AlixPartners, LLP v. Benichou
| Decision Date | 10 May 2019 |
| Docket Number | C.A. No. 2018-0600-KSJM |
| Citation | 250 A.3d 775 |
| Parties | ALIXPARTNERS, LLP, and AlixPartners Holdings, LLP, Plaintiffs, v. David BENICHOU, Defendant. |
| Court | Court of Chancery of Delaware |
Bradley R. Aronstam, Eric D. Selden, R. Garrett Rice, ROSS ARONSTAM & MORITZ LLP, Wilmington, Delaware; Robert S. Berezin, Nicholas J. Pappas, WEIL, GOTSHAL & MANGES LLP, New York, New York; Counsel for Plaintiffs AlixPartners, LLP and AlixPartners Holdings, LLP.
John P. DiTomo, Matthew R. Clark, Barnaby Grzaslewicz, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Counsel for Defendant David Benichou.
McCORMICK, V.C.
The plaintiffs operate a global corporate restructuring advisory firm. The defendant was the managing partner of the plaintiffs' Paris office. As a partner, the defendant had access to the plaintiffs' confidential information. When he became a partner, the defendant also became party to a limited liability partnership agreement that contained confidentiality obligations. The defendant resigned from his position in early 2017. Shortly before his resignation, the defendant connected a personal data drive to his work-issued computer and accessed the plaintiffs' business files. Shortly after his resignation, the defendant repeated this act.
After his resignation, the defendant began working for one of the plaintiffs' competitors. Concerned that defendant may use their confidential information to benefit the competitor, the plaintiffs sought assurances from the competitor regarding the defendant's confidentiality obligations. The plaintiffs were dissatisfied with the competitor's response and initiated an investigative proceeding in Paris courts seeking targeted data searches of certain devices. The plaintiffs then sued in this court for breach of the confidentiality provisions of the limited liability partnership agreement. They also asserted three non-contractual claims for relief: for violating the Delaware Uniform Trade Secrets Act (or "DUTSA"), for common law conversion, and for violating the federal Computer Fraud and Abuse Act (or the "CFAA"). The defendant moved to dismiss each of the non-contractual claims.
The defendant's motion to dismiss the CFAA claim raises an issue of first impression for this Court. The provision of the CFAA on which the plaintiffs rely renders liable a person who "intentionally accesses a computer without authorization, or exceeds authorized access , and thereby obtains ... information from any protected computer[.]"1 The plaintiffs argue that the defendant "exceeded authorized access" by using information in violation of the plaintiffs' limited partnership agreement and policies. The defendant argues that this language provides a narrow cause of action under which he can be liable for unauthorized access of protected computers only, not for misuse of information that he was authorized to access.
Federal courts split on the interpretation of the CFAA disputed by the parties, the Third Circuit has not weighed in, and district courts in the Third Circuit diverge. Relying on principles of statutory construction, this decision adopts the narrow approach first set forth by the Ninth Circuit in LVRC Holdings LLC v. Brekka .2 Under the narrow approach, the defendant's actions while he was employed by the plaintiffs and had authorized access to the plaintiffs' confidential information do not support a claim under the CFAA. By contrast, it is reasonably conceivable that the defendant did not have authorized access to the documents he allegedly transferred after his resignation. As to the defendant's post-resignation conduct, the plaintiffs' CFAA claim is legally viable. The motion to dismiss the CFAA claims is thus granted, but only in part.
The Court denies dismissal for the remainder of the plaintiffs' non-contractual claims. Because all of the alleged acts of misappropriation occurred in France, the defendant moves to dismiss the plaintiffs' claim under DUTSA based on the presumption against extraterritoriality. The parties' extraterritoriality analysis involves a fact-intensive inquiry. Nearly all states have adopted the Uniform Trade Secrets Act. It is reasonably conceivable that some state's Uniform Trade Secrets Act applies given the plaintiffs' global brand. Under Delaware's liberal pleading standard, the plaintiffs need not identify which law applies at the pleadings stage.
The defendant's other dismissal arguments likewise fail. The defendant argues that the plaintiffs have not adequately alleged the elements of a trade secrets claim, but the complaint easily meets the plaintiff-friendly pleading standard. The defendant argues that the plaintiffs' conversion claim is duplicative of the contractual claim, but those claims arise from different obligations and appropriately stand alone. The defendant argues that DUTSA preempts the plaintiffs' conversion claim, but that conclusion depends on which state's trade secrets laws—if any—apply. Such a determination is premature and as a result, dismissal of the plaintiffs' conversion claim is inappropriate.
The facts are drawn from the complaint3 and matters not subject to reasonable dispute.
AlixPartners, LLP and AlixPartners Holdings, LLP (collectively, "Plaintiffs"), are a corporate restructuring advisory firm and its holding company parent, respectively. Both entities are organized as Delaware limited liability partnerships. Plaintiffs were founded in 1981 and now have a "global reputation" built through work with "multinational clients" in a range of industries.4
Defendant David Benichou ("Defendant") joined Plaintiffs on February 27, 2006. He served as Managing Director in Plaintiffs' Paris offices from January 1, 2013 to October 25, 2017. In that position, Defendant was responsible for: building and maintaining client relationships; leading complex engagements; recruiting top talent; and developing intellectual property for the firm. In carrying out these responsibilities, Defendant had access to Plaintiffs' confidential and proprietary information.
When Defendant became a Partner, he signed as a party to Plaintiffs' January 12, 2017 Second Amended and Restated LLP Agreement (the "LLP Agreement"). The LLP Agreement includes confidentiality requirements protecting Plaintiffs' non-public information. Plaintiffs also have a written data policy on the acceptable use of Plaintiffs' "data, networks, systems, devices, and applications."5
During his employment with Plaintiffs, Defendant kept thousands of Plaintiffs' confidential documents on the local C drive of his work-issued computer in a folder titled "BatDocuments."6 These documents included "numerous PowerPoint presentations related to Defendant's work on behalf of [Plaintiffs], reports, revenue assessments, studies prepared by [Plaintiffs], notes from meetings, pricing analyses, and other strategic documents," Plaintiffs allege.7
Defendant resigned from his position with Plaintiffs in 2017, providing notice on May 1, 2017. Plaintiffs dismissed Defendant from his duties on July 25, 2017, and he stopped performing work for Plaintiffs around that time. Three days later, on July 28, 2017, "Defendant again connected his personal external hard drive to his Computer."10 The complaint alleges:
Defendant never informed Plaintiffs of his personal data drive, disclosed that he had transferred these documents to it, or returned any confidential information it contained.
Defendant started working for the corporate restructuring division of Boston Consulting Group ("BCG") around October 2017. BCG's restructuring division directly competes with Plaintiffs, according to the complaint.
Plaintiffs allege that BCG employees contacted Defendant in early 2017 before he resigned. Plaintiffs also allege that Defendant disclosed Plaintiffs' confidential information to BCG employees in the first half of 2017, and that Defendant "decided to take [Plaintiffs'] confidential information with him when he left in order to use that confidential information at [BCG] for his benefit and for the benefit of BCG ...."12
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