Datto Inc. v. Braband

• Citation: 856 F.Supp.2d 354
• Decision Date: 29 February 2012
• Docket Number: Civil Action No. 3:11–cv–617 (VLB).
• Court: U.S. District Court — District of Connecticut
• Parties: DATTO INC., Plaintiff, v. Kathleen BRABAND, Defendant and Third–Party Plaintiff, v. Austin McChord and Tira Vanderlinden, Third Party Defendants.

856 F.Supp.2d 354

DATTO INC., Plaintiff,

v.Kathleen BRABAND, Defendant and Third–Party Plaintiff,

v.Austin McChord and Tira Vanderlinden, Third Party Defendants.

Civil Action No. 3:11–cv–617 (VLB).

United States District Court,

D. Connecticut.

Feb. 29, 2012.

Crystal L. Lyons, Joseph J. Laferrera, Sean W.S. Gilligan, Gesmer Updegrove LLP, Boston, MA, for Plaintiff and Third Party Defendants.

Edward J. Phillips, Keane & Beane, White Plains, NY, Timothy F. Butler, Tibbetts, Keating & Butler, Darien, CT, for Defendant and Third–Party Plaintiff.

MEMORANDUM OF DECISION GRANTING IN PART AND DENYING IN PART DEFENDANT AND THIRD–PARTY PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS [DKT. # 50] AND GRANTING IN PART AND DENYING IN PART THIRD PARTY DEFENDANTS' PARTIAL MOTION TO DISMISS [DKT. # 34]

VANESSA L. BRYANT, District Judge.

I. Introduction

This lawsuit arises out of a dispute between Plaintiff, Datto, Inc. [“Datto”] and Kathleen Braband [“Braband”], the former Vice President of Sales and Business Development for Datto. Plaintiff, Datto Inc., filed this lawsuit as a declaratory judgment action seeking an affirmative declaration that an employment letter is not an enforceable contract. Additionally, Datto filed several other claims against Braband, including a violation of the Computer Fraud & Abuse Act, 18 U.S.C. § 1030, a violation of the Connecticut Uniform Trade Secrets Act, Conn. Gen.Stat. § 35–50, et. seq., a computer related offense under Conn. Gen.Stat. § 52–570b, and several Connecticut common law causes of action, including breach of contract, breach of fiduciary duty, tortious interference with business relations, and trespass to chattels. Braband in turn has raised several counterclaims against Datto, as well as third party claims against Austin McChord [“McChord”], the founder and majority shareholder of Datto, and Tira Vanderlin [“Vanderlin”], the chief financial officer of Datto. Currently pending before the Court is a partial motion to dismiss [Dkt. # 34] filed by Datto, McChord and Vanderlin pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim, and a motion for judgment on the pleadings [Dkt. # 50] filed by Braband as to her First and Sixth Counterclaims, and dismissing Datto's First Claim.

II. Factual Background

The following facts are taken from the Datto's Complaint [Dkt. # 1] and Braband's Answer setting forth several counterclaims [Dkt. # 20].

Datto, founded in February 2007 by Austin McChord, is a company that provides designs for and markets computer hardware systems for use by businesses in the back-up and recovery of electronic data. [Dkt. # 20, Answer with Counterclaims, ¶¶ 75–76]. On February 4, 2009, McChord contacted Braband via email to offer her an employment position with Datto. [ Id. at ¶ 83]. At the time, Braband was enrolled in a training program at UBS. [ Id. at ¶ 81]. After a series of communications,both written and telephonic, McChord and Braband negotiated the terms of her employment. [ Id. at ¶ 85]. This understanding was memorialized in a letter dated April 1, 2009. [ Id.].

The April 1, 2009 employment letter [“Employment Letter”], signed by both Braband and McChord, set forth the terms of the employment agreement, providing that Braband would receive a 10% ownership interest in Datto on the date she was hired, subject to forfeiture if she left Datto prior to April 1, 2010. [Dkt. # 1, Compl., ¶¶ 7–8]; [Dkt. # 20, Answer, ¶¶ 86, 88]. Further, the Employment Letter provided that Braband would receive an additional 10% ownership interest in the Datto if she remained employed by Datto for an additional year and if the certain sales targets were achieved. [Dkt. # 1, Compl., ¶ 9]; [Dkt. # 20, Answer, ¶ 88].

Datto contends that Braband's period of employment with Datto was tumultuous, marked by incidents of subordination and a refusal to perform her job requirements beginning as early as the first week of her employment. Datto asserts that Braband refused to attend trade shows, market new product lines, and speak with other members of the sales department. [Dkt. # 1, Compl., ¶ 11]. As a result of this behavior, Datto reports that Braband was placed on probation in early November 2009. [ Id.]. Datto asserts that Braband continued to act in an insubordinate manner and was suspended in September 2010 for failure to perform her responsibilities. [ Id. at ¶ 12]. Datto further alleges that Braband acted in a consistently unprofessional manner, demonstrating an abrasive demeanor towards her colleagues prompting several employees to complain about her behavior. [ Id. at ¶ 13].

As the Vice President of Sales, Datto reports that Braband was responsible for developing business and researching competitors, and was thus given access to client information and history maintained primarily through a customer relationship management database [“CRM database”], which Braband could access remotely. [Dkt. # 1, Compl., ¶ 15]. Datto further alleges that on September 28, 2010, Braband signed an Employee Handbook provided by Datto outlining the company's performance and conduct expectations. [ Id. at ¶ 14]. The Handbook, signed by Braband, included a Confidentiality and Non–Solicitation Agreement prohibiting the disclosure of confidential information or trade secrets or the use of such information other than for Datto's sole benefit, and an agreement not to solicit current or prospective customers for one year following separation of employment. [ Id.].

On November 9, 2010, Braband was terminated from her employment at Datto. [Dkt. # 1, Compl., ¶ 17]; [Dkt. # 20, Answer, ¶ 113–14]. Following her termination, Datto alleges that Braband removed or retained files, data and information belonging to Datto from Datto computers and by accessing Datto's CRM database without authorization and deleted customer contact information and customer history within the database. [Dkt. # 1, Compl., ¶ 18]. Datto further alleges that Braband improperly retained an Apple iPad tablet belonging to Datto and withheld sales information belonging to Datto. [ Id. at ¶ 20]. Moreover, Datto asserts that Braband disclosed confidential information belonging to Datto, including the personal health information of Datto employees, and caused this information to be posted on an online forum. [ Id. at ¶ 21].

Datto reports that Braband is currently employed as the Vice President of Channel Development for PathSolutions, Inc. [Dkt. # 1, Compl., ¶ 22]. Datto asserts that Braband is using Datto's trade secrets and confidential information to market and sell products for her current employer, and that Braband, through her new position of employment, has solicited Datto's current, former and prospective customers. [ Id. ¶ 23].

Braband disputes Datto's characterization of the circumstances of her employment with Datto. Braband reports that she was hired as the third full-time employee of a Datto, a start-up venture, brought on board to apply her “business acumen to develop an effective marketing plan and generate sales and visibility in the market place.” [Dkt. # 20, Answer, ¶¶ 84, 89]. At the time she was hired, Braband asserts that Datto's business strategy of direct sales was flawed and ineffective, reporting that Datto's monthly sales totaled $25,000. [ Id. at ¶¶ 90–91]. Braband alleges that she worked diligently to increase Datto's sales by creating and implement a channel-only sales model, involving sales through distributors. [ Id. at ¶¶ 92–93]. Braband contends that as the result of her efforts, monthly sales increased to $130,000 and the company satisfied one of the sales targets set forth in the April 1, 2009 Employment Letter by obtaining $250,000 in revenue over a three month period. [Dkt. # 20, Answer, ¶¶ 97–98].

Having satisfied the second sales target in her Employment Letter, Braband asserts that she spoke with McChord in July 2010 regarding the second 10% ownership interest in Datto which she asserted she was owed. [ Id. at ¶ 103]. Braband asserts that McChord assured her that she had a 20% ownership interest in the company, promising to retain an attorney within thirty days to prepare the documentation necessary to formally reflect this interest. [ Id. at ¶ 104]. Braband alleges that followed up on this conversation on September 3, 2010, by meeting with McChord to inquire as to his progress in retaining counsel to memorialize her 20% ownership interest. [ Id. at ¶ 105]. Braband asserts that during this conversation, McChord became irate and criticized Braband for raising the issue. [ Id. at ¶ 105].

In September 2010, McChord hired third party defendant Tira Vanderlin as Chief Financial Officer of Datto without informing Braband that he was looking to hire a CFO. [Dkt. # 20, Compl., ¶ 107]. On October 6, 2010, Braband asserts that she again emailed McChord to inquire about her ownership interest indicating that in light of her satisfaction of the sales goals and the changes going on at Datto she was concerned by the delay. [ Id. at ¶ 108]. Braband reports that McChord promised to make a concerted effort to formalize her interest within 30 to 60 days. [ Id. at ¶ 109].

On November 8, 2010, Braband asserts that she received an email from McChord requesting that she attend a meeting on November 9, 2010 with Datto's lawyers. [ Id. at ¶ 110]. At the meeting on November 9, 2010, attended by Vanderlinden, McChord, and an attorney for Datto, Braband was informed that her employment was terminated. [ Id. at ¶¶ 113–114]. Braband asserts that Vanderlinden informed her that she was not entitled to any ownership interest in Datto and attempted to coerce her into signing a settlement agreement. [ Id. at ¶ 114]. Insisting that she was entitled to a 20% ownership interest in Datto, Braband refused to sign the settlement agreement. [ Id. at ¶¶ 116, 119].

III. Standard of Review

“Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short and plain statement of the claim showing that the pleader is...