M5 Mgmt. Servs., Inc. v. Yanac

• Decision Date: 12 December 2019
• Docket Number: Case No.: 5:18-cv-00209-LCB
• Citation: 428 F.Supp.3d 1282
• Parties: M5 MANAGEMENT SERVICES, INC., Plaintiff, v. Rick YANAC, Defendant.
• Court: U.S. District Court — Northern District of Alabama

428 F.Supp.3d 1282

M5 MANAGEMENT SERVICES, INC., Plaintiff,

v.Rick YANAC, Defendant.

Case No.: 5:18-cv-00209-LCB

United States District Court, N.D. Alabama, Northeastern Division.

Signed December 12, 2019

Michael J. Douglas, Leak, Douglas & Morano, P.C., Birmingham, AL, for Plaintiff.

Ian D. Rosenthal, Holston Vaughan & Rosenthal LLC, Mobile, AL, for Defendant.

MEMORANDUM OPINION AND ORDER

LILES C. BURKE, UNITED STATES DISTRICT JUDGE

This case is before the Court on the Defendant Rick Yanac's motion to dismiss portions of the Plaintiff M5 Management Services, Inc.'s complaint and motion to grant summary judgment as to the remaining claims. The Plaintiff asserts five causes of action against the Defendant: breach of contract (Count I) (Doc. 26, p. 7); injunctive relief pursuant to 18 U.S.C. § 1836(b)(3)(A) (Count II) (Doc. 26, p. 8); monetary relief pursuant to 18 U.S.C. § 1836(b)(3)(B) & (C) (Count III) (Doc. 26, p. 8); breach of fiduciary duty (Count IV) (Doc. 26, p. 9); and request for preliminary and permanent injunction (Count V) (Doc. 26, p. 10). The Defendant asks the Court to dismiss Count I(c) and Counts II-V and also asks the Court to grant summary judgment as to Counts I(a-b) and again to Counts IV and V. (Doc. 31). The Court will consider Counts I(c), II, and III for the motion to dismiss and Counts I(a-b), IV, and V for the motion for summary judgment. For the reasons stated below, the Court finds that the Defendant's motion to dismiss is due to be granted and the Defendant's motion for partial summary judgment is due to be granted in part and denied in part.

I. BACKGROUND

The Plaintiff is a corporation that assists its clients "to improve their fixed operations business in their parts, service and collision centers" and has developed unique business methods and procedures that are valuable to the company. (Doc. 26, ¶ 7, 9). The Defendant entered employment negotiations with the Plaintiff in August 2010. (Doc. 31, ¶ 5). The Plaintiff claims that the Defendant began working for the company in October 2010¹ and stopped in July 2017. (Doc. 26, ¶ 10). While serving as Vice President of Operations, the Defendant had access to the Plaintiff's confidential information, such as trade secrets, candidate lists, and valuable business information. (Doc. 26, ¶ 11). As a condition of his employment, the Defendant signed an agreement on November 11, 2010, that he would not: personally use the confidential information or trade secrets he learned while employed; directly or indirectly compete with the Plaintiff within the United States for two years after his termination; contact or solicit any of the Plaintiff's clients within two years after his termination; or solicit any of the Plaintiff's employees to leave their jobs or request business from the Plaintiff's customers for two years after his termination. (Doc. 26, ¶ 13).

After the Defendant left his position in July 2017, he started a business called Consulting Automotive Resource Specialists, or ("CARS"). (Doc. 26, ¶ 14). The Defendant described CARS as a "brand new fixed operations consulting firm" that can improve its customers' service departments in an email to a potential client on October 18, 2017. (Doc. 26, p. 21). The Plaintiff claims that the Defendant violated his employment agreement by operating a competing organization and soliciting business from one of its customers. (Doc. 26, ¶ 14; p. 21-22). Additionally, the Plaintiff claims that the Defendant used its confidential information while operating CARS. (Doc. 26, ¶ 15). The Plaintiff attempted to contact the Defendant on October 26, 2017, to inform him that he was in violation of his employment agreement and needed conform his behavior to its terms. (Doc. 26, ¶ 16, p. 24). As the Defendant did not respond to this demand, the Plaintiff requests relief from the Court in the form of compensatory damages, punitive damages, and injunctive relief. See (Doc. 26).

II. STANDARD OF REVIEW – MOTION TO DISMISS

Federal Rule of Civil Procedure Rule 8(a)(2) mandates that a pleading contains "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2). A pleading does not have to include "detailed factual allegations" to survive. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). However, a complaint cannot simply have "a formulaic recitation of the elements of a cause of action." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "Threadbare 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.

A defendant can move to dismiss a complaint when he believes it is deficient. Rule 12(b)(6) allows defendants to request that the court dismiss a case for "failure to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6). To survive a motion to dismiss, a plaintiff must "state a claim to relief that is plausible on its face." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937, quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955. A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

When reviewing a motion to dismiss, the court "accept[s] the allegations in the complaint as true and construe[s] them in the light most favorable to the plaintiff." Hunt v. Aimco Properties , 814 F.3d 1213, 1221 (11th Cir. 2016). The court is not bound to accept the plaintiff's allegations as true if they are legal conclusions. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. Moreover, "where the plaintiff refers to certain documents in the complaint and those documents are central to the plaintiff's claim, then the Court may consider the documents part of the pleadings for purposes of Rule 12(b)(6) dismissal, and the defendant's attaching such documents to the motion to dismiss will not require conversion of the motion into a motion for summary judgment." Brooks v. Blue Cross and Blue Shield of Fla., Inc. , 116 F.3d 1364, 1369 (11th Cir. 1997).

III. DISCUSSION – MOTION TO DISMISS

A. Count I(c) - Breach of Contract

The Plaintiff claims the Defendant breached his employment agreement in several ways including: "a) operating as a competitive business, including soliciting, selling, or assisting in the sale or provision of services such as those provided by [the Plaintiff]; b) soliciting and working with [the Plaintiff's] customers and/or clients on behalf of themselves or other competitive entities; and c) removing, using, and/or sharing [the Plaintiff's] confidential and proprietary information." (Doc. 26, ¶ 20). The Defendant only targets Count I(c) in his motion to dismiss. He claims that the pleading is deficient as the Plaintiff does not detail what information is "confidential and proprietary," nor does it detail what information was removed, used, or shared. (Doc. 28, p. 5).

The Plaintiff justifies its allegation that the Defendant misused its confidential and proprietary information by repeating the same statements listed in the complaint. (Doc. 35, p. 2-3). It claims that the Defendant used the confidential information he obtained as a former employee in the operation of his new business. (Doc. 35, p. 2).

To support its reasoning, the Plaintiff argues that it did not refer to the confidential information in a general fashion but listed it as things like "sensitive and valuable business information, trade secrets, pricing information, [and] prospect lists." (Doc. 26, ¶ 11). While defending its claims under Count II, the Plaintiff suggests that its allegations in Count I are adequate, and confidential information can be discussed in general terms, (Doc. 35, p. 3), citing TRADE SECRETS LAW by Melvin F. Jager.

A party does not have to fully divulge the details of its confidential and proprietary information to survive a motion to dismiss. See DynCorp Int'l v. AAR Airlift Grp., Inc. 664 F. App'x 844, 849 (11th Cir. 2016). However, the allegations must be more than general categorizations to be sufficiently pled. See id. at 849 (the Court finding that the plaintiff's pleading identifying trade secrets was sufficient as it contained more than "broad categories of information.") See also RxStrategies, Inc. v. CVS Pharmacy, Inc. , 390 F. Supp. 3d 1341, 1352 (M.D. Fla. 2019) (district court finding that pleadings were adequate when they did more than suggest "the existence of general categories of ‘confidential information.’ ") The allegations must allow the defendant to have notice of the basis of the plaintiff's claims. DynCorp Int'l , 664 F. App'x at 850. Construed in the light most favorable to the Plaintiff, the confidential information alleged in the complaint and then reincorporated in Count I(c) is simply a generalized list of alleged proprietary material. Such a broad listing of information is not enough to survive a motion to dismiss. Id. at 849.

Further, even if the Plaintiff's description of its confidential information was adequate, the Plaintiff has not satisfactorily alleged in what ways the Defendant removed, used, or shared the information in violation of his employment agreement. The Plaintiff argues that the complaint read in its entirety supports the allegation the Defendant used the confidential information inappropriately in his business. (Doc. 35, p. 2-3). However, the Plaintiff does not support its claims with any of the necessary factual allegations to move its claim "across the line from conceivable to plausible." Iqbal , 556 U.S. at 680, 129 S.Ct. 1937. The Defendant having access to confidential information and operating a business does not automatically create a plausible presumption that he is in breach regarding this allegation. Accordingly, because the Plaintiff does not plausibly state a claim for which relief can be granted, Count I(c) of...