Treco International S.A. et al v. Kromka et al, No. 1:2009cv22987 - Document 87 (S.D. Fla. 2010)

Court Description: ORDER denying 68 Motion to Dismiss; granting in part and denying in part 70 Motion to Dismiss. Answer to Complaint due date is 4/26/2010. Signed by Senior Judge James Lawrence King on 4/7/2010. (jw)

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Treco International S.A. et al v. Kromka et al Doc. 87 IN THE UNITED STATES DISTRICIT (IItOURT FOR THE SOUTHERN DISTRICT OF FLlORIDA MIAMI DIVISION CASE NO. 09-CV-22987-KING TRECO INTERNATIONAL S.A. and TRECO INTERNATIONAL LTD., Plaintiffs, RICHARD KROMKA and FRANCOIS RODRIGUE, Defendants. ORDER DENYING MOTIONS TO D I S M j ~ IN ~ j PART THIS CAUSE comes before the Court upon Defendant Kromka and Defendant Rodrigue's Motions to Dismiss (DE #68 & 70). Plaintiff laas responded (DE #77) and Defendants have each filed a Reply (DE #82 & 83). I. Introduction The allegations in Plaintiffs' First Amended Complaint 1:IIE #65) are too numerous to recount fully here. Briefly, Plaintiffs are companies that sought to partner with xG Technology, Inc. with the purpose of deploying a network of base stations to bc,~used for a particular type of patented wireless technology that was developed by xG. To facilitate the financing of this project, Plaintiffs hired Defendants Kromka and Rodrigue to rec~muitinvestors for the project. Plaintiffs allege that, instead of working with Plaintiffs' best i~iterestsin mind, Defendants planned to use the confidential information that Plaintiffs gave them, create their own company, and lure the investors away from Plaintiffs. After Defendants rwgned from their employment with Plaintiffs, Plaintiffs filed this lawsuit, alleging various causei; of action. Each Defendant Dockets.Justia.com has filed a separate motion to dismiss, and each argument therein vv:.llbe addressed in turn. 11. Kromka's Motion to Dismiss A. Florida's Uniform Trade Secrets Act ("FUTSA'!:) Kromka's first argument is that Plaintiffs have failed to liitate a claim under Florida's Uniform Trade Secrets Act ("FUTSA"). The FUTSA, codified i1.t chapter 688 of the Florida Statutes, prohibits the misappropriation of trade secrets. Definitims of the relevant terms are of which will be addressed then provided.' Kromka makes several specific sub-arguments, ea~::,h in turn. 1. Describing Trade Secrets with Particu1arit:;y Kromka's first argument is that Plaintiffs have failed to tl~i:scribethe trade secrets with particularity. A plaintiff has the burden to describe the alleged trade secret with reasonable 1 "As used in ss. 688.001-688.009, unless the context requires othervvise (1) "Improper means" includes theft, bribery, misrepresentation, bireacti or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. (2) "Misappropriation" means: (a) Acquisition of a trade secret of another by a person who knovlis 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 e:upre:;!, or implied consent by a person who: 1. Used improper means to acquire knowledge of the trttd :i secret; or 2. At the time of disclosure or use, knew or had reason tct know that her or his knowledge of the trade secret was: a. Derived from or through a person who had itt ti lized improper means to acquire it; b. Acquired under circumstances giving rise tc~; I duty to maintain its secrecy or limit its use; or c. Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or 3. Before a material change of her or his position, kneu ( r had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake. (3) "Person" means a natural person, corporation, business trust, estale, trust, partnership, association, joint venture, government, governmental subdivision or agency, or any otlier legal or commercial entity. (4) "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process that: (a) Derives independent economic value, actual or potential, fro]11not being generally known to, and not being readily ascertainable by proper means by, other person,; ',vho can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumr;t mces to maintain its secrecy." particularity. Levenger Co. V. Feldman, 516 F. Supp. 2d 1272, 1287 (S.D. Fla. 2007). The allegations specific to this issue state that Kromka became filnlliliar with the development, structure, feasibility, and marketing of the xMax network and tinli ig of its release, but Kromka claims that Plaintiffs never allege the exact information that they c Ii iim was misappropriated. However, a party proceeding under FUTSA need only dest:~ibe the misappropriated trade secrets with "reasonable particularity." Id. Moreover, ''[v:]I~ether a particular type of information constitutes a trade secret is a question of fact." Cal'l~insv. IPD Analytics, L.L.C., 2009 U.S. Dist. LEXIS 115461, * 11 (S.D. Fla. Nov. 25, 2009). ,'ice also Furmanite America, Inc. v. T.D. Williamson, Inc., 506 F. Supp. 2d 1134, 1141 (M.11. Fla. 2007) ("The term trade secret is one of the most elusive and difficult concepts in tlie lalv to define. The question of whether an item taken from an employer constitutes a trade 5;e :ret is of the type normally resolved by a fact finder after full presentation of evidencle fio n each side." (citations and quotations omitted)). Here, Plaintiffs have satisfied that burden. The Complailit describes with reasonable particularity the information alleged to be misappropriated, including: (1) confidential information on the development, structure and marketing of the x \Xiax network (D.E. # 65,y 25); (2) the timing of the xMax network's commercial deployment 1\1b.E.#65, 7 25); (3) technical information about the feasibility of the xMax network obtained thrci ugh a highly confidential and high-level due diligence report and through discussions with xG r::,earcher and development and engineering personnel (D.E. # 65, 7 26); (4) the Infrastructure Agl eement - Defendant Kromka indicated that he was planning to send Beechtree the confidenixal Infrastructure Agreement (D.E. # 65, T[ 44); and (5) the Townes letter - Defendant Krormka inlproperly disclosed the Letter of Intent between xG and Townes to Beechtree and then the deal 11:11 through (D.E. # 65,Y 82). Thus, Plaintiffs have described the information with sufficient pati cularity to avoid dismissal on this basis. 2. The Information Was Not Generally Knov~n to Third Parties Defendant Kromka next argues that the information that Plaintiffs claim was misappropriated was available and accessible to the general pub11:I because xG issued numerous press releases discussing the information. Also, xG's CEO, Rick \l'[ooers, publicly discussed the details of xG's product, marketing, and deployment plans. information could not have been confidential or secret because it Thus, Kromka argues, the tv is previously provided by xG to various media outlets. See, e.g., Tedder Boat Ramp Sys., Inc. v ,~iillsboroughCounty, Flu., 54 F. Supp. 2d 1300, 1303 (M.D. Fla. 1999) However, to support this argument Defendant Kromka rc:l~esexclusively on a series of internet articles which he claims disclose the confidential informa.ic In. This information does not it when resolving a motion appear in the Complaint, and accordingly the Court cannot considl,~~r to dismiss. Thaeter v. Palm Beach County Sheriff's OfJice, 44!#1 F.3d 1342, 1352 (1 lth Cir. 2006) ("When considering a motion to dismiss, all facts set forth in the plaintiffs complaint are to be accepted as true and the court limits its consideration to ithe pleadings and exhibits attached thereto."). Thus, Kromka is not entitled to dismissal on this basis. 3. Plaintiffs Took Reasonable Steps to Protc:ct the Trade Secrets Defendant Kromka next claims that Plaintiffs failed to state through detailed factual allegations that they took reasonable steps to protect the trade secrels, as required by the FUTSA. He asserts that Plaintiffs only offer general examples of effci~staken, such as instructing Defendants not to disclose the information to third parties. He also claims that the only example Plaintiffs provide of their efforts to maintain the secrecy of tlqe trade secrets is the NonDisclosure Agreement. However, whether a party has taken reasonable steps under the circumstances to preserve its trade secrets is a factual inquiry that cannot be resolved on a motion to dismiss. See Furmanite, 506 F. Supp. 2d at 1141 ("Courts are extremely hesiten1 to grant summary judgment regarding the fact-intensive questions of the existence of a trade set -et or whether a plaintiff took reasonable steps to protect its trade secrets."). Moreover, the Co1nl)laint indicates that Plaintiffs did in fact take reasonable steps to protect the information. Both ri8ecoand xG carefully limited dissemination of the information only to those trusted employees and others who needed to know to carry out the purposes of the Infrastructure Agreement, a highly ,.onfidential document. (D.E. # 65, 7 28). Also, Defendants were repeatedly instructed by 'I'leco and xG to maintain the confidentiality of this information. (D.E. # 65, 7 28). Finally, E:r ,)mkaYsassertion that he was not personally a part of the Non-Disclosure Agreement is cl illo out merit. The Amended Complaint states that "[all1 employees of Treco, including Kromka ind Rodrigue, are covered by this confidentiality obligation. By signing this Non-Disclosure 14,:reement, Kromka confirmed his understanding that confidential information includes but i s not limited to proprietary, financial and commercial information belonging to xG or Treco." (D.E. # 65,B 29). Thus, the Complaint alleges that Plaintiffs took rea:,clnable steps to protect the information by having Kromka sign the Non-Disclosure Agreemellt and instructing Defendants not to disclose the information to third parties. Because the final resolution of this issue is a factual question, Kromka is not entitled to dismissal on this basis. 4. The Unauthorized Third Parties Kromka's final argument under the FUTSA is that Plainttfls have failed to state a claim for misappropriation because they have not identified the unaui h,~rizedthird parties to whom Kromka allegedly disclosed the information. This argument is n 11 hout merit. As detailed in the Amended Complaint, Kromka misappropriated Plaintiffs' trade secrets by disclosing them to Beechtree and others, not to further Plaintiffs' interest under the I n frastructure Agreement but in an effort to try and take over xG (D.E. # 65, 7 44). Moreover, the Complaint states that, at a September 3, 2009 meeting, Beechtree representatives revealed tcl :tG's CEO that Beachtree had been provided with this information (D.E. # 65, 776). Thus, I(rorn,ka is not entitled to dismissal of the FUTSA claim. B. Breach of Fiduciary Duty Kromka's second argument is that Plaintiffs have failed tc.:~state a claim for breach of fiduciary duty. "The elements of a breach of fiduciary duty clai~nare: (1) the existence of a fiduciary duty; (2) the breach of that duty; and (3) damage proxirnli3tely caused by that breach." Border Collie Rescue, Inc. v. Ryan, 418 F. Supp. 2d 1330, 1342 (:\JJI.D. Fla. 2006) (citing Gracey v. Eaker, 837 So. 2d 348, 353 (Fla. 2002)).~ Kromka argues that I1laintiffshave not sufficiently alleged that Kromka owed a fiduciary duty to Plaintiffs. Tht: Court disagrees. Although Plaintiffs have not alleged that Kromka was an officer or dil-ect;)~,, and not all employees owe fiduciary duties to their employers, Plaintiffs have sufficiently alleged that they placed Krornka in a position of trust and confidence, that Kromka accepted that ;:I( &ion and promised to act in 506 F. Supp. 2d at Plaintiffs' best interests, and that Kromka failed to do so. See JF:i~/rmanite, 1149 ("However, an employee may not engage in disloyal act:; in anticipation of his future competition, such as using confidential information acquired during the course of his employment or soliciting customers and other employees prior to t1l.e end of his employment. . . . An employee does not have to be managerial in order to have this d.,ltyof loyalty."). Thus, under these circumstances, Plaintiffs have sufficiently alleged a breach cl f fduciary duty. C. Tortious Interference with Contract and Busineszi Relationship Kromka's next argument is that the claim for tortious interference with contract should be dismissed because it fails to allege all the elements of that claim. "A claim for interference with * The Court determines that Florida law applies to this claim. See h4uklrlilral v. Bakes, 383 B.R. 798, 8158 17 (S.D. Fla. 2007). 6 a contractual relationship requires: (1) the existence of a contract: (2) the defendant's knowledge of the contract; (3) the defendant's intentional procurement of t i e contract's breach; (4) the absence of any justification or privilege; and (5) damages resulting from the breach." Special Purpose Accounts Receivable Coop. Corp. v. Prime One C~pittrlCo., 125 F. Supp. 2d 1093, 1103 (S.D. Fla. 2000). Kromka contends that this count fails b(:ct,wse Plaintiffs have failed to plead the third element-that is, that Kromka intentionally proc:lired a breach of the contract between Plaintiff and xG. Plaintiffs' only argument in re:spc n ;e is to cite to Slip-N-Slide Records, Inc. v. TVT Records, LLC, 2007 U.S. Dist. LEXIS 80788., ' 9 9 (S.D. Fla. Oct. 3 1,2007), which states that "Florida law does not require that a party show an actual breach of contract occurred in order to succeed on that tortious interference claim," However, this statement in Slip-N-Slide was referring to tortious interference with busi~~ess relationship, not tortious interference with contract. In fact, a review of the Complaint reveals that Plaintiffs have not alleged a breach of their contract with xG (or any other contrxt). At most, Plaintiffs have alleged that Kromka attempted to procure the contract's breach, but the element requires that Kromka actually succeed. Therefore, Count IV-tortious i~nlerference with contract-is dismissed with prejudice. Kromka also argues that the claim for tortious interfere111:ewith business relationship should be dismissed because Krornka had a supervisory interest in 1 he relationship with which he is accused of interfering. The elements of this claim are: "(I) the existence of a business relationship, not necessarily evidenced by an enforceable contract, under which the plaintiff has legal rights; (2) the defendant's knowledge of the relationship; (3 ) an intentional and unjustified interference with the relationship by the defendant; and (4) damag~:to the plaintiff as a result of the interference." Salit v. Ruden, 742 So. 2d 381, 385 (Fla. 4th DCA 1999). Moreover, "[flor the interference to be unjustified, the interfering defendant must be a third party, a stranger to the business relationship." Id. "A defendant is not a stranger to a business relationship if the defendant has any beneficial or economic interest in, or control :VI er, that relationship." Palm Beach County Health Care Dist. v. Prof1 Med. Educ., Inc., 13 So. 'Ild 1090, 1094 (Fla. 4th DCA 2009) (quotations and citations omitted). Finally, "[tlhe fact ithat [ IKromka] may have harbored some 'personal malice or ill-will' towards [Plaintiffs] does not tra~lsformthis case into one for tortious interference." Id. Here, although Plaintiffs have not specifically pled that Kromka had a supervisory interest in the business relationship, the Complaint makes clear l11;it he did have one. Kromka was hired by Plaintiffs and given a seat on xGYsboard of direc:tor!;. His specific assignment was to recruit investors and assist in the deployment of a new wir~:l~,:sscommunication network. Thus, he was put in charge of developing certain business relation:;hips, and was a member of the relationship between Plaintiffs and xG. He had a direct beneficial and economic interest in these relationships. Thus, Plaintiffs have failed to state a claim for torticius interference with business relationship, and therefore Count V is dismissed with prejudice. D. Unjust Enrichment "The elements of an unjust enrichment claim are a benefit c ,)nferred upon a defendant by the plaintiff, the defendant's appreciation of the benefit, and tlie defendant's acceptance and retention of the benefit under circumstances that make it inequitable for him to retain it without paying the value thereof." Flu. Power Corp. v. City of Winter P~r,li,887 So. 2d 1237, 1242 n. 4 (Fla. 2004) (quotations and citations omitted). Kromka argues ttu~tPlaintiffs' claim for unjust enrichment should fail because Plaintiffs have not alleged exaict1;i what "benefit" was conferred to Kromka. However, a review of the Complaint reveals that Plaintiffs have alleged that they conferred numerous benefits, including paying Kromka a salary and a living allowance. Thus, Kromka is not entitled to dismissal of this claim. E. Fraud and Negligent Misrepresentation With regard to the fraud claim, Kromka argues that Plainliffs have not identified with particularity the statements which are alleged to be false, in acc:clrdance with Federal Rule of Civil Procedure 9(b). However, a review of the Complaint revealls that Plaintiffs have alleged numerous specific false statements, including statements regarding Kromka's ability to recruit investors, Kromka's need for a housing allowance, Kromka's prcxgressin obtaining investors, and Kromka's actions with respect to obtaining financing. 'Thus Kromka's argument on this point is without merit. Next, Kromka argues that the fraud and negligent misrepr2:;entation claims are barred by the economic loss rule. However, the economic loss rule does no bar intentional torts such as fraud. Indem. Ins. Co. v. Am. Aviation, Inc., 891 So. 2d 532, 54.1 n. 3 (Fla. 2004) ("Intentional tort claims such as fraud, conversion, intentional interference, civil theft, abuse of process, and other torts requiring proof of intent generally remain viable either jr, the products liability context or if the parties are in privity of contract."). With regard to neg1il;ent misrepresentation: When a party in a contractual relationship alleges that the other party h.l~smade false statements, an action based on those false statements may only be brought for a non-intentional tort that is independent of the contractual relationship. See Bankers Mulual( 'apital Corp. v. United States Fidelity & Guarantee Co., 784 So.2d 485, 489 (Fla. 4th DCA ;)0101). neither alleged the parties had an express contract nor brought Because Plaintiffs have a-1 action for breach of contract, the exact contours of the contractual relationship remain unclear. 1hus, it would be premature to dismiss this count at this stage of the litigation. 111. Rodrigue's Motion to Dismiss A. Failure to State a Claim under PUTSA Rodrigue's first argument is the same as Kromka's; namelj~,that Plaintiffs have failed to plead the requisite facts with particularity. For the reasons staled ,jtsiove,this argument is without merit. B. Standing to Assert a Claim under FUTSA Rodrigue also argues that Plaintiffs do not have standing 10 assert a claim under FUTSA because they have not be plead that Plaintiffs owned the trade sc:(cl.etsthe Defendants allegedly misappropriated. Rather, Rodrigue argues, the trade secrets were: 11wnedby xG, which is not a party to this action. This argument is without merit. Plaintiffs; mlis I.establish that they owned or possessed the secret information and took reasonable steps to 1prolel:t its secrecy. See Del Monte Fresh Produce Co. v. Dole Food Co., 136 F.Supp.2d 1271, 1291 (S.D. Fla. 2001). No requirement of ownership appears in the statute, and as stated above, Plaintiffs have sufficiently pled the elements of a cause of action under FUTSA. Thus, Rodr~g,ueis not entitled to dismissal on this basis. C. Breach of Fiduciary Duty Finally, Rodrigue argues that the claim for breach of fiduc:i,~ryduty should be dismissed. For the reasons stated above denying Kromka's motion to dism~s;;on this basis (section II.B), Rodrigue is not entitled to dismissal on this basis. IV. Conclusion Accordingly, after careful consideration and the Court beiilq, otherwise fully advised, it is ORDERED, ADJUDGED, and DECREED that: 1. Kromka's Motion to Dismiss (DE # 70) is herc:by GRANTED in part and DENIED in part, as follows: a. Count IV (Tortious Interference with Contract) and Count V (Tortious Interference with B~lsin;:;s Relationships) are hereby DISMISSED WITH PREJUDICE,^ b. Kromka's Motion to Dismiss is 1)El'rlllED in all other respects. 2. Rodrigue's Motion to Dismiss (DE #68) is hereby 1)IIZNIED in its entirety. 3. Both Defendants shall file an Answer to the C:omplaint on or before April 26, 2010. DONE AND ORDERED in Chambers, at Miami, Miami..I:badeCounty, Florida, this 7th day of April, 20 10. Cc: Counsel for Plaintiff April Lynn Boyer K&L Gates LLP Wachovia Financial Center Suite 3900 200 S Biscayne Boulevard Miami, FL 33131-2399 305-539-3380 Fax: 358-7095 Email: april.boyer@klgates.com LEAD ATTORNEY ATTORNEY TO BE NOTICED Robert Clayton Leitner , I1 K&L Gates LLP Wachovia Financial Center Suite 3900 200 S Biscayne Boulevard Miami, FL 33 131-2399 305-539-3300 Fax: 305-358-7095 Email: rob.leitner@klgates.com 3 Because Plaintiffs have already amended their Complaint once, and 1:tecause the Complaint is highly detailed, these claims are dismissed with prejudice. Counsel for Defendants Thomas Meeks Carlton Fields, P.A. 100 S.E. Second Street Suite 4000 Miami, FL 33131 305-530-4063 Fax: 305-530-0055 Email: tmeeks@carltonfields.com LEAD ATTORNEY ATTORNEY TO BE NOTICED Christopher M. Farella Stahl Farella LLC 220 St Paul Street Westfield, NJ 07090 908-301-9001 Fax: 908-301-9008 Email: cfarella@stahlesq.com PRO HAC VICE ATTORNEY TO BE NOTICED Andrew L. Hurst Reed Smith LLP 3 110 Fairview Park Drive Suite 1400 Falls Church, VA 22042 202-4 14-9275 Email: ahurst@reedsmith.com PRO HAC VICE ATTORNEY TO BE NOTICED Leon Nicholas Patricios Zumpano Patricios & Winker, P.A. 3 12 Minorca Avenue Coral Gables, FL 33 134 305-444-5565 Fax: 444-8588 Email: lpatricios@zpwlaw.com ATTORNEY TO BE NOTICED

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