Base One Techs., Inc. v. Ali

• Decision Date: 20 January 2015
• Docket Number: Civil Action No. 14–1520 JEB
• Citation: 78 F.Supp.3d 186
• Parties: Base One Technologies, Inc., Plaintiff, v. Mohammed Ali, et al., Defendants.
• Court: U.S. District Court — District of Columbia

78 F.Supp.3d 186

Base One Technologies, Inc., Plaintiff

v.Mohammed Ali, et al., Defendants.

Civil Action No. 14–1520 JEB

United States District Court, District of Columbia.

Signed January 20, 2015

Michael Yim, Roshni Chaudhari, Ford Harrison LLP, New York, NY, B. Patrice Clair, Ford Harrison LLP, Washington, DC, for Plaintiff.

Christopher Rollis Wampler, Wampler & Souder, LLC, Kensington, MD, for Defendants.

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

One reason that companies insert non-compete provisions in their employment contracts is to prevent their workers from stealing their clients. That, claims Plaintiff Base One Technologies, is precisely what happened here.

Base One is an information-technology support firm that provides recruiting and staffing services to its clientele. Several years ago, it hired Defendants Mohammed Ali and Hossein Beyzavi and designated them to provide IT assistance to International Business Machines Corporation, one of Base One's bread-and-butter clients. According to Plaintiff, however, Defendants did more than assist: they exploited the access they had been granted and—while still employed with Base One—offered their services to IBM for full-time employment. That company ultimately hired both Defendants directly, thereby ousting Plaintiff from the picture and depriving it of potential revenue from continuing to staff those two positions.

Aggrieved by this abrupt turn of events, Base One turned to the courts. Its Complaint presents a veritable cornucopia of claims, including, inter alia, breach of contract, breach of fiduciary duty and the duty of loyalty, tortious interference with business relations, and unjust enrichment. Defendants have now filed a Motion to Dismiss. Although some of Plaintiff's allegations are facially deficient, others pass the relatively undemanding Rule 12(b)(6) bar. As a result, the Court will grant Defendants' Motion in part and deny it in part.

I. Background

According to its Complaint—which at this juncture the Court must credit—Plaintiff Base One Technologies is a “technology engineering services and support firm,” which recruits and staffs “a variety of IT disciplines,” including “network infrastructure support, software development and application services, information security, enterprise databases and warehousing, backup and recovery strategies, and project management.” Compl., ¶¶ 7–8. Its client base is principally comprised of companies operating within the telecommunications and financial spheres. See id., ¶ 9. The firm is incorporated under Delaware law and headquartered in New York. See id., ¶ 1.

Plaintiff's business model is fairly straightforward: it is essentially a matchmaker. Base One first confers with its clients to “determine their IT needs” and “the qualifications of the ideal candidate to provide those services.” Id., ¶ 9. It then recruits, vets, and hires—as its own employees—appropriately credentialed individuals who possess the requisite technical ability. See id., ¶¶ 9–12. As the final step, the newly hired employees are then matched to specific client projects, earning revenue for Base One for the length of their placements. See id. Plaintiff's “continued relationship with its clients, as well as [its] continued relationship with its employees,” are thus of “critical importance” to its success. Id., ¶ 17.

In December 2009, IBM engaged the firm to provide staffing assistance on a certain “Project.” See id., ¶ 12. The Project is ongoing and fully funded through June 2015, with a total value of over $10 million. See id. To date, approximately 32 Base One employees have worked for IBM in connection with the Project. See id.

In February 2012, Plaintiff hired Defendant Mohammed Ali to provide engineering assistance for the Project in the District of Columbia. See id., ¶ 13. Over a year and a half later, in December 2013, Defendant Hossein Beyzavi was hired to do the same. See id., ¶ 14. As a condition of employment with Base One, Defendants signed identical “Confidence and Non-Compete Agreement [s].” See id., ¶¶ 15, 27; see also id., Exhs. A & B (Ali and Beyzavi Agreements).

Pursuant to Section 1 of the Agreements, each Defendant “acknowledge[d]” the “substantial time, effort and money” expended by Plaintiff in identifying potential client business and qualified employees. See Agreements, § 1(B). The Agreements further spelled out Base One's concern that

the Employee will frequently be the principal intermediary and personal contact between [Base One] and its customers and it is, therefore, anticipated that because of the Employee's knowledge of the business of said persons or entities and the fact that personal loyalties may develop between the Employee and said persons or entities, such persons or entities might desire to place their IT business directly with the Employee rather than the Company at such time as the Employee is no longer employed by the Company.

Id., § 1(E).

Against that backdrop, Section 3 set forth certain restrictions that operate for the duration of an employee's tenure with Base One and for a one-year period thereafter. In relevant part, each Defendant agreed not to “market any Competitive type services directly or indirectly to any Base One clients” that had been assigned to him. See id., § 3(A). They also consented to refrain from

solicit[ing], contact[ing], represent[ing], or offer[ing] to represent the Company's Full-Time Employees and/or Independent Contractors, whether or not such solicitation, contact, or offer was initiated, prompted or in any other way developed by the Employee or by the other Full-Time Employee or Independent Contractor....

Id., § 3(B). The parties further stipulated that, in the event of breach, Base One would be entitled to equitable and injunctive relief in addition to any other available remedies. See id., § 6. Finally, Section 10 dictated that each Agreement would “be governed by and construed in accordance with the laws of the State of New York.”

All was quiet amongst the parties until June 2014. Base One claims that, around that time, it learned that Ali and Beyzavi had “conspired with one another to approach, and subsequently approached, IBM to market their own services for full-time employment with IBM.” Compl., ¶ 23. According to the Complaint, Defendants took these steps “while working for Base One on the Project”—that is, during the course of their employment with Base One. Id. “As a result of their overtures,” alleges Plaintiff, “Defendants were hired by IBM to ... perform[ ] materially the same services they had been providing to IBM through their employment with Base One and their assignment to the Project.” Id., ¶ 24. Ali and Beyzavi began employment with IBM on or around June 10, 2014, thus “depriving Base One of substantial revenue it would have received for the continued placement of Defendants to IBM through the Project end date of June 2015.” Id., ¶ 25.

Dismayed at this perceived betrayal, Base One filed suit in this Court on September 5, 2014, asserting sundry contractual, tort, and fiduciary causes of action. Defendants have now filed virtually identical Motions to Dismiss. For the sake of simplicity, the Court refers to the two submissions jointly as “Defendants' Motion” or “MTD.”

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), the Court must dismiss a claim for relief when the complaint “fail[s] to state a claim upon which relief can be granted.” In evaluating a motion to dismiss, the Court must “treat the complaint's factual allegations as true and must grant plaintiff the benefit of all inferences that can be derived from the facts alleged.” Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C.Cir.2000) (citation and internal quotation marks omitted); see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A court need not accept as true, however, “a legal conclusion couched as a factual allegation,” nor an inference unsupported by the facts set forth in the complaint. Trudeau v. FTC, 456 F.3d 178, 193 (D.C.Cir.2006) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ). Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), “a complaint must contain sufficient factual matter, [if] accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation omitted). A plaintiff may survive a Rule 12(b)(6) motion even if “recovery is very remote and unlikely,” but the facts alleged in the complaint “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ).

III. Analysis

Plaintiff's Complaint advances eight distinct claims, each of which Defendants dispute: (1) breach of Section 3(A) of the Non-Compete Agreement; (2) breach of Section 3(B) of the same Agreement; (3) breach of fiduciary duty; (4) unfair competition; (5) tortious interference with prospective business relations; (6) unjust enrichment; (7) faithless servant; and (8) a count styled “injunctive relief.” Base One has since conceded the infirmity of the fourth and fifth causes of action. See Opp. at 13 n.3. The Court will take up each of the remaining counts seriatim, ultimately concluding that Counts Two and Eight should be dismissed, but that the rest survive Defendants' Motion.

At the outset, the Court notes that federal jurisdiction in this case is based on diversity of citizenship, see 28 U.S.C. § 1332, and that, accordingly, state law provides the substantive rules of law with regard to all claims. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Here, the Non-Compete Agreement executed by Defendants contains a choice-of-law provision stating...