Exec. Trim Constr., Inc. v. Gross

• Decision Date: 10 March 2021
• Docket Number: 1:20-cv-544 (MAD/DJS)
• Parties: EXECUTIVE TRIM CONSTRUCTION, INC., doing business as Executive Group, Plaintiff, v. Christopher GROSS; Suddath Van Lines, Inc., a Florida Corporation; and Suddath Van Lines, Inc., doing business as Suddath Workplace Solutions, Defendants.
• Court: U.S. District Court — Northern District of New York

525 F.Supp.3d 357

EXECUTIVE TRIM CONSTRUCTION, INC., doing business as Executive Group, Plaintiff,

v.Christopher GROSS; Suddath Van Lines, Inc., a Florida Corporation; and Suddath Van Lines, Inc., doing business as Suddath Workplace Solutions, Defendants.

1:20-cv-544 (MAD/DJS)

United States District Court, N.D. New York.

Signed March 10, 2021

OF COUNSEL: MATTHEW J. KELLY, ESQ., ROEMER WALLENS GOLD & MINEAUX, LLP, 13 Columbia Circle, Albany, New York 12203, Attorneys for Plaintiff.

OF COUNSEL: CHAIM JAFFE, ESQ., SCOLARO, FETTER LAW FIRM, 507 Plum Street, Suite 300, Syracuse, New York 13204, Attorneys for Defendant Christopher Gross.

OF COUNSEL: GEORGE W. WRIGHT, ESQ., GEORGE W. WRIGHT & ASSOCIATES, LLC, 505 Main Street, Suite 106, Hackensack, New Jersey 07601, Attorneys for Defendant Suddath Van Lines, Inc.

MEMORANDUM-DECISION AND ORDER

Mae A. D'Agostino, U.S. District Judge:

I. INTRODUCTION

Plaintiff Executive Trim Construction, Inc. ("Executive") commenced this action on May 14, 2020, and filed a motion for temporary restraining order and preliminary injunction that same day. See Dkt. Nos. 1 & 2. On May 15, 2020, the Court granted Plaintiff's motion for a temporary restraining order and directed expedited briefing on the pending motion for preliminary injunctive relief. See Dkt. No. 8. After granting several requests by the parties for extensions of time, the Court held a hearing on the request for injunctive relief. On September 2, 2020, the Court denied Plaintiff's request for a preliminary injunction and dissolved the temporary restraining order then in place. See Dkt. No. 71.

Currently before the Court are Defendants’ motion to dismiss the complaint and Plaintiff's cross-motion to amend the complaint. See Dkt. Nos. 38 & 50.

II. BACKGROUND

Plaintiff is a domestic corporation duly licensed to do business in the State of New York, with its principal place of business in Gloversville, New York. See Dkt. No. 1 at ¶ 2. Defendant Christopher Gross was a resident of Wilton, Connecticut and formerly employed by Plaintiff. See id. at ¶ 4. Defendant Suddath Van Lines, Inc. ("Suddath") is a foreign corporation doing business within the State of New York, with a principal place of business in Jacksonville, Florida. See id. at ¶ 5.

Defendant Gross was hired by Plaintiff in April 2018 and was hired to provide sales work within the greater New York area. See id. at ¶ 7. Plaintiff is engaged in the business of selling, warehousing, freight, and installation services of furniture, fixtures and equipment to the hospitality industry and others in the eastern United States. See id. at ¶ 9. The business is regularly conducted by a bid process which requires consideration and evaluation of specific requests in a bid proposal. See id. Plaintiff claims that "[c]alculation of a bid in response requires an understanding of the specific worksite and the available labor force to complete the project. These calculations have been developed by Executive Group after years of first-hand experience and constitute trade secrets." Id. Further, Plaintiff claims that "[t]his information would not be known to people outside the business and is limited to specific individuals who calculate the bid amounts. It is guarded against disclosure to anyone else. The information is the coin of the realm in the business and has been developed over years of first-hand experience." Id.

On April 30, 2020, Defendant Gross left his employment with Plaintiff. See id. at ¶ 10. In the complaint, Plaintiff contends that, unbeknownst to it, Defendant Gross "engaged in a scheme to defraud, and did engage in unfair competition and breach his duty of loyalty to plaintiff, all meant to harm the business of the plaintiff hereto and enhance [his] position as a future employee of the defendant, Suddath Van Lines, Inc. d/b/a Suddath Workplace Solutions, by transmitting and delivering bid calculations and amounts on several current matters to Suddath's employee." Id. at ¶ 11. In its proposed amended complaint, Plaintiff has attached emails between Defendant Gross and Brad Jones of Suddath, "wherein proprietary documents consisting of protected trade secrets were first solicited by Mr. Jones, and then disclosed by Defendant Gross." Dkt. No. 50-2 at ¶ 12. The proposed amended complaint further alleges that "[t]hese bid documents were transmitted after the termination of Christopher Gross’ employment with Executive Group, and therefore he no longer had any authorized access to these proprietary materials. During the time of his employment, the transfer of such documents exceeded any authorized access that defendant Gross had, as noted in the Employee Handbook." Id. at ¶ 15. Additionally, the proposed amended complaint contends that Suddath's purpose in recruiting Defendant Gross was to make an entry into the New York market and that "[t]his was heightened by Suddath's desire to usurp Executive Group's corporate opportunities, and Mr. Gross's willingness to misappropriate trade secrets and defame the plaintiff in order to be hired at Suddath." Id. at ¶ 16.

Further, Plaintiff claims that Defendant Gross engaged in slander per se both during and subsequent to his employment with Plaintiff, "by contending that the plaintiff's business operations were not stable and inferred plaintiff was not likely to remain as an ongoing entity." Dkt. No. 1 at ¶ 12. Plaintiff alleges that Defendant Gross "did tell other people, both within and without the industry that plaintiff's business was failing and that it was unlikely to be able to continue in business." Id. at ¶ 13. Plaintiff claims that Defendant Gross's conduct harmed its reputation and damaged its business. See id. at ¶ 14.

In its complaint dated May 14, 2020, Plaintiff asserts the following causes of action:

(1) First Cause of Action against Defendant Christopher Gross for breach of duty of loyalty to Plaintiff;

(2) Second Cause of Action against Defendants Gross and Suddath Van Lines, Inc. for diversion of corporate opportunities;

(3) Third Cause of Action against Defendant Gross for slander per se ;

(4) Fourth Cause of Action against Defendants Gross and Suddath for tortious interference with Plaintiff's prospective business relationships with its customers;

(5) Fifth Cause of Action against Defendant Gross for breach of fiduciary duty to Plaintiff;

(6) Sixth Cause of Action against Defendants Gross and Suddath for unfair competition;

(7) Seventh Cause of Action against Defendants Gross and Suddath for "hacking" of Plaintiff's computers pursuant to 18 U.S.C. § 1030 ; and

(8) Eighth Cause of Action against Defendants Gross and Suddath for misappropriation of trade secrets pursuant to 18 U.S.C. §§ 1832 - 1836.

Dkt. No. 1; Dkt. No. 50-2.

III. DISCUSSION

A. Standard of Review

A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the party's claim for relief. See Patane v. Clark , 508 F.3d 106, 111-12 (2d Cir. 2007). In considering the legal sufficiency, a court must accept as true all well-pleaded facts in the pleading and draw all reasonable inferences in the pleader's favor. See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd. , 493 F.3d 87, 98 (2d Cir. 2007) (citation omitted). This presumption of truth, however, does not extend to legal conclusions. See Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). Although a court's review of a motion to dismiss is generally limited to the facts presented in the pleading, the court may consider documents that are "integral" to that pleading, even if they are neither physically attached to, nor incorporated by reference into, the pleading. See Mangiafico v. Blumenthal , 471 F.3d 391, 398 (2d Cir. 2006) (quoting Chambers v. Time Warner, Inc. , 282 F.3d 147, 152-53 (2d Cir. 2002) ).

To survive a motion to dismiss, a party need only plead "a short and plain statement of the claim," see Fed. R. Civ. P. 8(a)(2), with sufficient factual "heft to ‘sho[w] that the pleader is entitled to relief.’ " Bell Atl. Corp. v. Twombly , 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation omitted). Under this standard, the pleading's "[f]actual allegations must be enough to raise a right of relief above the speculative level," see id. at 555, 127 S.Ct. 1955 (citation omitted), and present claims that are "plausible on [their] face," id. at 570, 127 S.Ct. 1955.

"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." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citation omitted). "Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of "entitlement to relief." ’ " Id. (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ). Ultimately, "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief," Twombly , 550 U.S. at 558, 127 S.Ct. 1955, or where a plaintiff has "not nudged [its] claims across the line from conceivable to plausible, the[ ] complaint must be dismissed[,]" id. at 570, 127 S.Ct. 1955.¹

Rule 15 of the Federal Rules of Civil Procedure governs the amendment of pleadings prior to trial. See Fed. R. Civ. P. 15. Where, as here, leave of court is required to amend, the court has broad discretion to grant such leave "freely," "when justice so requires." Fed. R. Civ. P. 15(a)(2). The Rule encourages courts to determine claims "on the merits" rather than disposing of claims or defenses based on "mere technicalities." Monahan v. NYC Dep't of Corr. , 214 F.3d 275, 283 (2d Cir. 2000) ("Rule [15] reflects two of the most important principles behind the Federal Rules: pleadings are to serve the limited role of providing the opposing party with notice of the claim or defense to be litigated, ... and ‘mere technicalities’ should not prevent cases from...