Static Control Components v. Darkprint Imaging

• Decision Date: 09 February 2001
• Docket Number: No. 1:99CV00612.,1:99CV00612.
• Citation: 135 F.Supp.2d 722
• Parties: STATIC CONTROL COMPONENTS, INC., Plaintiff, v. DARKPRINT IMAGING, INC., Defendant.
• Court: U.S. District Court — Middle District of North Carolina

135 F.Supp.2d 722

STATIC CONTROL COMPONENTS, INC., Plaintiff, v. DARKPRINT IMAGING, INC., Defendant.

No. 1:99CV00612.

United States District Court, M.D. North Carolina.

February 9, 2001.

COPYRIGHT MATERIAL OMITTED

William L. London, III, Sanford, NC, for plaintiff.

Douglas W. Kenyon, Matthew Patrick McGuire, Hunton & Williams, Raleigh, NC, Timothy P. Getzoff Donald A. Degnan, Holland & Hart, LLP, Boulder, CO, for Defendant.

MEMORANDUM OPINION

TILLEY, Chief Judge.

This matter is before the Court on Defendant's Motions to Dismiss under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, and in the alternative, on Defendant's Motion for a More Definite Statement under Rule 12(e). [Doc. ## 6, 15.] For the reasons stated below, the Defendant's motions are DENIED IN PART and GRANTED IN PART.

I.

A.

The facts of this case, stated in the light most favorable to the Plaintiffs, are as follows. Plaintiff, Static Control Components, Inc., is a North Carolina corporation which distributes, among other things, replacement toner and component parts for laser printers. Plaintiff alleges Defendant, Darkprint Imaging, Inc., in an attempt to enter the toner business, gained an unfair business advantage by hiring away Plaintiff's employees who possessed intimate knowledge of Plaintiff's trade secrets.

In the spring of 1996, Plaintiff alleges that Defendant hired Tommy Daniels and Gary Shute, two of its former employees whose expertise included, respectively, product development and technical assistance. In September 1996, Defendant allegedly hired another former employee, Lauren Hulse, who had worked as a toner scientist for Plaintiff in the development of formulations used for printer models. Mr. Hulse had signed a confidentiality and non-compete agreement with Plaintiff containing the following language:

I [Lauren Hulse] agree to treat all of this information regarding these [Plaintiff's] products as the property of Static Control Components, Inc. I agree not to reveal any data regarding these products to any business enterprise or individual without the written permission of Static Control Components, Inc.

In the event I [Lauren Hulse] terminate my consultation association with Static Control Components, Inc., I agree not to compete directly or indirectly with Static Control Components, Inc. in its manufacturing and/or distribution of supplies to remanufacturers of laser printer cartridges for a period of two (2) years from the date of last compensation from Static Control Components, Inc.¹

Defendant allegedly hired two more of Plaintiff's employees, Heather Marino in 1997 and Leonard Gunter in 1998, both of whom had experience in Plaintiff's sales department.

Overall, Plaintiff argues that Defendant hired these five employees, with distinct areas of expertise, in order to obtain access to confidential, specialized knowledge, which Plaintiff had in the toner business. This knowledge allegedly included development of toner to remanufacturer specifications, customer support and technical assistance, and specialized customer preferences. Further, it is alleged that the Defendant hired these individuals only to gain such confidential information, evidenced by the fact that "many" of the previously mentioned employees held only brief tenures in Defendant's employment. Plaintiff claims it was unaware of the full extent of the Defendant's efforts to obtain confidential information until "the past year."²

Three of Plaintiff's four claims relate to the hiring of former employees: First, Plaintiff alleges that Defendant misappropriated and misused Plaintiff's trade secrets and confidential information, the "specialized knowledge" previously discussed, in violation of the North Carolina Trade Secrets Protection Act, N.C. Gen. Stat. § 66-152 to -157 (1992). Second, Plaintiff alleges that Defendant tortiously interfered with a confidentiality and noncompete agreement with Mr. Hulse. Third, Plaintiff alleges that Defendant's actions amounted to unfair and deceptive trade practices in violation of the Unfair Trade Practices Act, N.C. Gen.Stat. § 75-1.1 (1994). Overall, Plaintiff's prayer for relief includes a request for damages and that Defendant be permanently enjoined from misappropriating, copying, using, or disclosing Plaintiff's trade secrets.

Defendant seeks to dismiss all three claims pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted or, in the alternative, Defendant seeks to require Plaintiff to provide a more definite statement of these claims pursuant to Rule 12(e).

B.

Plaintiff's Fourth Claim for Relief involves an alleged dispute between Plaintiff and Defendant, regarding circumstances apart from those previously described. Both Plaintiff and Defendant are in the business of selling mag rollers, a component part of a laser printer cartridge. At the heart of the potential dispute, Plaintiff advertised on January 5, 2000, that certain printer "bearings" wear down "more rapidly when used with a mag roller sleeve that is textured from end to end," potentially causing a printer "defect." [Ex. A, Am. Comp.] Defendant's mag rollers are so textured at the ends. On the other hand, Plaintiff's mag rollers are smooth at each end; thus Plaintiff believes its rollers are not susceptible to this defect.

In response to Plaintiff's advertisement, Defendant's attorney sent a letter to Plaintiff stating that Defendant is aware of Plaintiff's "defect" allegations and demanded that Plaintiff provide its evidentiary basis for the assertion. Defendant noted, "[w]e believe this assertion to be false and, as such, gives rise to claims for false advertising under Section 43(a)(1)(B) of the Lanham act, product disparagement, trade libel, tortious interference with prospective and existing contractual relations, and other claims." [Ex. B, Am. Comp.] Defendant's attorney concluded that if he did not receive sufficient response within ten days, Defendant would "consider its legal options." [Id.] Plaintiff claims to have a real and reasonable apprehension of being sued and is concerned that Defendant will also bring lawsuits based on other mag roller advertisements.

In this light, Plaintiff requests that the Court declare that none of Plaintiff's advertisement and communication with customers or prospective customers, regarding "mag rollers," violate the Lanham Act, constitute product disparagement, trade libel, tortious interference with perspective and existing contractual relation, or give rise to any other claims by Defendant.

Defendant moves to dismiss Plaintiff's fourth claim pursuant to Rule 12(b)(1) on grounds that this Court lacks jurisdiction over the subject matter.

II.

Defendant moves to dismiss Plaintiff's first claim for relief, by Rule 12(b)(6), on grounds that Plaintiff has failed to state a claim of misappropriation and misuse of trade secrets upon which relief can be granted.

Fed. R Civ. P. 8(a)(2) provides that a complaint need provide only "a short and plain statement of the claim showing that the pleader is entitled to relief." The Supreme Court has interpreted Rule 8 "not to require a claimant to set out in detail the facts upon which he bases his claim."³ Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 168, 113 S.Ct. 1160, 1163, 122 L.Ed.2d 517 (1993) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957));⁴ see Bennett v. Schmidt, 153 F.3d 516, 518 (7th Cir.1998) (finding that a complaint need not allege "any" facts). Whether a complaint satisfies Rule 8(a)(2), is to be determined by whether the pleadings provide fair notice to the opposing party. See Conley, 355 U.S. at 47, 78 S.Ct. at 103; Turner v. Randolph County, N.C., 912 F.Supp. 182, 184 (M.D.N.C.1995). Furthermore, a claim will not be dismissed unless it appears certain that a Plaintiff can prove no set of facts which would entitle it to relief. See Conley, 355 U.S. at 45-46, 78 S.Ct. at 103; Mylan Lab., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993), cert. denied, 510 U.S. 1197, 114 S.Ct. 1307, 127 L.Ed.2d 658 (1994).

The North Carolina Trade Secrets Protection Act provides:

Misappropriation of a trade secret is prima facie established by the introduction of substantial evidence that the person against whom relief is sought both: (1) Knows or should have known of the trade secret; and (2) Has had a specific opportunity to acquire it for disclosure or use or has acquired, disclosed, or used it without the express or implied consent or authority of the owner.

N.C.G.S. § 66-155. See North Carolina Elec. Membership, Corp. v. North Carolina Dep't of Econ. and Cmty. Dev., 108 N.C.App. 711, 718-19, 425 S.E.2d 440, 445 (1993) (describing (1) and (2) as the "elements" for an action for misappropriation).

The Act defines "trade secrets" and "misappropriation" as follows:

(1) `Misappropriation' means acquisition, disclosure, or use of a trade secret of another without express or implied authority or consent, unless such trade secret was arrived at by independent development, reverse engineering, or was obtained by another person with a right to disclose the trade secret. [Section (2) omitted]

(3) `Trade Secret' means business or technical information, including, but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that:

a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and

b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

N.C.G.S. § 66-152.

In the complaint [¶ 15], Plaintiff claims to hold a trade secret in "specialized knowledge" regarding

a. development of toner especially for the remanufacturing process, which requires...