Alliance Tech. Grp., LLC v. Achieve 1, LLC, Civil Action No. 3:12CV701-HEH
| Decision Date | 11 January 2013 |
| Docket Number | Civil Action No. 3:12CV701-HEH |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | ALLIANCE TECHNOLOGY GROUP, LLC, Plaintiff, v. ACHIEVE 1, LLC, et al., Defendants. |
(Granting Motion to Dismiss in Part)
Between 2010 and 2012, a cohort of employees at Alliance Technology Group, LLC ("Alliance") left to join Achieve 1, LLC ("Achieve 1")—a competing company formed by Michael Thomas ("Thomas") and Carrie Thomas. Thomas had served as Alliance's Vice President of Southeast Division. In response, Alliance brought this lawsuit against Achieve 1, its related entities, and the employees who left Alliance. The Complaint asserts claims for breach of fiduciary duty, misappropriation of trade secrets, and civil conspiracy, among others.1 Many of the allegations accuse all "Defendants" ofcommitting tortious conduct collectively, without distinguishing among the individually-named defendants. Based on this attempt to lump all Defendants together, Defendant William Ralston ("Ralston") moves under Fed. R. Civ. P. 12(b)(6) to dismiss the claims against him. For the reasons that follow, the Motion will be granted, in part, and denied, in part.
As required by Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court assumes Plaintiff's well-pleaded allegations to be true, and views all facts in the light most favorable to him. T.G. Slater & Son v. Donald P. & Patricia A. Brennan, LLC, 385 F.3d 836, 841 (4th Cir. 2004) (citing Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). Viewed accordingly, the alleged facts are as follows.
Alliance is a "Value-added Reseller" of information technology services, providing data storage, networking systems, software, and services to a wide-ranging business clientele. (Compl. at ¶ 19.) While serving as its Vice President of the Southeast Division between April 2010 and April 2012, Thomas directed a staff of eight employees. (Id. at ¶¶ 25-26.) One of these employees was Defendant William Ralston ("Ralston"), who was hired on March 19, 2012—barely one month before Thomas's resignation. (Id. at ¶¶ 25, 29.)
Each Alliance employee in the Southeast Division, including Thomas and Ralston, had access to Alliance's trade secrets and proprietary information. (Id. at ¶¶ 31-33.)These included sales forecasts, data tracking tools, sales presentations, financial data, and customer lists, among other things. (Id. at ¶¶ 21-22, 33.) All Alliance employees expressly agreed that this information was proprietary and that each would protect the information as confidential. (Id. at ¶ 32.) Likewise, Alliance took its own measures to protect the confidential nature of this information. (Id. at ¶ 23.)
Thomas and his wife, Carrie Thomas, formed Achieve 1 and several related entities about four months before Thomas began employment with Alliance.2 (Id. at ¶¶ 9, 25, 34.) He never informed Alliance of his plans to compete in the industry, or even that he had formed Achieve 1. (Id. at ¶ 34.) As early as November 2011, while still employed by Alliance, Thomas and his subordinates began to use Alliance's trade secrets and proprietary information for the benefit of Achieve 1, thereby usurping Alliance's business opportunities for their own benefit. (Id. at ¶ 35.) At that time, Achieve 1 began to sell some of the same services and products offered by Alliance, competing directly for business from Alliance's existing and prospective customers. (Id. at ¶ 36.)
As but one example, Achieve 1 sold about $1 million in such products to an existing Alliance customer on May 18, 2012—approximately one month after Thomas resigned from Alliance. (Id.) Achieve 1 could not have reasonably executed this and other such transactions without using Alliance's certifications, trade secrets, and goodwill. (Id. at ¶ 36.) Numerous specific examples of similar transactions betweenAchieve 1 and Alliance's customers are described in the Complaint, all occurring while Alliance continued to employ Thomas or at least some of his subordinates who would later resign to join Achieve 1. (Id. at ¶¶ 37-49, 55-60.) Every "Former Employee Defendant" is alleged to have engaged in at least one specific transaction—except Defendant Ralston. (See id.) There is no allegation that he engaged in any particular transaction. And unlike the other "Former Employee Defendants," Alliance does not indicate exactly when, or under what conditions, Ralston ended his employment with Alliance. (Id. at ¶¶ 65, 66.)
Upon learning of these events, Alliance filed a ten-count Complaint against the "Former Employee Defendants," Carrie Thomas, and all Achieve 1 entities. Pertaining to Ralston, who is grouped with the other "Former Employee Defendants," Alliance asserts nine claims: (1) breach of fiduciary duty; (2) aiding and abetting breach of fiduciary duty; (3) misappropriation of trade secrets; (4) conversion; (5) tortious interference with contract; (6) tortious interference with existing contract, contract expectancy, prospective business relationship and economic advantage; (7) common law conspiracy; (8) statutory business conspiracy under Va. Code §§ 18.2-499, -500; and, (9) fraud. Ralston moves to dismiss each of these claims under Fed. R. Civ. P. 12(b)(6), in large part because of Alliance's attempt to levy allegations against the "Defendants" indiscriminately, never offering any allegations against Ralston specifically.
"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, orthe applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citation omitted). "Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief,'" to "'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A complaint need not assert "detailed factual allegations," but must contain "more than labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555 (citations omitted). Thus, the "[f]actual allegations must be enough to raise a right to relief above the speculative level," id. (citation omitted), to one that is "plausible on its face," id. at 570, rather than merely "conceivable." Id. In considering such a motion, a plaintiff's well-pleaded allegations are taken as true and the complaint is viewed in the light most favorable to the plaintiff. T.G. Slater, 385 F.3d at 841 (citation omitted). Legal conclusions enjoy no such deference. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
In addition to the general pleading requirements of Rule 8, the "circumstances" of fraud must be pled with particularity, except that allegations of scienter only need to be alleged generally. Fed. R. Civ. P. 9(b); Iqbal, 556 U.S. at 686. These "circumstances" are "the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby." Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999) (citation omitted).
Alliance's allegations paint a detailed picture with respect to most Defendants; but specifics as to Ralston's involvement are conspicuously absent. The circumstances of his involvement in the conspiracy are attenuated in several respects. He was hired a mere month before Thomas's resignation and nearly four months after the conspiracy is alleged to have begun.3 Unlike the other conspirators, Alliance has failed to indicate the date of Ralston's resignation, stating only that he "now works for the Achieve 1 Defendants." (Compare Compl. at ¶ 13 with Compl. at ¶¶ 65-66.) With the exception of Ralston, each former employee named in the Complaint is alleged to have participated in at least one specific transaction. (Id. at ¶¶ 37-49, 56-58.) Only two clearly alleged facts connect Ralston to the events leading up to this litigation: 1) he was hired by Alliance weeks before Thomas's resignation and 2) he now works for Achieve 1. (Id. at ¶¶ 13, 29.)
All other allegations against Ralston are against "the Defendants" generally. While the Court is not aware of any bright-line prohibition on pleading facts in this manner, any such allegations must nevertheless follow the strictures of Rule 8(a) and, where appropriate, Rule 9(b). Indeed, other courts have at times struggled with allegations drafted in this manner, finding the failure to meet Rule 9's heightened standard "exacerbated" where "multiple defendants are involved, but the complaint doesnot clearly identify which Defendant played which role." Grant v. Shapiro & Burson, LLP, 871 F. Supp. 2d 462, 466 (D. Md. 2012); see also Goodrow v. Friedman & Macfadyen, P.A., No. 3:1 lcv20, 2012 U.S. Dist. LEXIS 182188, at *9 (E.D. Va. Dec. 27, 2012) (quoting Grant, 871 F. Supp. 2d at 466). In the Complaint now under review, many of the omnibus allegations against "the Defendants" are conclusory, meriting minimal credit. Iqbal, 556 U.S. at 678. Thus, the analysis requires the Court to parse each claim to determine whether the undifferentiated allegations, if true, plausibly state a claim against Ralston on each count.
The sufficiency of all but one of the claims at issue is determined solely by analysis under Fed. R. Civ. P. 8(a). Thus, each claim must be accompanied by factual allegations that "raise a right to relief above the speculative level," Twombly, 550 U.S. at 555 (citations omitted), such that the claim is "plausible on its face." Id. at 570. In conducting the appropriate review, the Court must remain mindful of the indiscriminate character of those allegations against the "De...
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