Coeur, Inc. v. Wygal

COEUR, INC., Plaintiff, v. CHRIS WYGAL and ANTMED CORPORATION, Defendants.

No. 6:20-CV-06473 EAW

United States District Court, W.D. New York

September 16, 2021

DECISION AND ORDER

ELIZABETH A. WOLFORD, CHIEF JUDGE UNITED STATES DISTRICT COURT

INTRODUCTION

Plaintiff Couer, Inc. (“Plaintiff” or “Couer”) asserts claims of breach of contract, misappropriation of confidential information and trade secrets, and breach of fiduciary duty against defendant Chris Wygal (“Wygal”) and claims of tortious interference with contract and misappropriation of confidential information and trade secrets against defendant Antmed Corporation (“Antmed”).^[1] (Dkt. 9). Currently pending before the Court are motions by Wygal and Antmed to dismiss the amended complaint-the operative pleading in this matter-pursuant to Federal Rules of Civil Procedure 12(b)(1) and (b)(6) (Dkt. 62; Dkt. 63) and a motion by Antmed to stay discovery (Dkt. 73). For the reasons set forth below, the Court grants in part and denies in part Wygal's motion dismiss, denies Antmed's motion to dismiss, and denies Antmed's motion to stay discovery as moot.

BACKGROUND

I. Factual Background

The following facts are taken from the amended complaint. The Court treats Plaintiff's allegations as true for purposes of the instant motion except that, as discussed more fully below, the Court has considered Defendants' factual submissions in connection with their Rule 12(b)(1) motions.

Wygal is a former employee of Plaintiff. (Dkt. 9 at ¶ 2). The duration of Wygal's employment is disputed, and forms the basis for Defendants' Rule 12(b)(1) motions. Plaintiff alleges in the amended complaint that Wygal worked for Plaintiff from December 2007 until his resignation on March 18, 2020, pursuant to the terms and conditions of an Employee Non-Disclosure, Non-Solicitation, Invention and Technology Use Agreement (the “Employment Agreement”). (Id.). However, Wygal contends that his employment with Plaintiff ended in 2012, at which time he became employed by Illinois Tool Works, Inc. (“ITW”), Plaintiff's parent corporation. (Dkt. 62-2 at ¶ 3). Wygal has submitted documentary evidence in support of his contention, including evidence that his earnings statements and W-2 forms were issued by ITW after 2012. (Id. at ¶¶ 7-8, 10; Dkt. 62-3 at 2; Dkt. 62-4 at 2). Wygal has further submitted a sworn declaration indicating that after 2012, his compensation was solely paid and controlled by ITW, he used an ITW email address for work (and no longer had a Couer email address), and he used an ITW network or database for purposes of his employment. (Dkt. 62-2 at ¶¶ 4, 9). In addition, Wygal has submitted a sworn declaration from his former supervisor, Samuel Thomas, in which Mr. Thomas states under penalty of perjury that his employment with Couer ended in 2012 and that he was thereafter employed by ITW. (Dkt. 71-3 at ¶¶ 3-7).

Wygal's Employment Agreement with Plaintiff contained the following restrictive covenants: (1) a two-year post-termination restriction on the use, disclosure, or dissemination of Plaintiff's confidential information; (2) an ongoing post-termination restriction on the use, disclosure, or dissemination of Plaintiff's trade secrets; and (3) a two-year post-termination restriction on solicitation of Plaintiff's customers. (Dkt. 9 at ¶¶ 3, 17-22). Wygal also agreed to comply with Plaintiff's Principles of Conduct, which prohibited him from engaging in conflicts of interest, misusing Plaintiff's assets, or failing to protect Plaintiff's confidential information. (Id. at ¶ 4).

In the days leading up to his resignation on March 18, 2020, Wygal allegedly emailed himself confidential and proprietary information and trade secrets belonging to Plaintiff, including the following: (1) “[a] detailed master file of clients and distributors he had serviced for Couer”; (2) “[d]etailed pricing information regarding Couer's products”; (3) “[c]lient inquiries and information about one or more expiring contracts with Couer”; and (4) “[s]creenshots of documents containing Couer's client contact information.” (Id. at ¶¶ 5, 38-42). Defendants then used this information to “directly or indirectly solicit Couer's clients to move their accounts to Antmed.” (Id. at ¶ 6). “Due to Defendants' acts, a significant volume of Couer's clients and distributors transferred their . . . business to Antmed, ” costing Plaintiff “several million dollars in annual revenue.” (Id. at ¶ 48).

II. Procedural Background

Plaintiff commenced the instant action on July 8, 2020. (Dkt. 1). Plaintiff filed the amended complaint on July 9, 2020. (Dkt. 9). On January 21, 2021, the Court entered a Text Order extending Defendants' deadline to answer or otherwise respond to the amended complaint to February 5, 2021. (Dkt. 60). Defendants filed their motions to dismiss on February 5, 2021. (Dkt. 62; Dkt. 63). Plaintiff filed its response on March 8, 2021 (Dkt. 70), and Defendants filed their replies on March 15, 2021 (Dkt. 71; Dkt. 72).

Antmed filed its motion to stay discovery on May 31, 2021. (Dkt. 73). Plaintiff filed its opposition on June 22, 2021 (Dkt. 75), and Antmed filed its reply on June 29, 2021 (Dkt. 76).

DISCUSSION

I. Defendants' Rule 12(b)(1) Motions

As noted above, Defendants seek dismissal of this action under both Rule 12(b)(1) for lack of subject matter jurisdiction and Rule 12(b)(6) for failure to state a claim. “Subject matter jurisdiction is a threshold question that must be resolved before proceeding to the merits.” United States v. Bond, 762 F.3d 255, 263 (2d Cir. 2014) (quotation and alteration omitted). Accordingly, the Court considers the Rule 12(b)(1) challenges first.

“A district court properly dismisses an action under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction if the court lacks the statutory or constitutional power to adjudicate it. . . .” Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.á.r.l, 790 F.3d 411, 416-17 (2d Cir. 2015) (quotation and citation omitted). Here, Defendants argue that Plaintiff lacks standing to assert the claims presented by this lawsuit and that the Court accordingly lacks subject matter jurisdiction. “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, 981 F.3d 200, 207 (2d Cir. 2020) (quoting Spokeo, Inc. v. Robins, ___U.S.__, 136 S.Ct. 1540, 1547 (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 (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 Fed.Appx. 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).

Here Defendants have made a fact-based challenge to Plaintiff's standing. In particular, they...