Burns & Wilcox Ltd. v. CRC Ins. Servs.
| Decision Date | 20 April 2020 |
| Docket Number | Civil Action No. 19-CV-13167 |
| Parties | BURNS & WILCOX LTD., Plaintiff, v. CRC INSURANCE SERVICES, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
HON. BERNARD A. FRIEDMAN
This matter is presently before the Court on the motion of defendant Donald Carson Sr. ("Carson Sr.") to dismiss [docket entries 54] and the motion of defendants Sheila Hailey, Donald Carson Jr., Gregory T. Watson, William Lee Coleman, Paige Gibson, Amanda Ruppel, Andrew Carson, Matthew Vaughan, Ben Zhou, Anthony Cugini, Peter Ulmer, and Matthew Swaby to dismiss [docket entry 70]. Plaintiff has responded and defendants have replied. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court shall decide these motions without a hearing. For the reasons stated below, the Court shall deny defendant Carson Sr.'s motion and grant the other defendants' motion.
Plaintiff Burns & Wilcox, Ltd. ("B&W") "is a large insurance wholesale broker and underwriting manager that specializes in securing insurance coverage for hard-to-place risks across the United States and Canada." Am. Compl. ¶ 10. It has at least forty-four offices in twenty-six states and approximately 1,000 employees. Id. ¶¶ 11-12. Defendant CRC Insurance Services, Inc. ("CRC") "operates as a wholesale insurance broker that offers property insurance for various risks [and] [i]t operates across the United States, and it has offices in many of the same locations [where B&W] has offices." Id. ¶ 15. B&W and CRC are competitors. Id. ¶ 16. Plaintiff alleges that in October 2019 one of its vice-presidents, defendant Carson Sr., "stood up on a table at [B&W's] Arlington office and announced to the gathered employees that he was immediately resigning from [B&W] to work with the Dallas office of Defendant CRC." Id. ¶ 3. Defendants Sheila Hailey and Donald Carson Jr. allegedly made the same announcement at that time. Id. ¶ 4. The remaining defendants, also former employees of B&W, have likewise left B&W to work for CRC, allegedly all at the behest of Carson Sr. and CRC.1 Id. ¶¶ 5-8.
Plaintiff claims that Carson Sr. has breached his fiduciary duty to B&W (Count I); that CRC aided and abetted him in doing so (Count II); that CRC and Carson Sr. have tortiously interfered with plaintiff's business relationships and contracts with its employees (Count III); that CRC and Carson Sr. have been unjustly enriched by soliciting and hiring plaintiff's former employees (Count IV); that all of the defendants have misappropriated plaintiff's trade secrets, in violation of the Defend Trade Secrets Act and the Michigan Uniform Trade Secrets Act (Counts V and VI); that all of the individual defendants other than Carson Sr. have breached various contractual agreements with plaintiff (i.e., non-disclosure and non-solicitation agreements) (Count VII); and that all of the defendants participated in a "civil conspiracy to wrongfully deprive [B&W] of its confidential and protected information, to encourage [B&W] employees to defect, and/or to wrongfully compete with [B&W]" (Count VIII). Plaintiff seeks injunctive relief, damages, interest, costs, and attorney fees.
In this motion, defendant Carson Sr. seeks dismissal of plaintiff's breach of fiduciaryduty claim. He argues that "[p]laintiff fails to state a claim against Carson, Sr. for breach of fiduciary duty because it fails to plead facts supporting a breach of any duties arising from a fiduciary relationship between Plaintiff and Defendant." Def.'s Br. ¶ 3. Alternatively, defendant argues that plaintiff should provide a more definite statement of the facts supporting this claim.
Under Fed. R. Civ. P. 12(b)(6), the Court may dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a motion to dismiss, a complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for misconduct alleged." Id. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Defendant cites Creelgroup v. Brieden, No. 09-12493, 2010 WL 3023815, at *3 (E.D. Mich. July 29, 2010), for its statement that "[a]n employer cannot maintain a claim for post-employment breach of fiduciary duty based on solicitation of former clients unless the parties executed an appropriate non-competition agreement." Defendant also notes plaintiff's concession that he did not sign such an agreement. Def.'s Br. ¶ 4 ). But plaintiff's breach of fiduciary duty claim against Carson Sr. is based on more than his alleged post-employment solicitation of plaintiff's employees. Plaintiff also alleges, for example, that Carson Sr. misappropriated trade secrets and used them to give CRC an unfair competitive advantage over plaintiff. As the court noted in Creelgroup, a former employee "may not use former employer'strade secrets." Creelgroup, 2010 WL 3023815, at *3.
The allegations in the amended complaint, which are quite detailed as to Carson Sr., more than suffice to "raise a right to relief above a speculative level" as regards plaintiff's breach of fiduciary claim. Such a claim has just three elements, namely, the existence of a fiduciary relationship, failure to observe a duty arising from this relationship, and damages. See Daneshvar v. Kipke, 266 F. Supp. 3d 1031, 1053 (E.D. Mich. 2017), aff'd, 749 F. App'x 986 (Fed. Cir. 2018). The Court is satisfied that this claim is sufficiently pled to defeat a challenge under Fed. R. Civ. P. 12(b)(6), and that plaintiff's allegations are not "so vague or ambiguous that the party cannot reasonably prepare a response," such that a more definite statement should be required under Fed. R. Civ. P. 12(e). Accordingly, the Court shall deny defendant Carson Sr.'s motion to dismiss or for a more definite statement.
All of the other individual defendants (hereinafter, "defendants") seek dismissal of all of the claims against them on the grounds that the amended complaint "does not state even a single specific factual allegation supporting the Counts alleged against [them]." Defs.' Mot. to Dismiss at 2. Defendants argue that the claims against them are supported only by "information and belief allegations" and "blanket allegations against a group," which do not satisfy the pleading requirements articulated in Twombly and Iqbal. Defs.' Br. at 4. Defendants argue that in each of the counts against them (V-VIII), the amended complaint makes no allegations against any of them specifically, but instead makes general or unclear allegations regarding "some or all of the remaining defendants" (Am. Compl. ¶ 229), "Carson Sr. and . . . additional defendants" (id. ¶ 230), "other individual defendants" (id. ¶¶ 235, 247), "all of the remaining defendants" (id. ¶ 242), "all theindividual defendants" (id. ¶¶ 248, 269), "individual defendants" (id. ¶ 249), "each of the defendants named in the count" (i.e., all individual defendants except Carson Sr.) (id. ¶ 257), "several of them" (id. ¶ 261), "most or all of the defendants" (id. ¶ 262), "one or more of the defendants" (id. ¶¶ 263, 264), "each of the individual defendants" (id. ¶ 270), and "each member of the conspiracy" (id. ¶ 271). Defendants cite authority for the proposition that such "group" allegations do not suffice to state a claim against any particular individual.
In response, plaintiff argues that the amended complaint's allegations suffice to give all of the defendants fair notice of the claims and that sufficient facts are alleged to satisfy Twombly and Iqbal. Plaintiff notes that it specifically alleges that each of the defendants signed an agreement containing provisions prohibiting them from disclosing B&W's confidential information and from soliciting B&W's employees or clients. See Am. Compl. ¶¶ 117-18 (Hailey), 119 (Carson Jr.), 120 (Coleman), 121 (Gibson), 124 (Andrew Carson), 130 (Vaughn), 131 (Zhou), 135 (Ulmer), 138-39 (Watson), 140 (Ruppel), 141 (Cugini), and 142 (Swaby). Plaintiff also notes that the amended complaint specifically alleges that each of the defendants resigned from B&W in October and November 2019. See id. ¶¶ 31 (Hailey), 34 (Carson Jr.), 39 (Watson), 42 (Coleman), 45 (Gibson), 48 (Ruppel), 57 (Andrew Carson), 78 (Vaughan), 81 (Zhou), 90 (Cugini), 96 (Ulmer), and 99 (Swaby). But this is the extent of the specific facts alleged against each individual defendant.
The remaining allegations against these defendants are phrased in general, broad-brush terms that reveal no factual basis from which the Court can infer that a claim has been stated against any of the defendants specifically. In response to this motion, plaintiff argues that the amended complaint alleges that defendants misappropriated trade secrets and confidential information and that they solicited employees and clients. Plaintiffs direct the Court's attention toparagraphs 9, 190, 247-49, 269-74 of the amended complaint. Pl.'s Resp. at 6-7. But these paragraphs are simply further examples of general allegations that do little more than recite the elements of claims, rather than state facts from which wrongdoing can reasonably be inferred:
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