Paramount Residential Mortg. Grp. v. Nationwide Mortg. Bankers
| Docket Number | Civil Action 22-4656 (ZNQ) (RLS) |
| Decision Date | 31 May 2023 |
| Parties | PARAMOUNT RESIDENTIAL MORTGAGE GROUP, INC., Plaintiff, v. NATIONWIDE MORTGAGE BANKERS, INC., Defendant. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
THIS MATTER comes before the Court upon a Motion to Dismiss for Lack of Jurisdiction filed by Defendant Nationwide Mortgage Bankers, Inc. (“Defendant”). (“Motion”, ECF No. 11.) Defendant filed a Moving Brief in support of its Motion. (“Moving Br.” ECF No. 11-3.) Plaintiff Paramount Residential Mortgage Group, Inc. (“Plaintiff”) filed an Opposition to Defendant's Motion (“Opp'n”, at 12) to which Defendant replied (“Reply”, ECF No. 13.)
The Court has carefully considered the parties' submissions and decides the Motion without oral argument pursuant to Federal Rule of Civil Procedure 78 and Local Civil Rule 78.1. For the reasons set forth below, the Court will DENY Plaintiff's Motion to Dismiss.
Plaintiff initiated the instant action on July 20, 2022, by filing its Complaint. (ECF No. 1.) On October 3, 2022, Plaintiff filed an Amended Complaint-the operative Complaint in this matter. The Amended Complaint generally alleges damages arising from Defendant's misappropriation of Plaintiff's employees and its trade secrets. (Id. ¶ 1.)
Specifically, the Amended Complaint alleges that Defendant's purported business success is directly derived from stealing from its competition-namely, from misappropriating Plaintiff's employees and trade secrets. (Id.) Plaintiff is a California corporation and a leading lender, providing mortgage products to customers in nearly every state through its 282 branch offices located around the country, and a direct competitor of Defendant. (Id. ¶¶ 2, 7.) Plaintiff is in the business of making home mortgage and home equity loans (“Core Business”). (Id. ¶ 15.) The Core Business is conducted through Plaintiff's employees, who work in Plaintiff's offices nationwide. (Id. ¶ 16.) In order to obtain loans from Plaintiff, customers, applicants, and borrowers must provide their private, personal financial information such as credit scores, baking history and information, net worth, tax returns, compensation information, and current employment, among other sensitive information (“Personal Financial Information”) so that Plaintiff can determine the creditworthiness of its customers, applicants, and borrowers. (Id. ¶¶ 17, 19.) Customers, applicants, and borrowers expect that when they provide Plaintiff with their Personal Financial Information, it will be safeguarded and protected and used only by Plaintiff to help provide a loan. (Id. ¶ 21.) To successfully operate Plaintiff's Core Business, Plaintiff relies upon and uses confidential and proprietary information and trade secrets (“Confidential Information”) which include Personal Financial Information, loan-to-value ratios of properties, operating, capital, and budgeting information, vendor accounts, account numbers, passwords, and codes among other confidential information. (Id. ¶¶ 22-23.) This Confidential Information exists in hard copy format that resides in files in Plaintiff's secured offices, and in ESI format that resides in Plaintiff's secure computers and related information technology systems. (Id. ¶ 26.)
Several former Plaintiff-employees that were later recruited to Defendant were assigned password-protected, Plaintiff-owned computers and/or given access to Plaintiff's computer systems in order to perform their duties that was completely unaccusable to competitors. (Id. ¶¶ 27-29.) Plaintiff's Core Business would suffer if its Confidential Information were disclosed to and exploited for competitive advantage by one of its competitors. (Id. ¶ 35.) To ensure the protection of the confidential information and its trade secrets, Plaintiff's employees each executed an Employee Confidentiality, Non-Solicitation, and Inventions Assignment Agreement (“Restrictive Covenants Agreement”). (Id. ¶ 42.) In their Restrictive Covenants Agreement, former employees made specific promises to Plaintiff regarding their obligations and duties to protect Plaintiff's Confidential Information and trade secrets; Plaintiff's goodwill with its employees and its assembled workforce; and Plaintiff's goodwill with its customers. (Id. ¶ 43) (citing Pl. Ex A. “Heister Restrictive Covenant Agreement”, at 1; Ex. B, “Wampler Restrictive Covenant Agreement”, at 1.) Furthermore, former employees “promised [Plaintiff] that they would protect and not exploit or misappropriate [Plaintiff's] Trade Secrets, which are defined to include the Confidential Information.” (Id. ¶ 45) (citing Exs. A and B, at 4-5.) The former employees also promised that “all of the Company's Trade Secrets and Confidential Information shall forever be maintained in confidence by Employee and used by Employee only to such extent as may be necessary in the ordinary course of performing services for the Company under this Agreement.” (Id. ¶ 46) (citing Exs. A and B, at 6.) Former employees also promised that they would not solicit Plaintiff's clients in order to divert their mortgage business away from Plaintiff nor recruit employees to leave Plaintiff or seek alternative employment at a competitor. (Id. ¶¶ 48-49) (citing Exs. A and B, at 7-11.) Defendant “was well aware that each of former P[laintiff] employees owed the aforementioned contractual obligations to [Plaintiff].” (Id. ¶ 51.) Despite its alleged knowledge of former employee's contractual obligations, Defendant utilized the influence and authority of former-executives Bob Wampler (“Wampler”) and Joe Heister (“Heister”) while still employed by Plaintiff to recruit the former-Plaintiff employees, and then encouraging and enabling the former employees to violate their duty of loyalty and post-employment contractual duties to Plaintiff. (Id. ¶ 52.)
Through its onboarding process, Defendant orchestrated the resignation of dozens of former Plaintiff-employees by sending Defendant e-mail accounts and business cards to the former Plaintiff-employees, while they were working for and employed by Plaintiff and providing assistance through Defendant's licensing department to transfer Plaintiff's employees' licenses while they were still employed by Plaintiff. (Id. ¶¶ 53-54.) Defendant encouraged former employees to breach their contractual obligations to Plaintiff through monetary incentives and back-end protection in the form of indemnification from damage awards, penalties, or judgments, if Plaintiff were to succeed in litigation against them. (Id. ¶¶ 55-56.)
Defendant relied upon the recruitment of Heister and Wampler to solicit other employees to leave Plaintiff for Defendant. (Id. ¶¶ 58-60.) In the weeks leading up to final execution, Heister, with the encouragement and support of Defendant, visited many former employees to solicit them and obtain final buy-in on the plot to steal Plaintiff's Confidential Information and use it on behalf of Defendant. (Id. ¶ 61.) Before the former employees submitted their resignations, (Id. ¶ 62.) As part of the resignation process, Wampler directed the former employees to back up and synchronize their computers to Plaintiff's corporate information technology system, to ensure that that they would have access to and would be able to misappropriate all of the most recent and updated Confidential Information in the hours before they stopped working for Plaintiff. (Id. ¶ 63.)
By the time the former employees resigned and moved to Defendant corporation, Defendant had amassed a considerable collection of Plaintiff's Confidential Information. (Id. ¶ 72.) Plaintiff alleges that even before resigning from Plaintiff, the former employees began working for Defendant. (Id. ¶ 76.) “In a single day, [Defendant] executed an unlawful raid of thirty-five [of Plaintiff's] employees that was coordinated to steal not only the employees, but also the branch offices they operated, the confidential and trade secret information they had access to, the customers they serviced, and, ultimately, the profits they generated.” (Id. ¶ 3.) By May 2022, Defendant hired a total of forty-one of Plaintiff's employees despite Plaintiff's demand that Defendant end its misconduct. (Id. ¶¶ 4-5.) Defendant “conducted its raid with the full knowledge that the Former [Plaintiff's] Employees owed legal and contractual obligations to [Plaintiff] both during and after their employment with [Plaintiff].” (Id. ¶ 6.) Despite a cease and desist letter, Defendant continued to poach Plaintiff's employees. (Id. ¶¶ 84, 88.)
Under Fed.R.Civ.P. 12(b)(6), a complaint may be dismissed for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When reviewing a motion to dismiss on the pleadings, courts “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quotations omitted). Under such a standard, the factual allegations set forth in a...
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