Better Holdco, Inc. v. Beeline Loans, Inc.
| Decision Date | 30 March 2023 |
| Docket Number | 20 Civ. 8686 (JPC) (SN) |
| Parties | BETTER HOLDCO, INC., Plaintiff, v. BEELINE LOANS, INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Better Holdco, Inc. (“Better”) brings this action against Defendant Beeline Loans, Inc. (“Beeline”) alleging violations of the Defend Trade Secrets Act (the “DTSA”), 18 U.S.C. § 1836, and misappropriation, tortious interference with a contract, and aiding and abetting the breach of a fiduciary duty under New York common law. Better's claims stem from the actions of its former marketing analyst, non-party Jack Abramowitz, who left Better's employ to work for Beeline and allegedly shared with Beeline several pieces of Better's proprietary information, in violation of a confidentiality agreement that Abramowitz signed when he started working for Better.
Beeline has moved for summary judgment on all four of Better's claims, and the parties have moved to exclude testimony presented by each other's proffered experts under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). For the following reasons, Better's motion to exclude various opinions from Beeline's experts is granted in part and denied in part, Beeline's motions to exclude expert testimony is denied, and Beeline's motion for summary judgment is granted as to Better's tortious interference and aiding and abetting claims and denied in all other respects.
Better and Beeline are both mortgage lending platforms. Pl. 56.1 Stmt. ¶¶ 2-3. Better was founded in in 2014, while Beeline was formed in 2018 and announced the launch of its mortgage lending platform in 2020. Id. ¶¶ 2, 34, 44. In September 2018, Abramowitz accepted a position as a marketing analyst with Better. Id. ¶ 27. Prior to commencing work, Abramowitz signed a “Proprietary Information and Intervention Agreement” (the “PII Agreement”). Id. ¶¶ 5, 28. The PII Agreement, among other things, prohibits unauthorized disclosure and use of Better's confidential and proprietary information and trade secrets. Id. ¶ 29; see also Dkt 243-32 at ECF pp. 3-8 (“PII Agmt.”). Specifically, the Agreement states as follows:
Maintaining Confidential Company Information. I will not, during and after my employment with Better Holdco, Inc. . . . (i) directly or indirectly disclose to any person or entity, or use, except for the sole benefit of the Company, any of the Company's confidential or proprietary information or trade secrets . . . without the prior written permission from the Company's Chief Legal Officer. By way of illustration and not limitation, Company Information shall include the Company's research and development plans or projects; data and reports; computer materials such as programs, instructions, source and object code, and printouts; inventions, developments, and discoveries; data compilations, development databases; business improvements; business plans (whether pursued or not); ideas; budgets; unpublished financial statements; licenses; pricing strategy and cost data; information regarding the skills and compensation of employees of the Company; the protected health information of employees of the Company; strategies, forecasts and other marketing techniques; and the identities of the Company's suppliers and contractors, and all information about those supplier and contractor relationships such as contact person(s), pricing and other terms. I further acknowledge and recognize that all Company Information is confidential and proprietary, and shall remain the exclusive property of the Company.
PII Agmt. ¶ 1. Abramowitz also signed Better's Data and Information Security Policy when he accepted the job offer. Pl. 56.1 Stmt. ¶ 28; Dkt. 243-33. Abramowitz joined Better on October 2, 2018, and was subsequently promoted to the role of associate. Id. ¶¶ 4, 30, 33. His duties “included helping the company market itself through various channels, including affiliate marketing, paid search, direct mail, digital advertising and print advertising.” Id. ¶ 32. While at Better, Abramowitz was also subject to the “100+-page Information Security Management Program, which contain[ed] the company's policies regarding confidential information, including how such information is protected and how access to such information is regulated within the company.” Pl. 56.1 Stmt. ¶ 282.
In early 2020, Abramowitz began looking for a new job. Id. ¶ 42. While he initially sought a position with a venture capital firm, Abramowitz subsequently became interested in working for Beeline, id., and reached out to Beeline via email the day after Beeline announced the launch of its mortgage lending platform, id. ¶ 45. He eventually connected with Peter Gonzalez, Beeline's President and Chief Financial Officer, who then put Abramowitz in touch with Jay Stockwell, Beeline's Chief Marketing Officer. Id. ¶ 47. Executives at Beeline noted Abramowitz's experience in the U.S. mortgage market, gained from working at Better, which contrasted with their lack thereof. Id. ¶¶ 51-53. Abramowitz claimed “to have some unique knowledge that would help accelerate [Beeline's] marketing efforts,” id. ¶ 59, and during the interviews, he mentioned certain pieces of non-public information. For example, he told Stockwell that “Better just did a Series D (not yet public) that values them around 2B mark,” a piece of information that was useful to Beeline as something to point to get potential investors to view Beeline more favorably, even though Beeline knew that such information should not ordinarily be shared. Id. ¶¶ 56-60, 64-65.
On June 6, 2020, following an interview with Beeline's Chief Executive Officer, Nick Liuzza, id. ¶ 71, Abramowitz emailed Beeline a copy of the PII Agreement, attached to a thank-you email, id. ¶ 74; Dkt. 243-32. Characterizing the Agreement as a “non-compete,” Abramowitz asked Better's General Counsel and Chief Compliance Officer, Jessica Kennedy, for some “guidance . . . on how enforceable it is.” Dkt. 243-32 at 2; accord Pl. 56.1 Stmt. ¶¶ 55, 74. After Kennedy read the agreement, she and Gonzalez told Abramowitz that “we don't think there's much to worry about.” Pl. 56.1 Stmt. ¶¶ 76-77. Beeline sent Abramowitz a formal offer letter on June 15, 2020. Id. ¶ 78. Abramowitz accepted Beeline's offer on June 19, 2020, and quit his job at Better on the same day. Id. ¶ 83. He did not tell anyone at Better that he was going to work for Beeline. Id. ¶ 84. Abramowitz began working at Beeline on July 8, 2020. Id. ¶¶ 6, 117.
Better disabled Abramowitz's access to its computer network the day he left. Id. ¶ 87. Yet before Better had done so, Abramowitz downloaded over a dozen confidential documents belonging to Better onto his personal computer. Id. ¶ 86. While the record contains evidence of many instances where Abramowitz shared different pieces of confidential information with Beeline, there are three categories of information that are particularly relevant to Better's claims: (1) Better's Operating Model; (2) Better's Facebook Ad Data; and (3) Better's Partner Agreements (collectively, the “Better Information”). The Court addresses each in turn.
“The Operating Model is a massive Excel workbook comprised of dozens of worksheets which details Better's unique and proprietary approaches and methods for organizing, staffing (including proprietary compensation information and other information about Better's operations), and financing its business, as well as marketing and executing its business.” Id. ¶ 198. It includes “detailed historical data, and projections of, Better's performance.” Id. ¶ 199. For example, one of its tabs contains “Key Performance Indicators and Unit Economics,” which are “quantifiable measures of Better's financial and operational performance, including, among other things, counts of loan applications, interest rate locks, loans funded, and the associated revenues and profits earned.” Id. ¶¶ 200-01. This information would permit a competitor to replicate Better's staffing model and partnerships, and “benchmark the revenues they need to . . . secure fundraising.” Id. ¶¶ 215-16. Another tab in the Operating Model contains “details regarding the number of loans offered and sold to secondary market investors and the number of days Better holds onto loans before it sells them in the secondary market.” Id. ¶ 203. The Operating Model also includes information concerning Better's cash positions in 2019 and 2020, id. ¶¶ 205-06, and “details regarding Better's loans and marketing spend,” id. ¶ 211, including “the revenue Better expects to earn from those loans, and the costs, such as labor and customer acquisition expenses, that Better expects to incur originating the loans,” id. ¶ 212. Taken together, this information “constitutes a roadmap of Better's strategies which, in the hands of a competitor, could be used to replicate in a short time what Better has spent years developing.” Id. ¶ 214. Thus, “only a limited number of employees who are actively working on the Operating Model” have access to it, and such access is protected by “two-factor authentication.” Id. ¶¶ 284, 286.
Abramowitz began sharing information from the Operating Model with Beeline before he even started working there. For example, on July 1, 2020, Abramowitz sent Liuzza a projected valuation of Beeline that he had created using information gleaned from the Operating Model. Id. ¶ 108. Liuzza responded with questions, and noted that he wanted the information “for comp purposes” and “to develop Beeline's strategy to reach the same milestones as Better.” Id. ¶¶ 109-10. Abramowitz responded to Liuzza's questions and mentioned that he had...
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