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Rain v. Rolls-Royce Corp.

November 18, 2010

DAVID N. RAIN AND PARAMOUNT INTERNATIONAL, INC., PLAINTIFFS-APPELLANTS,
v.
ROLLS-ROYCE CORPORATION, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 07 C 1233-WTL-DML-William T. Lawrence, Judge.

The opinion of the court was delivered by: Flaum, Circuit Judge.

ARGUED SEPTEMBER 14, 2010

Before BAUER, FLAUM, and HAMILTON, Circuit Judges.

David Rain and Paramount Inter-national, Inc. brought a breach of contract action against Rolls-Royce Corporation, alleging that Rolls-Royce twice breached a non-disparagement agreement the parties executed in connection with the settlement of an earlier lawsuit. The district court granted partial summary judgment in Rolls-Royce's favor on one of the claims, and, following a bench trial, entered judgment for Rolls-Royce on the second claim. For the following reasons, we affirm.

I. Background

A. Factual Background

Rolls-Royce manufactures a Model 250 aircraft engine for use in helicopters. Rolls-Royce has a number of "authorized maintenance centers" ("AMCs") and "authorized rework facilities" ("ARFs")-known as the "Model 250 FIRST Network"-that service, repair, and overhaul Model 250 engines around the world. David Rain is the sole shareholder and officer of Paramount International, Inc. ("Paramount"), which is in the business of selling parts for the Model 250 engine to, among others, the AMCs and ARFs in the FIRST Network. Therefore, Paramount and Rolls-Royce are direct competitors.

Rolls-Royce and Rain have a contentious history. In 2005, Rolls-Royce filed suit against Rain, Paramount, and others, alleging that they had misappropriated Rolls-Royce's intellectual property. On May 19, 2006, the parties executed a formal settlement agreement and dismissed the lawsuit. The agreement, which is governed by Indiana law, contains a non-disparagement provision stating: "None of the Parties will disparage the other." The agreement further provides that any material breach of the settlement agreement entitles the prevailing party to its attorney's fees plus damages in an amount not less than $1,000,000.

1. The 2007 Texas Lawsuit

In 2007, Rolls-Royce filed a complaint in the United States District Court for the Northern District of Texas, alleging that the defendants in that case had obtained Rolls-Royce's proprietary information from a New Jersey corporation-referred to as the "Principal Corporation"-owned by "Mr. Doe." The complaint asserted a RICO claim, in which Rolls-Royce alleged that the defendants had conspired with "Principal Corporation" and "Doe" to obtain and use Rolls-Royce's proprietary information. There is no dispute that, while Rain and Paramount were not named as defendants in the Texas suit, the complaint used the pseudonyms "Mr. Doe" and "Principal Corporation" to refer to Rain and Paramount.

2. The 2007 Helio-Expo

Also in 2007, Rain attended the Heli-Expo, an annual trade show sponsored by the Helicopter Association International ("HAI"). At the 2007 Heli-Expo, Rolls-Royce, the AMCs, and the ARFs sponsored a private customer appreciation event. The FIRST Network members purchased passes to the event from Rolls-Royce to give to their customers. Rain obtained a pass from an AMC and attended the event.

At the event, Rain spoke with various Rolls-Royce employees-including Scott Crislip, then the President of the Rolls-Royce Helicopter Division-without incident. While Rain was speaking with Rolls-Royce employee Tom Leonard, Jeff Edwards, a Rolls-Royce vice-president, approached Rain. Concerned that Rain would "bait" a Rolls-Royce employee into making a disparaging comment about him, Edwards told Rain that his presence at the event was inappropriate, and asked him to leave. Both Leonard and another Rolls-Royce employee, Andrew Maasch, were in the vicinity while Edwards spoke to Rain. Rain exited the event through the hotel lobby, at Edwards's direction, and Edwards followed Rain out. On his way out, Rain passed a business associate, Eric Witters, and told Witters that he was "getting kicked out."

Another individual, Steve Van Hemert, also was asked to leave the event. Van Hemert is the general manager of a shop that services Model 250 engines. Representatives from the AMCs were upset that Rolls-Royce had asked some of their invited ...


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