Am. Registry, LLC v. Yonah Hanaw, Michael Levy, Showmark Holdings, LLC

• Court: U.S. District Court — Middle District of Florida
• Writing for the Court: JOHN E. STEELE
• Decision Date: 16 July 2014
• Docket Number: Case No: 2:13-cv-352-FtM-29CM
• Citation: Am. Registry, LLC v. Hanaw, Case No: 2:13-cv-352-FtM-29CM (M.D. Fla. Jul 16, 2014)
• Parties: AMERICAN REGISTRY, LLC, a Delaware limited liability company, Plaintiff, v. YONAH HANAW, MICHAEL LEVY, SHOWMARK HOLDINGS, LLC, a Delaware limited liability company, and SHOWMARK MEDIA, LLC, a Delaware limited liability company, Defendants.

AMERICAN REGISTRY, LLC, a Delaware limited liability company, Plaintiff, v. YONAH HANAW, MICHAEL LEVY, SHOWMARK HOLDINGS, LLC,a Delaware limited liability company, and SHOWMARK MEDIA, LLC,a Delaware limited liability company, Defendants.

Case No: 2:13-cv-352-FtM-29CM

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION

Dated: July 16, 2014

OPINION AND ORDER

This matter comes before the Court on review of defendants' Motion to Dismiss Third Amended Complaint (Doc. #42) filed on January 20, 2014. Plaintiff filed a Response (Doc. #46) on February 3, 2014, and defendants, with leave of the Court, filed a Reply (Doc. #49) on February 27, 2014. Also before the Court is defendant Michael Levy's Motion to Dismiss Third Amended Complaint for Lack of Personal Jurisdiction (Doc. #43) filed on January 20, 2014. Plaintiff filed a Response (Doc. #45) on February 3, 2014.

I.

On May 7, 2013, plaintiff American Registry, LLC (plaintiff) filed a five-count Complaint against Yonah Hanaw (Hanaw), MichaelLevy (Levy), Showmark Holdings, LLC (Showmark Holdings), and Showmark Media, LLC (Showmark Media). (Doc. #1.) In order to resolve jurisdictional deficiencies, plaintiff filed a Second Amended Complaint (Doc. #7) on May 22, 2013. Thereafter, Levy filed a motion to dismiss for lack of personal jurisdiction (Doc. #22), and the remaining defendants filed a motion to dismiss for failure to state a plausible claim (Doc. #23). On December 5, 2013, the Court dismissed the Second Amended Complaint as inadequately pled and provided plaintiff with an opportunity to amend. (Doc. #35.) Plaintiff filed a five-count Third Amended Complaint on December 19, 2013. In support thereof, plaintiff alleges as follows:

Plaintiff sells customized achievement recognition items, such as plaques, marquees, crystals, counter displays, and banners, throughout the United States. In connection with its business operations, plaintiff has developed and acquired an extensive list of trade secrets necessary to conduct its business operations, including, but not limited to, its business plan; customer lists; system architecture; financial data; profits and profit margins; statistical history with its customers and vendors; computer programs and software concerning its entire business operations; research and development information related to its customers and products offered for sale; information about its strategic partners and relationships with them; and data andinformation on its employees, independent contractors, and third party vendors (collectively, "Proprietary Information"). By utilizing this information, plaintiff is able to maintain a competitive advantage in the personal achievement recognition market.

Defendant Yonah Hanaw, a citizen and resident of Israel, worked as a sales agent and independent contractor for plaintiff from November 2003 until his termination on March 26, 2010. As a sales agent, Hanaw was required to sign a Sales Agent Program Agreement on November 1, 2009.¹ The Sales Agent Program Agreement provides, in relevant part, that the sales agent agrees to treat all confidential business information and trade secrets as confidential and proprietary to plaintiff and is prohibited from using such information for his own benefit or for the benefit of another. Upon separation from the company, the sales agent shall deliver all records, data, information, and other documents produced or acquired and all copies thereof to plaintiff. (Doc. #36-2.)

After his termination, Hanaw met with Michael Levy, also a citizen and resident of Israel, to discuss the formation and organization of a company that would sell customized achievementrecognition items through an e-commerce website. On May 12, 2010, Hanaw and Levy formed Showmark Media, LLC, a Florida limited liability company, but dissolved it on July 19, 2010. After the dissolution of the Florida limited liability company, Hanaw and Levy formed Showmark Media, LLC, a Delaware limited liability company.²

While working as an independent contractor for plaintiff, Hanaw became intimately familiar with, had access to, and acquired extensive knowledge of plaintiff's Proprietary Information, and was privy to plaintiff's business and marketing strategies and plans, costs, pricing, customer and supplier relationships, and financial strategies. Prior to his termination, Hanaw "physically thieved, copied, reproduced, replicated, converted, and misappropriated" as much of plaintiff's confidential and Proprietary Information as possible. (Doc. #36, ¶ 46.) Hanaw has utilized and disclosed plaintiff's Proprietary Information in the operation of Showmark Media. Specifically, Hanaw has used the Proprietary Information to emulate plaintiff's business model and to directly target plaintiff's customers.

The Third Amended Complaint sets forth the following five claims based on the alleged misappropriation of trade secrets: breach of contract against Hanaw only (Count I); violation of the Florida Uniform Trade Secrets Act (FUTSA) against all defendants (Count II); violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) against all defendants (Count III); and tortious interference with business relationships against all defendants (Counts IV and V). Levy seeks dismissal from this lawsuit on the grounds that plaintiff has failed to allege facts that establish personal jurisdiction. The remaining defendants contend that plaintiff's trade secret claim is barred by the statute of limitations and is inadequately pled. Defendants also assert that Counts III, IV, and V are preempted by the FUTSA.

II.

The Court will first address defendants Hanaw, Showmark Media, and Showmark Holding's motion to dismiss.

A. Motion to Dismiss Standard

Under Federal Rule of Civil Procedure 8(a)(2), a Complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). This obligation "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). To survive dismissal, the factual allegationsmust be "plausible" and "must be enough to raise a right to relief above the speculative level." Id. at 555. See also Edwards v. Prime Inc., 602 F.3d 1276, 1291 (11th Cir. 2010). This requires "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted).

In deciding a Rule 12(b)(6) motion to dismiss, the Court must accept all factual allegations in a complaint as true and take them in the light most favorable to plaintiff, Erickson v. Pardus, 551 U.S. 89 (2007), but "[l]egal conclusions without adequate factual support are entitled to no assumption of truth," Mamani v. Berzain, 654 F.3d 1148, 1153 (11th Cir. 2011) (citations omitted). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. "Factual allegations that are merely consistent with a defendant's liability fall short of being facially plausible." Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012) (internal quotation marks and citations omitted). Thus, the Court engages in a two-step approach: "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679.

B. Timeliness of Plaintiff's Claim Under the FUTSA

Defendants assert that plaintiff's claim for misappropriation of trade secrets is clearly barred by the three year statute of limitations. Under Florida law, an action for misappropriation of trade secrets "must be brought within 3 years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered." Fla. Stat. § 688.007.

The statute of limitations is an affirmative defense, and the burden of proving an affirmative defense is on the defendant. Tello v. Dean Witter Reynolds, Inc., 410 F.3d 1275, 1292 (11th Cir. 2005). Dismissal under Rule 12(b)(6) on statute of limitations grounds is only appropriate if it is apparent from the face of the complaint that the claim is time-barred. Id. A motion to dismiss on statute of limitations grounds should not be granted where resolution depends either on facts not yet in evidence or on construction of factual ambiguities in the complaint in defendants' favor. Omar ex rel. Cannon v. Lindsey, 334 F.3d 1246, 1252 (11th Cir. 2003).

After reviewing the allegations in the Third Amended Complaint, the Court is unable to determine when the alleged misappropriation was discovered or should have been discovered by the exercise of reasonable diligence. Because it is not clear on the face of the complaint that plaintiff's claim for misappropriation of trade secrets is time-barred, defendants'motion to dismiss Count II as untimely is denied. La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845-50 (11th Cir. 2004).

C. Violation of the FUTSA

In order to state a plausible claim for misappropriation of trade secrets under the FUTSA, Fla. Stat. § 688.001 et seq., plaintiff must allege that (1) it possessed secret information and took reasonable steps to protect its secrecy and (2) the secret it possessed was misappropriated, either by one who knew or had reason to know that the secret was improperly obtained or by one who used improper means to obtain it. VAS Aero Servs., LLC v. Arroyo, 8 60 F. Supp. 2d 1349, 1358 (S.D. Fla. 2012) (citing Del Monte Fresh Produce Co. v. Dole Food Co., 136 F. Supp. 2d 1271, 1291 (S.D. Fla. 2001)). The Court previously dismissed plaintiff's claim for misappropriation of trade secrets because the broad list of trade secrets in the Second Amended Complaint failed to give defendants notice of what was misappropriated and was devoid of factual allegations supporting the...