## Facts

- Joseph T. Fraval worked for Morton International for about 20 years in the zirconium powder business.
- During his employment, Fraval signed an employee trade secret/confidentiality agreement covering confidential business information and know-how, applicable during and after employment, and stating it would inure to the benefit of Morton’s successors and assigns.
- Chemetall GmbH acquired Morton’s zirconium powder business through an asset purchase agreement (APA).
- The APA required Morton to keep transferred assets and information secret and to obtain similar secrecy commitments from employees, but it did not specifically list Fraval’s agreement among transferred assets and disclaimed assumption of Morton’s employee-related obligations, including employment agreements.
- About three years after the sale, Fraval left and formed ZR Energy, Inc., with Arnold Berkovitz to compete in producing and marketing zirconium powder.
- Chemetall sued, alleging (among other claims) that Fraval breached the confidentiality agreement and that defendants misappropriated trade secrets acquired in the purchase.

## Issues

1. Whether the denial of Fraval’s pretrial motion to dismiss (treated as summary judgment) was reviewable on appeal after final judgment when it presented contract-interpretation questions.
2. Whether Chemetall, as purchaser of the business, could enforce Fraval’s confidentiality agreement despite the APA’s employee-obligation disclaimer and the agreement’s omission from a list of transferred contracts.
3. Whether challenged evidentiary rulings or jury instructions required reversal.

## Decision

- The court held the denial of the pretrial motion was reviewable because it presented purely legal questions of contract interpretation.
- The court affirmed the denial of Fraval’s motion, concluding the governing contracts did not, as a matter of law, bar Chemetall from enforcing the confidentiality obligations.
- The court upheld submitting intent-related evidence to the jury where the contracts were reasonably susceptible to more than one interpretation.
- The court found no reversible abuse of discretion in evidentiary rulings and no instructional error warranting a new trial.
- The district court’s judgment was affirmed.

## Legal Principles

- A denial of a summary-judgment-type motion may be reviewed on appeal from a final judgment when the motion turns on purely legal issues (such as contract interpretation), not on evidentiary sufficiency.
- Contract language providing that an employee confidentiality agreement benefits “successors and assigns” supports enforceability by a successor owner of the business.
- Where an asset purchase agreement and an employee confidentiality agreement, read together, do not unambiguously resolve assignment/enforcement and are open to competing interpretations, intent and related extrinsic evidence may be presented to the factfinder.
- Evidentiary rulings are reviewed for abuse of discretion, and jury instructions are assessed as a whole; reversal requires prejudicial error.

## Conclusion

The Seventh Circuit affirmed a jury verdict for the business purchaser, holding that the purchaser could enforce an employee’s confidentiality obligations where the employee agreement contemplated successors and the asset purchase agreement did not clearly negate transfer of enforcement rights, and it rejected claimed evidentiary and instructional errors.


Chemetall GmbH v. ZR Energy, Inc., 320 F.3d 714 (7th Cir. 2003)