Array Techs., Inc. v. Mitchell

305 F.Supp.3d 1256

ARRAY TECHNOLOGIES, INC., Plaintiff,

v.Colin MITCHELL, NEXTracker, Marco Garcia, Daniel S. Shugar, Scott Graybeal, Flextronics International USA, Inc., Defendants.

No. 17 CV 0087 JAP/LF

United States District Court, D. New Mexico.

Filed January 22, 2018

Jennifer G. Anderson, Modrall Sperling Roehl Harris & Sisk PA, Nathan S. Stimson, Kurt Wihl, William Spencer Reid, Keleher & McLeod, PA, Albuquerque, NM, Jared J. Braithwaite, Pro Hac Vice, Michael J. Howell, Salt Lake City, UT, Daniel H. April, David F. Cunningham, Thompson, Hickey, Cunningham, Clow, April & Dolan, P.A., Santa Fe, NM, Jeffrey Sinek, Pro Hac Vice, Tanya L. Greene, Pro Hac Vice, Kirkland & Ellis, LLP, Los Angeles, CA, Kirk R. Harris, Park City, UT, Tyson K. Hottinger, Pro Hac Vice, Irvine, CA, for Plaintiff.

Matthew Eric Jackson, Robert E. Hanson, Walker Boyd, Peifer, Hanson, & Mullins P.A., Albuquerque, NM, Andrew G. Fiorella, Pro Hac Vice, Benesch, Friedlander, Coplan & Aronoff LLP, Cleveland, OH, Katherine Prescott, Pro Hac Vice, Betty Chen, Pro Hac Vice, Fish & Richardson PC, Redwood City, CA, Nicholas J. Secco, Trevor J. Illes, Benesch, Friedlander, Coplan & Aronoff LLP, Chicago, IL, Frank Scherkenbach, Pro Hac Vice, Fish and Richardson PC, Boston, MA, for Defendants.

MEMORANDUM OPINION AND ORDER

JAMES A. PARKER, SENIOR UNITED STATES DISTRICT JUDGE

Defendants Colin Mitchell (Mitchell), NEXTracker (NX), Marco Garcia (Garcia), Daniel S. Shugar (Shugar), Scott Graybeal (Graybeal), and Flextronics International USA, Inc. (Flextronics) ask the Court to dismiss Counts Three through Ten of Plaintiff Array Technologies, Inc.'s (ATI's) AMENDED COMPLAINT (Doc. No. 52).¹

The Court will refer to NX, Garcia, Shugar, Graybeal, and Flextronics as "the NX/Flextronics Defendants." The Court will refer to Mitchell and the NX/Flextronics Defendants as "Defendants." The Court will dismiss the claim against Mitchell in Count Eight for unjust enrichment, and the Court will dismiss the claim against Defendants in Count Ten under the New Mexico Unfair Practices Act (NMUPA). The Court will deny the Motion as to Counts Three through Seven, Count Eight as to the NX/Flextronics Defendants, and Count Nine.

I. STANDARD OF REVIEW

In ruling on the Motion, the Court must "assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Brokers' Choice of America, Inc. v. NBC Universal, Inc. , 757 F.3d 1125, 1135 (10th Cir. 2014) (citation omitted). In evaluating a Rule 12(b)(6) motion, the Court must "accept as true all well-pleaded facts, as distinguished from conclusory allegations, and view the facts in the light most favorable to the nonmoving party." Maher v. Durango Metals, Inc. , 144 F.3d 1302, 1304 (10th Cir. 1998). However, the Court is under no obligation to accept bare conclusory allegations, Hall v. Belmon , 935 F.2d 1106, 1110 (10th Cir. 1991) or to accept legal assertions without factual support. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In sum, to survive the Motion, the Amended Complaint must contain sufficient factual allegations "to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true...." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

II. BACKGROUND

Since 1989 ATI has designed, manufactured, and sold solar tracking equipment, related technologies, and support services to customers in the United States and abroad. (Am. Compl. ¶ 2.) ATI's solar trackers allow solar panels to move with the sun, which increases the panels' direct exposure to the sun and the amount of energy generated. (Id. ¶ 16.) ATI has pioneered significant innovations in ground-mounted solar tracking systems. (Id. ¶ 18.)

A. Mitchell's Employment at ATI

On May 3, 2013, ATI hired Mitchell as a Business Development Manager responsible for "all aspects of sales from identifying sales opportunities to closing the sale, including: identifying, contracting and/or qualifying potential customers and presenting solar tracking systems to same; articulating ATI products with appropriate product positioning to ATI's customers; and, bid preparation." (Am. Compl. ¶¶ 1, 27.) Mitchell executed a NON–DISCLOSURE, NON–SOLICITATION AND NON–COMPETITION AGREEMENT (NDA). (Id. ¶ 28, Ex. 1.) Mitchell agreed that, during his employment and for one year thereafter, he would not to work for or assist an ATI competitor:

During the period of [Mitchell's] employment with [ATI], and for one year after the termination of such employment for whatever reason, with or without cause, [Mitchell] shall not, directly or indirectly engage in the ownership or operation of a business which designs and/or manufactures solar tracking equipment or systems, whether as an officer, director, partner, proprietor, investor, associate, employee, consultant, independent contractor or in any other capacity relating to such a business.

(NDA ¶ 4.) Mitchell also agreed to

(i) protect, safeguard and keep secret any Confidential Information (as defined below); (ii) only use or disclose Confidential Information as necessary in connection with [Mitchell's] work for [ATI]; (iii) refrain from using Confidential information for [Mitchell's] benefit or the benefit of any third party or in any manner adverse to [ATI's] interests; and (iv) upon the termination of [Mitchell's] employment with [ATI], or at any other time upon [ATI's] request, return or destroy all Confidential Information which is in [Mitchell's] possession or control, including all originals and copies thereof, whether maintained in physical or electronic format.

(NDA ¶ 2(a).) "Confidential Information" is defined as

any and all information concerning the business and affairs of [ATI], whether or not separately identified as "confidential" or "proprietary;" provided, however, that information will not be considered Confidential Information if it is or becomes generally available to the public other than through a breach of this Agreement. Without limiting the scope of the foregoing, Confidential Information includes nonpublic information about [ATI's] marketing, business or development plans, financial data, customer or vendor lists, tax records, and personnel files or histories.

(NDA ¶ 2(b).)

As mentioned, the non-disclosure provisions of the NDA survived Mitchell's resignation:

(c) [Mitchell] agrees that all right, title and interest in any Confidential Information is and shall remain the exclusive property of [ATI], and that the non-disclosure obligation described herein shall survive the termination of [Mitchell's] employment with [ATI] for whatever reason, with or without cause.

(NDA ¶ 2(c).) The NDA provided for injunctive relief in the event of a breach:

[Mitchell] understands and agrees that [ATI] shall suffer irreparable harm in the event that [Mitchell] breaches any of [Mitchell's] obligations hereunder and that monetary damages will be inadequate to compensate [ATI] for such breach. Accordingly, [Mitchell] agrees that, in the event of a breach or threatened breach by [Mitchell] of any of the provisions of this Agreement, [ATI], in addition to any other rights, remedies or damages available to [ATI] at law or in equity, shall be entitled to a temporary restraining order, preliminary injunction and permanent injunction in order to prevent or to restrain any such breach by [Mitchell], or by any other person acting for, on behalf of, or with [Mitchell].

(NDA ¶ 6.)

ATI uses "an intricate bid preparation and contract procurement model" that allows ATI to offer solar tracking equipment to customers at competitive prices. (Id. ¶ 20.) ATI's bid proposals are tailored to specific customers' needs based on proprietary research. (Id. ) ATI's bid preparation and contract procurement information—including pricing, profit margins, costs of production, operations and maintenance costs (O&M costs), pricing concessions, promotional discounts, advertising allowances, volume rebates, marketing concessions, payment terms, and rebate incentives—have independent economic value because the information gives ATI an advantage over competitors. (Id. ) Because a competitor could use this information to undercut ATI's bid prices, the information is an ATI trade secret. (Id. ¶¶ 21–22.) In addition to having employees sign the NDA, ATI limits employee access to its electronic data. (Id. ¶¶ 24–25.)

B. Mitchell's Contacts with ATI's Competitors

ATI alleges that Mitchell violated the NDA while he was employed at ATI and after he resigned on July 8, 2016. (Id. ¶ 31.) On May 25, 2016, Mitchell wrote an email to Ms. Cristina Clavijo, the head of Strategic Business Development for Grupo Clavijo (Grupo), an ATI competitor. (Id. ) Mitchell said, "I really want to thank you for this opportunity" and "I believe I can be successful in helping you grow your brand and footprint here in the U.S. in a sustainable manner." (Id. ¶ 32.) Mitchell described certain challenges that Grupo faced in the United States market noting that Grupo's cost to install its systems was higher than ATI's cost. (Id. ) Mitchell recommended ways that Grupo could increase its presence in the United States. (Id. )

NX is ATI's largest competitor in the market for solar tracking equipment. (Id. ¶ 33.) NX is a wholly-owned subsidiary of Flextronics. (Id. )² On June 1, 2016, NX employees Garcia and Shugar exchanged emails. (Id. ¶ 34.) Garcia's first email was entitled "Re Colin Mitchell, 97% of ATI sales." (Id. ) Garcia informed Shugar that Mitchell earned $300,000 at ATI and that NX should offer Mitchell a salary of $340,000. (Id. ) Garcia asserted "We will cripple our top USA competitor ... we will dominate the USA tracker market and keep out our Euro competitors." (Id. ) In response, Shugar told Garcia that he should hire Mitchell and that Garcia and Shugar "needed to get Flextronics on board." (Id. ) The person...