Moog Inc. v. Skyryse, Inc.
| Decision Date | 15 December 2022 |
| Docket Number | 22-CV-187-LJV-JJM |
| Parties | MOOG INC., Plaintiff, v. SKYRYSE, INC., et al., Defendants. |
| Court | U.S. District Court — Western District of New York |
DECISION & ORDER
On March 7, 2022, Moog Inc., filed a complaint against Skyryse Inc., and two of Skyryse's then-employees, Robert Alin Pilkington and Misook Kim,[1] alleging that the defendants “misappropriate[d] valuable confidential, proprietary and trade secret information” from Moog “by way of stealing it.” Docket Item 1 at ¶ 4. The same day that Moog filed its complaint, it also moved for a temporary restraining order and a preliminary injunction. Docket Item 4.
Four days later, the parties signed a stipulated order “re[garding the] production of information, data preservation[,] and forensic searches.” Docket Item 25. Six days after that, the parties filed a second stipulated order “re[garding] expedited discovery procedures and [a] briefing schedule for [Moog's] preliminary injunction motion.” Docket Item 33. Twelve days after the second stipulated order was filed, the defendants moved to dismiss the case for lack of personal jurisdiction and improper venue or, in the alternative, to transfer the case to the United States District Court for the Central District of California under 28 U.S.C. § 1404(a). Docket Items 47, 48.
At issue now is the precise effect of those two stipulated orders on the defendants' motions. On August 29, 2022, United States Magistrate Judge Jeremiah J. McCarthy, to whom this case was referred under 28 U.S.C. § 636(b)(1)(A) and (B), issued a Report, Recommendation and Order (“RR&O”) denying the defendants' motions to transfer in part and recommending that their motions to dismiss be denied in part. Docket Item 253. More specifically, Judge McCarthy concluded that the defendants “consented to litigate Moog's preliminary injunction motion in this court” by agreeing to the March 17 stipulated order and therefore consented to personal jurisdiction and venue for the purpose of resolving that motion. Id. at 1-4. Judge McCarthy reserved “the question of jurisdiction and venue for the remainder of the case” until after “Moog's preliminary injunction motion is resolved.” Id. at 4.
The defendants objected to the RR&O on September 12, 2022. Docket Items 263, 264. They argue that they never consented to personal jurisdiction and venue by executing those two stipulated orders and that their motions to dismiss or transfer can and should be decided before this Court rules on Moog's motion for a preliminary injunction. See id. On September 27, 2022, Moog responded to the defendants' objections, see Docket Items 270, 271, and the defendants replied a week later, see Docket Items 274, 275. This Court heard oral argument on the objections on November 29, 2022. Docket Item 294.
A district court may accept, reject, or modify the findings or recommendations of a magistrate judge. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(3). The court must review de novo those portions of a magistrate judge's recommendation to which a party objects.[2] 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(3).
This Court has carefully and thoroughly reviewed the RR&O; the record in this case; the objections, responses, and replies; and the materials submitted to Judge McCarthy. Based on that review, the Court grants the defendants' motions to transfer the case to the Central District of California. The defendants' motions to dismiss for lack of personal jurisdiction and improper venue are denied without prejudice. The Court leaves the merits of all other pending motions to the Central District of California.
FACTUAL AND PROCEDURAL BACKGROUND[3]
Moog is an “aerospace and defense company” with “a world-wide workforce of over 13,000” that is headquartered in East Aurora, New York. Docket Item 1 at ¶ 10.
Moog designs and manufactures “electric, electro-hydraulic[,] and hydraulic motion[] controls and systems for applications in aerospace, defense, industrial[,] and medical devices.” Id. “The company's largest business segment is aircraft controls, which generates revenues from military and commercial aircraft in addition to aftermarket support.” Id. at ¶ 23.
“As part of its motion control product portfolio, Moog develops software that governs flight controls for airplanes and other aircrafts, including helicopters.” Id. at ¶ 24. “Moog's flight control software works in tandem with an aircraft's computer to control its flight and navigation functionality.” Id. at ¶ 25. “Moog's base flight control software for commercial use,” Platform, “is in essence [an] ‘operating system' that an aircraft's computer uses,” which “allows the entire system and machine to work.” Id. at ¶ 26. “The source code for Platform base software and related project-specific applications, as well as documentation and information regarding the development, modification, improvement[,] and deployment of [] Platform, constitute Moog's most valuable, sensitive, and proprietary information.” Id. at ¶ 33. Moog “protect[s] its intellectual property” in several ways, including requiring its employees to sign “internal proprietary information agreements,” limiting its employees' access to Platform software, and conducting background checks on prospective employees. Id. at ¶¶ 40-50.
By late 2021, 51 software developers and engineers worked on Platform at Moog's Buffalo and California offices. Id. at ¶ 55. That included Pilkington and Kim, who worked as Software Manager and Software Engineer, respectively, in Moog's office in Torrance, California. Id. at ¶¶ 12-13, 53-54. Pilkington “was the lead architect . . . on the second iteration of the Platform base software for military purposes.” Id. at ¶ 53. Kim worked under Pilkington. Id. at ¶ 54.
In 2018, Moog's Growth and Innovation Group, which is tasked with “explor[ing] new and innovative business opportunities for Moog,” started to “explor[e] a potential business opportunity with [] Skyryse.” Id. at ¶¶ 56-57. Skyryse is a Delaware corporation with a principal place of business in El Segundo, California. Id. at ¶ 11. During Moog's initial discussions with Skyryse, Skyryse “represented that it wanted to offer on-demand helicopter transportation to the general public[] through the use of automated flight system technology.” Id. at ¶ 60.
As the two companies began to interact more often, Moog and Skyryse entered into two non-disclosure agreements (“NDAs”) in 2018 and 2019. Id. at ¶¶ 64-66. “Under these NDAs, [Moog and Skyryse] agreed not to disclose any proprietary information disclosed by [each other],” and agreed that “the receiving party of [any] such information could only use it for the limited purpose of the contemplated engagement between Moog and Skyryse.” Id. at ¶ 67. Moog and Skyryse “contemplated” that their business relationship would “be conducted in four separate phases, with the [p]arties agreeing to enter into a separate contract before each phase.” Id. at ¶ 68.
“Before the parties were to explore Phase 2, Skyryse intended to take its system live to the public.” Id. at ¶ 76. But “Skyryse's launch did not go as planned and was not successful.” Id. So by late 2019, “Skyryse stopped its business operations, fired many of its employees, and was looking to pivot its business model.” Id. Skyryse then “pivoted” its business model “into exactly what Moog was doing”-that is, “offering an autonomous flight system as part of a flight control operating system.” Id. at ¶¶ 76-79.
In late 2019 and early 2020, Skyryse announced the development and launch of its autonomous flight control technology. Id. at ¶¶ 76-80. After announcing those developments, Skyryse issued a “request for quote” to Moog. Id. at ¶ 82. The quote was for work that would “provide flight control computers and actuator systems for Skyryse to use and to implement Skyryse's flight control operating system software.” Id. at ¶¶ 82-83. Although Moog says that it was “reluctant to pursue that line of business with Skyryse” because “Skyryse had changed its entire business plan and model,” Moog nevertheless submitted a bid because of its “prior business relationship with Skyryse” and because “several former respected Moog employees worked at Skyryse.” Id. at ¶¶ 83-84.
Skyryse declined Moog's bid due to its cost. Id. at ¶ 85. After that, “there was additional correspondence between the companies about closing up Phase 1,” and the companies “did not pursue any further [mutual] business opportunities.” Id. at ¶ 86.
The formal relationship between Moog and Skyryse ended there. But Moog says that Skyryse still had its eye on Moog. More specifically, Moog alleges that Skyryse, “[f]acing considerable pressure to meet investor expectations and obtain a significant advantage against [its] competitors, [] made the strategic decision to . . . engage in a ‘full court press' to take from Moog as many key employees as possible so that it [could] shortcut its own timeline and costs in developing automated flight software and related products.” Id. at ¶ 89. As part of that “full court press,” Skyryse “engaged in a methodical, intentional, and pervasive raid of Moog's developers who built Platform and resulting project-specific applications.” Id. at ¶¶ 89-90. By “specifically targeting Moog's Los Angeles-area office,” Skyryse “successfully raided 20 Moog employees, including high-level Moog officers, senior level engineers, coding engineers, and testers.” Id. at ¶ 209; see also id. at ¶ 91 ().[4] Those twenty employees included...
To continue reading
Request your trial