MasterCard Int'l Inc. v. Nike, Inc.

• Decision Date: 23 February 2016
• Docket Number: No. 15-cv-114 (NSR),15-cv-114 (NSR)
• Citation: 164 F.Supp.3d 592
• Parties: MasterCard International Incorporated, Plaintiff, v. Nike, Inc., William E. Dennings III, and Ryan Fusselman, Defendants.
• Court: U.S. District Court — Southern District of New York

164 F.Supp.3d 592

MasterCard International Incorporated, Plaintiff,

v.Nike, Inc., William E. Dennings III, and Ryan Fusselman, Defendants.

No. 15-cv-114 (NSR)

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

Signed February 23, 2016

Adam J. Safer, Martin David Edel, Kerrin Teneyck Klein, Miller & Wrubel, P.C., New York, NY, for Plaintiff.

David Wayne Garland, Aime Gessler Dempsey, Epstein Becker & Green, P.C., New York, NY, for Defendants.

OPINION & ORDER

NELSON S. ROMÁN, United States District Judge

Plaintiff MasterCard International Incorporated (“Plaintiff” or “MasterCard”) brings this action alleging breach of contract, tortious interference, and unfair competition against Defendants NIKE, Inc. (“NIKE”), William E. Dennings III (“Dennings”), and Ryan Fusselman (“Fusselman”) (collectively, “Defendants”). Defendants move to dismiss Plaintiffs amended complaint (ECF No. 13, or the “Amended Complaint”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, Defendants' motion is DENIED in part and GRANTED in part.

BACKGROUND

The following facts are taken from the Amended Complaint unless otherwise noted and re accepted as true for the purposes of this motion.

Dennings and Fusselman¹ are former employees of MasterCard² and currently work at NIKE.³ (Am. Compl. ¶ 1.) Dennings was MasterCard's Chief Information Security (“IS”) Officer (“CISO”) until May 28, 2013, and Fusselman was the Senior Business Leader in MasterCard's IS department until October 11, 2013. (Id. ¶¶ 2–3.) Fusselman reported directly to Dennings. (Id. ¶ 34.) Dennings and Fusselman had responsibility for managing MasterCard's information security department, sequencing and carrying out initiatives to protect data, identifying new personnel, and promoting existing personnel. (Id. ¶ 30.) They also received confidential information about MasterCard's network configuration, as well as suppliers and other persons engaged in business with MasterCard. (Id. ¶ 31.)

As part of their employment with MasterCard, Dennings and Fusselman each signed a Long Term Incentive Compensation Plan Agreement (“LTIP Agreement”), which contains, among other things, restrictions regarding disclosure of MasterCard's confidential information and solicitation of MasterCard's employees, consultants, suppliers, and other persons engaged in business with MasterCard. (Id. ¶ 4.) Section 2 of Dennings' and Fusselman's LTIP Agreements prohibit them from soliciting MasterCard employees, consultants, suppliers, and other persons engaged in business with MasterCard for a 24-month period (Dennings)/12-month period (Fusselman) following termination of their employment (the “Non-Solicitation Clause”). (Id. ¶¶ 38, 40.) Section 3 of Dennings' and Fusselman's LTIP Agreements prohibits them from disclosing MasterCard's confidential information to NIKE (the “Non-Disclosure Clause”). (Id. ¶¶ 39–40.) Section 5 of the LTIP Agreements provides that MasterCard is entitled to an injunction to prevent breaches of the LTIP Agreement. (Id. ¶ 42.) Additionally, Dennings and Fusselman certified that they would comply with MasterCard's Code of Conduct in the course of their employment, which provides for non-disclosure of confidential information. (Id. ¶ 43.) NIKE was aware of these provisions in the LTIP Agreements. (Id. ¶¶ 52, 68.)

The Amended Complaint alleges that, in recent years, there has been an increasing demand for IS personnel due to the rise in electronic storage and growing data security threats. (Id. ¶¶ 6–7.) Furthermore, there is a limited supply of skilled personnel available to perform IS job functions. (Id. ¶ 7.) The Amended Complaint further alleges that MasterCard's success is derived, in part, from its ability to provide a secure platform for customer information which it receives and transmits. (Id. ¶¶ 10–12.) As of 2013, MasterCard had a developed IS department,⁴ whereas NIKE was looking to create such a department. (Id. ¶¶ 13–14.) According to the Amended Complaint, “[i]nformation security concerns the protection of data that companies store and transmit about customers, contracting parties and themselves.” (Id. ¶ 5.) Prior to his departure from MasterCard, Dennings prepared a report on the retention and development of key talent in the IS department. (Id. ¶ 49.) Dennings resigned from MasterCard on or about May 28, 2013 and accepted a position with NIKE. (Id. ¶ 50.) Subsequently, Dennings solicited Fusselman to join NIKE, and Fusselman resigned from MasterCard and accepted a position with NIKE on October 11, 2013. (Id. ¶ 65.)

Dennings and Fusselman allegedly conspired to build NIKE's IS department by using confidential information from MasterCard about its employees and consultants and the configuration and software of MasterCard's network, as well as soliciting MasterCard's employees, consultants, suppliers, and others engaged in business with MasterCard. (Id. ¶ 14.) In particular, of the eleven employees of MasterCard's IS department that left their employ between May 2013 and September 2014, eight individuals joined NIKE's IS department. (Id. ¶ 28.) The Amended Complaint further alleges that Dennings and Fusselman used personal social media accounts, such as LinkedIn, and personal e-mails and cell phones to encourage MasterCard employees to join NIKE. (Id. ¶ 88.)

STANDARD ON A MOTION TO DISMISS

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). “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.” Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. Although “a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff'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.” Starr v. Sony BMG Music Entm't , 592 F.3d 314, 321 (2d Cir.2010). A court should accept non-conclusory allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Ruotolo v. City of N.Y. , 514 F.3d 184, 188 (2d Cir.2008). “[T]he duty of a court ‘is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.’ ” DiFolco v. MSNBC Cable L.L.C. , 622 F.3d 104, 113 (2d Cir.2010) (quoting Cooper v. Parsky , 140 F.3d 433, 440 (2d Cir.1998) ).

When ruling on a motion to dismiss for failure to state a claim under Rule 12(b)(6), a “court may consider the facts as asserted within the four corners of the complaint together with the documents attached to the complaint as exhibits, and any documents incorporated in the complaint by reference.” Peter F. Gaito Architecture, LLC v. Simone Dev. Corp. , 602 F.3d 57, 64 (2d Cir.2010) (internal quotation marks and citation omitted). Courts also may consider “matters of which judicial notice may be taken” and “documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit.” Brass v. Am. Film Techs., Inc. , 987 F.2d 142, 150 (2d Cir.1993). One way a document may be deemed incorporated by reference is where the complaint “refers to” the document. EQT Infrastructure Ltd. v. Smith , 861 F.Supp.2d 220, 224 n. 2 (S.D.N.Y.2012).

DISCUSSION

I. Breach of Contract⁵

Plaintiff's first cause of action against Defendants asserts that Dennings and Fusselman breached the LTIP Agreements and MasterCard's Code of Conduct by disclosing MasterCard's confidential information to NIKE and soliciting, or assisting NIKE to solicit, directly or indirectly, managers, employees, or suppliers of MasterCard and others engaged in business with MasterCard. (Am. Compl. ¶ 124–31.) Defendants advance three grounds for dismissal of the breach of contract claim: (1) the non-recruitment provision of the LTIP Agreements is unenforceable; (2) the Amended Complaint is devoid of well-pleaded facts regarding Dennings' and Fusselman's misuse of confidential information; and (3) the allegations regarding breaches of the Non-Solicitation Provision of the LTIP Agreements are conclusory. (Defendants' Memorandum of Law in Support of Their Motion to Dismiss the Amended Complaint (“Defs.' Mot.”) at 7–16.) The Court will address the merits of each of Defendants' arguments in turn.

A. Enforceability of Non-Recruitment Provision

Both Dennings' and Fusselman's LTIP Agreements contain a provision that prohibits them from “directly or indirectly, solicit[ing], induc[ing], recruit [ing], or encourag[ing] any other employee, agent, consultant or representative to leave the service of [MasterCard] for any reason ...” for a period of 24 months (Dennings) or 12 months (Fusselman) following termination of their employment (the “Non-Recruitment Provision”). (Am. Compl. ¶¶ 38, 40.) In examining whether Plaintiff may maintain a valid breach of contract claim as to the Non-Recruitment Provision, this Court first must determine whether the Non-Recruitment Provision qualifies as a restrictive covenant or is subject to a less stringent level of scrutiny. Then, the Court will apply the appropriate analysis to determine if the Non-Recruitment Provision is enforceable.

i. Applicable Inquiry

As an initial matter, the parties appear to disagree as to whether the Non-Recruitment Provision qualifies as a restrictive covenant, which dictates the nature of this Court's inquiry into the enforceability of the provision. Plaintiff contends that non-recruitment provisions are distinct from non-compete provisions, which are considered restrictive covenants, because non-recruitment provisions...