Etimine USA Inc. v. Yazici

ETIMINE USA INC., Plaintiff, v. GOKHAN YAZICI and YZC CONSULTING LTD., Defendants.

Civil Action No. 2:20-cv-713

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

March 24, 2021

Hon. William S. Stickman IV

MEMORANDUM OPINION

WILLIAM S. STICKMAN IV, United States District Judge

Plaintiff Etimine USA Inc. ("Etimine USA") filed its Amended Complaint against Defendants Gokhan Yazici ("Yazici") and YZC Consulting Ltd. ("YZC") (collectively, "Defendants") alleging an action for (a) violations of the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836 (Counts I, II); (b) violations of the Pennsylvania Uniform Trade Secrets Act ("PUTSA"), 12 Pa. C.S.A. § 5301 (Counts V, VI); (c) breach of contract (Counts III, IV); and (d) conversion (Counts VII, VIII). (ECF No. 18, ¶ 8). Defendants moved to dismiss the Amended Complaint under Federal Rule of Civil Procedure ("Rule") 12(b)(6) for failure to state a claim upon which relief may be granted. (ECF No. 20). For these reasons, the Court denies Defendants' Motion.

FACTUAL AND PROCEDURAL HISTORY

Etimine USA is a distributor of boron products including mineral ores, boric acid, sodium borates and other products. (ECF No. 18, ¶ 15). Etimine USA ships its products from the Republic of Turkey for use in interstate and foreign commerce. (Id.). Boron products are used globally in various industries including agriculture, cleaning, metallurgy, ceramics, wood protection, glass, insulation, textile fiberglass and energy. (Id. ¶ 16). According to Etimine USA, "[t]he global reserves of boron are limited and, thus, the boron mining industry is an extremely competitive and limited market . . . ." (Id. ¶ 17).

Etimine USA employed Yazici for several years as its General Manager beginning in 2003. (Id. ¶ 1). Yazici also served on Etimine USA's Board of Directors. (Id. ¶ 19). During his employment, Yazici had access to all company information including Etimine USA's proprietary information (e.g., logistics, distribution information, production costs and sales margins), which also belonged to Etimine USA's holding company and other subsidiaries globally. (Id. ¶ 21). The information included logistical expertise necessary for Etimine USA's pricing of its products for its U.S. and multi-national customers. (Id.). Etimine USA's profit margins rely heavily on its logistics network, and the logistics information is vital for its competitive edge. (Id.).

The proprietary information, which Etimine USA provided to Yazici during his employment, allowed Etimine USA to compete in the limited boron market. (Id. ¶¶ 23, 24). The information derived actual or potential economic value from it not being known to nor readily ascertainable by other persons, including Etimine USA's competitors. (Id. ¶ 24). According to Etimine USA, the proprietary information "would be of significant value to competitors in the industry." (Id.).

In February 2012, Etimine USA and Yazici entered into the Employment Agreement for Yazici's continued employment as Etimine USA's President and Chief Executive Officer. (Id. ¶ 26). The Employee Agreement provided:

[Yazici] agrees, during and subsequent to the Term of this Agreement, not to make or use, for his own benefit or the benefit of any party other than the Company, nor to divulge to anyone other than duly authorized personnel or representatives of the Company, any information or knowledge relating to the business, business methodsor techniques of the Company, including, but not limited to, information about accounting procedures, sales prospects, customers' or suppliers' lists, bidding formula, sales, profits, costs, systems, concepts or similar matters owned by or known to the Company, except to the extent that the same generally known to the public or recognized as standard practice in the businesses in which the Company is engaged or is otherwise known to or disclosed to Executive by a third party not bound by any covenant of confidentiality.

Executive and the Company agree that any breach or evasion of the terms of this Section 8 will result in immediate and irreparable harm to the Company. Therefore, in the event of any controversy concerning the rights or obligations of the parties under this Section 8, the Company shall be entitled to obtain an injunction and/or specific performance as well as any other legal or equitable remedy necessary in order to compel compliance with this Section 8. Such remedies, however, shall be cumulative and nonexclusive and shall be in addition to any other remedy or remedies to which the Company may be entitled.

(Id. ¶ 29). The Employee Agreement required Yazici to return all Etimine USA properly, in any form, to Etimine USA upon the termination of his employment. (Id. ¶ 30).

In 2013, Etimine USA distributed an Employee Handbook with a letter from Yazici welcoming all new employees. (Id. ¶¶ 31-33). The Employee Handbook required employees to maintain the information of Etimine USA in strict confidence:

Protecting our company's information is the responsibility of every employee. Do not discuss the company's confidential business or proprietary business matters, or share confidential, personal employee information with anyone who does not work for us such as friends, family members, members of the media, or other business entities.

(Id. ¶ 34). Etimine USA required its employees, at the end of employment with Etimine USA, to return all information to Etimine USA and reserved the right to pursue legal action for any violations of its exit policies. (Id. ¶¶ 34, 36).

Yazici left Etimine USA in January 2017 and later filed a complaint, styled Yazici v. Etimine USA, Inc., No. 17-010331, against Etimine USA in Court of Common Pleas of Allegheny County, Pennsylvania ("Post-Employment Lawsuit"). (Id. ¶¶ 37-38).

In November 2018, Etimine USA and Yazici entered into a Separation Agreement, resolving the Post-Employment Lawsuit. (Id. ¶ 39). Yazici agreed to not share any of Etimine USA's proprietary information with any third parties. (Id. ¶¶ 40-42).

Soon after, Yazici formed YZC Consulting Ltd. (Id. ¶ 43). Etimine USA alleges Yazici, through his work with YZC, disclosed and used Etimine USA's proprietary information for his benefit and the benefit of Etimine USA's competitors. (Id. ¶ 47). One of Etimine USA's direct competitors hired a former sales agent of Etimine USA who informed the direct competitor that Yazici was unhappy with Etimine USA. (Id. ¶¶ 49-50). The direct competitor arranged a meeting with Yazici and YZC where Yazici divulged Etimine USA's proprietary information, including customers' information, profit margins, logistics information, logistical matrixes and details of its global sourcing and distribution network. (Id. ¶¶ 51-52). A different, former Etimine USA employee also attended the meeting. (Id. ¶ 53). Sometime after the meeting, YZC provided consulting services to the direct competitor. (Id. ¶ 55). Defendants disclosed Etimine USA's proprietary information throughout its consultation services with the direct competitor, which the competitor knew was proprietary information. (Id. ¶¶ 56-57).

STANDARD OF REVIEW

A motion to dismiss filed under Federal Rule of Civil Procedure ("Rule") 12(b)(6) tests the legal sufficiency of the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A plaintiff must allege sufficient facts that, if accepted as true, state a claim for relief plausible on its face. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A court must accept all well-pleaded factual allegations as true and view them in the light most favorable to a plaintiff. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009); see also DiCarlo v. St. Marcy Hosp., 530 F.3d 255, 262-63 (3d Cir. 2008). Althougha court must accept the allegations as true, it is "not compelled to accept unsupported conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation." Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citations omitted).

The "plausibility" standard required for a complaint to survive a motion to dismiss is not akin to a "probability" requirement but asks for more than sheer "possibility." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). In other words, the complaint's factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations are true even if doubtful in fact. Twombly, 550 U.S. at 555. Facial plausibility is present when a plaintiff pleads factual content that allows a court to draw the reasonable inference that a defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678. Even if the complaint's well-pleaded facts lead to a plausible inference, that inference alone will not entitle a plaintiff to relief. Id. at 682. The complaint must support the inference with facts to plausibly justify that inferential leap. Id.

Generally, a court may not consider an extraneous document when reviewing a motion to dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). If parties present matters outside the pleadings and the court does not exclude them, the motion must be converted to a motion for summary judgment. See Fed. R. Civ. P. 12(d). When reviewing the sufficiency of a complaint, however, a court may consider attachments to it without converting the motion into one for summary judgment if they are integral to the allegations in the complaint and are authentic. See In re Burlington, 114 F.3d at 1426 (holding that a court may consider a "document integral to or explicitly relied upon in the complaint"); ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994) (same); Fallon v. Mercy Cath. Med. Ctr. of Se. Pa., 877 F.3d 487, 493 (3d Cir. 2017) (same); Fed. R. Civ. P. 10(c) ("A copy of a written instrument that is an exhibitto a pleading is a part of the pleading for all purposes."); see also ...