Utah high court rules in power plant dispute involving PacifiCorp

The Utah Supreme Court on May 16 in part sided with USA Power LLC, which early last decade was developing a gas-fired power plant in the state, in a dispute with PacifiCorp where USA Power was accusing the utility of hijacking its power plant plans.

This case concerns a dispute about proprietary plans to develop a power plant. USA Power engaged in extensive work to research and develop a power plant project in Mona, Utah—its Spring Canyon “vision.” It claims that this vision is a trade secret, that PacifiCorp misappropriated it, and that PacifiCorp also breached a confidentiality agreement between the parties.

This was a 530-MW plant that was to include two General Electric Frame 7-FA gas turbines with air inlet chillers, two heat recovery steam generators to create additional combined cycle power, and an air-cooled condenser.

USA Power further claims that its water attorney, Jody L. Williams, and her law firm, Holme Roberts & Owen LLC (HRO) (collectively referred to as “Ms. Williams”), breached their fiduciary duties by working for PacifiCorp to acquire water rights on a competing power plant proposal.

USA Power‘s Spring Canyon vision took two years, thousands of work-hours, and close to $1 million to develop. To advance its proposed power plant project, it made several public disclosures to regulatory bodies. These disclosures included such information as the plant‘s proposed location, technological specifications, fuel type, water use, and generating capacity. Other information about the proposed plant, such as USA Power‘s economic and feasibility studies, was not publicly disclosed.

Meanwhile, PacifiCorp had identified a quickly-approaching need for energy and was working to meet this demand. As part of its response to its upcoming power needs, PacifiCorp approached USA Power and entered into negotiations to purchase USA Power‘s Spring Canyon assets. As part of these negotiations, USA Power required PacifiCorp to sign a Confidentiality and NonDisclosure Agreement before it would divulge its entire Spring Canyon vision, i.e., a compilation of both the already disclosed information and the portions of its vision that had not yet been publicly disclosed. PacifiCorp did so, and USA Power provided PacifiCorp details on its entire project, including the non-public backup studies that validated its public disclosures.

Eventually PacifiCorp terminated those negotiations and decided to issue a Request for Proposal (RFP) to obtain bids for power sufficient to cover its needs. USA Power submitted its Spring Canyon project in response to PacifiCorp‘s RFP. PacifiCorp submitted its own competing proposal, however, to build a power plant in Mona—its Currant Creek project. PacifiCorp‘s project was very similar to the Spring Canyon project proposed by USA Power. PacifiCorp also retained Ms. Williams, USA Power‘s former attorney, to help it obtain water rights for its Currant Creek project. PacifiCorp selected its own bid over USA Power‘s bid and, soon after, began construction on its project.

USA Power then brought suit against Ms. Williams asserting malpractice claims based on an alleged breach of her fiduciary duties of confidentiality and loyalty. USA Power later amended its complaint to include PacifiCorp as a defendant, asserting that PacifiCorp had misappropriated USA Power‘s trade secret, its “vision” for a plant in Mona, and various components of this vision, which were themselves trade secrets. This case first came to the court in 2010, after the trial court granted summary judgment to both defendants.

In that case, called “USA Power I,” the high court reversed the grant of summary judgment, holding that issues of material fact existed and summary judgment was inappropriate. It also clarified that a compilation of publicly available information could, in some circumstances, constitute a trade secret. After USA Power I, a five-week jury trial was held. Both parties moved for a directed verdict on all of USA Power‘s claims. The court denied these motions except as to USA Power‘s claim against Ms. Williams for punitive damages. The jury returned a special verdict against PacifiCorp and Ms. Williams, both of whom filed a rule 50 judgment notwithstanding the verdict (JNOV) motion and a rule 59 motion for new trial. The trial court denied PacifiCorp‘s motions, except to reduce the unjust enrichment award against PacifiCorp, granted Ms. Williams‘s JNOV motion for lack of evidence related to causation, and determined that USA Power was entitled to attorney fees. The court also denied USA Power‘s request for exemplary damages and prejudgment interest. The parties appealed all adverse rulings.

Said the May 16 high court decision: “We uphold the trial court on all claims. First, we uphold the trial court‘s denial of PacifiCorp‘s JNOV on the trade secret issue. As discussed below, under our deferential standard of review, there was a sufficient basis in the evidence from which the jury could reasonably conclude that certain components of USA Power‘s vision were not generally known or readily ascertainable. It is important to note that PacifiCorp appealed only the issue of whether a trade secret existed, conceding for purposes of appeal that if there was a trade secret, it was misappropriated.

“Second, as to USA Power‘s cross-appeal challenging various aspects of the damages award, we affirm the trial court‘s rulings, holding that the trial court applied the correct standards and did not abuse its discretion. Finally, regarding USA Power‘s direct appeal of the JNOV granted in favor of Ms. Williams, we affirm the trial court because there is no competent evidence demonstrating that Ms. Williams caused USA Power‘s damages or that USA Power would have benefitted if Ms. Williams had not breached her fiduciary duties. Accordingly, we affirm the trial court‘s ruling as to each issue presented on appeal.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.