Balfour Beatty Infrastructure Inc. v. Am. Track Generations LLC

533 F.Supp.3d 1030

BALFOUR BEATTY INFRASTRUCTURE INC., Plaintiff,

v.AMERICAN TRACK GENERATIONS LLC, Jeff Wass, and Steven Gorton, Defendants.

Case No. 19-CV-249-F

United States District Court, D. Wyoming.

Signed October 16, 2020

Brian Shenker, Pro Hac Vice, David S. Greenhaus, Pro Hac Vice, Jackson Lewis PC, Melville, NY, Mistee Lyn Elliott, Timothy Michael Stubson, Crowley Fleck PLLP, Casper, WY, for Plaintiff.

Christine Annette Gilbert Stickley, Lance E. Shurtleff, Gordon Rees Scully Mansukhani LLP, Denver, CO, Jason Stiehl, Pro Hac Vice, Robin V. Waters, Pro Hac Vice, Loeb & Loeb LLP, Chicago, IL, for Defendant American Track Generations LLC.

Christine Annette Gilbert Stickley, Lance E. Shurtleff, Gordon Rees Scully Mansukhani LLP, Denver, CO, for Defendants Jeff Wass, Steven Gorton.

ORDER ON DEFENDANTS' MOTION TO DISMISS AMENDED COMPLAINT

NANCY D. FREUDENTHAL, UNITED STATES DISTRICT JUDGE

Defendants American Track Generations LLC ("ATG"), Jeff Wass and Steven Gorton move to dismiss the seven-count Amended Complaint (ECF No. 20) of Plaintiff Balfour Beatty Infrastructure Inc. ("Plaintiff") for failure to state a claim for relief under Federal Rule of Civil Procedure 12(b)(6). ECF Nos. 21-22. Plaintiff opposes the motion as to all claims. As follows, the Court denies the motion.

I. Background

The Amended Complaint appears to contain all of the fact allegations noted in the Court's order granting in part Defendants' motion to dismiss the original complaint. The Court will not repeat those allegations here. In the amended pleading, Plaintiff adds several allegations regarding how each of the Defendants has allegedly misappropriated its trade secrets from its division known as Balfour Beatty Rail ("BB Rail"). See, e.g. , Amended Complaint ¶¶ 20, 60-69. The amendment also drops Plaintiff's two claims for breach of the duty of good faith.

II. Standards for Rule 12(b)(6) Motions

As stated in the Court's order on Defendants' first motion to dismiss, Rule 12(b)(6) motions for dismissal must take into account the notice pleading standard of Rule 8 (or Rule 9, if pleading special matters). " Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief.’ Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ " Erickson v. Pardus , 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). "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." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. This is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937.

The court "must accept as true all well-pleaded facts, as distinguished from conclusory allegations, and those facts must be viewed in the light most favorable to the non-moving party." Moss v. Kopp , 559 F.3d 1155, 1161 (10th Cir. 2009). But "dismissal is appropriate where ‘the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct.’ " Al–Owhali v. Holder , 687 F.3d 1236, 1240 (10th Cir. 2012) (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. "Thus, mere ‘labels and conclusions’ and ‘a formulaic recitation of the elements of a cause of action’ will not suffice." Khalik v. United Air Lines , 671 F.3d 1188, 1191 (10th Cir. 2012) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). But "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable and that a recovery is very remote and unlikely." Twombly , 550 U.S. at 556, 127 S.Ct. 1955.

III. Analysis

Because the Court's jurisdiction hinges upon the Defense of Trade Secrets Act claim, the Court again begins its analysis there.

A. Claim III Under 18 U.S.C. § 1836, Defense of Trade Secrets Act, and Claim IV for Misappropriation of Trade Secrets Under State Law

Plaintiff claims each of the Defendants violated 18 U.S.C. § 1836 by misappropriating trade secrets. "An owner of a trade secret that is misappropriated may bring a civil action under this subsection 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 statute defines what information may constitute a "trade secret" in detail; essentially it "is information that derives economic value from not being generally known that is subject to reasonable measures of secrecy by it[s] owners." Select Energy Servs., Inc. v. Mammoth Energy Servs., Inc. , No. CIV-19-28-R, 2019 WL 1434586, at *2 (W.D. Okla. Mar. 29, 2019) (citing 18 U.S.C. § 1839(3) ). The statute defines misappropriation as:

(A) 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; or

(B) disclosure or use of a trade secret of another without express or implied consent by a person who—

(i) used improper means to acquire knowledge of the trade secret;

(ii) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was—

(I) derived from or through a person who had used improper means to acquire the trade secret;

(II) acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or

(III) derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or

(iii) before a material change of the position of the person, knew or had reason to know that—

(I) the trade secret was a trade secret; and

(II) knowledge of the trade secret had been acquired by accident or mistake[.]

18 U.S.C. § 1839(5). Thus, misappropriation is the acquisition, disclosure or use of a trade secret with knowledge or reason to know it is unauthorized. Id. § 1839(5).

In this case, Defendants argue the Amended Complaint fails to state a DTSA claim because it does not adequately allege BB Rail had any trade secrets or that ATG used any of those trade secrets. The Court is not persuaded. As to Plaintiff's allegations of trade secrets, the Amended Complaint spells out in detail the types of trade secret information that BB Rail had and how it treated them as such. Defendants claim the alleged trade secrets are publicly available, "for example, customers for a railway line can be found merely by looking at a map of the rail line." But this disputes Plaintiff's allegations that its customer lists are not publicly available information, and the Court cannot resolve such fact disputes at the Rule 12(b)(6) phase.

Moreover, Defendants' example addresses only one of the trade secrets Plaintiff alleges, not all. Defendants argue that information an employee gains from years of experience is likewise not trade secret, but this again simply disputes Plaintiff's allegations that it had trade secrets. Giving reasonable inferences, Plaintiff's fact allegations plausibly support that Mr. Wass and Mr. Gorton obtained and took from Plaintiff not just experience and professional knowledge, but also specific information regarding Plaintiff's business that Plaintiff had maintained as trade secret.

Defendants also argue the Amended Complaint lacks plausibility that ATG used any of Plaintiff's trade secrets. It does not appear Defendants make this argument as to Mr. Wass or Mr. Gorton. Defendants recognize "Plaintiff alleges that BB Rail's Trade Secrets allowed ATG to undercut BB Rail and approach BB Rail's clients," but contend this allegation is conclusory because Plaintiff does not further explain "how the ‘trade secret information’ allegedly allowed ATG to ‘go from having no business operations in Salt Lake City and Gillette, Wyoming to opening a competing business in a matter of weeks.’ " The Court disagrees.

Plaintiff's Amended Complaint adds factual allegations to plausibly support that ATG used the trade secrets that Mr. Wass and Mr. Gorton allegedly brought with them from BB Rail. Notice pleading does not require more. While Defendants' memorandum points out factual weaknesses they perceive in Plaintiff's claim (ECF No. 22 at 17), the facts they raise are outside the Amended Complaint and dispute Plaintiff's allegations.

Accordingly, the Court finds the DTSA claim as now pleaded states a claim. Both sides agree that the elements for trade secret misappropriation under state law (Count IV) and the DTSA are the same. Accordingly, Defendants' motion is denied with respect to Counts III and IV.

B. Claim I for Breach of Duty of Loyalty Against Wass and Gorton

In Count I, Plaintiff claims Mr. Wass and Mr. Gorton each breached their duty of loyalty. Defendants argue this claim fails as a matter of law because Plaintiff does not allege that Mr. Wass or Mr. Gorton were officers, and a mere employee's duty of loyalty allows the conduct that Plaintiff alleges. Defendants cite cases standing for the proposition that employees can prepare to compete before leaving their employer, and that those preparations can lawfully include discussions with fellow employees. Defendants cite the Restatement (Second) of Agency:

[I]t is normally permissible for employees of a firm, or for some of its partners, to agree among

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