Meridian Imaging Solutions, Inc. v. Omni Bus. Solutions LLC

• Decision Date: 25 April 2017
• Docket Number: Case No. 1:17-cv-186.
• Citation: 250 F.Supp.3d 13
• Parties: MERIDIAN IMAGING SOLUTIONS, INC., et al., Plaintiffs, v. OMNI BUSINESS SOLUTIONS LLC, et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

250 F.Supp.3d 13

MERIDIAN IMAGING SOLUTIONS, INC., et al., Plaintiffs,

v.OMNI BUSINESS SOLUTIONS LLC, et al., Defendants.

Case No. 1:17-cv-186.

United States District Court, E.D. Virginia, Alexandria Division.

Signed April 25, 2017

James Matthew Coleman, Theresa Mannion Connolly, Constangy Brooks Smith & Prophete LLP, Fairfax, VA, for Plaintiffs.

Brian Adam Scotti, Gordon & Rees LLP, Michael J. Schrier, Duane Morris LLP, Washington, DC, Martin Andrew Conn, Moran Reeves & Conn PC, Richmond, VA, for Defendants.

MEMORANDUM OPINION

T. S. Ellis, III, United States District Judge

In this trade secrets and unfair competition case, defendant William Christopher Brumlow ("Brumlow") has moved to dismiss all claims against him pursuant to Rule 12(b)(3), Fed. R. Civ. P., or, in the alternative, to stay the proceedings against him and compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 3 & 4. Although Brumlow did not sign the pertinent arbitration agreement, he nonetheless seeks to enforce that agreement against one of the signatories and its parent company.

For the reasons that follow, Brumlow's Rule 12(b)(3) motion must be denied, and his motion to compel arbitration and stay proceedings must be granted in part and denied in part.

I.

It is unnecessary to delve into the facts to conclude that Brumlow's Rule 12(b)(3)¹ motion is a nonstarter. Brumlow incorrectly contends that "[a] motion to dismiss for improper venue concerning a forum-selection clause is properly brought under Fed. R. Civ. P. 12(b)(3)." D. Mem. at 11.² The Supreme Court has recently and explicitly rejected this argument. Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex. , ––– U.S. ––––, 134 S.Ct. 568, 577, 187 L.Ed.2d 487 (2013) ("[Defendant] contends that a party may enforce a forum-selection clause by seeking dismissal of the suit under ... Rule 12(b)(3). We disagree."). In Atlantic Marine , the Supreme Court held that " Rule 12(b)(3) [is] not [a] proper mechanism[ ] to enforce a forum-selection clause," id. at 580, because "a forum-selection clause does not render venue in a court ... ‘improper’ within the meaning of ... Rule 12(b)(3)," id. at 579.³ Thus where, as here, a party seeks "to enforce a forum-selection clause pointing to a state or foreign forum," Rule 12(b)(3) has no application, and typically the "appropriate" procedure is to seek dismissal pursuant to "the residual doctrine of forum non conveniens [.]" Id. at 580. Put simply, Supreme Court precedent forecloses Brumlow's Rule 12(b)(3) motion, and thus the motion must be denied.

Because Brumlow has not argued forum non conveniens and the Complaint does not suggest any basis for such an argument, the following analysis is properly limited to Brumlow's motion to stay or compel arbitration, pursuant to the FAA, 9 U.S.C. §§ 3 & 4.⁴

II.⁵

Plaintiffs in this action are Konica Minolta Business Solutions U.S.A., Inc. ("Konica") and its recently-acquired, wholly-owned subsidiary, Meridian Imaging Solutions, Inc. ("Meridian").

The six named defendants are:

• two LLCs, OMNI Business Solutions LLC and OMNI Business Systems LLC (collectively, "OMNI"),• three former Meridian employees, Greg Conroy, Scott Westfall, and Ed Lovatt, and

• the movant, William Christopher Brumlow, an employee of a nonparty company, Ricoh Americas Corporation ("Ricoh"), which company is currently in arbitration against Meridian for claims arising out of the same nucleus of operative facts as is alleged in the Complaint.

The basis for subject matter jurisdiction is federal question and supplemental jurisdiction, pursuant to 28 U.S.C. §§ 1331 & 1367. Compl. ¶¶ 24–25. The Complaint alleges the following nine counts.

• Count I: Violation of the Federal Defense of Trade Secrets Act, 18 U.S.C. § 1832 et seq. (brought by both plaintiffs against all defendants);

• Count II: Unfair Competition under Maryland law (brought by both plaintiffs against all defendants);

• Count III: Tortious Interference (brought by only Meridian against Brumlow, the OMNI defendants, Conroy, and Westfall);

• Count IV: Breach of the Duties of Confidential Relationship and Loyalty (brought by both plaintiffs against defendants Conroy, Westfall, and Lovatt);

• Count V: Conversion (brought by both plaintiffs against all defendants);

• Count VI: Unjust Enrichment (brought by both plaintiffs against all defendants);

• Count VII: Quantum Meruit (brought by both plaintiffs against all defendants);

• Count VIII: Violation of the Virginia Uniform Trade Secret Act (brought by both plaintiffs against all defendants); and

• Count IX: Civil Conspiracy—statutory and common law (brought by both plaintiffs against all defendants).

Distilled to its essence, the Complaint alleges that defendants stole plaintiffs' business information and customers. Specifically, the Complaint alleges, in pertinent part, the following.

• From the late 1990s to mid-March 2016, Meridian was an authorized dealer for Ricoh. Compl. ¶ 3.

• Meridian and Ricoh executed their most recent dealer agreement in 2007 (the "Ricoh Agreement").⁶ Compl. Ex. 3.

• In mid-March 2016, Konica acquired Meridian. Compl. ¶ 4.

• On March 17, 2016, Ricoh terminated the Ricoh Agreement. Id. ¶ 74.

• Meridian and the OMNI defendants are competitors. They each provide office technology, hardware, software, IT services, and document management solutions to customers in Maryland, Virginia, and the District of Columbia. Id. ¶ 28.

• Defendants Conroy, Westfall, and Lovatt formerly worked together at Meridian, and they currently work together at OMNI Business Solutions to compete directly with Meridian. Id. ¶ 21.

• Brumlow, a major account consultant at Ricoh,⁷ allegedly worked closely with Conroy, Westfall and Lovatt, both in their former capacities as Meridian employees and in their current roles as employees of OMNI.Id. ¶ 23.⁸

• Between January and June 2016, Conroy, while still employed by Meridian, allegedly spoke with the President of OMNI Business Systems about forming an affiliate of OMNI Business Systems to compete directly with Meridian as an authorized Ricoh-brand dealer. Id. ¶ 42.

• Before his departure from Meridian in June 2016, Conroy used Meridian's computer systems to access Meridian's confidential files, including business intelligence and information classified as trade secrets. Conroy allegedly obtained these trade secrets for use as an OMNI employee. Id. ¶ 50.

• Similarly, Westfall allegedly misappropriated information from Meridian for eventual use as an OMNI employee. See id. ¶¶ 52–59. The same conduct is alleged against Lovatt. See id. ¶¶ 60–64.

• Defendants, including Brumlow, executed a "Knockout Plan," by which they attempted to "knock" Meridian out of the Washington, D.C. market by converting Meridian's major and strategic client accounts to OMNI. Id. ¶¶ 75–80, 82.

• Plaintiffs allege that Brumlow continues to work closely and regularly with Conroy, Westfall, and Lovatt in their present roles at OMNI Business Solutions in Virginia. Id. ¶ 23.

• On August 23, 2016, Brumlow allegedly sent an email containing information about Ricoh's "major accounts" to Conroy and Westfall. Id. ¶ 59.

• Brumlow purportedly transmitted Meridian's confidential information and trade secrets to Conroy, Westfall, and OMNI Business Solutions as part of Brumlow's plan to knock Meridian out of the market of Ricoh-brand dealers. Id. ¶¶ 87–91.

• Brumlow's actions were part of the alleged scheme to aid, abet, and assist OMNI, Conroy, and Westfall to target existing Meridian clients and accounts in order to drive business away from Meridian to OMNI. Id. ¶ 95.

• Brumlow is also accused of directly or indirectly helping Conroy, Westfall, Lovatt, and OMNI to target and sell products, services, and technology to Meridian clients and customers, causing Meridian to lose customers and revenue. Id. ¶ 103.

• Brumlow's actions also allegedly facilitated Ricoh's breach of the Ricoh Agreement's confidentiality clauses, thereby harming Meridian. Id. ¶¶ 132–141.

Although the Complaint omits details regarding Brumlow's employment with Ricoh—and makes no mention of the arbitration clause in the Ricoh Agreement—there is no question that Meridian and Ricoh are currently (and properly) in arbitration regarding Meridian's claims that Ricoh breached the Ricoh Agreement through Brumlow's conduct. In addition, Brumlow has submitted competent evidence that may be considered on his motion to compel arbitration or stay proceedings pursuant to the FAA.⁹ Specifically, Brumlow's submitted evidence, which is unrefuted, demonstrates the following.

• Meridian is a Virginia corporation headquartered in Alexandria, Virginia whereas Ricoh is a Delaware corporation based in New Jersey. Ricoh Agreement at 1.

• Ricoh currently employs Brumlow as a Major Account Consultant—Dealer Division and has performed in that role for Ricoh since October 2016. He first began working at Ricoh on September 28, 2015 as a Major Account Sales Manager. See, e.g. , Brumlow Aff. at ¶¶ 2–3; see also Loder Supp. Decl. Ex. 1 (Letter from Counsel for Meridian to Ricoh) (representing Meridian's understanding that Brumlow is Major Accounts Sales Manager for Ricoh); Compl. Exs. 11–13 (emails sent by Brumlow from his Ricoh email address).¹⁰

• At the relevant time periods, Brumlow used the email address, Chris.Brumlow@ricoh-usa.com. His email signature block stated his position—Major Accounts Sales Manager—as well as contact information for Ricoh, including the company's address and website. See Compl. Exs. 11–13.

• Brumlow's job duties include supporting area Ricoh dealers and the efforts of those Ricoh dealers to sell and lease Ricoh products to customers, and to provide service and support to those customers. Brumlow Aff. at ¶ 5.

• The documents that plaintiffs allege Brumlow sent were transmitted by Brumlow from his Ricoh computer (provided to him by Ricoh) and used by Brumlow in conducting business on Ricoh's behalf. Id. ¶ 4; see also Compl. Exs. 11–13.

• Those documents were sent in his capacity

...