Envisn, Inc. v. Davis

• Decision Date: 11 May 2012
• Docket Number: Civil Action No. 11-12246-FDS
• Parties: ENVISN, INC., Plaintiff and Counterclaim-Defendant, v. KATHLEEN BRODERICK DAVIS, Defendant, Counterclaim-Plaintiff, and Third-Party Plaintiff, v. CHARLES RYAN, Third-Party Defendant.
• Court: U.S. District Court — District of Massachusetts

ENVISN, INC., Plaintiff and Counterclaim-Defendant,

v.KATHLEEN BRODERICK DAVIS, Defendant, Counterclaim-Plaintiff, and Third-Party Plaintiff,

v.CHARLES RYAN, Third-Party Defendant.

Civil Action No. 11-12246-FDS

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

Dated: May 11, 2012

MEMORANDUM AND ORDER ON PLAINTIFF'S AND THIRD-PARTY

DEFENDANT'S MOTIONS TO DISMISS COUNTERCLAIMS

SAYLOR, J.

Plaintiff Envisn, Inc., has brought suit against defendant Kathleen Broderick Davis, a former employee, alleging violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, the Uniform Trade Secrets Act, and Mass. Gen. Laws chs. 93A and 93, § 42. Envisn also contends that Davis misappropriated trade secrets and breached a Confidentiality and Nondisclosure Agreement. Davis has counterclaimed against Envisn for breach of contract, violation of Mass. Gen. Laws ch. 149, §§ 148 and 150, and assault and battery, and against third-party defendant Charles Ryan, the owner of Envisn, for tortious interference with contractual relations, and assault and battery.

Envisn has moved to dismiss the counterclaim under Fed. R. Civ. P. 12(b)(1) and (b)(6)for lack of subject-matter jurisdiction and for failure to state a claim, as well as failure to comply with the pleading requirements under Rule 8. Third-party defendant Ryan has moved to dismiss under Rules 12(b)(1) and (b)(5) for lack of subject-matter jurisdiction and for insufficient service of process.

For the reasons set forth below, Envisn's motion to dismiss will be granted in part and denied in part. Ryan's motion to dismiss will be granted.

I. Background

The following factual allegations are drawn from the counterclaim.

Envisn, Inc., is a small computer software company based in Harvard, Massachusetts. Kathleen Broderick Davis joined Envisn in April 2000 as a consultant. Charles Ryan is the owner and chief operating officer of Envisn.

On November 22, 2011, Ryan called a company meeting to discuss product issues. Ryan, Davis, and Gary Larsen, the Technology Director, attended. The conversation at the meeting grew heated, and Ryan demanded answers from Larsen. According to Davis, when she attempted to speak, Ryan pointed to her and told her "be quiet," in an aggressive voice. When she attempted to speak a second time approximately two minutes later, Ryan grabbed her shoulder with his right hand, yelled "I told you to be quiet," and pushed her. Davis responded, "That was totally uncalled for, I will not tolerate this behavior."

Davis was upset and left work that day with no intention to return. On November 28, 2011, she emailed Envisn to tender her resignation. She stated that she felt her safety at work was at risk and her resignation was therefore effective immediately.

Davis contends that according to Envisn policy, she was entitled to four weeks ofvacation and one personal day per year. Davis never used all her vacation time while she was employed at Envisn. On November 30, 2011, Davis sent Envisn a letter requesting accrued, but unused, vacation pay, which she calculated to be $22,935. On December 15, 2011, Envisn sent Davis a letter stating that it would be depositing $12,225.65 in her account, based on its calculation that she had 56.75 accrued but unused days of vacation, and a pay rate of $215.43 a day. On December 21, 2011, Davis filed a Non-Payment of Wage and Workplace Complaint Form against Envisn for $10,280 with the Massachusetts Attorney General.¹

On December 16, 2011, Envisn filed a complaint against Davis, alleging that just prior to resigning, she stole software belonging to Envisn and that she improperly contacted Envisn customers. On January 11, 2012, Davis answered the complaint, counterclaimed against Envisn, and filed a third-party complaint against Ryan. Both Envisn and Ryan have moved to dismiss the counterclaims.

II. Standard of Review

On a motion to dismiss, the Court "must assume the truth of all well-plead[ed] facts and give plaintiff the benefit of all reasonable inferences therefrom." Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007) (citing Rogan v. Menino, 175 F.3d 75, 77 (1st Cir. 1999)). To survive a motion to dismiss, the plaintiff must state a claim that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). That is, "[f]actual allegations must be enough to raise a right to relief above the speculative level, . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. at 555 (citations omitted)."The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556). Dismissal is appropriate if plaintiff's well-pleaded facts do not "possess enough heft to show that plaintiff is entitled to relief." Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 84 (1st Cir. 2008) (quotations and original alterations omitted).

III. Analysis

A. Improper Pleading and Failure to State a Claim

Envisn contends that the counterclaim fails to make a clear, concise statement of the claims in violation of Fed. R. Civ. P. 8, and that it fails to state a claim upon which relief can be granted in violation of Fed. R. Civ. P. 12(b)(6). A complaint that satisfies the requirements of Fed. R. Civ. P. 8(a)(2) is sufficient to survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6). Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 11 (1st Cir. 2011). Although the counterclaims could certainly have been pleaded more clearly, they allege sufficient facts to state a facially plausible claim and give Envisn fair notice of the nature and basis for the claims. Dismissal for violation of Rule 8 and failure to state a claim is therefore unwarranted.

B. Supplemental Jurisdiction

Davis's counterclaims do not clearly state any basis for the court's jurisdiction. However, no affirmative pleading of subject-matter jurisdiction is required as long as the facts alleged are sufficient to establish jurisdiction. In re Mailman Steam Carpet Cleaning Corp., 196 F.3d 1, 5 (1st Cir. 1999).

In a civil action where a district court has original jurisdiction, the court has supplemental jurisdiction over all related claims that form part of the "same case or controversy." 28 U.S.C. §1367(a). A court has jurisdiction where state and federal claims derive from "a common nucleus of operative fact," and when the claims are such that a party would "ordinarily be expected to try them all in one judicial proceeding." United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1966). The case-or-controversy standard is the jurisdictional limit for counterclaims. Global NAPS, Inc. v. Verizon New England Inc., 603 F.3d 71, 87 (1st Cir. 2010). Supplemental jurisdiction under § 1367 is broader than the transaction-or-occurrence test. Id. at 88.

Envisn contends that none of Davis's counterclaims arise from the same "common nucleus of operative fact." Davis's claim of assault and battery is, however, closely linked to Envisn's claims of misappropriation. Testimony about the sequence of events through which Davis acquired the customer information and software would plainly involve her reasons and motivations. Put another way, it is hard to imagine that the misappropriation claims would be tried without evidence of the circumstances under which Davis abruptly left the company and allegedly took the information. Although her motivations may not be strictly legally relevant to a claim of theft of trade secrets, the facts are interlinked and judicial economy favors hearing the claims and counterclaim together. See Gibbs, 383 U.S. at 726. Therefore, this Court has and will exercise supplemental jurisdiction over the counterclaim for assault and battery.²

However, Davis's counterclaims for violation of Mass. Gen. Laws ch. 149, §§ 148 and 150 and breach of contract are not as closely related. Davis contends that there is a causal link between the events, and that "[h]ad she not been assaulted by Mr. Ryan, the question of her accrued but unused vacation pay would not have arisen." (Opp. to Envisn's Mot. to Dismiss at4). A broad causal relationship is insufficient to confer supplemental jurisdiction. Salei v. Boardwalk Regency Corp., 913 F. Supp. 993, 998-999 (E.D. Mich. 1996) (rejecting jurisdiction over plaintiff's state law claims because they did not share "operative facts" with the federal claims, while recognizing that "the state and federal claims appear to be causally related; but for the alleged breach of a settlement agreement that forms the basis of Plaintiff's state claims, the alleged federal violation would not have occurred"); Trilithic, Inc. v. Wavetek U.S. Inc., 6 F. Supp. 2d 803, 806-807 (S.D. Ind. 1998) (rejecting jurisdiction over causally related state and federal claims because the success of the state claim did not depend at all on the success of the federal claim). Some commonality of facts between claims and counterclaims alone does not constitute a common nucleus of operative fact. Burgess v. Omar, 345 F. Supp. 2d 369, 372 (holding that "while facts relevant to one claim might provide background with respect to the other, more is required"). While the alleged assault and battery may have ultimately led to the wage claims, the latter could easily be tried without proof of the former. Those facts are distinct from the terms of any compensation agreement that may have existed between Davis and Envisn that would be determinative in the wage and breach of contract counterclaims. The Court, therefore, will not exercise supplemental jurisdiction over the counterclaims against Envisn for violation of Mass. Gen. Laws ch. 149, §§ 148 and 150 and breach of contract, and those claims will be dismissed for lack of subject-matter jurisdiction.³

C. Envisn's Vicarious Liability

Envisn contends that it cannot be held liable for Ryan's alleged assault and...