Opinion
Civil Action No. 6:19-3546-HMH-KFM
07-24-2020
Propel PEO, Inc., Propel HR, Inc., Lee C Yarborough, and Propel Holding Company, Inc., Plaintiffs, v. Sean Eric Roach, Idea Catapult, LLC, Angela Morris f/k/a Angela Renea Tyler, and Arron Drye, Defendants.
REPORT OF MAGISTRATE JUDGE
This matter is before the court on defendant Sean Eric Roach's motion to dismiss (doc. 39) and motions to strike (docs. 38, 59), defendant Arron Drye's motion to dismiss (doc. 40), and defendant Angela Morris' motion to dismiss and alternative motion for a more definite statement (doc. 43). Both Drye and Roach are proceeding pro se in this case, and defendants Morris and Idea Catapult, LLC ("Catapult") are represented by separate counsel. Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1)(A) and Local Civil Rule 73.02(B)(2)(e) (D.S.C.), all pretrial matters in cases involving pro se litigants are referred to a United States Magistrate Judge for consideration.
I. BACKGROUND
On December 20, 2019, the plaintiffs filed a complaint in this court (doc. 1). On February 3, 2020, defendant Roach filed motions to dismiss the complaint and to strike portions of the complaint (docs. 11, 12). On February 18, 2020, defendant Drye filed a document joining in defendant Roach's motion (doc. 28). On that same date, the plaintiffs filed a 59-page amended complaint, along with numerous exhibits (doc. 25). On February 26, 2020, the undersigned issued a report and recommendation (doc. 33) that the district court deny as moot defendant Roach's motions to dismiss and to strike the complaint and defendant Drye's motion to dismiss the complaint. On March 17, 2020, the Honorable Henry M. Herlong, Jr., Senior United States District Judge, adopted that recommendation and ordered that the motions were moot (doc. 48).
On March 3, 2020, defendant Catapult filed an answer to the amended complaint (doc. 37). On that same date, defendant Roach filed a motion to strike certain allegations from the amended complaint and a motion to dismiss (docs. 38, 39). On March 4, 2020, defendant Drye filed a motion to dismiss, asking that his motion "be attached to the Motion of Dismissal filed by [defendant Roach]" (doc. 40). On March 16, 2020, defendant Morris filed a motion to dismiss and an alternative motion for a more definite statement (doc. 43). On March 17, 2020, the plaintiffs filed a response in opposition to defendants Roach and Drye's motions to dismiss and defendant Roach's motion to strike (doc. 50). On March 26, 2020, defendant Roach filed a motion to strike exhibits from the plaintiffs' response to his motions (doc. 59). On April 9, 2020, the plaintiffs filed a response in opposition to Roach's motion to strike exhibits (doc. 61). On April 13, 2020, the plaintiffs filed their response to defendant Morris' motion to dismiss (doc. 64). On April 15 and 16, 2020, defendant Roach filed replies to the plaintiffs' responses to his motions (docs. 69, 70). On April 20, 2020, defendant Drye filed a reply to the plaintiffs' response to defendant Morris' motion to dismiss (doc. 72). As the motions are fully briefed, they are ready for ruling.
II. ALLEGATIONS
Plaintiff Lee C. Yarborough is one of the owners of plaintiff Propel Holding Company, Inc., which in turn owns plaintiffs Propel PEO, Inc. and Propel HR, Inc. (collectively, "Propel") (doc. 64 at 2; doc. 25, amend. comp. ¶ 26). Plaintiff Propel Holding Company, Inc., is the owner of the federally registered trademark "Propel HR®" (doc. 25, amend. comp. ¶ 36; doc. 25-19). Pursuant to a license agreement dated October 2, 2017, plaintiffs Propel HR and Propel PEO obtained certain rights in the trademark (doc. 25, amend comp. ¶ 37). Propel HR's "mission is to provide valuable human resources outsourcing solutions through client-focused partnerships" (id. ¶ 24).
On October 29, 2018, defendant Roach, as Chief Executive Officer of defendant Catapult, entered into a confidentiality and non-disclosure agreement with Propel, and on November 1, 2018, Roach individually and Catapult entered into an independent contractor agreement with Propel (collectively, "Roach Agreements"). The terms of the confidentiality and non-disclosure agreement remain in effect for a period of five years, and the non-solicitation of clients provisions remain in effect for 12 months following the termination of the agreement (doc. 25, amend. comp. ¶¶ 46-53; docs. 25-2, 25-3).
On February 23, 2018, defendant Drye entered into a confidentiality and non-solicitation agreement with Propel PEO and Propel HR ("Drye Agreement").On January 31, 2019, defendant Morris entered into a confidentiality and non-solicitation agreement with Propel PEO and Propel HR ("Morris Agreement"). Both the Drye and Morris Agreements contain provisions prohibiting solicitation of company clients and employees for 12 months following termination of employment and confidentiality obligations for a period of 24 months following termination of employment (doc. 25, amend comp. ¶¶ 170-85; docs. 25-15, 25-17).
Defendant Morris is referred to as Tyler in the amended complaint.
The plaintiffs allege that on May 13, 2019, Propel terminated the Roach Agreements "for good cause." Around this same time, defendant Roach sent several allegedly threatening messages to Propel HR employees and executive team members. Propel HR engaged outside counsel to send a cease and desist letter to defendant Roach on May 13th. The plaintiffs allege that defendant Roach accessed Propel HR's security cameras through a smartphone app without authorization, and he suggested to present and former Propel HR employees that he could see plaintiff Yarborough and others moving about in the Propel HR office. The plaintiffs contacted the Greenville Police Department, after which defendant Roach was advised by the police not to contact plaintiff Yarborough or anyone else from Propel HR (doc. 25, amend. comp. ¶¶ 53-82; doc. 25-4; doc. 64 at 2).
In June 2019, defendants Morris and Drye, who each worked with Roach in his consulting capacity, resigned from their employment with Propel HR. The plaintiffs allege that defendant Roach was instrumental in convincing Morris and Drye to resign. Defendants Morris and Drye began working at the same company the day after their resignations. The plaintiffs allege that defendant Morris thereafter refused to return her Propel HR-owned computer and that the information on this computer was accessed and used by the defendants to send eight mailings described below. The plaintiffs further allege that defendants Drye and Morris knew that defendant Roach was planning to send these eight mailings (doc. 25, amend. comp. ¶¶ 137, 140-54, 170-77, 186-89; doc. 25-18).
The plaintiffs allege that between October 31, 2019, and December 2, 2019, defendant Roach sent eight mailings to Propel HR clients and customers, plaintiff Yarborough's neighbors, PEO industry associations for which plaintiff Yarborough serves on boards, and trade associations. In the first mailing, clients of the plaintiffs received copies of defendants Morris and Drye's resignation letters, along with a document containing allegations of racism and workplace discrimination by the plaintiffs. It was signed by "[a] concerned group of current and former employees of Propel HR." The second mailing was sent to the recipients of the first mailing along with plaintiff Yarborough's neighbors and was comprised of a postcard with an image of plaintiff Yarborough and her name and the phrase, "Starring Lee Yarborough as Two Slice Hillee." The other side of the postcard contained allegations that the plaintiffs were racist and treated their employees like servants. The third mailing was a postcard with an image of a current employee of Propel HR, whom the defendants allegedly disliked, along with the Propel HR name and trademark and the statements: "Just think what The JERK could do with all your information and data!" and "Time to look for a NEW HR Company!" The fourth mailing was a postcard sent to all of the recipients of the first mailing and contained the Propel HR name and trademark and accused plaintiff Propel HR of illegal conduct, including sexual harassment, and included the statement, "Time to look for a NEW HR Company!" The fifth mailing was a postcard with the Propel HR name and trademark and the same accusations as the fourth mailing. It was also sent to all of the recipients of the first mailing. The sixth mailing also contained the Propel HR name and trademark and two images of a female dancer with two different men, one of which included the cropped image of the face of plaintiff Yarborough's father, Braxton Cutchin. This card was mailed to all of the recipients of the first mailing and also to hundreds of plaintiff Yarborough's neighbors. The postcard stated, "A Christian woman-owned Company, Must value and respect all women?!?" The seventh mailing contained images of five current staff members of Propel, including plaintiff Yarborough, along with an image of the "Grim Reaper," and it also contained the Propel HR name and trademark. It was mailed to the recipients of the first mailing and neighbors of plaintiff Yarborough. The plaintiffs allege that the first six mailings included "Propel HR's common law trademark/tagline, 'Business Forward,'" while the seventh mailing included the text, "Business Backward." The eighth mailing contained the Propel HR name and trademark, what appears to be an Employer Identification Number/ Tax Identification Number (EIN/TIN"), and the text, "Is your EIN (Employer Identification Number) SAFE?" The plaintiffs allege that it was sent to instill fear in customers and clients of Propel HR and to harass, intimidate, and embarrass the plaintiffs. The mailing was sent to all recipients of the first mailing, and most of these mailings to Propel HR clients included the last four digits of the client's EIN/TIN, which the plaintiffs allege was to suggest a data breach involving confidential client information. The plaintiffs allege that the defendants have illegally accessed and used Propel HR's confidential mailing list and the last four digits of client EIN/TINs in the mailings described above in violation of the Roach, Drye, and Morris Agreements. The plaintiffs allege that plaintiff Yarborough has been in fear of defendant Roach and continues to experience tremendous mental and emotional distress and substantial expenses because of his actions (doc. 25, amend. comp. ¶¶ 98-137, 155-69; docs. 25-5 through 25-12).
The plaintiffs allege that the eighth mailing was mailed on November 29, 2019, after defendant Roach received notice of a restraining order action instituted by plaintiff Yarborough in West Greenville Summary Court in Yarborough v. Roach, Case No. 2019-OR-23-10100014 (doc. 25, amend. comp. ¶¶ 4, 120).
The plaintiffs allege the following 18 causes of action in the amended complaint: (1) false advertising in violation of the Lanham Act against all defendants; (2) contributory false advertising in violation of the Lanham Act against all defendants; (3) common law unfair competition against all defendants; (4) violation of the Computer Fraud and Abuse Act against all defendants; (5) violation of the Defend Trade Secrets Act against all defendants; (6) breach of contract against defendant Morris; (7) breach of contract against defendant Drye; (8) breach of contract against defendants Roach and Catapult; (9) tortious interference with contract with regard to the Morris Agreement against defendants Roach and Drye; (10) tortious interference with contract with regard to the Drye Agreement against defendants Roach and Morris; (11) tortious interference with contract with regard to the Roach Agreements against defendants Morris and Drye; (12) violation of the South Carolina Trade Secrets Act against all defendants; (13) violation of the South Carolina Unfair Trade Practice Act against all defendants; (14) violation of the South Carolina Homeland Security Act against all defendants; (15) invasion of privacy against all defendants; (16) intentional infliction of emotional distress against all defendants; (17) defamation and libel per se against all defendants; and (18) civil conspiracy against all defendants. As relief, the plaintiffs seek compensatory, exemplary, and punitive damages; an injunction; attorney fees; and disgorgement of the defendants' profits from their unlawful acts (doc. 25, amend. comp. ¶ 204-354 & prayer for relief).
III. APPLICABLE LAW AND ANALYSIS
A. Motions to Strike
As noted, defendant Roach has filed two motions to strike (docs. 38, 59). Federal Rule of Civil Procedure 12(f) provides:
The court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.
The court may act:
(1) on its own; orFed. R. Civ. P. 12(f). Impertinent matter is defined as "any allegation not responsive or relevant to the issues involved in the action and which could not be put in issue or be given in evidence between the parties." Sanders v. Reg'l Fin. Corp. of S.C., C.A. No. 1:17-293-CMC-SVH, 2017 WL 3026069, at *3 (D.S.C. July 14, 2017) (quoting 61A Am. Jur. 2d Pleading § 466). Scandalous matter is defined as that which "improperly casts a derogatory light on someone, usually a party to the action." 61A Am. Jur. 2d Pleading § 471. Although motions to strike are generally disfavored as a drastic remedy, the court "possesses considerable discretion in disposing of a Rule 12(f) motion to strike." Godfredson v. JBC Legal Group, P.C., 387 F. Supp.2d 543, 547 (E.D.N.C. 2005) (citations and internal quotation marks omitted).
(2) on motion made by a party either before responding to the pleading or, if a response is not allowed, within 21 days after being served with the pleading.
In the first motion, Roach makes an alternative motion to strike paragraphs 83-97 of the amended complaint if the court denies his motion to dismiss the amended complaint against him in its entirety (doc. 38). As set out below, the undersigned recommends that the district court grant in part and deny in part defendant Roach's motion to dismiss. Accordingly, consideration of the alternative motion is appropriate.
The allegations referenced by defendant Roach make up the section under the heading "Allegations of Property Damage, Harassment" (doc. 25, amend. comp. ¶¶ 83-97). In these paragraphs, the plaintiffs set out allegations made against defendant Roach in a lawsuit in California state court regarding property damage to a house Roach lived in there. The plaintiffs state that these "allegations of property damage and abusive behaviors by Roach in response to conflict (or perceived conflict) by the Defendant Roach are ripe and proper for discovery in this action" (id. ¶ 84). The paragraphs at issue also allege that defendant Roach created and benefitted from a Crowdfund solicitation, but the money was not used for its stated purpose and that, according to news reports, the plaintiff was involved "in litigation in Las Vegas years ago," in which he was accused of defamation and trespassing (id. ¶¶ 85-91). The plaintiffs also allege that defendant Roach was the subject of a rule to vacate action in summary court in Greenville County and that defendant Roach has had "several other very uncomfortable run-ins/ encounters with people" in Greenville (id. ¶¶ 92-96). Finally, the plaintiffs state that "while it is not known at this time if the allegations in the above-identified lawsuits . . . are accurate," the allegations show that defendant Roach has previously been accused of similar conduct to that alleged by the plaintiffs here (id. ¶ 97).
In the numbering of the paragraphs in the amended complaint, the plaintiffs repeat numbers 82 through 85 (doc. 25, amend. comp. ¶¶ 83-97).
Defendant Roach argues that the allegations in these paragraphs are wholly irrelevant to the plaintiffs' claims; they are based on speculation, rumors, and unproven allegations from other lawsuits that have been dismissed in his favor; and they "are nothing more than malicious attempts to falsely paint [d]efendant Roach and his deceased wife in a negative light" (doc. 38 at 1-2). In response, the plaintiffs argue that these allegations "show a pattern of abusive behaviors by Roach . . . " (doc. 50 at 9).
The undersigned agrees with defendant Roach that paragraphs 83-97 of the amended complaint should be stricken as immaterial, scandalous matter. See Fed. R. Civ. P. 12(f). As recently described by a district court in this circuit:
Scandalous allegations are those that unnecessarily reflect on a party's moral character or detracts from the dignity of the court. See Cobell v. Norton, 224 F.R.D. 5 (D.D.C. 2004). Scandalous allegations that improperly cast a derogatory light on a party will be stricken, especially if they are immaterial or irrelevant, or "may cause the objecting party prejudice." Talbot v. Robert Matthews Distrib. Co., 961 F.2d 654, 664 (7th Cir. 1992). Indeed, even if a prior incident is potentially relevant, when a party uses "inflammatory language that is not in keeping with the spirit of notice pleading ... and that is prejudicial to [defendant's] reputation, [defendant's] motion to strike will be granted." Schultz v. Braga, 290 F. Supp. 2d 637, 655 (D. Md. 2003).Swift Beef Co. v. Alex Lee, Inc., C.A. No. 5:17-cv-176, 2018 WL 792070, at *3 (W.D.N.C. Feb. 8, 2018). These paragraphs are wholly irrelevant to the plaintiffs' claims at issue here and add nothing to the substance of the complaint. See Fed. R. Civ. P. 8(a)(2), (d)(1) (requiring that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief" and that "[e]ach allegation must be simple, concise, and direct"). Accordingly, the undersigned recommends that the district court grant defendant Roach's alternative motion to strike paragraphs 83-97 from the amended complaint.
Because the motion requests the court strike only a portion of the plaintiffs' amended complaint rather than the entire amended complaint, the motion is nondispositive. Accordingly, the undersigned would normally rule upon such motion rather than making a recommendation to the district court. However, as the motion to strike is presented here as an alternative to the motion to dismiss, the undersigned finds it appropriate to make a recommendation to the district court.
In his second motion (doc. 59), defendant Roach moves to strike the following exhibits attached to the plaintiffs' response to his motion to dismiss and first motion to strike: a restraining order issued on March 9, 2020, in the restraining order action in summary court and defendant Roach's affidavit submitted to the summary court on that same date (docs. 50-1, 50-2). Motions to strike pursuant to Rule 12(f) are directed only to pleadings. According to Rule 7, a document is a pleading only if it corresponds in one of the following categories: complaint, answer to complaint, answer to a counterclaim, answer to a crossclaim, third-party complaint, answer to a third-party complaint, and a reply to an answer. Fed. R. Civ. P. 7(a). Accordingly, as these documents are not a pleading, the motion to strike should be denied.
Defendant Roach further argues that the documents are inappropriate for consideration by the court on the pending motions to dismiss (doc. 59 at 2). The undersigned agrees. Rule 12(d) states: "If on a motion under Rule 12(b)(6) . . . , matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." However, "[i]n deciding whether a complaint will survive a motion to dismiss, a court evaluates the complaint in its entirety, as well as documents attached or incorporated into the complaint." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011). The court may consider such a document, even if it is not attached to the complaint, if the document "was integral to and explicitly relied on in the complaint," and there is no authenticity challenge. Id. (quoting Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir. 1999)). See also Int'l Ass'n of Machinists & Aerospace Workers v. Haley, 832 F. Supp.2d 612, 622 (D.S.C. 2011) ("In evaluating a motion to dismiss under Rule 12(b)(6), the Court . . . may also 'consider documents attached to . . . the motion to dismiss, so long as they are integral to the complaint and authentic.'") (quoting Sec'y of State for Def. v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007)).
While the restraining order action is referenced by the plaintiffs in their amended complaint (doc. 25, amend. comp. ¶¶ 4, 83 n.4, 120), the exhibits at issue are not "integral" to the amended complaint. See Goines v. Valley Comm. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016) (stating that a police incident report was not "integral to the complaint" and should not have been considered by the district court on a motion to dismiss because the plaintiff's claims "do not turn on, nor are they otherwise based on, statements contained in the Incident Report" (citation omitted)). As noted by defendant Roach, neither document even existed at the time of the filing of the amended complaint (doc. 70 at 1-2). Accordingly, the undersigned recommends that the district court exclude these documents from consideration of the pending motions to dismiss.
Likewise, the undersigned notes that defendant Drye who is proceeding pro se, attached several exhibits to his reply in support of defendant Morris' motion to dismiss in order "to disprove" the plaintiffs' theory that he "was actively pursuing Propel HR clients" (doc. 72). These exhibits (docs. 72-1 through 72-4) are also inappropriate for consideration on the pending motions to dismiss under Rule 12(b)(6) and should be excluded by the district court. See Fed. R. Civ. P. 12(d).
Based upon the foregoing, the district court should grant defendant Roach's alternative motion to strike paragraphs 83-97 from the amended complaint (doc. 38) and should deny defendant Roach's motion to strike the exhibits from the plaintiffs' response in opposition to his motions (doc. 59). The undersigned further recommends that the district court exclude documents 50-1, 50-2, and 72-1 through 72-4 from consideration on the motions to dismiss, for the reasons discussed above. B. Motions to Dismiss and, alternatively, Motion for More Definite Statement
Defendants Roach, Morris, and Drye (collectively, "the moving defendants") have filed motions to dismiss pursuant to Rule 12(b)(6) (docs. 39, 40, 43). "The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint." Williams v. Preiss-Wal Pat III, LLC, 17 F. Supp. 3d 528, 531 (D.S.C. 2014) (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). Rule 8(a) sets forth a liberal pleading standard, which requires only a " 'short and plain statement of the claim showing the pleader is entitled to relief,' in order to 'give the defendant fair notice of what . . . the claim is and the grounds upon which it rests.' " Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). When ruling on a Rule 12(b)(6) motion to dismiss, "a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007). The court must also "draw all reasonable inferences in favor of the plaintiff." Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009). "[T]he facts alleged 'must be enough to raise a right to relief above the speculative level' and must provide 'enough facts to state a claim to relief that is plausible on its face.'" Robinson v. American Honda Motor Co., Inc., 551 F.3d 218, 222 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 555, 570). "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted).
As an alternative motion to her motion to dismiss, defendant Morris argues that the plaintiffs "should be ordered to provide more definite statements as to [d]efendant Morris's alleged actions so that [she] can properly respond to the allegations" (doc. 42-1 at 1). Under Rule 12(e), "[a] party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response." Fed. R. Civ. P. 12(e).
1. Lanham Act (First and Second Claims)
The plaintiffs' first two claims are labeled as "false advertising" and "contributory false advertising" claims under the Lanham Act, 15 U.S.C. § 1125(a) (doc. 25, amend. comp. ¶¶ 204-26). The applicable statute provides:
(a) Civil action
(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or
another person's goods, services, or commercial activities,
15 U.S.C. § 1125(a)(1).
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
"Section 1125(a) thus creates two distinct bases of liability: false association, § 1125(a)(1)(A), and false advertising, § 1125(a)(1)(B)." Lexmark Intern., Inc. v. Static Control Components, Inc., 572 U.S. 118, 122 (2014). Under Section 1125(a)(1)(B):
[A] plaintiff asserting a false advertising claim under the Lanham Act must establish that:Scotts Co. v. United Industries Corp., 315 F.3d 264, 272 (4th Cir. 2002) (citation omitted). As noted, the plaintiffs have alleged a false advertising claim.
(1) the defendant made a false or misleading description of fact or representation of fact in a commercial advertisement about his own or another's product; (2) the misrepresentation is material, in that it is likely to influence the purchasing decision; (3) the misrepresentation actually deceives or has the tendency to deceive a substantial segment of its audience; (4) the defendant placed the false or misleading statement in interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the misrepresentation, either by direct diversion of sales or by a lessening of goodwill associated with its products.
The moving defendants argue that the plaintiffs have failed to allege that the mailings were sent or used "in commerce" or were "commercial advertising or promotion" as required by a false advertising claim under the statute (doc. 43-1 at 4-5; doc. 39 at 1-2). In response, the plaintiffs "direct the Defendant and the Court to a full reading of 15 U.S.C. § 1125, which provides that § 1125(a)(1)(B) is an 'or' alternative to § 1125(a)(1)(A)" (doc. 64 at 9). The plaintiffs argue that "this ground fails for at least this reason" (id.; see also doc. 50 at 4-5). The argument is faulty as the plaintiffs have specifically alleged a false advertising claim, which, as set forth above, is brought under Section 1125(a)(1)(B). The plaintiffs further state that they "rely upon their citations to the Amended Complaint referenced above regarding activity in commerce" (doc. 64 at 9). The plaintiffs cite to paragraphs 5, 190, 198, 209, and 221 of the amended complaint (id.; doc. 50 at 5). The paragraphs cited by the plaintiffs reference the eight mailings and allege that the defendants' false and misleading representations were made in interstate commerce (doc. 25, amend. comp. ¶¶ 5, 190, 198, 209, 221).
In Handsome Brook Farm, LLC v. Humane Farm Animal Care, Inc., the Court of Appeals for the Fourth Circuit considered a false advertising claim under the Lanham Act brought by a farm against a non-profit organization that certified certain egg producers for humane treatment of their laying hens. 700 F. App'x 251 (4th Cir. 2017). The defendant sent an email to grocery retailers stating that the plaintiff farm lacked up-to-date certifications to support its representations that its eggs were organic and pasture raised. Id. at 252. The court adopted the following factors for determining whether a communication is "advertising or promotion" as required for a false advertising claim under the Lanham Act: 1) commercial speech (2) for the purpose of influencing consumers to buy goods or services; and (3) must be sufficiently disseminated to the relevant purchasing public to constitute advertising or promotion within that industry. Id. at 256-57. The court further noted that "[t]he Supreme Court has identified three qualities of commercial speech: whether the message is economically motivated, promotes a specific product, and is an advertisement." Id. at 257 (citing Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66-67 (1983)). In the email at issue in Handsome Brook Farm, the defendant stated, "I hope that you will reconsider changing suppliers" and then touted its own-certified eggs over all other eggs. Id. at 260. Accordingly, the court found that the communication "promoted a good," thus meeting the second quality of "commercial speech" and the second factor for determining whether a communication is "advertising or promotion." Id. at 259-60, 262.
The court noted that the third quality of commercial speech, whether the communication is an advertisement, was "unhelpful here, where we must determine [the] email is commercial speech in order to see if it is commercial advertising or promotion." Handsome Brook Farm, 700 F. App'x at 258 n.3.
Here, accepting as true all of the factual allegations in the amended complaint and drawing all reasonable inferences in favor of the plaintiffs, the facts alleged are insufficient to state a false advertising claim that is plausible on its face. The plaintiffs have alleged that at least some of the mailings included the statement, "Time to look for a NEW HR Company!" (see doc. 25-5 through 25-12), which is similar to the non-profit's statement in the email at issue in Handsome Brook Farm, "I hope that you will reconsider changing suppliers." 700 F. App'x at 260. However, in that case, the email went on to make "statements [that] were intended to, and indeed did, promote [defendant]-certified eggs over any other eggs, including those certified by other organizations," and thus the email promoted a good. Id. at 259-60. However, here, there is no allegation that the mailings promoted a good or service offered by the defendants or anyone else. At most, the plaintiffs allege that the defendants "hoped" that their actions "would result in more business for Defendants Drye and [Morris]" (doc. 25, amend. comp. ¶ 189). The plaintiffs do not allege that the mailings promoted the services of any competitor. Based upon the foregoing, the plaintiffs have failed to plead sufficient facts to support a claim that the mailings were "commercial advertising or promotion" as required to state a false advertising claim that is plausible on its face. Accordingly, the motions to dismiss should be granted as to this claim.
The plaintiffs also cite 15 U.S.C. § 1125(a)(1)(A) in the Lanham Act claim (doc. 25, amend. comp. ¶ 206), which, as noted above, creates a false association basis of liability. Lexmark, 572 U.S. at 122.
To state a claim under § 1125(a)(1)(A), a party must allege facts establishing "(1) that it possesses a mark; (2) that the defendant used the mark; (3) that the defendant's use of the mark occurred in commerce; (4) that the defendant used the mark "in connection with the sale, offering for sale, distribution, or advertising" of goods or services; and (5) that the defendant used the mark in a manner likely to confuse consumers."Scurmont LLC v. Firehouse Rest. Group, Inc., C.A. No.4:09-CV-00618-RBH, 2010 WL 11433199, at *6 (D.S.C. May 19, 2010) (quoting People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 364 (4th Cir. 2001)). See Amcol Sys., Inc. v. Lemberg Law, LLC, C.A. No. 3:15-3422-CMC, 2015 WL 8493955, at *5 n.1 (D.S.C. Dec. 10, 2015) (same) (citation omitted). Under the Lanham Act,
The term "use in commerce" means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For purposes of this chapter, a mark shall be deemed to be in use in commerce- . . . (2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.15 U.S.C. § 1127.
To the extent the plaintiffs have attempted to state a false association claim under the Lanham Act in claims 1 and 2, they have failed to allege sufficient facts to do so. As argued by the defendants, the plaintiffs have failed to plead facts showing that the alleged mailings occurred "in commerce" or "in connection with the sale, offering for sale, distribution, or advertising" of goods or services (doc. 39 at 1). The plaintiffs again rely on paragraphs 198, 209, and 221 of the amended complaint (doc. 50 at 4). However, these paragraphs simply allege general conclusions that the "false and misleading information about the plaintiffs [was] put into the stream of commerce" and "the false and misleading representations were and are made in interstate commerce" (doc. 25, amend. comp. ¶¶ 198, 209, 221). Other than these "labels and conclusions," which are insufficient to state a claim, Twombly, 550 U.S. at 555, the plaintiffs have failed to plead facts plausibly showing that the mailings were made "in commerce" or "in connection with the sale, offering for sale, distribution, or advertising" of goods or services as required to state a false association claim that is plausible on its face.
Based upon the foregoing, the undersigned recommends that the motions to dismiss be granted as to the Lanham Act claims.
2. Common Law Unfair Competition (Third Claim)
A claim for common law unfair competition shares the same elements as a claim under the Lanham Act. See Monster Daddy, LLC v. Monster Cable Prods., Inc., C.A. No. 6:10-1170-MGL, 2013 WL 5467854, at *7 (D.S.C. Sept. 30, 2013) (citation omitted). Defendant Morris argues that this cause of action should be dismissed for the same reasons as the Lanham Act claims because the "alleged actions were not in commerce or as part of an advertisement or promotion" (doc. 43-1 at 5). As discussed above, the undersigned agrees and recommends that defendant Morris' motion to dismiss be granted as to this claim.
Defendant Roach (and by extension defendant Drye, who asked that his motion to dismiss "be attached" to that filed by Roach (doc. 40)), does not specifically address the state law claims but rather argues that because all federal claims should be dismissed, the court should decline to exercise supplemental jurisdiction over the state law causes of action (doc. 39 at 3). As set forth herein, the undersigned recommends that some, but not all, of the plaintiffs' federal claims be dismissed.
3. Computer Fraud and Abuse Act (Fourth Claim)
The plaintiffs allege that the computer assigned to defendant Morris and their computerized security systems and cameras are "protected computers" under the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030. The plaintiffs allege that the defendants accessed and made unauthorized use of the computers and obtained proprietary and confidential information from them, including customer lists and data, in violation of the CFAA, 18 U.S.C. § 1030(a)(2)(C) (doc. 25, amend. comp. ¶¶ 238-51). The relevant subsection of the CFAA states: "Whoever - . . . 2) intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains - (C) information from any protected computer; . . . shall be punished as provided in subsection (c) of this section." 18 U.S.C. § 1030(a)(2)(C). As relevant here, "[t]he term 'protected computer' means a computer . . . [that] is used in or affecting interstate or foreign commerce or communication . . . ." Id. § 1030(e)(2)(B). The CFAA further provides that "[a]ny person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief. . . ." Id. § 1030(g).
The defendants argue that the plaintiffs have failed to make allegations as to which defendant allegedly accessed the plaintiffs' computer, what computers or systems were actually accessed, when such access occurred, when the plaintiffs learned of such access, or what information was accessed or taken (doc. 39 at 2; doc. 43-1 at 5-6). The undersigned disagrees. The plaintiffs have alleged sufficient facts to state a claim to relief under the CFAA that is plausible on its face. Specifically, the plaintiffs have alleged that Propel maintains and uses computers in interstate commerce. They further allege that information belonging to Propel that was stored on defendant Morris' "unreturned computer, including but not limited to client mailing addresses and related data, has been accessed and used by the Defendants to send the eight defamatory mailings," which caused the plaintiffs to suffer economic losses (doc. 25, amend. comp. ¶ 177; see also id. ¶¶ 238-51). The undersigned finds that the plaintiffs have alleged sufficient facts in support of this statutory claim. As to defendant Roach's argument that the plaintiffs are limited to economic damages and the amended complaint "improperly attempts to assert claims for damages for 'lost goodwill, damages to reputation, impairment of value to their reputations'" (doc. 39 at 2), the undersigned agrees with the plaintiffs that this is not a basis for dismissal of the entire CFAA claim, and the issue of availability of remedies may be addressed later in the proceedings.
Based upon the foregoing, the motions to dismiss should be denied as to this cause of action.
4. Defend Trade Secrets Act (Fifth Claim)
In this cause of action, the plaintiffs allege that their processes, financial data, and customer information constitute trade secrets; they have taken steps to protect their trade secrets; and the defendants have acquired and used the plaintiffs' trade secrets to harm the plaintiffs and/or to compete against them in violation of the Defend Trade Secrets Act ("DTSA") (doc. 25, amend. comp. 252-63). The DTSA creates a private cause of action in favor of the "owner of a trade secret that is misappropriated ... if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce." 18 U.S.C. § 1836(b)(1).
The moving defendants argue that the plaintiffs have failed to allege with particularity how they have acquired, disclosed, and/or used the plaintiffs' trade secrets; what specific documents or information constitutes trade secrets under the law; how the alleged misappropriation happened; what each defendant's specific involvement in the alleged misappropriation was; when such alleged misappropriations occurred; to whom such information was disclosed; how each defendant has used such information; or how trade secrets are being used to compete against the plaintiffs (doc. 39 at 3; doc. 43-1 at 6-7).
The undersigned finds that the plaintiffs have alleged sufficient facts to state a claim that is plausible on its face. The plaintiffs have alleged that their computers are used in interstate commerce; they have taken steps to protect their trade secrets; defendant Morris refused to return her work computer; the defendants accessed confidential information on that computer, including customer lists and information, to send the eight mailings; and they have been harmed by the defendants' actions (doc. 25, amend. comp. ¶¶ 137,175-77, 243-44, 254, 262). See, e.g., Philips Elecs. N. Am. Corp. v. Hope, 631 F. Supp. 2d 705, 721 (M.D.N.C. 2009) ("Customer pricing lists, cost information, confidential customer lists, and pricing and bidding formulas may constitute trade secrets."). "While the defendants may desire a more particularized description of the alleged trade secrets, at this stage in the litigation, the court finds that [the plaintiffs'] allegations are sufficient to place [the defendants] on notice as to the trade secrets they are accused of misappropriating." Indus. Packaging Supplies, Inc. v. Davidson, C.A. No. 6:18-651-TMC, 2018 WL 10456201, at *6 (D.S.C. June 22, 2018) (citations omitted). As to defendant Roach's argument that the plaintiffs cannot bring a claim under the DTSA for exemplary damages or attorney fees (doc. 39 at 3), as discussed above with regard to the fourth claim, the undersigned agrees with the plaintiffs that this is not a basis for dismissal of the entire DTSA claim, and the issue of availability of remedies may be addressed later in the proceedings.
The plaintiffs allege that these steps include: network firewalls, password protections, security credentials, limiting employees' access to that which is necessary for their job, revoking employee authorization when they leave employment, controlling physical access to offices, and requiring employees to execute nondisclosure agreements (doc. 25, amend comp. ¶ 254).
Based upon the foregoing, the motions to dismiss should be denied as to this cause of action.
5. Breach of Contract (Sixth, Seventh, and Eighth Claims)
In the plaintiffs' sixth cause of action, they allege:
Upon information and belief, Morris breached the Morris Agreement by, inter alia, retaining, disclosing and / or using Plaintiffs' confidential, proprietary, and trade secret information and / or combining with Roach and Drye, including but not limited to by knowingly soliciting specific Propel HR clients, using Propel HR confidential information without permission or authorization, and in attempts to compete against and / or harm Plaintiffs.(Doc. 25, amend. comp. ¶ 266). In the seventh cause of action, the plaintiffs allege an identical claim against defendant Drye regarding his agreement with Propel, and in the eighth cause of action, a similar cause of action is alleged against defendants Roach and Catapult regarding their agreements with Propel (id. ¶¶ 271, 275).
"The elements of an action for breach of contract are (1) the existence of a contract; (2) the contract's breach; and (3) damages cause by such breach." Mears Group, Inc. v. Kiawah Island Utility, Inc., 372 F. Supp. 2d 363, 376 (D.S.C. 2019) (citing Allegro, Inc. v. Scully, 791 S.E.2d. 140, 146 (S.C. 2016)).
Defendant Morris argues that the plaintiffs have failed to allege what specific "confidential, proprietary, and trade secret information" was retained, disclosed, or used; what Propel HR clients were solicited or where they were solicited or how they were solicited; or how the defendants attempted to "compete against" the plaintiffs (doc. 43-1 at 7).
The plaintiffs have sufficiently alleged the breach of contract claims. They have alleged that defendant Roach entered into confidentiality and non-disclosure and independent contractor agreements with Propel, that the terms of the confidentiality and non-disclosure agreement remain in effect for a period of five years, and that the non-solicitation of clients provisions remain in effect for 12 months following the termination of the agreement (doc. 25, amend. comp. ¶¶ 46-53; docs. 25-2, 25-3). The plaintiffs have also alleged that defendants Drye and Morris each entered into confidentiality and non-solicitation agreements with Propel PEO and Propel HR, and both the Drye and Morris Agreements contain provisions prohibiting solicitation of company clients and employees for 12 months following termination of employment and confidentiality obligations for a period of 24 months following termination of employment (id. ¶¶ 170-85; docs. 25-15, 25-17). The plaintiffs have alleged that defendants Drye and Morris breached their agreements by making direct solicitations to Propel clients and failing to advise their new employers of their agreements with the plaintiffs (doc. 25, amend comp. ¶¶ 175, 180-81). They further allege that Drye also breached his agreement by soliciting Morris to work for his new employer (id. ¶ 182). Further, they have also alleged that the defendants used confidential information, at least some of which was accessed on defendant Morris' unreturned work computer, in order to send the eight mailings, including client lists and the last four digits of clients' EIN/TINs (id. ¶¶ 3, 62-65, 80, 99, 126, 128, 135-37, 177, 203). The plaintiffs further allege that they have suffered damages as a result of the breaches, including loss of sales, profits, and customers (id. ¶¶ 168, 267, 272, 278).
Based upon the foregoing, defendant Morris' motion to dismiss should be denied as to this cause of action.
6. Tortious Interference with Contract (Ninth, Tenth, and Eleventh Claims)
Defendant Morris argues that the ninth cause of action alleging tortious interference with the Morris Agreement should be dismissed against her (doc. 43-1 at 8). In response, the plaintiffs clarify that this claim is not alleged against Morris, but instead against defendants Roach and Drye (doc. 64 at 10). Accordingly, the motion is moot as to this claim.
In the tenth cause of action, which is alleged against defendants Roach and Morris, the plaintiffs allege tortious interference with the Drye Agreement (doc. 25, amend. comp. ¶¶ 284-89). In the eleventh cause of action, alleged against defendants Morris and Drye, the plaintiffs allege tortious interference with the Roach Agreements (id. ¶¶ 290-96).
To establish a cause of action for tortious interference with contract under South Carolina law, a plaintiff must demonstrate: (1) existence of a valid contract; (2) the wrongdoer's knowledge thereof; (3) the wrongdoer's intentional procurement of its breach; (4) the absence of justification; and (5) resulting damages. Eldeco, Inc. v. Charleston Cty. Sch. Dist., 642 S.E.2d 726, 731 (S.C. 2007) (citation omitted).
Defendant Morris argues that the plaintiffs have failed to provide details in these claims as to what she did, how she did it, or when and where she did it (doc. 43-1 at 8-9). The undersigned disagrees. In the amended complaint, the plaintiffs allege, with regard to the Drye Agreement, that defendants Roach and Morris "knowingly, intentionally, unjustifiably, and in bad faith induced Drye to breach the Drye Agreement by requesting, encouraging, or otherwise inducing him to disclose or use Plaintiffs' confidential, proprietary, or trade secret information" (doc. 25, amend. comp. ¶ 288). Identical allegations are made in the eleventh claim regarding the Roach Agreements (id. ¶ 295). The plaintiffs have made sufficient factual allegations to state a claim that is plausible on its face, and, therefore, defendant Morris' motion to dismiss should be denied as to these causes of action.
7. South Carolina Trade Secrets Act (Twelfth Claim)
To establish a claim for misappropriation of trade secrets under the South Carolina Trade Secrets Act ("SCTSA"), a plaintiff must show: (1) the existence of a trade secret; (2) misappropriation, wrongful use, or wrongful disclosure of a trade secret by the defendant; and (3) damages." Sonoco Prods. Co. v. Guven, C.A. No. 4:12-CV-00790-BHH, 2015 WL 127990, at *6 (D.S.C. Jan. 8, 2015) (citations omitted). Both the SCTSA and the DTSA, which is discussed above, define trade secrets as information that "has actual or potential economic value derived from not being generally known to, and not being readily ascertainable by, any other person, and are the subject of efforts that are reasonable under the circumstances to maintain its secrecy." Indus. Packaging Supplies, Inc., 2018 WL 10456201, at *4 (citing 18 U.S.C. § 1839(3); S.C. Code Ann. § 39-8-20(5)).
Defendant Morris argues that the plaintiffs have failed to allege with particularity how any defendant has acquired, disclosed, and used the plaintiffs' trade secrets. Defendant Morris further argues that the plaintiffs have failed to allege what specific documents or information constitutes trade secrets under the law, how the alleged misappropriation happened, what her specific involvement in the alleged misappropriation was, when such alleged misappropriations occurred, to whom such information was disclosed, how she has used such information, or how "trade secrets" are being used to compete against the plaintiffs (doc. 43-1 at 9).
As with the DTSA claim, the undersigned finds that the plaintiffs have alleged sufficient facts to state a claim that is plausible on its face for misappropriation of trade secrets under the SCTSA. Specifically, the plaintiffs have alleged that their computers are used in interstate commerce; they have taken steps to protect their trade secrets; defendant Morris refused to return her work computer; the defendants accessed confidential information on that computer, including customer lists and other information, to send the eight mailings; and they have been harmed by the defendants' actions (doc. 25, amend. comp. ¶¶ 137,175-77, 243-44, 300, 306). Accordingly, defendant Morris' motion to dismiss should be denied as to this cause of action.
8. South Carolina Unfair Trade Practice Act (Thirteenth Claim)
The South Carolina Unfair Trade Practice Act ("SCUTPA") prohibits "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." S.C. Code Ann. § 39-5-20(a). "'Trade' and 'commerce' shall include the advertising, offering for sale, sale or distribution of any services . . . . " Id. § 39-5-10(b).To maintain a claim pursuant to the SCUTPA, a plaintiff must establish: "(1) that the defendant engaged in an unlawful trade practice, (2) that the plaintiff suffered actual, ascertainable damages as a result of the defendant's use of the unlawful trade practice, and (3) that the unlawful trade practice engaged in by the defendant had an adverse impact on the public interest." Havird Oil Co. Inc. v. Marathon Oil Co., Inc., 149 F.3d 283, 291 (4th Cir. 1998).
The plaintiffs allege that the defendants committed an unfair or deceptive act by acquiring, disclosing, or using the plaintiffs' confidential, proprietary or trade secret information and that the defendants' "marketing and promoting of their competing services developed through the unlawful use of Plaintiffs' confidential, proprietary, and trade secret information are deceptive to the public and have the potential for repetition" (doc. 25, amend. comp. ¶¶ 309, 312).
The undersigned agrees with defendant Morris that the plaintiffs have failed to provide specific facts to support these allegations (doc. 43-1 at 10). Similarly to the Lanham Act claims discussed above, the plaintiffs have failed to plead sufficient facts to establish that the defendants' alleged unfair or deceptive acts or practices occurred "in the advertising, offering for sale, sale or distribution of any services." S.C. Code Ann. § 39-5-10(b). The plaintiffs have failed to plead facts supporting their claim that the defendants "market[ed] and promot[ed] . . . their competing services" by using the plaintiffs' confidential information. There is no allegation that the mailings promoted a service by the defendants or anyone else. Further, the plaintiffs have failed to plead any facts to establish that the alleged unlawful conduct had an adverse impact on the public interest. "An impact on the public interest may be shown if the acts or practices have the potential for repetition," which may be demonstrated by either "showing the same kind of actions occurred in the past, thus making it likely they will continue to occur absent deterrence" or "showing the company's procedures created a potential for repetition of the unfair and deceptive acts." Singleton v. Stokes Motors, Inc., 595 S.E.2d 461, 466 (S.C. 2004) (citation omitted). The plaintiffs have failed to allege that, in the past, the defendants have committed the same acts the plaintiffs complain of here or that the defendants' procedures create the potential for repetition of the unfair or deceptive acts alleged in this case. The plaintiffs' conclusory allegations, without supportive facts, are insufficient to survive the motion to dismiss. See Ethox Chem., LLC v. Coca-Cola Co., C.A. No. 6:12-CV-01682-TMC, 2013 WL 41001, at *3 (D.S.C. Jan. 3, 2013). Accordingly, defendant Morris' motion should be granted as to this cause of action.
9. South Carolina Homeland Security Act (Fourteenth Claim)
The plaintiffs allege that the defendants intercepted or attempted to intercept the plaintiffs' wire or electronic communications, "as further described hereinabove," in violation of the South Carolina Homeland Security Act ("SCHSA"), S.C. Code Ann. § 17-30-10 et seq. (doc. 25, amend. comp. ¶ 319).
Defendant Morris argues that the plaintiffs have failed to make specific factual allegations about how she intercepted or attempted to intercept the plaintiffs' wire or electronic communications (doc. 43-1 at 10-11). In response, the plaintiffs argue, "Paragraph 319 states the Defendants acted in concert, which is sufficient to satisfy S.C. Code Ann. § 17-30-20(a)(1), which implicates anyone who 'intentionally intercepts, attempts to intercept, or procures any other person to intercept or attempt to intercept any wire, oral, or electronic communication'" (doc. 64 at 12). The plaintiffs also note that the SCHSA provides six ways in which a violation of the act is committed and faults defendant Morris for failing to "reference any one of these six options to prove a violation" (id.).
The statute referenced by the plaintiffs is a criminal statute. See S.C. Code Ann. § 17-30-20. The applicable statute for civil actions provides, "Any person whose wire, oral, or electronic communication is intercepted, disclosed, or used in violation of this chapter has a civil cause of action against any person or entity who intercepts, discloses, or uses, or procures any other person or entity to intercept, disclose, or use the communications . . . ." Id. § 17-30-135. The plaintiffs miss the point of defendant Morris' argument. Presumably, this claim is brought in reference to defendant Roach's conduct in allegedly accessing Propel HR's computer-operated security cameras and watching plaintiff Yarborough and others in the Propel HR office after the termination of the Roach Agreements (doc. 25, amend. comp. ¶¶ 67-70, 152). However, the plaintiffs have failed to plead any facts about defendant Morris' alleged involvement in this conduct. The undersigned agrees that the plaintiffs have failed to allege sufficient facts to state a claim to relief that is plausible on its face against defendant Morris. Accordingly, defendant Morris' motion to dismiss should be granted as to this cause of action.
10. Invasion of Privacy (Fifteenth Claim), Intentional Infliction of Emotional Distress (Sixteenth Claim), and Defamation and Libel per se (Seventeenth Claim)
In these claims, the plaintiffs allege:
325. Defendant Roach, by virtue of his outrageous conduct as identified and set forth herein, including but not limited to directing, coordinating and causing the eight mailings (Exhibits 5-12) to be mailed and / or delivered into practically every aspect of Plaintiff Yarborough's life, has caused an unwanted appropriation of Plaintiff Yarborough's private affairs, with no legitimate purpose.(Doc. 25, amend. comp. ¶¶ 325, 332, 341). With regard to defendants Morris and Drye, the plaintiffs allege, "On information and belief, Defendants Tyler and Drye knew of the planned actions of Defendant Roach, and encouraged, facilitated, participated, aided, abetted, and/or failed to stop him" (id. ¶¶ 326, 333, 342).
332. Defendant Roach, as set forth herein, has intentionally, willfully and recklessly directed, caused, and / or coordinated a continuous pattern of outrageous conduct directed at Plaintiff Yarborough, that no reasonable person could be expected to endure.
341.Defendant Roach directed numerous false communications regarding the Plaintiff Yarborough, into her community and her life, including but not limited to as shown in Exhibits 5-12.
With regard to these three causes of action, defendant Morris argues that the plaintiffs "allege that defendant Roach committed the outrageous conduct that underlies each cause of action, but that defendant Morris [and Drye] knew about Roach's conduct and 'encouraged, facilitated, participated, aided, abetted, and / or failed to stop him from continuing'" (doc. 43-1 at 11) (emphasis in original) (quoting doc. 25, amend. comp. ¶¶ 326, 333, 342). Defendant Morris further argues, "[K]nowing about such conduct and failing to stop such conduct does not render Morris liable for the alleged actions of Roach towards Plaintiffs. And Plaintiffs have alleged no facts to support how Morris "encouraged, facilitated, participated, aided, or abetted" Roach in his alleged conduct" (id.). In response, the plaintiffs refer the court to the allegations in paragraphs 1, 135, and 137 (doc. 64 at 12). In those paragraphs of the amended complaint, the plaintiffs allege that the defendants had access to confidential, proprietary, and trade secret information; the defendants accessed and used Propel HR's mailing list and clients' EIN/TINs to send the eight mailings; and this access and use was facilitated by defendant Morris' failure to return her Propel HR computer (doc. 25, amend. comp. ¶¶ 1, 135, 137).
The undersigned agrees with the plaintiffs that the factual allegations are sufficient to give defendant Morris fair notice of what the claims are against her and the grounds upon which they rest. Accordingly, defendant Morris' motion should be denied as to these claims.
11. Civil Conspiracy (Eighteenth Claim)
In this claim, the plaintiffs allege that the defendants "combined together for the purpose of harming Plaintiffs" and that the defendants'
conduct, as described herein, has caused the Plaintiff to suffer special damages, including but not limited to all such damages as naturally and proximately result from the wrongful act or acts done in pursuance of the conspiracy and which result from it, including damage or injury to the profession, business or occupation of the Plaintiffs person, any loss of business, and any loss of profits resulting from the conspiracy.(Doc. 25, amend. comp. ¶¶ 352-53).
Under South Carolina law, the elements of a cause of action for civil conspiracy are: "(1) a combination of two or more persons, (2) for the purpose of injuring the plaintiff, and (3) causing plaintiff special damage." Hackworth v. Greywood at Hammett, LLC, 682 S.E.2d 871, 874 (S.C. Ct. App. 2009).
Defendant Morris argues that the plaintiffs have failed to allege any specific facts about her related to this claim, the plaintiffs have failed to allege additional facts in furtherance of a conspiracy, and the plaintiffs have failed to allege special damages that arose specifically from the conspiracy (doc. 43-1 at 12). In response, the plaintiffs "stand on the allegations" in the paragraphs set out above (doc. 64 at 12).
The undersigned agrees with defendant Morris that the plaintiffs have failed to state a claim upon which relief can be granted. "A claim for civil conspiracy must allege additional acts in furtherance of a conspiracy rather than reallege other claims within the complaint." Hackworth, 682 S.E.2d at 874 (citation omitted). The plaintiffs have failed to do so here. Further, Federal Rule of Civil Procedure 9(g) states, "If an item of special damage is claimed, it must be specifically stated." Fed. R. Civ. P. 9(g). "Special damages must ... be specifically alleged in the complaint to avoid surprise to the other party." Hackworth, 682 S.E.2d at 875. The damages pleaded in this claim are the same as those generally pleaded in the plaintiffs' other claims (doc. 25, amend. comp. ¶¶ 211, 222, 223, 234, 250, 251). "This alone means that [the] civil conspiracy [claim] fails." State Farm Life Ins. Co. v. Murphy, 260 F. Supp. 3d 497, 504 (D.S.C. 2017) (citing Hackworth, 682 S.E.2d at 875).
Based upon the foregoing, the undersigned recommends that defendant Morris' motion to dismiss be granted as to this cause of action.
IV. CONCLUSION AND RECOMMENDATION
Wherefore, based upon the foregoing, the undersigned recommends that the motions to dismiss of defendants Roach, Drye, and Morris (doc. 39, 40, 43) be granted in part and denied in part; defendant Morris' alternative motion for a more definite statement (doc. 43) be denied; defendant Roach's first motion to strike (doc. 38) be granted; and defendant Roach's second motion to strike (doc. 59) be denied.
In response to defendant Roach's motion to dismiss, the plaintiffs contend that defendant Roach "has apparently been provided with 'suggestions' from his counsel in the Restraining Order Action that enabled him to file this pot-shot motion to dismiss citing no case law" (doc. 50 at 8). The plaintiffs request that the court "inquire into the likelihood of 'ghost writing' by Mr. Rothstein or de facto 'ghost writing' in providing his client with the 'grounds' for dismissal" (id.). Mr. Rothstein represents defendant Catapult, an LLC owned and/or controlled by defendant Roach (doc. 25, amend. comp. ¶ 11). At least one court in this district has prohibited the ghost writing of pleadings and motions, in part based on the court's observation that it violated local court rules, the Federal Rules of Civil Procedure, and the South Carolina Rules of Professional Responsibility and that it granted latitude that should not be afforded to a litigant who actually has the benefit of legal counsel. In re Mungo, 305 B.R. 762, 768-70 (Bankr.D.S.C. 2003). See also Paul v. S.C. Dept. of Transp., C.A. No. 3:12-1036-CMC-PJG, 2012 WL 7009664, at *4 n.3 (D.S.C. Dec. 3, 2012) ("Other courts within the Fourth Circuit have 'admonish[ed] Plaintiff[s] that the practice of ghost-writing legal documents to be filed with the Court by litigants designated as proceeding pro se is inconsistent with the procedural, ethical and substantive rules of this Court.'" (citations and internal quotation marks omitted)), report and recommendation adopted by 2013 WL 461349 (D.S.C. Feb. 6, 2013).The undersigned encourages the attorneys and parties in this case to take note of these cases in further proceedings before this court.
IT IS SO RECOMMENDED.
s/Kevin F. McDonald
United States Magistrate Judge July 24, 2020
Greenville, South Carolina The attention of the parties is directed to the important notice on the following page.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
300 East Washington Street
Greenville, South Carolina 29601
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).