ReMedPar, Inc. v. AllParts Medical, LLC

• Decision Date: 04 January 2010
• Docket Number: Civil Action No. 3:09-cv-00807.
• Citation: 683 F. Supp.2d 605
• Parties: REMEDPAR, INC., Plaintiff, v. ALLPARTS MEDICAL, LLC and Thomas Camacho, Defendants.
• Court: U.S. District Court — Middle District of Tennessee

683 F.Supp.2d 605

REMEDPAR, INC., Plaintiff, v. ALLPARTS MEDICAL, LLC and Thomas Camacho, Defendants.

Civil Action No. 3:09-cv-00807.

United States District Court, M.D. Tennessee, Nashville Division.

January 4, 2010.

Hans P. Schmidt, John S. Hicks, William A. Lewis, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Nashville, TN, for Plaintiff.

Donald Neil Capparella, Margaret Louise Behm, Gregory D. Buppert, Nashville, TN, Anne C. Martin, Bone, McAllester & Norton, PLLC, Nashville, TN, Marshall T. Cook, Bone, McAllester & Norton, PLLC, Hendersonville, TN, for Defendants.

MEMORANDUM OPINION

THOMAS A. WISEMAN, JR., Senior District Judge.

In this action, plaintiff ReMedPar, Inc. ("RMP") has filed a Verified Complaint asserting federal claims against defendants AllParts Medical, LLC and Thomas Camacho (collectively, "Defendants") for violations of the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030, as well as supplemental state-law claims based upon violation of the Tennessee Uniform Trade Secrets Act and the Tennessee Personal and Commercial Computer Act. In a nutshell, RMP alleges that that Defendants "stole the intellectual property of ReMedPar and exploited it to unfairly compete with ReMedPar" (Doc. No. 1, Verified Compl. at 1), as a result of which RMP seeks damages as well as declaratory and injunctive relief. This Court's original jurisdiction is premised upon the federal claims arising under the CFAA, with supplemental jurisdiction over the state-law claims pursuant to 28 U.S.C. § 1367(a).

Defendants have now filed separate Motions to Dismiss (Doc. Nos. 31 and 33) in which they seek dismissal of the Verified Complaint on the grounds that RMP has failed to assert a claim under the CFAA, and that the Court, after dismissing RMP's federal claims, should decline to exercise supplemental jurisdiction over the remaining state-law causes of action.

I. STANDARD OF REVIEW

A motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure seeks to have the complaint dismissed based upon the plaintiff's failure to state a claim upon which relief can be granted. The reviewing court must "accept all the ... factual allegations as true and construe the complaint in the light most favorable to the Plaintiff ." Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir.2009) (citation and internal quotation marks omitted). "To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 319 (6th Cir.1999) (internal quotation marks omitted). "Even though a complaint need not contain `detailed' factual allegations, its `factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true.'" Ass'n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir.2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

II. FACTUAL ALLEGATIONS

According to the allegations in plaintiff RMP's Verified Complaint, which the Court accepts as true for purposes of Defendants' motions, RMP is a Delaware corporation whose principal place of business is in Goodlettsville, Tennessee. RMP specializes in the sale of after-market medical diagnostic imaging equipment and replacement parts, and in providing technical support, technical repair and training services. Defendant AllParts is a Tennessee limited liability company that is also engaged in the sale of after-market medical imaging equipment and replacement parts and is RMP's direct competitor. Defendant Camacho, a Tennessee resident, was employed by RMP from April 15, 2002 through September 8, 2008, the vast majority of which time he served as RMP's Director of Information Technology. At some point in 2009, Camacho apparently began working for AllParts. Several of RMP's former employees had left RMP to found AllParts in 2006. Since then, a number of other former RMP employees besides Camacho have been induced to leave RMP to go to work for AllParts.

RMP uses a computer application it calls "ROCS," which is RMP's proprietary Enterprise Resources Planning ("ERP") and Customer Relations Management ("CRM") platform through which RMP utilizes electronic data and software to operate its business. The ROCS application serves as RMP's core inventory, purchasing and customer information database. On the CRM side, ROCS contains all of RMP's customer information, including contact information, purchase history, prices paid in prior transactions, as well as specific account notes about each customer. On the ERP side, ROCS contains an extensive library of information on approximately 20,000 parts that has been compiled by RMP over the years.

RMP developed ROCS specifically for its own use, and the platform cannot be purchased by other companies in the market. RMP has used the application to compile a vast amount of proprietary and confidential information. RMP has engaged in and continues to engage in substantial efforts to maintain the secrecy of its confidential and proprietary information, including ROCS and the information compiled through the use of ROCS, and to prevent dissemination of its confidential information in the marketplace. RMP has never given permission, through a license agreement or otherwise, for AllParts or any other company to use ROCS. RMP disseminates a Policy and Procedures Manual to its employees, who are required to sign receipts acknowledging that they have read, understood and agree to abide by its provisions. Included in the Policy and Procedures Manual is an express Confidentiality Policy.

In August 2009, RMP interviewed a person who was then employed by AllParts for a Customer Service Representative position with RMP. Through that person, RMP learned that AllParts had been using an early version of ROCS since at least 2007. RMP also learned that in July 2009, AllParts' computer system underwent a substantial upgrade and that, after the enhancement, the version of ROCS used by AllParts acquired the same screen appearance and layouts as RMP's current version of ROCS. After the upgrade, the functionality of the AllParts system was virtually identical to ROCS. RMP also learned that, beginning in January 2009, Thomas Camacho, a former RMP employee, was frequently at AllParts' business location, and frequently in contact with Scott Young, AllParts' shipping manager, and with Wanda Legate, AllParts' Vice President of Customer Relations and also a founder and principal of AllParts. Both Young and Legate are former RMP employees, and both knew or should have known the confidential nature of RMP's ROCS application and the information compiled and stored through the use of ROCS. The purpose of Camacho's work at AllParts was to maintain and upgrade the software that operates AllParts' computer system. Camacho was engaged as an independent contractor to implement enhancements to AllParts' computer system, which he in fact did.

While he was still employed by RMP, Camacho was responsible for the maintenance, modification and enhancement of ROCS. Camacho had access to and created upgrades to the source code for ROCS and was responsible for integrating ROCS into RMP's computer system. He was responsible for maintaining and providing support for RMP's information technology, including ROCS. In that role, Camacho had the ability and authority to access RMP's computer system, including ROCS, remotely.

In late August 2008, Camacho advised RMP that he was resigning his position in order to accept alternate employment. At the time his resignation became effective, Camacho was the leader of a project to build a web-based interface for ROCS that could be used by RMP's customers at their own facilities. At the time Camacho announced his intention to resign from RMP, the project was still several months from completion. Because Camacho had been the primary contact for vendors involved in the project, and a replacement for him had not yet been hired, RMP determined that it needed Camacho's continued involvement in order to complete the project on time. Consequently, on August 28, 2008, Camacho and RMP entered into a consulting agreement pursuant to which Camacho would continue to work as an independent contractor and would be paid an hourly rate for work performed supervising the completion of the project. After his resignation, Camacho continued to work on the project part-time, as an independent contractor, for six to eight weeks until the project was completed. During that time, Camacho had access, including remote access, to RMP's computer system, and specifically to the ROCS source code.

RMP alleges that as former employees of RMP, Camacho and the other employees who left RMP to go work for AllParts had an obligation not to divulge or disclose information gained in connection with their employment with RMP to any other person or company, but that Camacho and AllParts (through its employees) violated RMP's protectable interests in ROCS and caused injury to RMP through the use and disclosure of the ROCS application for their own business purposes and to compete unfairly with RMP.

RMP asserts, based upon these facts, that Camacho and AllParts violated the CFAA. Under Count I of the complaint, which purports to assert a cause of action under the CFAA, RMP alleges specifically that (1) RMP's computers and computer systems are "protected computers" for purposes of the CFAA (Verified Compl. ¶ 70); (2) Camacho intentionally accessed RMP's protected computer system "without authorization and/or in excess of authorized access, and thereby obtained information from RMP's protected computer system (id. ¶ 71); (3) "Camacho knowingly and with intent to defraud, accessed RMP's protected computer system, without...