American Honda Motor v. Motorcycle Info. Network

• Citation: 390 F.Supp.2d 1170
• Decision Date: 10 May 2005
• Docket Number: No. 5:04-cv-12-Oc-10GRJ.,5:04-cv-12-Oc-10GRJ.
• Parties: AMERICAN HONDA MOTOR CO., INC., a foreign corporation, Plaintiff, v. MOTORCYCLE INFORMATION NETWORK, INC., a Florida corporation, Gregory S. Schweighart, Defendants.
• Court: U.S. District Court — Middle District of Florida

390 F.Supp.2d 1170

AMERICAN HONDA MOTOR CO., INC., a foreign corporation, Plaintiff, v. MOTORCYCLE INFORMATION NETWORK, INC., a Florida corporation, Gregory S. Schweighart, Defendants.

No. 5:04-cv-12-Oc-10GRJ.

United States District Court, M.D. Florida, Ocala Division.

May 10, 2005.

COPYRIGHT MATERIAL OMITTED

Hal K. Litchford, Scott K. Lippman, Orlando, FL, for Plaintiff.

Gregory S. Schweighart, Homosassa, FL, pro se.

ORDER

HODGES, District Judge.

This action arises out of a business relationship between Plaintiff American Honda Motor Company, Inc. and Defendant Motorcycle Information Network, Inc. The Plaintiff's complaint sought declaratory relief (Doc. 1); however, the gravamen of the case is the Defendants' amended counterclaim (Doc. 50). Essentially, the Defendants claim that the Plaintiff induced them with promises of confidentiality and future business dealings to divulge confidential information about a telematic system for motorcycles and then misappropriated that information to develop its own similar system. Before the Court is the Plaintiff's motion for dismissal of most of the claims in the amended counterclaim (Doc. 51). The Plaintiff does not dispute that the Defendants have properly stated a claim under Florida's Uniform Trade Secrets Act, §§ 688.001, et seq. ("FUTSA"). However, it argues that the remaining claims (deceptive and unfair trade practices breach of oral confidentiality agreement, breach of contract implied in law/quasi contract, fraud, negligent misrepresentation, and constructive fraud) should be dismissed as preempted by FUTSA or because the Defendants have otherwise failed to state a claim. For the reasons that follow, the motion will be granted in part and denied in part. The Court concludes that the FUSTA preemption argument is unavailing but that the breach of contract implied in law (quasi contract) and the constructive fraud counts (counts four and seven) should be dismissed for failure to state a claim.

Background and Facts

The Plaintiff is American Honda Motor Company, Inc. ("Honda"), a California corporation and global manufacturer and seller of motorcycles, automobiles, and other motorized vehicles. The Defendants are Motorcycle Information Network Inc. ("MIN"), a Florida corporation, and its principal, Gregory S. Schweighart, a resident of Florida.¹

Sometime prior to October of 2000, MIN, through its agents and employees, conceived of the idea for a novel telematic system for motorcycle riders. The term "telematics" refers to the combination of telecommunications and computing or data communications between systems and devices.² In its telematic system, MIN envisioned an onboard computer system consisting of embedded hardware and software which would allow motorcycle riders to access telecommunication and navigation services, as well as other information services and features, via the Internet from their vehicles.³ MIN considered the system as envisioned to be more advanced than any telematics system then available or under development, and took steps to keep its ideas confidential when prospecting for potential investors and business partners. MIN never went further in developing the system than creating "a paper, or hard copy, version."⁴

During October of 2000, Mr. Schweighart, as principal of MIN, met with Honda agents at several motorcycle-related public events. At these meetings, Schweighart gave the agents a very general description of the system, without divulging any confidential information, in order to see if Honda was interested in either developing the system under the Honda brand or providing funding for MIN to pursue development. Schweighart told Honda that he could not discuss the specific details of the system unless Honda entered into a confidentiality agreement. The agents told Schweighart that they were not authorized to execute a confidentiality agreement on behalf of Honda, but led Schweighart to believe that such an agreement was merely a formality and that MIN's trade secrets would nevertheless be held in confidence by the agents. Schweighart was told by Honda that if he continued to demand "trivial" things such as signed confidentiality agreements, then Honda "might just close the doors that had graciously been opened for MIN concerning this opportunity."⁵ In reliance on these representations, Schweighart disclosed to Honda's agent confidential information relating to the telematic system. Thereafter, Honda represented that it was interested in developing the system under its name or by funding MIN, and that MIN should forgo entering into any agreements with other businesses to market or sell the system.

Between October of 2000 and October of 2001, Schweighart and agents of Honda corresponded by email and telephone. Over the course of this one-year period, Schweighart revealed to Honda further details and technical information about how the proposed system would operate. During this time, Honda continued to refuse to formalize its relationship with MIN in a written agreement. MIN nevertheless abstained from seeking funding or sponsorship from any individual or other entity and did not attempt to market or sell the paper version of the system. In October of 2001, after obtaining the confidential details of the system, Honda told Schweighart that it was not interested in going forward with a business relationship with MIN on any terms and ceased all communication with MIN. Sometime thereafter, Honda began to market and sell in its motorcycles an embedded telematics system substantially similar to the system first conceptualized by MIN.

On December 15, 2003, Mr. Schweighart wrote to Honda demanding relief and enclosed a draft complaint alleging, inter alia, theft of trade secrets and breach of agreement.⁶ This prompted Honda to file suit in this Court, seeking a declaration that Honda's system does not infringe any intellectual property rights held by the Defendants. The Defendants answered and filed a counterclaim (Doc. 19), which was subsequently amended (Doc. 50). The amended counterclaim is framed in seven counts: (1) theft of trade secrets, in violation of Florida's Uniform Trade Secrets Act, §§ 688.001, et seq. ("FUTSA"); (2) deceptive and unfair trade practices, in violation of Florida's Deceptive and Unfair Trade Practices Act, §§ 501.201, et seq. ("FDUTPA"); (3) breach of oral confidentiality agreement; (4) breach of contract implied in law/quasi contract; (5) fraud; (6) negligent misrepresentation; and (7) constructive fraud. The Plaintiff moves to dismiss counts two through seven as preempted by FUTSA or for otherwise failing to state a claim upon which relief may be granted.

Motion to Dismiss Standard

Determining the propriety of granting a motion to dismiss requires courts to accept all the factual allegations in the complaint as true and to evaluate all inferences derived from the facts in the light most favorable to the plaintiff.⁷ In passing on a motion to dismiss under Rule 12(b)(6), the Court is mindful that "[d]ismissal of a claim on the basis of barebones pleadings is a precarious disposition with a high mortality rate."⁸ As the Supreme Court declared in Conley v. Gibson, a complaint should not be dismissed for failure to state a claim unless it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief."⁹ Thus, if a complaint "shows that the Plaintiff is entitled to any relief that the Court can grant, regardless of whether it asks for the proper relief," it is sufficiently plead.¹⁰ "[T]he threshold of sufficiency that a complaint must meet to survive a motion to dismiss for failure to state a claim is exceedingly low."¹¹ Federal Rule of Civil Procedure 8(a) requires only a "short and plain statement of the claim showing that the pleader is entitled to relief."¹² Liberal notice pleading standards embodied in Rule 8(a) "do not require that a plaintiff specifically plead every element of a cause of action"¹³ or set out in precise detail the specific facts upon which he bases his claim.¹⁴ The complaint must only "contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory."¹⁵ However, to survive a motion to dismiss, a plaintiff must do more than merely "label" his claims.¹⁶ "[C]onclusory allegations, unwarranted factual deductions or legal conclusions masquerading as facts will not prevent dismissal [for failure to state a claim]."¹⁷

Discussion

The Plaintiff moves to dismiss counts two through seven as preempted by FUTSA. The Plaintiff also moves to dismiss counts two, three, four, and seven for otherwise failing to state a claim upon which relief may be granted. Each argument will be considered in turn. For the sake of expediency, the Court will consider the preemption issue last.¹⁸

A. Whether the Defendants Lack Statutory Standing to Sue Under FDUTPA

Count two of the Defendants' amended counterclaim is predicated on alleged violations of Florida's Deceptive and Unfair Trade Practices Act, §§ 501.201, et seq. ("FDUTPA"). The Plaintiff moves to dismiss this claim, arguing that the Defendants lack standing under the statute because they are not "consumers" of Honda and because the applicable version of the statute only permits "consumers" to sue.

Prior to its amendment, § 501.211(2) of FDUTPA provided:

In any individual action brought by a consumer who has suffered a loss as a result of a violation of this part, such consumer may recover actual damages, plus attorney's fees and court costs as provided in s 501.2105....¹⁹

Section 501.211(2) was amended effective July 1, 2001, and the class of potential claimants was broadened by the substitution of the word "person" for "consumer." The statute now reads:

In any action brought by a person who has suffered a loss as a result of a violation of this part, such person may recover actual damages, plus...