High Sch. Servicos Educacionais, LTDA. v. Mun Y. Choi
| Decision Date | 22 February 2022 |
| Docket Number | 4:21-CV-00029-DGK |
| Parties | HIGH SCHOOL SERVICOS EDUCACIONAIS, LTDA., Plaintiff, v. MUN Y. CHOI, et al., Defendants. |
| Court | U.S. District Court — Western District of Missouri |
ORDER ON DEFENDANTS' MOTIONS TO DISMISS
This case involves a soured business relationship involving educational services provided to Brazilian schoolchildren. Plaintiff High School Servicos Educacionas, LTDA is a Brazilian corporation that contracted with the Curators of University of Missouri (“Curators”) to provide Brazilian K-12 schoolchildren with a curriculum and diploma that aligned with United States educational standards. This relationship allegedly allowed the University of Missouri to create a pipeline for Brazilian students to matriculate to its university. Plaintiff alleges that during this relationship, the employees of Mizzou K-12 (“MK12”)-a private school that worked with Plaintiff-allegedly infringed Plaintiff's copyrighted educational materials and unlawfully acquired Plaintiff's client list, so it could do business directly with the Brazilian schools. Plaintiff also alleges that individuals who controlled MK12 as well as a separate company International Education Associates, LLC (“IEA”) and IEA's investors schemed to defraud Plaintiff through inflated invoices, infringed copyrights, and stolen trade secrets.
To recover for this alleged wrongdoing, Plaintiff has filed a six-count lawsuit against IEA and various individuals employed by-or associated with-MK12 and IEA, including Defendants Mun Y. Choi, Kathryn Chval, Angela Hammons, Tamara Regan, Kathryn Fishman-Weaver Stephanie Walters, Thitinun Boonseng, and John Does 1-100. The amended complaint (ECF No. 37) alleges various claims for different types of copyright right infringement (Counts I-III), Racketeer Influenced and Corrupt Organizations Act (“RICO”) violations (Count IV), and deprivations of due process rights (Counts V & VI).
Now before the Court are Chval's Motion to Dismiss (ECF No 43) and Defendants Choi, IEA, Hammons, Regan, Fishman-Weaver, Walters, and Boonseng's (“Choi Defendants”) Motion to Dismiss (ECF No. 45). For the reasons stated below, the motions are GRANTED IN PART AND DENIED IN PART. Counts II and IV are dismissed without prejudice, but Plaintiff may file an amended complaint within fourteen days of this order.
Plaintiff High School Servicos Educacionais, Ltda. (“HSE”) is a Brazilian corporation that contracts with various universities in the United States to provide Brazilian K-12 schools and students with a curriculum aligned with the United States educational system. This work allowed Brazilian students to receive an accredited United States high school diploma and a pathway to United States universities. To facilitate this, Plaintiff developed a proprietary operational manual (“Operational Manual”) that it used with its partner universities to help teach Brazilian students. Plaintiff guarded the Operational Manual, only distributing it to people and institutions with whom Plaintiff had confidentiality and intellectual property agreements. Plaintiff alleges that the Operational Manual is entitled to copyright protection, with one of the photographs in it having been registered with the U.S. Copyright Office.
The amended complaint names a variety of other entities but provides no meaningful explanation of what precisely they do and what their relationships are to each other. But the entities are cited throughout the remaining allegations, so the Court attempts to discern and then distill these allegations as best it can.
MK12 is an accredited private school. Defendant Choi has been President of University of Missouri since March 2017, and he “control(s)” MK12. Defendants Hammons, Regan, Fishman-Weaver, and Walter are employees of MK12. IEA is a Missouri LLC that “caters to, and operates for the benefit of, non-university level students including those who are not residents of the State of Missouri or the USA.” ECF No. 37, Compl. ¶ 3. IEA purportedly has “no official authorization from the State of Missouri, ” and it does not receive funding from the Curators. Id. Defendant Chval was a director of IEA, while Defendant Boonseng was some type of investor in IEA. IEA entered into agreements with certain favored partners and investors, [1] including a commitment of a five percent (5%) share of the revenue from its activities in Brazil. The amended complaint does not explain the relationship between the Curators, MK12, and IEA.
In early-to-mid 2015, Plaintiff entered into various agreements with the Curators. These agreements ensured non-disclosure of certain information and outlined the intellectual property sharing and protections for the parties. None of the agreements defined the amount of money that either party would pay the other, but the parties reached an informal agreement for reasonable payments from Plaintiff to the Curators. The amended complaint never specifies what these payments were for, but Plaintiff allegedly paid the Curators “millions of dollars” for 2015-2019 without being invoiced. ECF No. 37, Compl. ¶ 21.
On May 12, 2018, the Curators allegedly invoiced Plaintiff $4, 085, 048, including retroactive billing from 2015-2017 for services that Plaintiff had already paid for. The amended complaint never specifies what the supposed services were. On January 1, 2019, the Curators provided a replacement invoice that raised the amount to $5, 162, 638. These retroactive bills for “services” were not based on any written agreement, and Plaintiff claims that “upon information and belief, [they] included inflated charges.” ECF No. 37, Compl. ¶ 24. Plaintiff responded to the Curator's invoices by saying the amounts had already been paid to MK12.
Although many sections of the amended complaint allege the Curators invoiced Plaintiff, other sections attribute invoicing issues to other parties. Later in the amended complaint, Plaintiff alleges that IEA “paid or agreed to pay its investors/partners an undisclosed share of the revenues, which it turned around, and using the mail and wire system, fraudulently invoiced to Plaintiff as if they were legitimate costs of the Curators providing online curriculum to Brazilian students in middle school and high school.” ECF No. 37, Compl. ¶ 82. Plaintiff further alleges that “IEA paid artificially inflated invoices from Taratuga, LLC, which then charged or attempted to charge Plaintiff as legitimate costs of providing online curriculum to Brazilian students.” ECF No. 37, Compl. ¶ 83. The amended complaint never explains when these invoices were issued, what Taratuga LLC is, and what its relationship was to IEA, MK12, or the Curators. Still later in the amended complaint, Plaintiff alleges that unnamed John Does were responsible for the “fraudulent” invoicing in 2018 and 2019 described in the preceding paragraph. ECF No. 37, Compl. ¶¶ 94, 103.
On January 4, 2019, only a few days after the updated invoice was sent, MK12 employee Tanya Haeussler sent a “Highly Confidential” email to Defendants Hammons, Regan, Fishman-Weaver, and Walter. The email gave them a link to the “INTERNAL 2019 MK12 Operation Manual Google Doc” and told them to “go through the entire document and make sure any changes that are needed are included, including removing all HSE references.” ECF No. 37, Compl. ¶ 32. The email further asked these Defendants to engage other individuals in confidence as necessary to edit the document but warned to Id. ¶ 33. On March 12, 2019, Hauessler stated that the changes were complete and that “in light of the IP concern with HSE, the ‘Operational Manual' has been completely revised and we now have a DRAFT 2020 Mizzou Academy Handbook.” Id. ¶ 34. Defendants Hammons, Regan, Fishman-Weaver, and Walter had removed all HSE references from the Operational Manual to make it look like the 2020 Mizzou Academy was a different document. But the 2020 Mizzou Academy Handbook had the same structure, content, and HSE copyrighted photograph as the Operational Manual. Defendants Chval, Choi, Hammons, Regan, Fishman-Weaver, and Walter allegedly approved an undated PowerPoint that states “immediately stop all work with HSE, ” “remove HSE from all online docs, ” “do not work in HSE space, ” “files have been copied, ” and “delete your links to HSE space.” ECF No. 37-16.
On January 7, 2019, three days after “the Curators”[2] started making an unauthorized derivative copy of the Operational Manual, Haeussler emailed one of Plaintiff's employees asking for its “Contact List” so MK12 could carry out its 2019 obligations with Plaintiff. The “Contact List” was developed over many years, and it included the contact names, email addresses, and phone numbers of the important decisionmakers at Plaintiff's Brazilian partner schools. Plaintiff protected this “Contact List” and only shared it with parties on a “need-to-know” basis and under the terms of a non-disclosure agreement. The Curators, with the assistance of Defendants Chval and Choi, used the “Contact List” to solicit and pressure Plaintiff's partner schools to abandon Plaintiff and work directly with the Curators. Plaintiff claims it would not have provided the “Contact List” had it known the Curators' true intent.
On February 14, 2019, the Curators sent an email to all of Plaintiff's Brazilian partner schools with the subject line “Mizzou for You in 2020.” ECF No. 37, Compl. ¶ 44. The Curators characterized this as “The Flip.” Plaintiff was not included on the email, and it was sent without Plaintiff's knowledge or consent. That same day, after sending...
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