Sirius Fed. v. Jelen

SIRIUS FEDERAL, LLC, Plaintiff, v. MICHAEL JELEN, et al., Defendants.

Civil Action No. 22-cv-00223-LKG

United States District Court, D. Maryland

February 24, 2023

MEMORANDUM OPINION AND ORDER

LYDIA KAY GRIGGSBY, United States District Judge.

I. INTRODUCTION

In this civil action, Plaintiff, Sirius Federal, LLC (“Sirius”) brings breach of contract, tortuous interference, breach of fiduciary duty, misappropriation of trade secrets, unfair competition and civil conspiracy claims against Red River Technology, LLC (“Red River”) and three of its former employees, Michael Jelen, Paul Czetwertynski and Carolyn Ray (the “Former Employees”). See generally ECF No. 1. Defendants have moved to dismiss the complaint for failure to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P. 12(b)(6). ECF No. 21. This motion is fully briefed. See ECF No. 21; ECF No. 22; ECF No. 23; ECF No. 26. No hearing is necessary to resolve this motion. See L.R. 105.6 (D. Md. 2021). For the reasons that follow, the Court: (1) GRANTS-in-PART and DENIES-in-PART Defendants' motion to dismiss and (2) DISMISSES Counts III, VII and VIII of the complaint.

II. FACTUAL AND PROCEDURAL BACKGROUND ^[1]

A. Factual Background

In this civil action, Sirius Federal, LLC alleges that its Former Employees, Defendants, Paul Czetwertynski, Michael Jelen and Carolyn Ray, breached certain restrictive covenants by coordinating with its direct competitor, Defendant Red River, to misappropriate Sirius's trade secrets and other confidential information, and to misuse that information to usurp business from Sirius. ECF No. 1. Sirius also alleges that Red River has engaged in unfair competition, by soliciting and hiring Sirius's employees, thereby tortiously interfering with their postemployment obligations. See id. And so, Sirius asserts claims in this case for: (1) breach of contract against the Former Employees for violating their employment agreements with Sirius (Count I); (2) tortious interference against Red River for procuring the Former Employees' breach of their employment agreements with Sirius (Count II); (3) tortious interference with Sirius's prospective economic advantage against all Defendants (Count III); (4) breach of fiduciary duty against Czetwertynski for breaching his duty to act with the utmost good faith and loyalty towards Sirius (Count IV); (5) misappropriation of trade secrets in violation of the Defend Trade Secrets Act of 2016 against all Defendants (Count V); (6) misappropriation of trade secrets in violation of the Maryland Uniform Trade Secrets Act against all Defendants (Count VI); (7) unfair competition against all Defendants (Count VII); and (8) civil conspiracy against all Defendants (Count VIII). See id. at ¶¶ 103-162.

Sirius And Red River

As background, Sirius is a federal contractor that specializes in national information technology (“IT”) solutions. Id. at ¶ 17. Sirius offers IT services and products either directly to the Federal Government as a prime contractor, or as a subcontractor to manufacturers and federal system integrators. Id. at ¶ 19.

Sirius sources the majority of its IT products and services from Cisco Systems, Inc. (“Cisco”). Id. at ¶ 20. In this regard, Sirius alleges in the complaint that it has spent 26 years building a business relationship between Cisco and the Federal Government. Id. at ¶ 20. Sirius also alleges that the United States Navy (the “Navy”) has been its customer for more than 26 years. Id. at ¶ 26. In addition, Sirius alleges that it has developed and relied upon trade secrets and other confidential and proprietary information related to its business.^[2] Id. at ¶ 33. And so, Sirius further alleges that this confidential and proprietary information affords it a competitive advantage over other companies that provide IT solutions to the Federal Government. Id. at ¶¶ 37-38.

Defendant Red River is a New Hampshire limited liability technology transformation company. Id. at ¶ 11; see also www.redriver.com. Red River is a direct competitor of Sirius. ECF No. 1 at ¶¶ 1, 82.

The Former Employees

Defendant Paul Czetwertynski began his employment with Sirius as a senior account manager on October 20, 2021. Id. at ¶ 42. Sirius alleges that Mr. Czetwertynski: (1) received the company's confidential information; (2) learned its government contracting business practices; (3) learned its engineering abilities and go-to market strategies; (4) was involved in strategic development initiatives; and (5) conducted sales and project coordination for its partners and customers. Id. at ¶¶ 42-43. Prior to joining Sirius, Mr. Czetwertynski worked for Cisco as an account manager for Cisco's Navy account for eight years. Id. at ¶ 40.

Defendant Michael Jelen began his employment with Sirius in March of 2013, and he served as an account executive for Sirius Federal's Army/Navy West account until January 2014. Id. at ¶ 45. For the next three years, Mr. Jelen served as the account manager for Sirius's Special Intelligence-Department of Defense accounts. Id. at ¶ 46. In December 2021, Mr. Jelen was promoted to the position of senior account manager for Sirius's Navy account. Id. at ¶ 47. Sirius alleges that Mr. Jelen had access to, developed and utilized its confidential information, including: (1) customer identity and key decision maker contact information; (2) historical and current partner and customer orders and requirements; (3) high performing and underperforming products, services and programs; (4) partner and customer financial information and analysis related to same; (5) historical pricing and profit margins associated with various products, services and programs, including for the Navy account; and (6) preferred partner and customer information and terms. See id. at ¶¶ 48-49, 51. Sirius also alleges that Mr. Jelen was involved in strategic development initiatives for its partners and customers, and that he developed relationships with key decision-makers for the Navy and Sirius's strategic partners. Id. at ¶ 50.

Defendant Carolyn Ray began her employment with Sirius in January 2003, and she served as a senior account executive until February 2012. Id. at ¶ 55. Thereafter, Ms. Ray served as an inside sales manager for Sirius's Department of Defense account until April 2016, and then as the senior account executive for Sirius Federal's SI-DOD account. Id. at ¶ 55. Sirius alleges that Ms. Ray received and utilized its confidential information, including: (1) customer identity and key decision maker contact information; (2) historical and current partner and customer orders and requirements; (3) high performing and underperforming products, services and programs; (4) partner and customer financial information and analysis related to same; (5) historical pricing and profit margins associated with various products, services and programs, including for the DOD and Navy accounts; and (6) preferred partner and customer information and terms. See id. at ¶¶ 56-60. Sirius also alleges Ms. Ray developed relationships with key decision-makers for DOD, the Navy and Sirius's strategic partners. Id. at ¶¶ 56, 58.

The Employment Agreements

On October 6, 2021, Mr. Czetwertynski executed a Confidentiality and Non-Solicitation Agreement (the “Czetwertynski Agreement”) in connection with his employment with Sirius. Id. at ¶ 65. Section 1 of the “Czetwertynski Agreement addresses confidentiality and provides, in relevant part, that:

Employee will be provided Sirius Federal's Confidential Information during the course of Employee's employment. Employee agrees that without the use of Sirius Federal's Confidential Information, Employee will not be able to perform Employee's job duties. In order to avoid any inadvertent or other disclosure of Sirius Federal's Confidential Information, Employee agrees that when Employee's employment with Sirius Federal ends or whenever requested by Sirius Federal, Employee will immediately return any and all Confidential Information of Sirius Federal's in Employee's possession or control irrespective of the form in which the information is held or maintained . . . Additionally, Employee agrees to keep secret all Confidential Information of Sirius Federal, and not to disclose this information to anyone outside of Sirius Federal including, without limitation, disclosing this information to any customer, account, vendor, or competitor. Employee will only use Employee's knowledge of Sirius Federal's Confidential Information in the ordinary course of Employee's job duties and Employee will not disclose this information to anyone internally who does not have a need to know, nor will Employee disclose it to any person after Employee's employment ends.^[3]

ECF No. 1-2 at 2. Section 2 of the Czetwertynski Agreement addresses protection of customer relations and provides, in relevant part, that:

For a period of one (1) year after ceasing to be employed by Sirius Federal, regardless of whether Employee's employment ends voluntarily or involuntarily, Employee shall not, directly or indirectly, as an employee or independent contractor, alone or in association with, on behalf of, or for the benefit of any third party, provide or solicit to provide any service or product to any of Sirius Federal's customers, which service or product is similar to or competitive with any service or product offered by Sirius Federal, or the provision of which could adversely affect Sirius Federal's business relationship with such customer.

Id.

Lastly, Section 3 of the Czetwertynski Agreement addresses non-solicitation of employees and provides, in relevant part, that:

During Employee's employment with Sirius Federal, and for a period of one (1) year hereafter (regardless of whether Employee's employment ends

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