under CR 11 is an award of attorney fees, it must

limit those fees to the amounts reasonably expended in responding to the

sanctionable filings.” Biggs, 124 Wn.2d at 201; Just Dirt, Inc. v. Knight

Excavating, Inc., 138 Wn. App. 409, 418, 157 P.3d 431 (2007).

[A]n appropriate sanction . . . may include an order to pay to the other party or parties the amount of the reason-able expenses incurred because of the filing of the pleading, motion, or legal memorandum, including a reasonable at-torney fee.

In re Guardianship of Lasky, 54 Wn. App. 841, 851, 776 P.2d 695 (1989).

Contrary to Mr. Johnson’s assertions, the letter was never the primary ba-

sis of Anderson’s case. In an important case where this Court found that

the Superior Court had abused its discretion in imposing CR 11 sanctions,

this Court said that the fee award:

was not limited to those amounts attorney two reasonably expended in responding to specific sanctionable filings. In-stead, it included attorney two's billable hours for acquaint-ing herself with and organizing the file, initiating discov-ery, and preparing for trial. An award for those amounts appears to be a fee shifting mechanism rather than "the least severe sanction[] adequate to serve the purpose."

MacDonald, 80 Wn. App. at 892-93. This language is directly applicable

in the present case. At most, the fee award should have been limited to the

amount reasonable necessary for Mr. Johnson to respond to the sanction-


able conduct, which involves the discovery that he did concerning it and

preparing the CR 11 motion and related documents, amounting to $5,073.

A judgment for that amount would have met the test of narrowly tailored

relief. It is a significant penalty, but does not transform CR 11 into a fee-

shifting mechanism. However, a blanket order covering all of Mr. John-

son’s attorney fees did amount to a fee shifting order and was simply not

justified. Where a CR 11 violation has been committed an appropriate

penalty “could range from a reprimand to the full award of attorney's fees

and other appropriate penalties.” Rhinehart v. Seattle Times, 59 Wn. App.

332, 341, 798 P.2d 1155 (1990). The Superior Court chose a full award of

attorney fees—the most extreme sanction available to it short of dis-

missal—which is envisioned for a case where a plaintiff brings a case that

is entirely frivolous. This sanction is inappropriately harsh in view of the

fact that it arose from a small alteration to the form of a letter and not its

substance, in a manner that a layperson may sincerely not have guessed

would be improper.

4. It Was Error For The Superior Court To Dis-

miss Anderson Paper’s Trade Secret Claims

Against All Parties As An Alternative Remedy

For Copying A File Copy Of A Letter On To A

More Recent Letterhead Before Submitting It To

The Court


The Superior Court dismissed Anderson Paper’s trade secret1

claims as an alternative to the excessive financial sanctions because

Anderson Paper was unable to pay the financial sanctions within sixty

days. Applying the CR 11 principles articulated in the foregoing section

to the more severe sanction of dismissal, this Court should not affirm an

order of dismissal where a lesser remedy is sufficient to address the sanc-

1 A customer list or “compilation” may be considered a trade secret if it derives economic value from being kept secret and if it is the subject of efforts to protect its confidentiality. RCW 19.108.010(4). The Washing-ton Supreme Court has made clear that a customer list is such a protected trade secret when it meets the aforementioned statutory criteria. Ed

(owogroski Insurance, Inc. v. Rucker, 137 Wn.2d 427, 440, 971 P.2d 936, 943 (1999). Furthermore, under:

the Uniform Trade Secrets Act, common law in Washing-ton prior to the adoption of the Act holds that a former em-

ployee could not use confidential information of his or

her former employer's customers to actively solicit their

business. The fact that the former employee memorized the information, rather than taking it in a written form, made no difference.

Id. at 444 (emphasis supplied). Mr. Johnson and the Great Little Box Company have been misappropriating Anderson Paper’s trade secrets (in-cluding customer identities, vendor identities, pricing information and other contract terms) by soliciting Anderson Paper’s customers. However, this Court has held that “with no action by the trial court on the merits of an issue, [the Court of Appeals has] nothing to review.” Reid v. Dalton, 124 Wn. App. 113, 120 (Wash. Ct. App. 2004) (citing Wash. Pub. Trust

Advocates v. City of Spokane, 120 Wn. App. 892, 898, 86 P.3d 835 (2004)). Because the trial court procedurally dismissed these claims and has not decided them on the merits, these issues are not briefed herein.


tionable conduct. Even if dismissal were appropriate, the Court should

limit the dismissal of claims to those that are closely related to the offend-

ing document—not a blanket dismissal of all claims. Some of these

claims were brought against an entirely different party that has not, thus

far, participated in the litigation in any meaningful way and cannot claim

to have been damaged by the copying of Mr. Anderson’s letter on to let-

terhead.

“Washington courts do not enter an order of dismissal lightly. A

trial court resorts to dismissal when a party shows it is substantially preju-

diced by another party's actions.” Conom v. Snohomish County, 155

Wn.2d 154, 163, 118 P.3d 344 (2005). In the present case, dismissal was

used as a hammer to enforce a judgment for fees on different claims. With

respect to prejudice, all that Mr. Johnson demonstrated is that Mr. Ander-

son copied a file copy of a letter onto its newer letterhead before submit-

ting it to the court. The claim that was supported by the letter was dis-

missed before the CR 11 issue ever came before the court. Thus, it is dif-

ficult to imagine how Mr. Johnson may have been prejudiced by the inac-

curate letterhead.

While copying a document on a different letterhead before submit-

ting it as evidence is not an action to be commended, it is unlikely to be

prejudicial to Mr. Johnson’s case, particularly in view of the fact that the


document was likely on a different letterhead of the same company when

it was originally created. Furthermore, dismissal was an extreme measure

and not the narrowly tailored relief demanded by CR 11.

D. COCLUSIO

Based on the analysis set forth above, Anderson Paper respect-

fully requests that this Court reinstate Anderson Paper’s non-compete and

trade secret claims and remand said claims to the Superior Court for a jury

trial, reverse the Superior Court’s order of attorney fees pursuant to CR

11, and remand it to the Superior Court with instructions that sanctions

should include only the fees incurred responding to sanctionable conduct.

Respectfully submitted this 10th day of February 2008.

_______________________

JEFFREY B. TEICHERT Attorney for Appellant WSBA No. 29826


CERTIFICATE I certify that I mailed a copy of the attached

document to this COURT and Respondents’

attorneys, at:

Jeffrey P. Fairchild 400 North Commercial Street PO Box 5158 Bellingham, WA 98227-5158 Karen Leigh Funston BuriFunston Attorneys @ Law 1601 F Street Bellingham, WA 98225

postage prepaid, on March 10, 2008.

____________________________________ JEFFREY B. TEICHERT, WSBA o. 29826 Attorney for Appellant

anderson paper opening brief

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