Magnesita Refractories Co. v. Tianjin New Century Refractories Co.
| Decision Date | 28 February 2019 |
| Docket Number | CIVIL ACTION NO. 1:17-CV-1587 |
| Parties | MAGNESITA REFRACTORIES COMPANY and BAKER REFRACTORIES I.C., INC., Plaintiffs v. TIANJIN NEW CENTURY REFRACTORIES CO., LTD., YINGKOU NEW CENTURY REFRACTORIES LTD., NEW CENTURY REFRACTORY SOLUTIONS INC., and DONALD GRIFFIN, an individual and doing business as TECHNICAL CONSULTANT LABORATORIES, Defendants |
| Court | U.S. District Court — Middle District of Pennsylvania |
(Chief Judge Conner)
Plaintiffs commenced this action asserting federal claims of trade secret misappropriation, racketeering, and unfair competition as well as related state law claims against a former employee and several competitors. Before the court are two defense motions to dismiss the amended complaint brought pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(5), and 12(b)(6). (Docs. 36, 37).
Plaintiff Magnesita Refractories Company ("Magnesita") is a Pennsylvania company that manufactures and supplies various refractory products and materials to producers of cement, glass, steel, and other metals. (Doc. 33 ¶¶ 1-2). Plaintiff Baker Refractories I.C., Inc. is a Delaware company which holds trade secrets and related intellectual property concerning the composition of fired and tempered dolomite brick products, the manufacturing and production processes for dolomite bricks, and "the optimization of brick properties and functionalities for a given process, particular application, [or] particular process conditions." (Id. ¶¶ 5-6, 38). Magnesita is the exclusive licensee of Baker Refractories I.C., Inc.'s intellectual property and researches, develops, manufactures, and sells insulating fired and tempered dolomite bricks worldwide. (Id. ¶¶ 3, 7, 36-37).
Defendant Donald Griffin ("Griffin") is a Pennsylvania resident. (Id. ¶ 8). J.E. Baker Company, a Magnesita predecessor, hired Griffin in August 1980. (Id. ¶¶ 47-49). On August 15, 1980, Griffin executed a "Secrecy Agreement" wherein he agreed not to make use of his employer's confidential information or to disclose it to any third party. (Id. ¶ 50; Doc. 8 at 18-21).1 In February 2003, Griffin signed a "Confidentiality and Noncompetition Agreement" with LWB Refractories Company, another Magnesita predecessor. (Doc. 33 ¶¶ 47-48, 51; Doc. 8 at 23-26). Therein, Griffin agreed to not disclose his employer's confidential information and, upon cessation of employment, to "not take with him any document or paper containing Confidential Information." (Doc. 33 ¶¶ 49, 51; Doc. 8 at 24, 26).
Magnesita implements various security measures to safeguard its trade secrets and confidential information. (Doc. 33 ¶ 40). All employees must agree toand sign Magnesita's "Code of Ethics" which extensively defines "confidential information" and prohibits distributing said information to third parties. (Id. ¶ 42; Doc. 8 at 2-14). Griffin acknowledged receipt of and agreed to abide by the Code of Ethics. (Doc. 33 ¶ 43; Doc. 8 at 16). Magnesita restricts access to confidential information stored on company computers to authorized persons through secure passwords and computer access profiles which allow Magnesita to tailor what confidential information each individual employees may access. (Doc. 33 ¶ 45). Confidential information may not be stored on public portions of Magnesita's network, and employees may not forward confidential information by email "without proper labeling and authorization." (Id. ¶ 46). Magnesita specifically prohibits the forwarding of confidential information to personal email accounts, and employees with access to confidential information are routinely required to sign nondisclosure agreements. (Id. ¶¶ 44, 46).
Throughout his nearly 35 years working for Magnesita and its predecessors, Griffin purportedly developed extensive knowledge of plaintiffs' trade secrets and other confidential information. (Id. ¶¶ 18, 49, 52, 59). Griffin held various positions in which he supervised research, development, and manufacture of numerous Magnesita products, requiring full access to plaintiffs' confidential information pertaining to fired and tempered dolomite brick technology. (Id. ¶¶ 18, 53). This confidential information included proprietary technology for brick composition, brick manufacturing conditions, and optimization processes (e.g., optimization of thermal shock resistance). (Id. ¶ 52). From May 25, 2010 through 2014, Griffin served as Technology Director in Asia based in Shanghai, China. (Id. ¶¶ 56, 58).
Plaintiffs allege that during his tenure abroad as Technology Director, Griffin "made contact with one or more of" the codefendant companies: Tianjin New Century Refractories Co., Ltd. ("Tianjin"), Yingkou New Century Refractories Ltd. ("Yingkou"), and New Century Refractory Solutions Inc. ("New Century") (collectively, "the NCR defendants"). (Id. ¶ 57). Tianjin and Yingkou are China-based companies with principal places of business in Tianjin and Liaoning Province, respectively. (Id. ¶¶ 9-10). New Century is a California corporation with its principal place of business therein. (Id. ¶ 11). Plaintiffs allege that these three NCR defendants are all commonly owned and controlled. (Id. ¶ 12). For a time, Tianjin claimed New Century as a subsidiary on its website. (Id. ¶¶ 13-14).
Griffin returned to Magnesita's York, Pennsylvania location in 2014 as Research and Development and Quality Control Director for North America. (Id. ¶ 58). According to the amended complaint, Griffin retired from Magnesita in December 2014. (Id. ¶¶ 59-60). During the six-month period immediately prior to his departure, Griffin purportedly forwarded to his personal email account numerous emails containing plaintiffs' trade secrets and confidential information. (Id. ¶¶ 61-63; Doc. 9 at 12-50). He also allegedly downloaded plaintiffs' proprietary information to an external hard drive. (Doc. 33 ¶ 65). Griffin was self-employedfrom January 2015 to September 2015. (Id. ¶ 66). Following this period of self-employment, the NCR defendants hired Griffin.2 (Id. ¶ 67).
The NCR defendants created a PowerPoint presentation in November 2016 to advertise their products to prospective customers. (Id. ¶¶ 69, 84; see Doc. 7). Plaintiffs aver that Griffin helped the NCR defendants to create this presentation. (Doc. 33 ¶ 70). The presentation represents that the NCR defendants have "Totally Foreign Upper Management" and displays brief biographies and photographs of three former Magnesita employees: Steve Hennel ("Hennel"), Griffin, and Greg Greiss ("Greiss"). (Id. ¶¶ 78-79; Doc. 7 at 8-11). It lists various refractory products that the NCR defendants produce, including fired and tempered dolomite bricks, before stating that product "Formulations are all Foreign Technologies." (Doc. 33 ¶ 80; Doc. 7 at 12). The presentation closes with a slide of reasons that prospective customers should choose the NCR defendants as business partners, including that Tianjin has a "Chinese produced cost base but [is] under foreign management and Technology." (Doc. 33 ¶ 81; Doc. 7 at 42).
Plaintiffs allege that Griffin provided their trade secrets and confidential information—the "foreign technology" referenced in the presentation—to the NCR defendants and that the NCR defendants now produce fired and tempered dolomite bricks which incorporate plaintiffs' proprietary information. (Doc. 33 ¶¶ 75-76, 83-86). Plaintiffs aver that the NCR defendants are selling fired and tempered dolomite bricks to plaintiffs' customers and that the NCR defendants were not producing these bricks prior to Griffin's hire. (Id. ¶¶ 21, 84, 88-89, 94). Plaintiffs identify Harbison Walker International ("Harbison Walker"), a Pennsylvania company, as one entity which purportedly purchases dolomite bricks incorporating plaintiffs' trade secrets from the NCR defendants. (Id. ¶¶ 26-30).
Plaintiffs commenced this action with the filing of a complaint on September 6, 2017, subsequently filing an amended complaint on November 22, 2017. Therein, plaintiffs assert seven counts against all defendants premised on defendants' alleged misappropriation of plaintiffs' trade secrets and other confidential information, to wit: misappropriation of trade secrets pursuant to the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836 (Count I) and Pennsylvania's Uniform Trade Secrets Act ("PUTSA"), 12 PA. CONS. STAT. § 5301 et seq. (Count II); violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. (Count III); unfair competition in violation of Lanham Act ("Lanham Act"), 15 U.S.C. § 1125 (Count V); and Pennsylvania common law claims of unfair competition (Count VI), conversion (Count VII), and civil conspiracy (Count VIII). Plaintiffs also bring a breach of contract claim against Griffin (Count IV).
The NCR defendants move to dismiss the amended complaint for insufficient service of process, lack of personal jurisdiction, and failure to state a claim under Federal Rules of Civil Procedure 12(b)(2), 12(b)(5), and 12(b)(6). They also move for a more definite statement pursuant to Federal Rule of Civil Procedure 12(e). Griffin separately moves to dismiss the amended complaint for failure to state a claimunder Federal Rule of Civil Procedure 12(b)(6). The motions are fully briefed and ripe for disposition.
Rule 4 of the Federal Rules of Civil Procedure "sets forth the procedure by which a court obtains personal jurisdiction over the defendant." Ayres v. Jacobs & Crumplar, P.A., 99 F.3d 565, 569 (3d Cir. 1996). The Rule prescribes the process for properly issuing and serving a summons. FED. R. CIV. P. 4. Pursuant to Rule 4, a summons must, inter alia, name each individual plaintiff and defendant and "be directed to the defendant." FED. R. CIV. P. 4(a)(1)(A), (B). When a complaint names more than one defendant, a separate summons "must be issued for each defendant to be served." FED. R. CIV. P. 4(b).
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