Opinion
6:20-CV-06722 EAW
2020-12-08
R.R. DONNELLEY & SONS COMPANY and Tucker Printers, Inc., Plaintiffs, v. Glenn MARINO, Patricia Gaborski and Mercury Print Productions, Inc., Defendants.
Jessica F. Pizzutelli, Littler Mendelson, P.C., Fairport, NY, Ivan R. Novich, Pro Hac Vice, Tyler A. Sims, Littler Mendelson P.C., Newark, NJ, for Plaintiffs. Alissa M. Fortuna-Valentine, Chad W. Flansburg, Phillips Lytle LLP, Rochester, NY, Kamran F. Hashmi, Hashmi Law Firm, Rochester, NY, Laurie A. Vahey, Patrick D.R. Leavy, Vahey Getz LLP, Rochester, NY, for Defendants.
Jessica F. Pizzutelli, Littler Mendelson, P.C., Fairport, NY, Ivan R. Novich, Pro Hac Vice, Tyler A. Sims, Littler Mendelson P.C., Newark, NJ, for Plaintiffs.
Alissa M. Fortuna-Valentine, Chad W. Flansburg, Phillips Lytle LLP, Rochester, NY, Kamran F. Hashmi, Hashmi Law Firm, Rochester, NY, Laurie A. Vahey, Patrick D.R. Leavy, Vahey Getz LLP, Rochester, NY, for Defendants.
DECISION AND ORDER
ELIZABETH A. WOLFORD, United States District Judge
I. BACKGROUND
Plaintiffs R.R. Donnelley & Sons Company ("RRD") and Tucker Printers, Inc. ("Tucker") (collectively "Plaintiffs") commenced this action on September 16, 2020, against defendants Glenn Marino ("Marino"), Patricia Gaborski ("Gaborski"), and Mercury Print Productions, Inc. ("Mercury") (collectively "Defendants"), arising from Marino's and Gaborski's employment with Mercury after working at the Tucker plant in Rochester, New York. Plaintiffs assert the following causes of action against the following defendants: (1) violation of the Defend Trade Secrets Act, 18 U.S.C. § 1836, et seq. (the "DTSA") against all Defendants; (2) breach of contract against Marino and Gaborski; (3) breach of duty of loyalty against Marino and Gaborski; (4) return of compensation in accordance with the faithless servant doctrine against Marino and Gaborski; (5) misappropriation of trade secrets and confidential information against all Defendants; (6) unjust enrichment against all Defendants; (7) unfair competition against all Defendants; (8) tortious interference with contract against all Defendants; (9) tortious interference with prospective economic relations against all Defendants; and (10) a claim for attorneys’ fees against Marino and Gaborski. (Dkt. 1).
Contemporaneously with the filing of the verified complaint, Plaintiffs filed a motion for a temporary restraining order and preliminary injunction (Dkt. 7) and a motion for expedited discovery (Dkt. 8). Two days later, the Court conducted a telephone conference and set a briefing schedule for the pending motions. (Dkt. 13; Dkt. 15). Oral argument was held before the undersigned on September 30, 2020, and the Court denied the motion for a temporary restraining order explaining that Plaintiffs had failed to meet their burden. (Dkt. 31; Dkt. 36 at 47-48). With respect to the pending motions for expedited discovery and a preliminary injunction, as well as expected motions to dismiss that Defendants indicated at that oral argument would be forthcoming, the Court directed the parties to confer and submit a proposed briefing schedule. (Dkt. 31). The parties submitted a proposal to the Court on October 7, 2020, which among other things contemplated further briefing on the motion for a preliminary injunction depending on the outcome of the pending motion for expedited discovery. (Dkt. 34).
The Court adopted the parties’ proposal in part, and set a further briefing schedule for the motion for expedited discovery and anticipated motions to dismiss. (Dkt. 35). In accordance with that schedule, on October 23, 2020, all Defendants filed motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. 38 (Mercury's motion); Dkt. 39 (Gaborski's motion); Dkt. 42 (Marino's motion)). On that same date, Plaintiffs filed a renewed motion for expedited discovery. (Dkt. 40). Each party filed papers in opposition and reply papers (Dkt. 52; Dkt. 53; Dkt. 55; Dkt. 56; Dkt. 57; Dkt. 58; Dkt. 59; Dkt. 64; Dkt. 67; Dkt. 68; Dkt. 69; Dkt. 70), and oral argument was held before the undersigned on November 30, 2020 (Dkt. 72), at which time the Court reserved decision.
For the reasons set forth below, Plaintiffs’ motions for expedited discovery (Dkt. 8; Dkt. 40) are granted in part and denied in part, Defendants’ motions to dismiss (Dkt. 38; Dkt. 39; Dkt. 42) are granted in part and denied in part, and the Court dismisses the pending motion for a preliminary injunction (Dkt. 7) without prejudice and with leave to renew at Plaintiffs’ discretion.
II. DEFENDANTS’ RULE 12(b)(1) MOTIONS TO DISMISS
Each Defendant has sought dismissal of the claims as asserted by RRD on the ground that it lacks standing, and therefore this Court lacks subject matter jurisdiction over any claims asserted by RRD. (Dkt. 38 (Mercury motion); Dkt. 39 (Gaborski motion); Dkt. 42 (Marino motion)).
"Standing is a federal jurisdictional question ‘determining the power of the court to entertain the suit.’ ‘[A] plaintiff must demonstrate standing for each claim and form of relief sought.’ " Carver v. City of New York , 621 F.3d 221, 225 (2d Cir. 2010) (alteration in original) (internal citations omitted). To establish standing, a plaintiff must have "(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Kearns v. Cuomo , No. 19-3769-CV, 981 F. 3d 200, 207 (2d Cir. Nov. 30, 2020) (quoting Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) ). "Each element of standing ‘must be supported ... with the manner and degree of evidence required at the successive stages of the litigation,’ and at the pleading stage, ‘general factual allegations of injury resulting from the defendant's conduct may suffice.’ " John v. Whole Foods Mkt. Grp., Inc. , 858 F.3d 732, 736 (2d Cir. 2017) (quoting Lujan v. Defs. of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ).
Where standing is challenged on the basis of the pleadings, a court must "accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Carver , 621 F.3d at 225 (quoting W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche LLP , 549 F.3d 100, 106 (2d Cir. 2008) ). Thus, when a Rule 12(b)(1) motion is facial (based solely on the pleadings), a plaintiff has no evidentiary burden and the "task of the district court is to determine whether the Pleading ‘allege[s] facts that affirmatively and plausibly suggest that [the plaintiff] has standing to sue.’ " Carter v. HealthPort Techs., LLC , 822 F.3d 47, 56 (2d Cir. 2016) (alterations in original) (citation omitted); see also Katz v. Donna Karan Co., L.L.C. , 872 F.3d 114, 119 (2d Cir. 2017) (when a standing challenge is facial, a plaintiff has no evidentiary burden, "for both parties can be said to rely solely on the facts as alleged" in the complaint); John , 858 F.3d at 736 (where a defendant "mounts only a ‘facial’ challenge" to a plaintiff's allegations of standing, the plaintiff "bears no evidentiary burden at the pleading stage").
On the other hand, if a defendant makes a fact-based challenge under Rule 12(b)(1), by proffering evidence beyond the pleadings, a plaintiff must come forward in opposition to such a motion "with evidence of their own to controvert that presented by the defendant ‘if the affidavits submitted on a 12(b)(1) motion ... reveal the existence of factual problems’ in the assertion of jurisdiction." Carter , 822 F.3d at 57 (citation omitted). But a plaintiff is entitled to rely on the allegations in the pleading if the evidence proffered by the defendant "is immaterial because it does not contradict plausible allegations that are themselves sufficient to show standing." Id. It is only where the "extrinsic evidence presented by the defendant is material and controverted, [that] the district court will need to make findings of fact in aid of its decision as to standing." Id. ; see Aikens v. Portfolio Recovery Assocs., LLC , 716 F. App'x 37, 39 n.2 (2d Cir. 2017) (even if a Rule 12(b)(1) motion is fact-based, it is only necessary to make factual findings if the evidence is disputed—in other words, where the extrinsic evidence offered by the moving party contradicts pertinent allegations in the complaint or where the opposing party challenges the "authenticity or the factual interpretation" of the extrinsic evidence).
With respect to each of Defendants’ Rule 12(b)(1) motions, they attack RRD's standing based on the injury-in-fact element. In sum, each Defendant argues that RRD is not the party that has suffered the alleged injury, but rather, if any injury was suffered, it was incurred by Tucker, a subsidiary of RRD. (See Dkt. 38-1 at 18-20; Dkt. 39-1 at 11-12; Dkt. 42-7 at 11-17). The injury-in-fact requirement "helps to ensure that the plaintiff has a personal stake in the outcome of the controversy," and the Second Circuit has "repeatedly described that requirement as a ‘low threshold.’ " John , 858 F.3d at 736 (quoting Susan B. Anthony List v. Driehaus , 573 U.S. 149, 134 S. Ct. 2334, 2341, 189 L.Ed.2d 246 (2014) ). "[G]eneral factual allegations of injury ... may suffice, for on a motion to dismiss we presum[e] that general allegations embrace those specific facts that are necessary to support the claim." Id. at 737 (quoting Lujan , 504 U.S. at 561, 112 S.Ct. 2130 ) (second alteration in original). Thus, at the pleading stage, a plaintiff "need only generally allege facts that, accepted as true, make his alleged injury plausible." Id.
In his reply memorandum, Marino argues that RRD, even if able to show an injury-in-fact, has failed to show that the injury would be redressable by a favorable judicial decision because there is "nothing in the record evidence showing" that Marino used the information. (Dkt. 68 at 8-9). The Court disagrees that this is the standard at this stage of the litigation.
The Court addresses RRD's standing to assert each cause of action below.
A. DTSA Claim and Common Law Misappropriation of Trade Secrets Claim (Counts One and Five)
"To state a claim for misappropriation under the DTSA, a plaintiff must allege that it possessed a trade secret that the defendant misappropriated." Iacovacci v. Brevet Holdings, LLC , 437 F. Supp. 3d 367, 380 (S.D.N.Y. 2020) (citing 18 U.S.C. § 1836(b)(1) ). "Misappropriation" is defined under the DTSA to include "acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means," 18 U.S.C. § 1839(5), and "improper means" is defined to include "theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means," id. § 1839(6)(A).
"To succeed on a claim for the misappropriation of trade secrets under New York law, a party must demonstrate: (1) that it possessed a trade secret, and (2) that the defendants used that trade secret in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means." Faiveley Transp. Malmo AB v. Wabtec Corp. , 559 F.3d 110, 117 (2d Cir. 2009).
Under the DTSA, a trade secret includes "all forms and types of information that derives independent economic value from not being generally known and that the owner of which took reasonable measures to keep secret." AUA Private Equity Partners, LLC v. Soto , No. 1:17-CV-8035-GHW, 2018 WL 1684339, at *4 (S.D.N.Y. Apr. 5, 2018) (quotation and alterations omitted). Similarly, New York law defines a trade secret as "any pattern, formula, device or compilation of information which is used in one's business and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." PaySys Int'l, Inc. v. Atos Se , No. 14-CV-10105 (KBF), 2016 WL 7116132, at *7 (S.D.N.Y. Dec. 5, 2016) (citation and quotations omitted).
Both Mercury and Gaborski make facially-based challenges to RRD's standing to assert the trade secret claims, arguing that RRD fails to plausibly allege that it owned or possessed trade secrets and that RRD cannot assert trade secret claims on behalf of Tucker. (Dkt. 38-1 at 19; Dkt. 39-1 at 11). The Court disagrees. The complaint contains specific allegations about the misappropriation of RRD's trade secrets. (Dkt. 1 at ¶ 3 ("RRD entrusted Marino and Gaborski with their trade secrets, confidential, and proprietary information (including, but not limited to...."); id. at ¶ 43 ("Marino was part of the transition calls and learned confidential, proprietary, and trade secret information about RRD's business plans and strategies relating to the transition and clients."). Moreover, while the bulk of the allegations in the complaint group RRD and Tucker together and allege misappropriation on behalf of both entities, the Court is unpersuaded that at this stage of the litigation those allegations are insufficient to confer standing on RRD. Given the "low threshold" required to plausibly allege an injury-in-fact, and the requirement that a court "draw from the pleadings all reasonable inferences in the plaintiff's favor and ... presum[e] that general allegations embrace those specific facts that are necessary to support the claim," John , 858 F.3d at 736 & 737 (internal quotations omitted), the Court concludes that the allegations are sufficient at this stage of the proceedings.
Unlike Mercury and Gaborski, Marino has offered evidence outside the pleadings in support of his Rule 12(b)(1) motion. Marino has submitted a declaration wherein he contends that he had access to Tucker's "network" so that he could obtain documents and files necessary to perform his duties, but he did not have access to RRD's "network" (Dkt. 42-1 at ¶¶ 5, 20); that he sold Tucker's commercial printing and packaging services under Tucker's name to Tucker customers, and Tucker received revenue from his sales (id. at ¶ 4); and any documents or files that he possessed upon his departure from Tucker came from Tucker's "network" or were connected with his sales of Tucker products (id. at ¶¶ 7, 27). Based on this, Marino argues that RRD cannot establish an injury arising from, or personal stake, in the trade secret claims. (Dkt. 42-7 at 15).
However, there are some aspects of the trade secret allegations about which Marino offers no extrinsic evidence. Namely, Marino does not offer any extrinsic evidence disputing that he participated in planning sessions concerning the transition to RRD, which the complaint alleges allowed Marino to learn "confidential, proprietary, and trade secret information about RRD's business plans and strategies relating to the transition and clients." (Dkt. 1 at ¶ 43). Thus, to the extent the trade secret misappropriation claims are based on misappropriation of trade secret information related to this transition, Marino's motion is facially-based, and the Court concludes that the claims are sufficient to confer standing on RRD at this stage. See Aikens , 716 F. App'x at 39 ("As to any issue beyond the scope of [the moving party's extrinsic] evidence, we accept [the plaintiff's] allegations as true and draw all reasonable inferences in her favor.").
In addition, while Marino submits extrinsic evidence as to the source of the material that he took upon his departure—that it came from Tucker's "network" as opposed to RRD's "network" and that it was related to his sales of Tucker products—Marino's declaration does not contradict the plausible allegations in the complaint that he had access to RRD's trade secrets and misappropriated those trade secrets. In other words, the complaint does not contend that RRD trade secrets only resided within the RRD network (or that they did not reside within the Tucker "network"). Whether information existed within a certain computer network is a different issue than whether a company owned or possessed trade secrets and has a right to pursue claims for misappropriation of those trade secrets. Here, RRD plainly alleges in the complaint that Marino had access to its trade secret information. Indeed, paragraph 66(a) of the complaint contains a detailed list of documents allegedly misappropriated by Marino, some of which are expressly titled as RRD's information. (Dkt. 1 at ¶ 66(a)).
Thus, the Court concludes that Marino's extrinsic evidence is immaterial because it does not contradict the plausible allegations in the complaint that are themselves sufficient to show standing. As a result, the Court does not need to make findings of fact in aid of its decision with respect to standing and concludes that RRD has established, at this stage of the proceedings, its standing to pursue the trade secret misappropriation claims.
B. Breach of Contract Claim (Count Two)
Plaintiffs assert a breach of contract claim against Marino and Gaborski based on confidentiality agreements that each signed at or near the time their employment with Tucker commenced. (Id. at ¶¶ 88-97). The agreements are attached as exhibits to the complaint. (Id. at 40-45). Defendants argue that RRD does not have standing to assert this claim because it is not a party to the contract. As noted above, Gaborski has made a facially-based challenge to RRD's standing under Rule 12(b)(1), but Marino has submitted extrinsic evidence in support of his motion. However, with respect to the breach of contract claim, like the trade secret misappropriations claims, Marino's extrinsic evidence does not contradict the plausible allegations in the complaint—which are based on the language of the agreements. Thus, the Court views both Gaborski's and Marino's motions directed to RRD's standing to assert the breach of contract claim as facial.
The complaint alleges that RRD is included within the definition of "subsidiaries, affiliates, successors, and assigns." (Id. at ¶ 29). Moreover, there is support under New York law for the notion that a parent corporation may be considered an affiliate, at least, of its subsidiary. See , e.g. , Credit Index, L.L.C. v. RiskWise Int'l L.L.C. , 192 Misc. 2d 755, 760, 746 N.Y.S.2d 885 (N.Y. Sup. Ct. 2002) (collecting cases), aff'd , 296 A.D.2d 318, 744 N.Y.S.2d 326 (1st Dep't 2002) ; see also Newmarkets Partners LLC v. Oppenheim , 638 F. Supp. 2d 394, 408 (S.D.N.Y. 2009) ("While non-signatories normally cannot be liable for a breach of contract under New York law, there are exceptions to this rule, such as where a noncompete agreement includes an ‘affiliates’ clause and the non-signatory buys a controlling stake in a signatory to the contract." (citations omitted)). Thus, the Court concludes that RRD has plausibly alleged standing to assert a breach of contract claim against Marino and Gaborski, as an affiliate of Tucker and, thus, a party to the agreements in its own right.
The law is well-established that a parent corporation may not bring "direct suits aimed at vindicating injuries suffered by their subsidiaries." Nature's Plus Nordic A/S v. Nat. Organics, Inc. , 980 F. Supp. 2d 400, 409 (E.D.N.Y. 2013). Thus, to the extent RRD is attempting to enforce the contractual rights of Tucker, its subsidiary, it is not permitted to do so. Id. at 410 (parent corporation could not assert contractual rights of its subsidiary as a "successor" to that subsidiary absent a formal merger). However, RRD has not simply asserted a breach of contract claim based on Tucker's rights under the contract, but also contends that it has its own rights to assert contractual claims against Marino and Gaborski. At this stage of the proceedings, the Court concludes these allegations are sufficient to withstand a Rule 12(b)(1) motion to dismiss.
In his reply memorandum of law, Marino argues that RRD cannot be an affiliate because at the time the agreements were signed, it was not Tucker's parent, and the agreements do not refer to "future" affiliates. (Dkt. 68 at 15). The Court disagrees that this argument is appropriate for resolution at this stage of the proceedings. In fact, the case relied upon by Marino in support of this argument was decided post-trial. VKK Corp. v. Nat'l Football League , 244 F.3d 114, 130 (2d Cir. 2001) (in context of release of future claims, concluding that reference to affiliates did not include future members of the NFL). All that the Court is resolving at this stage is whether, based on the agreements, RRD has satisfactorily alleged standing to assert a breach of contract claim.
C. Breach of Duty of Loyalty and Claim for Return of Compensation Duty Claims (Counts Three and Four)
Count Three of the complaint alleges a breach of the duty of loyalty claim against Marino and Gaborski based on their "employment relationship with Plaintiffs...." (Dkt. 1 at ¶ 99). Similarly, Count Four alleges a claim against Marino and Gaborski entitled "Return of Compensation in Accordance with the Faithless Servant Doctrine," and it is based on the existence of the duty of loyalty alleged in Count Three. (Id. at ¶ 111).
"A claim for breach of fiduciary duty must allege both the existence of a duty based on a relationship of trust and confidence and breach of that duty." Gortat v. Capala Bros., Inc. , 585 F. Supp. 2d 372, 376 (E.D.N.Y. 2008), aff'd , 568 F. App'x 78 (2d Cir. 2014). "New York law establishes that an employee-employer relationship is fiduciary." Fairfield Fin. Mortg. Grp., Inc. v. Luca , 584 F. Supp. 2d 479, 485 (E.D.N.Y. 2008).
With respect to Gaborski, the allegations in the complaint establish that she was not an employee of RRD. The complaint alleges that RRD extended Gaborski an offer of employment on July 20, 2020, and she was terminated with cause on July 27, 2020, never having "responded to RRD's offer...." (Dkt. 1 at ¶¶ 47-48). With respect to Marino, the complaint alleges that on or about April 17, 2020, "as part of the national reorganization, RRD transferred Marino from Tucker to its national sales team under Ms. DeVito." (Id. at ¶ 41). However, Marino has submitted extrinsic evidence establishing that he was never employed by RRD. (Dkt. 42-1 at ¶ 2 ("I was employed by Tucker at all relevant times. Contrary to Plaintiffs’ allegations in the Verified Complaint, I was never employed by RRD."); ¶ 26 ("At the time of my departure from Tucker, I was not an RRD employee, and any such insinuation by Plaintiffs is false. On July 10, 2020, I was still a Tucker employee.")). As a result, RRD bears the burden to come forward with evidence establishing by a preponderance of the evidence that Marino was employed by RRD. RRD has failed to meet its burden.
Plaintiffs submit a declaration from Mark Brothers, RRD's Senior Vice President of Human Resources. (Dkt. 54-1). Mr. Brothers discusses the interrelation of operations between RRD and Tucker, indicates that employees at the Tucker facility were provided with RRD employee identification numbers and had access to RRD human resources support, and states that employees at the Tucker facility were subject to RRD's policies. (Id. at ¶¶ 3-21). However, nowhere in the declaration does Mr. Brothers expressly state that Marino became employed by RRD on or about April 17, 2020. Instead, he seems to suggest that once RRD acquired Tucker's parent in January 2014, the employees of the Tucker facility essentially became employed by RRD. However, the complaint makes clear that RRD and Tucker are two separate corporations. (Dkt. 1 at ¶¶ 15, 16).
Plaintiffs also have submitted a declaration of David Lewis, RRD's Vice President of Sales, that states that on or about April 17, 2020, Marino was "transferred from the local Tucker sales team to the RRD national sales team reporting to RRD Regional Sales Manager Mary Beth DeVito" (Dkt. 54-2 at ¶ 3), but this declaration does not address which corporation had the legal employment relationship with Marino.
The law is clear that a parent corporation may not assert the legal rights belonging to its subsidiary. Hudson Optical Corp. v. Cabot Safety Corp. , 162 F.3d 1148, 1998 WL 642471, at *3 (2d Cir. 1998) ; Phoenix Light SF Ltd. v. U.S. Bank Nat. Ass'n , No. 14-CV-10116 KBF, 2015 WL 2359358, at *3 (S.D.N.Y. May 18, 2015) ; Tradition Chile Agentes de Valores Ltda. v. ICAP Secs. USA LLC , No. 09 CIV. 10343 (WHP), 2010 WL 4739938, at *9 (S.D.N.Y. Nov. 5, 2010) ; Diesel Sys., Ltd. v. Yip Shing Diesel Eng'g Co. , 861 F. Supp. 179, 181 (E.D.N.Y. 1994). "This conclusion follows from the principle that ‘a parent corporation cannot create a subsidiary and then ignore its separate corporate existence whenever it would be advantageous to the parent.’ " Feinberg v. Katz , No. 99 CIV. 45 (CSH), 2002 WL 1751135, at *6 (S.D.N.Y. July 26, 2002) (citation omitted). In other words, "courts will not allow a parent to pierce the corporate veil it created for its own benefit, so as to assert the claims of its subsidiary." Bross Utils. Serv. Corp. v. Aboubshait , 618 F. Supp. 1442, 1445 (S.D.N.Y. 1985).
In an effort to overcome this legal authority, RRD contends that it and Tucker were integrated or single employers of Marino and Gaborski. (Dkt. 64 at 28-31). However, each one of the cases relied upon by RRD in support of this contention relates to situations dealing with labor rights of employees and whether a particular corporate entity should be considered a joint employer. See, e.g., Fowler v. Scores Holding Co. , 677 F. Supp. 2d 673, 680-81 (S.D.N.Y. 2009) ("Under New York law, there are two well-established doctrines—the single and joint employer doctrines—that allow an employee to assert employer liability against an entity that is not formally his or her employer."). This principle articulated in the case law relied upon by Plaintiffs does not translate into allowing a parent corporation to proactively pierce the corporate veil to pursue a claim against an employee of its subsidiary. Bross Utils. Serv. Corp. , 618 F. Supp. at 1445 (a parent may not "pierce the corporate veil it created for its own benefit"). Moreover, even if that case law could support such a theory of recovery, the complaint fails to allege that RRD employed Marino or Gaborski as a joint employer with Tucker.
Accordingly, Marino's and Gaborski's Rule 12(b)(1) motions to dismiss RRD's claims based on alleged breaches of fiduciary duty arising from the employment relationship are granted.
D. Remaining Causes of Actions (Counts Six through Ten)
Count Six (unjust enrichment), Count Seven (unfair competition), and Count Nine (tortious interference with prospective economic relations) are alleged against all Defendants based, in part, on the alleged diversion of business belonging to Plaintiffs through improper means. (Dkt. 1 at ¶¶ 123-44, 154-62). Count Eight alleges a claim for tortious interference with contract against all Defendants based on alleged interference with Plaintiffs’ contracts with its customers and the confidentiality agreements signed by Marino and Gaborski. (Id. at ¶¶ 145-53). Finally, Count Ten seeks attorneys’ fees from Marino and Gaborski based on the confidentiality agreements. (Id. at ¶¶ 163-64). Each of these claims, at least in part, is based upon the alleged misappropriation of trade secrets and breach of the confidentiality agreements. Thus, for the reasons that the Court has already concluded RRD has standing to assert those misappropriation and breach of contract claims, it also concludes that, at least at this stage of the proceedings, it has standing to assert these claims.
III. MERCURY'S RULE 12(b)(6) MOTION TO DISMISS
Plaintiffs attempt to assert six causes of action against Mercury: (1) violation of the DTSA; (2) misappropriation of trade secrets and confidential information; (3) unjust enrichment; (4) unfair competition; (5) tortious interference with contract; and (6) tortious interference with prospective economic relations. (Dkt. 1). Mercury seeks to dismiss these claims pursuant to Rule 12(b)(6) on the ground that Plaintiffs have failed to plausibly allege these claims against it. (Dkt. 38).
"In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint." DiFolco v. MSNBC Cable L.L.C. , 622 F.3d 104, 111 (2d Cir. 2010). A court should consider the motion by "accepting all factual allegations as true and drawing all reasonable inferences in favor of the plaintiff." Trs. of Upstate N.Y. Eng'rs Pension Fund v. Ivy Asset Mgmt. , 843 F.3d 561, 566 (2d Cir. 2016), cert. denied , ––– U.S. ––––, 137 S. Ct. 2279, 198 L.Ed.2d 703 (2017). To withstand dismissal, a claimant must set forth "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Turkmen v. Ashcroft , 589 F.3d 542, 546 (2d Cir. 2009) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ).
"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (alteration in original) (internal quotations and citations omitted). "To state a plausible claim, the complaint's ‘[f]actual allegations must be enough to raise a right to relief above the speculative level.’ " Nielsen v. AECOM Tech. Corp. , 762 F.3d 214, 218 (2d Cir. 2014) (alteration in original) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).
Here, Plaintiffs’ claims against Mercury fail. Plaintiffs’ complaint contains a variety of allegations against Marino, and to a lesser extent Gaborski, in connection with their alleged efforts to steal Plaintiffs’ alleged confidential and trade secret information and use that information in their efforts to generate business on behalf of Mercury, their new employer. But the complaint is devoid of factual allegations as to Mercury's involvement in these activities. In fact, in the 72 paragraphs of factual allegations asserted before the individual causes of action are pleaded, there is only one paragraph with any specific factual allegations against Mercury:
Mercury was aware of Marino's contractual obligations at the time it recruited him in or around May 2020. Nevertheless, Mercury induced Marino to violate his contract and profited from his breach of contract and other legal duties owed to Plaintiffs. Upon information and belief, Mercury offered limited packaging solutions to its customers prior to its hire of Marino and Gaborski, and specifically hired Marino and Gaborski to substantially increase its commercial packaging business . Marino's disloyal acts were done to benefit Mercury. Marino also acted on Mercury's behalf and as an agent of Mercury when he diverted Plaintiffs’ clients to Mercury while still employed by Plaintiffs. Mercury, as a new competitor in the commercial packaging industry, knew full well the damage to Plaintiffs if Marino stole their confidential and trade secret information and unlawfully diverted business to Mercury before and after his resignation from Plaintiffs.
(Dkt. 1 at ¶ 13 (emphasis in original)). At bottom, these allegations are nothing more than conclusory allegations. Plaintiffs allege that Mercury knew about Marino's contractual obligations, but it is important to bear in mind that those contractual obligations did not require that Marino not work for a competitor or solicit former customers. (See id. at 41-42). Rather, those contractual obligations required Marino to maintain the secrecy of his former employer's confidential information. Mercury's hiring of Marino in the hopes of establishing or increasing its commercial packaging business does not constitute a per se breach of those contractual obligations. And that is the essence of what is pleaded against Mercury—that it hired Marino (and Gaborski) in an effort to generate business and compete against Plaintiffs. Indeed, paragraph 80 of the complaint alleges claims of trade secret misappropriation against Marino and Gaborski, and then in a conclusory manner alleges that Mercury also engaged in misappropriation "by virtue of its employment of Marino and Gaborski...." (Id. at ¶ 80). Mercury's employment of Marino and Gaborski is not unlawful. To the extent Plaintiffs allege Mercury's conduct rose to the level of being in violation of the law, those allegations are conclusory and unsupported by sufficient factual detail to survive a Rule 12(b)(6) motion.
Turning to the specific causes of action alleged against Mercury, Plaintiffs allege claims of misappropriation under both the DTSA and New York common law. Here, Plaintiffs have failed to plausibly allege that Mercury used Plaintiffs’ trade secrets or other confidential information. As detailed above, at best, Plaintiffs allege that Marino and Gaborski did so, and that Mercury hired Marino and Gaborski. But this is not enough to create liability as to Mercury. Indeed, in their memorandum of law in opposition to the motions to dismiss, in attempting to respond to the argument that they have failed to allege that trade secrets were misappropriated, Plaintiffs focus exclusively on conduct purportedly engaged in by Marino and Gaborski. (See Dkt. 64 at 38-39). In attempting to respond to Mercury's argument that there are no allegations that it possessed or misused Plaintiffs’ trade secrets or confidential information, Plaintiffs contend that "Mercury wholly ignores the fact that Marino was first interviewed by Mercury on May 18, 2020 and accepted an offer of employment with Mercury on June 18, 2020, and Marino was, at least as of the latter date, acting on Mercury's behalf and as an employee and agent of Mercury." (Dkt. 64 at 39). Plaintiffs admit that there are no allegations to this effect in the complaint (id. at 39 n.11), but they also cite no case law in support of the proposition that a party can be brought into a trade secret misappropriation case simply by offering employment to an employee who has been disloyal to his or her former employer. Similarly, Plaintiffs offer no case law in support of the notion that an individual becomes an agent of a corporation for purposes of a trade secret misappropriation claim simply by accepting an offer of employment.
Plaintiffs also purport to allege a claim for unjust enrichment against Mercury. An unjust enrichment claim under New York law requires that a plaintiff show that the defendant was enriched at the plaintiff's expense and "it is against equity and good conscience to permit [the defendant] to retain what is sought to be recovered." BanxCorp v. Costco Wholesale Corp. , 723 F. Supp. 2d 596, 618 (S.D.N.Y. 2010) (citing Am. Med. & Life Ins. Co. v. Crossummit Enters., Inc. , 27 Misc.3d 1210(A), 2010 WL 1493136, at *5 (N.Y. Sup. Ct. 2010) ). While responding to some of Mercury's arguments in support of dismissal of this claim (see Dkt. 64 at 45-47), Plaintiffs fail to address the argument that there are no plausible allegations that Mercury has been unjustly enriched at Plaintiffs’ expense so that equity and good conscience require its return (see Dkt. 38-1 at 29). For the same reason that Plaintiffs’ other claims against Mercury fail, the unjust enrichment claim against Mercury lacks sufficient factual detail so as to plausibly state a claim.
Plaintiffs also try to allege a claim for unfair competition against Mercury. "To state a claim for unfair competition, Plaintiffs must allege ‘that the [D]efendants misappropriated the [P]laintiffs’ labors, skills, expenditures, or good will and displayed some element of bad faith in doing so.’ " BanxCorp , 723 F. Supp. 2d at 617 (alterations in original) (quoting Abe's Rooms, Inc. v. Space Hunters, Inc. , 38 A.D.3d 690, 833 N.Y.S.2d 138, 140 (2d Dep't 2007) ). Here, for the same reasons that Plaintiffs’ misappropriation claims fail to plausibly allege a claim against Mercury, the unfair competition claim also fails. See Sci. Components Corp. v. Sirenza Microdevices, Inc. , No. 03-CV-1851(NGG)(RML), 2006 WL 2524187, at *29 (E.D.N.Y. Aug. 30, 2006) ("Where an unfair competition claim duplicates a claim for misappropriation of trade secrets, the two claims generally rise or fall together.").
In its memorandum of law in opposition to Defendants’ motions to dismiss, Plaintiffs appear to concede that they have failed to allege the requisite bad faith on the part of Mercury so as to state an unfair competition claim, but they state in a footnote that "[t]o the extent the Court finds that Plaintiffs have not alleged deceptive means or bad faith on behalf of Mercury, Plaintiffs should be given the opportunity to amend the Verified Complaint...." (Dkt. 64 at 45 n.12). Without passing on whether Plaintiffs’ allegations that extending a job offer to Marino on June 18, 2020, but setting a start date of employment as July 13, 2020, could rise to the level of the requisite bad faith pleading, the Court denies without prejudice Plaintiffs’ cursory request because it is procedurally defective under Local Rule of Civil Procedure 15. See Popat v. Levy , 253 F. Supp. 3d 527, 546 (W.D.N.Y. 2017) (finding request for leave to amend defective for failure to comply with Local Rules of Civil Procedure); Wi3, Inc. v. Actiontec Elecs. , 71 F. Supp. 3d 358, 363 (W.D.N.Y. 2014) (same); see also Food Holdings Ltd. v. Bank of Am. Corp. , 423 F. App'x 73, 76 (2d Cir. 2011) (finding district court did not abuse its discretion in denying leave to amend complaint when request to amend was made "on the final page of their brief in opposition to defendants’ motion to dismiss, in boilerplate language and without any explanation as to why leave to amend was warranted" and collecting cases).
Finally, Plaintiffs purport to allege claims for tortious interference with contract and tortious interference with prospective economic relations. To plausibly allege either one of these claims, a plaintiff must allege improper conduct on the part of the defendant in either procuring a breach of contract or interfering with a business relationship. See Popat , 253 F. Supp. 3d at 544-46. For the same reasons that Plaintiffs’ other claims fail to plausibly allege a cause of action, so too these claims against Mercury cannot withstand scrutiny under Rule 12(b)(6).
IV. MARINO'S AND GABORSKI'S RULE 12(b)(6) MOTIONS TO DISMISS
Marino and Gaborski also contend that the complaint fails to plausibly allege the various claims as asserted against them. The Court disagrees.
With respect to the trade secret misappropriation claims, the complaint is sufficiently detailed so as to plausibly allege misappropriation. The Second Circuit has never "expressly required trade secrets to be identified with any particular degree of specificity," in a pleading, and while courts in this Circuit have held that "a vague and indefinite piece of information cannot be protected as a trade secret," Broker Genius, Inc. v. Zalta , 280 F. Supp. 3d 495, 515 (S.D.N.Y. 2017) (quotation omitted); see also Zirvi v. Flatley , 433 F. Supp. 3d 448, 465 (S.D.N.Y. 2020) ("Although the Second Circuit has not articulated a specificity requirement, district courts in this circuit routinely require that plaintiffs plead their trade secrets with sufficient specificity to inform the defendants of what they are alleged to have misappropriated."), the complaint here contains sufficient detail so as to satisfy this threshold. (See, e.g. , Dkt. 1 at ¶ 66).
Moreover, while there is no question that the complaint focuses its attention on Marino's alleged wrongful conduct, the complaint contains sufficient allegations to assert the claims alleged against Gaborski, including her alleged collusion with Marino to communicate with a competitor while both were still employed by Tucker (id. at ¶ 66(c)), and her involvement with Marino in communications with clients in efforts to solicit work on behalf of Mercury even though she was still employed by Tucker (id. at ¶ 66(d), (f), (h)).
To the extent that Gaborski argues that any claims asserted by Tucker are moot because the facility has closed (Dkt. 39-1 at 12-13), this argument goes beyond the allegations in the complaint and is not appropriate for resolution at the motion to dismiss stage.
In all, while some of the claims in the complaint are pleaded better than others and while the allegations against Marino are more fulsome than those against Gaborski, at this stage of the proceedings the allegations are sufficient to proceed and the motions to dismiss by Marino and Gaborski pursuant to Rule 12(b)(6) are denied.
V. MOTION FOR EXPEDITED DISCOVERY
Plaintiffs seek expedited discovery from each of Marino and Gaborski in the form of five interrogatories, five document demands, and a deposition. (Dkt. 40-2 at ¶ 2). Defendants oppose these requests, and the parties disagree as to the appropriate standard by which to evaluate Plaintiffs’ request. Specifically, Plaintiffs contend that a flexible standard of reasonableness and good cause applies (Dkt. 40-1 at 17-19), whereas Defendants contend that the more stringent standard set forth in Notaro v. Koch , 95 F.R.D. 403, 405 (S.D.N.Y. 1982) applies and at the very least Plaintiffs must show irreparable harm (Dkt. 56 at 10-13). "The Second Circuit has yet to articulate a standard for determining whether to allow expedited discovery and courts in this circuit have variously applied either the four-part test derived from Notaro v. Koch , 95 F.R.D. 403, 405 (S.D.N.Y. 1982) —the elements of which track the standard for granting a preliminary injunction—or the more flexible standard of reasonableness and good cause...." Schneiderman v. Griepp , No. 17-CV-3706(CBA)(JO), 2017 WL 3129764, at *1 (E.D.N.Y. July 20, 2017) (citations and internal quotations omitted).
To the extent that Plaintiffs seek expedited discovery from Mercury as a party defendant in this case, that motion is denied as moot because the claims against Mercury have been dismissed. Plaintiffs will be free to pursue discovery in this litigation against Mercury as a third-party witness and/or they may file a renewed motion for expedited discovery against Mercury as a third-party witness.
The majority of courts in the Second Circuit apply the more flexible "good cause" standard when evaluating motions for expedited discovery. As explained by then-District Judge Lynch:
These [cases providing for a good cause standard] ... seem to have the better of the argument. As the Rules permit the Court to act by order, but do not elaborate on the basis for taking action, it seems that the intention of the rule-maker was to confide the matter to the Court's discretion, rather than to impose a specific and rather stringent test. As one court has pointed out, the Notaro test is similar to the analysis necessary to justify the far more dramatic decision to grant a preliminary injunction, and employing a preliminary-injunction type analysis to determine entitlement to expedited discovery makes little sense, especially when applied to a request to expedite discovery in order to prepare for a preliminary injunction hearing.
Ayyash v. Bank Al-Madina , 233 F.R.D. 325, 326-27 (S.D.N.Y. 2005). See also Stern v. Cosby , 246 F.R.D. 453, 457 (S.D.N.Y. 2007) (Chin, then-DJ.) ("I agree that the more flexible approach is the better approach.").
The Court concludes that the good cause standard is the appropriate approach, but also that in assessing good cause a court may take into account the standard necessary to establish entitlement to a preliminary injunction, including for instance whether there is some connection between the request for expedited discovery and the avoidance of irreparable injury and any burdens associated with the expedited discovery in comparison to the potential injury to the moving party in the absence of expedited discovery. Balancing these factors, and particularly in view of Marino's admission that he took material upon his departure from Tucker (albeit, he contends that he was granted permission to do so), the Court concludes that expedited discovery is warranted as follows:
1. Within 14 days of the date of this Decision and Order, Marino and Gaborski shall each produce documents responsive to the following requests: (a) Any and all communications, documents or ESI, including but not limited to emails and text messages, exchanged between or among Marino and Gaborski concerning Mercury from April 1, 2020 through July 31, 2020; (b) Any and all documents, ESI, or information in Marino's or Gaborski's possession, custody or control that belong to, originated at, came from or relate to the business of (and/or his/her employment with) Tucker; and (c) Any and all communications, documents, or ESI, including but not limited to emails and text messages, between or among Marino, Gaborski, Mercury, and/or any of Plaintiffs’ Clients in which any Tucker or RRD document, thing or information obtained by Marino or Gaborski while employed by Tucker, was transmitted, referenced, noted, or summarized from July 10, 2020 (in the case of Marino) and July 27, 2020 (in the case of Gaborski) through the present; and
2. Within 30 days of the date of this Decision and Order, Marino shall appear for a deposition to be conducted remotely at a mutually agreeable date and time, wherein he may be questioned by counsel for Plaintiffs concerning issues relevant to this litigation for no more than four hours.
All other requests for expedited discovery by Plaintiffs are hereby denied without prejudice. Moreover, Plaintiffs shall not be permitted to duplicate any discovery obtained through this expedited process during discovery conducted in the ordinary course at any subsequent stage of this litigation.
VI. PENDING MOTION FOR A PRELIMINARY INJUNCTION
As noted above, Plaintiffs originally filed a motion for a preliminary injunction with the filing of the complaint in this action on September 16, 2020. (Dkt. 7). While the Court denied the motion for a temporary restraining order, it indicated that Plaintiffs could supplement the pending motion with additional information in an attempt to obtain a preliminary injunction. (Dkt. 36 at 47-48). To date, Plaintiffs have not supplemented the motion papers, undoubtedly in part because they are seeking to obtain additional information through expedited discovery. Nonetheless, in accordance with its discretionary right to manage its docket, and particularly because this Decision and Order impacts the status of the claims and the parties, the Court dismisses the motion for a preliminary injunction without prejudice. In the event Plaintiffs seek to obtain a preliminary injunction from this Court, they shall file a new motion seeking such relief, at which point the Court will set a briefing schedule.
VII. CONCLUSION
For the foregoing reasons, Marino's and Gaborski's motions to dismiss pursuant to Rule 12(b)(1) (Dkt. 39; Dkt. 42) are granted as to Counts Three and Four and those claims as asserted by RRD against Marino and Gaborski are dismissed without prejudice, see Carter , 822 F.3d at 54 ("where a complaint is dismissed for lack of Article III standing, the dismissal must be without prejudice"), but the motions by all Defendants pursuant to Rule 12(b)(1) (Dkt. 38; Dkt. 39; Dkt. 42) are otherwise denied; Mercury's motion to dismiss pursuant to Rule 12(b)(6) (Dkt. 38) is granted and the claims against Mercury are dismissed without prejudice, see Ronzani v. Sanofi S.A. , 899 F.2d 195, 198 (2d Cir. 1990) (typical practice at motion to dismiss stage is to dismiss claims without prejudice); Marino's and Gaborski's motions to dismiss pursuant to Rule 12(b)(6) are denied (Dkt. 39; Dkt. 42); Plaintiffs’ motions for expedited discovery (Dkt. 8; Dkt. 40) are granted in part and denied in part as set forth herein; and Plaintiffs’ motion for a preliminary injunction (Dkt. 7) is dismissed without prejudice.
SO ORDERED.