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Knight Capital Partners Corp. v. Henkel Ag & Co.

United States Court of Appeals, Sixth Circuit

July 16, 2019

Knight Capital Partners Corporation, Plaintiff-Appellant,
v.
Henkel AG & Company, KGaA, Defendant-Appellee.

          Argued: May 10, 2019

          Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:16-cv-12022-David M. Lawson, District Judge.

         ARGUED:

          Jamie Warrow, KICKHAM HANLEY PLLC, Royal Oak, Michigan, for Appellant.

          Atif N. Khawaja, KIRKLAND & ELLIS LLP, New York, New York, for Appellee.

         ON BRIEF:

          Jamie Warrow, Gregory D. Hanley, KICKHAM HANLEY PLLC, Royal Oak, Michigan, for Appellant.

          Atif N. Khawaja, KIRKLAND & ELLIS LLP, New York, New York, Daniel A. Bress, KIRKLAND & ELLIS LLP, Washington, D.C., Thomas W. Cranmer, MILLER CANFIELD, Troy, Michigan, for Appellee.

          Before: ROGERS, DONALD, and THAPAR, Circuit Judges.

          OPINION

          Bernice Bouie Donald, Circuit Judge.

         This case arises from a failed negotiation regarding a potential distribution agreement. The involved entities are a threesome: Knight Capital Partners Corp. ("KCP"), the plaintiff who had hoped to act as a middleman in a potential distribution deal for a novel cleaning product; Henkel Corporation, a large industrial and consumer products company that KCP targeted as a potential distributor; and Henkel AG & Company, KGaA ("Henkel KGaA"), the only named-defendant and the parent company of Henkel Corporation. KCP places the blame on Henkel KGaA for the failed negotiations.

         The shorthand version is that KCP and Henkel Corporation entered into a non-disclosure agreement ("NDA") to aid in the negotiations of a potential distribution deal. Pursuant to the NDA, KCP would provide Henkel Corporation with confidential information about a purportedly novel cleaning product. Following a year of exchanging information and engaging in negotiations, the NDA lapsed, no deal was consummated, and the parties discontinued commercial communication. KCP asserts that Henkel Corporation's parent company, Henkel KGaA, used confidential information it acquired through the NDA to develop the product on its own and also interfered with the potential distribution deal.

         Accordingly, KCP filed a lawsuit against Henkel KGaA for breach of the NDA and tortious interference. The district court granted summary judgment in favor of Henkel KGaA on both claims. As to the breach of contract claim, the district court found that Henkel KGaA was not a party to the NDA and thus could not be liable for its breach. As to the tortious interference claim, the district court found that Henkel KGaA is the parent company of Henkel Corporation, so the parent-subsidiary privilege immunizes it from a tortious interference claim involving its subsidiary; further, the district court found that the narrow "improper motive" exception to that privilege does not apply. KCP appeals each aspect of the district court's summary judgment order. KCP also appeals the district court's denial of its motion for sanctions and its motion to amend.

         For the reasons that follow, we AFFIRM the district court's grant of summary judgment to Henkel KGaA, AFFIRM the district court's denial of KCP's motion to amend, and REVERSE and REMAND the district court's order denying KCP's motion for sanctions.

         ANALYSIS

         A. Standard of Review

         We review the district court's grant of summary judgment de novo. Blackmore v. Kalamazoo Cty., 390 F.3d 890, 894-95 (6th Cir. 2004). Summary judgment is proper when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Henkel KGaA, as the moving party, bears the initial burden of demonstrating the absence of genuine disputes of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). It may do so by offering affirmative evidence that negates an element of KCP's claims or by pointing to an absence of evidence to support KCP's claims. If Henkel KGaA satisfies its burden, KCP must then set forth the specific facts showing that there is a genuine dispute for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).

         In evaluating the evidence, we draw all reasonable inferences in favor of KCP. Blackmore, 390 F.3d at 895 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). KCP must put forth more than a mere "scintilla" of evidence to survive summary judgment; the jury must be able to reasonably find for KCP. Anderson, 477 U.S. at 252.

         B. Breach of Contract Claim

         KCP first claims that Henkel KGaA violated the terms of the NDA by using its confidential information in ways not permitted under the NDA. The district court found that Henkel KGaA cannot be sued for breach of the NDA because Henkel KGaA ...


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