NJ Coed Sports LLC v. ISP Sports, LLC
| Docket Number | Civil Action 22-06969 |
| Decision Date | 14 June 2023 |
| Parties | NJ COED SPORTS LLC, Plaintiff, v. ISP SPORTS, LLC, VOLO SPORTS GROUP LLC, JOHN NEWMAN, TIMOTHY ERTL, JULIANNA HENAO, and DEBORAH NEXON, Defendants. |
| Court | U.S. District Court — District of New Jersey |
Not for Publication
This case concerns an alleged misappropriation of trade secret customer information. Plaintiff N.J. Coed Sports LLC (“NJ Coed Sports”) alleges that Defendants violated the Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq. (“DTSA”), among other things. Currently pending before the Court is a motion to dismiss filed by Defendants ISP Sports, LLC (“ISP Sports”); John Newman; Timothy Ertl; and Julianna Henao (collectively, the “Moving Defendants”).[1] D.E. 10. The Moving Defendants claim that Plaintiff has failed to plead its DTSA claim, and that the Court should decline to exercise supplemental jurisdiction over the remaining claims. The Court reviewed the parties' submissions[2] and decided the motion without oral argument pursuant to Fed.R.Civ.P. 78(b) and L Civ. R. 78.1(b). For the following reasons, the Moving Defendants' motion is GRANTED.
Plaintiff alleges that in or around 2011, it contracted with Jeffrey and Barbara Walder (the “Prior ISP Owners”) for the use of a sports facility (the “Facility”) in Randolph, New Jersey. D.E. 1 (“Compl.”) ¶ 15. The Facility has numerous “indoor AstroTurf fields meant for conducting various recreational sports.” Id. ¶ 16. Plaintiff was granted “exclusive use and access to their Facility for the purpose of hosting various adult recreational sports programs and attendant sporting activities” (the “Agreement”). Id. ¶ 17. Plaintiff alleges that “the Prior ISP Owners executed a non-disclosure agreement (the ‘NDA'), whereby it agreed, among other things, to maintain confidentiality of N.J. Coed Sports' proprietary information.” Id. ¶ 18. This proprietary information allegedly includes “customer lists and their respective contact information (e.g., names, phone numbers, addresses, email addresses) (the ‘Confidential Information').” Id. ¶ 19.
Plaintiff alleges that “solely for insurance purposes, the Prior ISP Owners required N.J. Coed Sports' customers to fill out waiver forms and to include their respective Confidential Information.” Id. ¶ 21. Plaintiff continues that “the Prior ISP Owners were permitted to use N.J. Coed Sports' customers' Confidential Information solely for this limited insurance purpose.” Id. ¶ 22.
“[I]n or around July 2018, the Prior ISP Owners sold the Facility, its operations and goodwill to ISP Sports.” Id. ¶ 23. Defendant Newman is alleged to be “the principal, owner or member of ISP Sports,” id. ¶ 5, but Ertl, Henao, or Nexon's connection to the entity Defendants is not clear. Plaintiff alleges that “[u]pon information and belief, as part of the sale of the Facility to ISP Sports, ISP Sports acquired certain assets, liabilities and obligations, including all obligations under the Agreement and NDA.” Id. ¶ 24. Plaintiff adds that “the Prior ISP Owners advised ISP Sports of its obligation to maintain confidentiality of N.J. Coed Sports' Confidential Information.” Id. ¶ 25. Plaintiff also alleges that on several occasions, its principal Jay Oliva “advised ISP Sports, Newman, Ertl, and Henao”-both verbally and in writing-“of their collective obligation to maintain confidentiality of the Confidential Information and to not disclose such information to any third party for any purpose outside of the limited and sole purpose of requiring N.J. Coed Sports' customers to fill-out requisite insurance and/or liability waivers.” Id. ¶ 29. ISP Sports, Newman, Ertl, and Henao allegedly “acknowledged that N.J. Coed Sports' Confidential Information was being gathered, stored and disseminated for the sole purpose of requiring N.J. Coed Sports' customers to fill-out requisite insurance and/or liability waivers.” Id. ¶ 30. ISP Sports, Newman, Ertl and Henao also allegedly “represented to N.J. Coed Sports and Oliva both verbally and in writing that it would maintain confidentiality of the Confidential information[.]” Id. ¶ 31.
According to Plaintiff, “ISP Sports maintained a strict policy that all lists of teams and player rosters be forwarded to ISP Sports in the form of a spreadsheet sent via email prior to the commencement of each season and for each night N.J. Coed Sports held its league activities.” Id. ¶ 26. As a result, Plaintiff “regularly updated the aforementioned lists because new customers would often register after the season had begun.” Id. ¶ 27. “Further, guest players were required to sign an insurance waiver with ISP Sports, wherein, the guest player's contact information, including without limitation, name, telephone number, email address, date of birth and sport of participation, was collected and stored.” Id. ¶ 28.
Plaintiff states that “[o]n or about January 25, 2022, ISP Sports and Newman demanded that N.J. Coed Sports increase its customers' membership fee by approximately 35% . . . so that ISP Sports, in turn, could increase the rate it charged N.J. Coed Sports for use of its Facility.” Id. ¶¶ 3334. Plaintiff refused, which allegedly caused ISP Sports to seek “a contractual arrangement with Volo Sports to replace N.J. Coed Sports' presence at the Facility.” Id. ¶ 35. Plaintiff alleges that ISP Sports and Volo Sports agreed (the “Volo Agreement”) that “Volo Sports would operate various adult recreational sports programs at the Facility in place and instead of N.J. Coed Sports and, to the exclusion of N.J. Coed Sports.” Id. ¶ 36. Plaintiff claims that it was then precluded “from continuing its operations at the Facility.” Id. Plaintiff continues that “[i]n furtherance of the Volo Agreement, ISP Sports willfully and knowingly disseminated to Volo Sports N.J. Coed Sports' Confidential Information.” Id. ¶ 38. Plaintiff further asserts that “Volo Sports used N.J. Coed Sports' Confidential Information to solicit N.J. Coed Sports' customers away from N.J. Coed Sports and, instead, to enroll with Volo Sports to participate in various adult recreational sports programs at the Facility.” Id. ¶ 39.
Plaintiff filed this action on December 2, 2022, alleging nine state law causes of action and, in Count X, misappropriation of trade secrets in violation of the DTSA. Id. ¶¶ 102-11. The present motion followed. D.E. 10.
Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a complaint that fails “to state a claim upon which relief can be granted[.]” Fed.R.Civ.P. 12(b)(6). For a complaint to survive dismissal under Rule 12(b)(6), it must contain sufficient factual allegations to state a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 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.” Id. Further, a plaintiff must “allege sufficient facts to raise a reasonable expectation that discovery will uncover proof of her claims.” Connelly v. Lane Constr. Corp., 809 F.3d 780, 789 (3d Cir. 2016). In evaluating the sufficiency of a complaint, district courts must separate the factual and legal elements. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Restatements of the elements of a claim are legal conclusions, and therefore, are not entitled to a presumption of truth. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The Court, however, “must accept all of the complaint's well-pleaded facts as true” and give a plaintiff the benefit of all reasonable inferences therefrom. Fowler, 578 F.3d at 210.
The Moving Defendants seek to dismiss Plaintiff's DTSA claim and assert that the Court should decline to exercise supplemental jurisdiction over the remaining state law claims. The DTSA states that “[a]n owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” 18 U.S.C. § 1836(b)(1). The Moving Defendants first argue that Plaintiff has failed to plead a nexus to interstate commerce, as required by the statute. Br. at 6-7. The Court agrees. The Complaint indicates that Plaintiff's product/service-adult recreational sports leagues-are entirely intrastate. As explained by another federal court:
While “the Supreme Court has broadly construed the phrase ‘involving interstate commerce' . . . to mean ‘the functional equivalent of the more familiar term ‘affecting commerce' - words of art that ordinarily signal the broadest permissible exercise of Congress' Commerce Clause power[,]'” [United States v.] Aleynikov, 676 F.3d[ 71,] 81 [(2d Cir. 2012)] (quoting Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003)), the actual language used in the DTSA is “used in, or intended for use in, interstate . . . commerce.” 18 U.S.C. § 1836(b)(1) (emphasis added). The words “in commerce” are not as broad as the words “involving commerce,” or “affecting commerce,” and cover “only persons or activities within the flow of interstate commerce.” Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 273 (1995) (emphasis omitted); see also Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003) (); Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 118 (2001) (...
To continue reading
Request your trial