Fischkoff v. Iovance Biotherapeutics, Inc.

• Decision Date: 17 October 2018
• Docket Number: 17 Civ. 5041 (AT) (GWG)
• Citation: 339 F.Supp.3d 408
• Parties: Steven FISCHKOFF, Plaintiff, v. IOVANCE BIOTHERAPEUTICS, INC. and Maria Fardis, Defendants.
• Court: U.S. District Court — Southern District of New York

339 F.Supp.3d 408

Steven FISCHKOFF, Plaintiff,

v.IOVANCE BIOTHERAPEUTICS, INC. and Maria Fardis, Defendants.

17 Civ. 5041 (AT) (GWG)

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

Signed October 17, 2018

Kimberly Klein, Megan Holcomb Daneshrad, Daniel Adam Hoffman, Moses & Singer LLP, New York, NY, for Plaintiff.

Claire Marie Lesikar, Morgan, Lewis & Bockius, LLP (CA), Palo Alto, CA, Hanna Elizabeth Martin, Morgan, Lewis, & Bockius, LLP, New York, NY, John V. Gorman, Morgan Lewis & Bockius, LLP (PA), Philadelphia, PA, Kathryn T. McGuigan, Morgan, Lewis & Bockius (LosA), Los Angeles, CA, Kimberley Elizabeth Lunetta, Morgan, Lewis & Bockius LLP (NJ), Princeton, NJ, for Defendant.

OPINION AND ORDER

GABRIEL W. GORENSTEIN, United States Magistrate Judge

Steven Fischkoff brought this suit against Iovance Biotherapeutics, Inc. and Maria Fardis (collectively "Iovance") alleging that Iovance breached a contractual employment agreement, failed to pay him wages, and retaliated against him. Iovance counterclaimed asserting that Fischkoff violated his employment agreements and that he misappropriated trade secrets. Iovance now moves to amend its answer to add counterclaims for conversion, trespass to chattels, violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, and violation of New Jersey's Theft and Related Offenses Act, N.J.S.A. § 2C:20-7 ; 20-20.¹ For the reasons stated below, Iovance's motion is denied.

I. BACKGROUND

A. Factual Allegations in the Proposed Counterclaims

Because the resolution of Iovance's motion turns on whether its proposed counterclaims state a claim for relief, we "accept[ ] all factual allegations [in its proposed counterclaims] as true and draw[ ] all reasonable inferences in favor of the [counterclaimant]." Empire Merchants, LLC v. Reliable Churchill LLLP, 902 F.3d 132, 139 (2d Cir. 2018) (citation and internal quotation marks omitted). We also consider all "documents attached to the [proposed amended answer] as exhibits, and documents incorporated by reference in the [proposed amended answer]." DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010). We thus ignore the lengthy counter-recitation of facts contained in Fischkoff's opposition to the motion to amend. See P. Opp. at 2-5.

The proposed counterclaims allege in pertinent part as follows:

Iovance is a bio-pharmaceutical company with offices in California, Florida, and New York, that specializes in the development of drugs to treat cancer.

Proposed Amended Answer and Counterclaims (annexed as Ex. A to Lunetta Decl.) ("PAA"), ¶¶ 12-13, 16. In February 2016, Fischkoff began working at Iovance as Chief Medical Officer and signed multiple documents and agreements reflecting the "importance of maintaining the confidentiality" of Iovance proprietary information. Id. ¶¶ 20-22. "[E]arly in his tenure," Fischkoff failed to meet certain "fundamental" employment obligations, including missing "operations goals, provid[ing] low quality outputs," and failing to "adequately manage clinical operations activities." Id. ¶ 25. Iovance terminated his employment on March 28, 2017. Id. ¶ 31.

Iovance alleges that, before his termination, Fischkoff sent a number of confidential Iovance documents to his personal email addresses and also mounted a personal hard drive onto his work computer that he used to receive uploaded confidential files. Id. ¶¶ 32-33. Included in these files were tax materials that contained "approximately 285 files" containing social security numbers of others, as well as the entire contents of Fischkoff's email inbox. Id. ¶ 35. Iovance alleges that Fischkoff never had authorized access to the documents he copied, and that he violated the Company Employee Handbook and the Employee Conduct Policy, which limited Fischkoff's access to company documents. Id. ¶¶ 36-38.

Iovance alleges that the copied files include materials that "represent a significant portion of the intangible value of the Company, as they relate to its two most important clinical trials as well as its overall strategy and business." Id. ¶ 41. It alleges that Fischkoff was later hired by a competitor and that his possession of company materials "would likely have resulted" in their disclosure to the competitor. Id. ¶ 45. "Despite numerous requests and obligations to do so, Plaintiff did not return all Confidential Materials and Human Resources, Finance, and Personal Information ... for a period of at least 15 months." Id. ¶ 58; accord id. ¶ 60.

B. Procedural History

The case began in June 2017 when Fischkoff filed breach of contract and New York Labor Law claims against Iovance in New York state court. See Complaint, Steven Fischkoff v. Lion Biotechnologies, Inc. et al., Index No. 653231/2017 (N.Y. Sup. Ct.) (annexed as Ex. A to Notice of Removal) (Docket # 1). After Iovance removed the action to federal court, it filed an answer that included counterclaims for (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) breach of fiduciary duty/duty of loyalty; and (4) misappropriation of trade secrets under 18 U.S.C. § 1836 and New York common law. See Defendants' Partial Answer and Defenses to Plaintiff's Complaint and Lion's Counterclaims Against Steven Fischkoff, filed July 13, 2017 (Docket # 7).

Iovance's proposed amended answer includes four additional counterclaims: conversion; trespass to chattels; violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 ; and violations of New Jersey's Theft and Related Offenses Act,

N.J.S.A. §§ 2C:20-7 ; 20-20. See PAA ¶¶ 84-111.

II. LAW GOVERNING MOTIONS TO AMEND

Fed. R. Civ. P. 15(a)(2) provides that leave to amend a pleading should be "freely give[n] ... when justice so requires." See Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). A court must have "good reason" to deny leave to amend. See Acito v. IMCERA Grp., 47 F.3d 47, 55 (2d Cir. 1995). Leave to amend may be denied in situations of "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, [or] undue prejudice to the opposing party." Foman, 371 U.S. at 182, 83 S.Ct. 227. An amendment may also be denied if it is futile. Id. Here, plaintiff argues only that the proposed amendment is "futile." See P. Mem. at 1, 6.

When a party argues that an amendment to a pleading would be futile, the court must determine whether the "proposed claim could ... withstand a motion to dismiss pursuant to [Federal Rule of Civil Procedure] 12(b)(6)." Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 88 (2d Cir. 2002) (citing Ricciuti v. N.Y.C. Transit Auth., 941 F.2d 119, 123 (2d Cir. 1991) ). Pursuant to Rule 12(b)(6), a party may move to dismiss the opposing party's pleading on the ground that it "fail[s] to state a claim upon which relief can be granted." In deciding such a motion, a court must accept as true all of the allegations contained in the pleading, see Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), but that principle does not apply to legal conclusions. Id.; see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ("[A party's] obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.") (internal quotation marks, citation, and alteration omitted). In other words, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice," Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citation omitted), and thus a court's first task is to disregard any conclusory statements in the pleading, see id. at 679, 129 S.Ct. 1937.

Next, a court must determine if the pleading contains "sufficient factual matter" which, if accepted as true, state a claim that is "plausible on its face." Id. at 678, 129 S.Ct. 1937 (internal quotation marks and citation omitted); accord Port Dock & Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 121 (2d Cir. 2007) ("[A pleading] must allege facts that are not merely consistent with the conclusion that the [adverse party] violated the law, but which actively and plausibly suggest that conclusion.") (citations omitted).

A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. 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 (internal quotation marks and citations omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct," [a pleading] is insufficient under Fed. R. Civ. P. 8(a) because it has merely "alleged" but not " ‘show[n]’— ‘that the pleader is entitled to relief.’ " Id. at 679, 129 S.Ct. 1937 (second alteration in original) (quoting Fed. R. Civ. P. 8(a)(2) ).

III. DISCUSSION

Because we analyze the proposed counterclaims under the Rule 12(b)(6) standard of review, we turn to the question of whether the each of the proposed counterclaims could survive a motion to dismiss.²

A. Conversion

The Second Circuit has summarized New York law of conversion as follows:

According to New York law, "[c]onversion is the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights." Vigilant Ins. Co. of Am. v. Hous. Auth., 87 N.Y.2d 36, 44, 637 N.Y.S.2d 342, 660 N.E.2d 1121 (1995) (internal quotation marks omitted). This includes a "denial or violation of the plaintiff's dominion, rights, or possession" over her property. Sporn [v. MCA Records], 58 N.Y.2d [482,] 487, 462 N.Y.S.2d 413, 448 N.E.2d 1324 [ (1983) ]. It also requires that the defendant exclude the owner from exercising her rights

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