Ahern Rentals, Inc. v. EquipmentShare.com
| Decision Date | 07 February 2023 |
| Docket Number | 22-1399 |
| Parties | Ahern Rentals, Inc. Plaintiff-Appellant v. EquipmentShare.com, Inc.; EZ Equipment Zone, LLC Defendants-Appellees |
| Court | U.S. Court of Appeals — Eighth Circuit |
Submitted: November 16, 2022
Appeal from United States District Court for the Western District of Missouri - Jefferson City
Before COLLOTON, SHEPHERD, and GRASZ, Circuit Judges.
Ahern Rentals, Inc. (Ahern), alleges that two competitors- EquipmentShare.com, Inc. (EquipmentShare) and EZ Equipment Zone, LLC (EZ)- misappropriated its trade secrets to gain an unfair advantage in the construction equipment rental industry. The district court first dismissed EZ from the lawsuit, ruling that Ahern failed to state a plausible claim for relief against it. Later, the district court dismissed the case altogether, ruling that Ahern's remaining claims against EquipmentShare were duplicative of claims against EquipmentShare in several other ongoing lawsuits brought by Ahern. Ahern appeals both rulings, arguing that the district court erred in dismissing its claims. Having jurisdiction under 28 U.S.C. § 1291, we agree and reverse.
Ahern is one of the largest independently owned equipment rental companies in the United States. Ahern provides heavy equipment rental and repair services and sells new and used equipment. Ahern has locations across the United States and 60 years of experience in the equipment rental industry. To protect its sensitive data, Ahern requires its employees to sign non-disclosure, non-solicitation, and noncompetition agreements. Ahern's employee handbook also explicitly requires employees to safeguard the company's confidential information, which includes customer and vendor lists, pricing and marketing data, sales systems, training materials, and personnel data.
EquipmentShare is a relative newcomer in the equipment rental industry. Formed in 2014, EquipmentShare has quickly grown to become one of Ahern's top competitors. Its business model is similar to Ahern's, with a focus on brick-and-mortar rental locations. EquipmentShare has also developed custom telematics systems to track rental equipment in real time. Like its competitor Ahern, EquipmentShare now has dozens of locations across the country. As it has grown, EquipmentShare has hired many former Ahern employees.
In 2019, Ahern sued EquipmentShare and several of Ahern's former employees in both federal and state courts. Several of the federal lawsuits have been consolidated as a multidistrict litigation (MDL) proceeding in the Western District of Missouri. They include a Racketeer Influenced and Corrupt Organizations Act (RICO) suit against EquipmentShare as well as various contract- and tort-based employment actions against former Ahern employees, which include related claims against EquipmentShare. These lawsuits are all premised on the same general allegation: EquipmentShare has engaged in a wide-ranging and unlawful conspiracy to increase its market share at Ahern's expense. Specifically, Ahern alleges that, in early- to mid-2017, EquipmentShare began recruiting Ahern's employees to steal Ahern's trade secrets before leaving Ahern to work for EquipmentShare. EquipmentShare then used Ahern's trade secrets to develop its telematics systems and capture significant portions of Ahern's business.
In November 2020, Ahern brought this lawsuit against EquipmentShare and included EZ as a named defendant. Like EquipmentShare, EZ is a newcomer in the equipment rental industry, but its business model is different. Formed in 2018, EZ is a managed cooperative platform that assists owners of rental equipment to rent out their equipment. Importantly, it is undisputed that EZ and EquipmentShare have a business relationship. Much of this business relationship is summarized in the Asset Management Agreement provided by EZ to its users, which mentions EZ's "rental agreements with a national equipment rental company." As part of this Agreement, EZ requires its users to participate in an "Asset Management Marketplace" which enables them "to acquire equipment assets [and] monetize [their] equipment through [EZ's] rental agreements with a national equipment rental company with numerous rental locations" but also binds users under EZ's contracts with EquipmentShare. Further, EZ serves its users through software that is owned, operated, and managed by EquipmentShare. For example, EZ requires its users to utilize EquipmentShare's "ES Track" and "ES Service" programs to monitor and maintain their rental equipment, respectively.
Ahern contends that the coordination between EZ and EquipmentShare is more than an innocent business relationship. In its November 2020 complaint- Ahern's only involving EZ-Ahern alleges that after its original lawsuits, EquipmentShare conspired with EZ to continue its scheme of using Ahern's trade secrets to gain a competitive advantage in the rental equipment industry. Ahern's complaint details the close business relationship between EquipmentShare and EZ described above and asserts that EquipmentShare and EZ are, in fact, one and the same. Ahern alleges, based on "information and belief," that EZ is using the "customer lists, rental information, pricing information, and marketing strategies" that EquipmentShare illegally obtained from Ahern to monitor, service, and place its users' equipment. Further, Ahern alleges that EZ has "knowledge" that this information "was illegally obtained by EquipmentShare from Ahern." All told, this lawsuit is different from the others in the MDL in that it alleges a conspiracy between EquipmentShare and EZ to misappropriate Ahern's stolen trade secrets to gain an unfair advantage.
Ahern filed its November 2020 complaint in the Eastern District of Missouri, alleging six claims against EquipmentShare and EZ: (1) conspiracy under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030; (2) misappropriation of trade secrets in violation of the Defend Trade Secrets Act, 18 U.S.C. § 1836; (3) misappropriation of trade secrets in violation of the Missouri Uniform Trade Secrets Act, Mo. Rev. Stat. § 417.450 et seq.; (4) tampering with computer data in violation of Mo. Rev. Stat. § 569.095; (5) civil conspiracy; and (6) unjust enrichment. In January 2021, EquipmentShare and EZ filed separate motions to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Soon thereafter, but before a ruling on the motion to dismiss, the case was transferred to the Western District of Missouri, where it was consolidated with Ahern's other lawsuits in the ongoing MDL.
After transfer to the Western District of Missouri, the district court dismissed EZ from the lawsuit. The district court found that Ahern's complaint did not allege facts plausibly demonstrating EZ's involvement in EquipmentShare's alleged misappropriation of trade secrets and tampering of computer data, much less that there was a meeting of the minds sufficient for a conspiracy to exist. In particular, the district court took issue with several paragraphs in Ahern's complaint alleging EZ's involvement and knowledge, which are all pled "upon information and belief." The district court concluded that Ahern's complaint failed to state a plausible claim against EZ and, accordingly, granted EZ's motion to dismiss.
With EZ dismissed from the lawsuit, EquipmentShare objected to Ahern's discovery requests relating to EZ. The district court sustained those objections. In November 2021, EquipmentShare filed a motion for judgment on the pleadings, arguing that Ahern's claims were duplicative of the other actions in the MDL and should be dismissed for improper claim-splitting. In February 2022, the district court dismissed all remaining claims, holding that, with EZ gone, the remaining claims against EquipmentShare were no different from the other claims in the MDL proceeding. Ahern now appeals.
Ahern first argues that the district court improperly dismissed its claims against EZ for failing to state a claim. "We review de novo a grant of a motion to dismiss for failure to state a claim under Rule 12(b)(6), accepting as true all factual allegations in the light most favorable to the nonmoving party." Glick v. W. Power Sports, Inc., 944 F.3d 714, 717 (8th Cir. 2019). Nevertheless, "we need not accept as true a plaintiff's conclusory allegations or legal conclusions drawn from the facts." Id.
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible if the plaintiff pleads facts "that allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. If, on the other hand, the plaintiff pleads facts that are "'merely consistent with' a defendant's liability," the complaint "stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557).
The district court dismissed Ahern's claims against EZ primarily because Ahern's complaint alleged EZ's involvement in EquipmentShare's scheme only "upon information and belief." For example, Ahern alleges based on "information and belief," that "EquipmentShare has contracted with EZ to use Ahern's confidential, proprietary, and/or trade secret information to continue the illegal attack upon Ahern's business." Similarly, Ahern alleges "[u]pon information and belief" that EquipmentShare "sought out and conspired with EZ to use Ahern's confidential, proprietary, and/or trade secret information to continue the illegal attack upon Ahern." The...
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