Uni-Sys., LLC v. U.S. Tennis Ass'n, Inc.

• Decision Date: 04 October 2018
• Docket Number: 17-cv-147 (KAM)
• Citation: 350 F.Supp.3d 143
• Parties: UNI-SYSTEMS, LLC, Plaintiff, v. UNITED STATES TENNIS ASSOCIATION, INC., Rossetti Inc., Hunt Construction Group, Inc., Hardesty & Hanover, LLC, Hardesty & Hanover LLP, Morgan Engineering Systems, Inc., and Geiger Engineers, P.C., Defendants.
• Court: U.S. District Court — Eastern District of New York

350 F.Supp.3d 143

UNI-SYSTEMS, LLC, Plaintiff,

v.UNITED STATES TENNIS ASSOCIATION, INC., Rossetti Inc., Hunt Construction Group, Inc., Hardesty & Hanover, LLC, Hardesty & Hanover LLP, Morgan Engineering Systems, Inc., and Geiger Engineers, P.C., Defendants.

17-cv-147 (KAM)

United States District Court, E.D. New York.

Signed October 4, 2018

Filed October 5, 2018

Amy Li Herrera, James Reed, Michelle Erica Wang, Susan L. Ross, Paul B. Keller, David H. Ben-Meir, Pro Hac Vice, Michelle L. Mello, Pro Hac Vice, Norton Rose Fulbright US LLP, New York, NY, James G. Warriner, Pro Hac Vice, William Andrew Liddell, Pro Hac Vice, Norton Rose Fulbright US LLP, Austin, TX, John A. O'Malley, Pro Hac Vice, Kelsey Ann Maher, Pro Hac Vice, Norton Rose Fulbright US LLP, Los Angeles, CA, for Plaintiff.

Eleanor Yost, Carlton Fields Jordan Burt, P.A., Tampa, FL, Eric D. Coleman, Pro Hac Vice, Carlton Fields Jorden Burt, P.A., Miami, FL, Ethan Horwitz, Gabriella Sofia Paglieri, Vitaly David Rivkin, Carlton Fields Jorden Burt, P.A., David M. Pollack, Lewis Brisbois Bisgaard & Smith LLP, Danielle Elizabeth Tepper, Dyan M. Finguerra-DuCharme, Jeffrey L. Snow, Joseph Vincent Micali, Pryor Cashman LLP, Natalie Christine Clayton, Andrew James Ligotti, Alston & Bird LLP, Pasquale A. Razzano, Seth Boeshore, Fitzpatrick, Cella, Harper & Scinto, New York, NY, Maxwell J. Petersen, Steven M. Shape, Lewis Brisbois Bisgaard & Smith LLP, Chicago, IL, William A. DeVan, Pro Hac Vice, Constructionlex,. PLC, Alexandria, VA, Douglas E. Ringel, Pro Hac Vice, Kacvinsky Daisak Bluni PLLC, Washington, DC, Suzanne M. Parker, Pro Hac Vice, KDB PLLC, Marblehead, MA, Brian R. Mertes, Black McCuskey Souers & Arbaugh, Canton, OH, David Scott Frist, Pro Hac Vice, Patrick J. Flinn, Pro Hac Vice, Alston & Bird LLP, Atlanta, GA, for Defendants.

MEMORANDUM AND ORDER

KIYO A. MATSUMOTO, United States District JudgePlaintiff Uni-Systems, LLC, a Minnesota limited liability company ("Uni-Systems") commenced this action on January 11, 2017 against defendants United States Tennis Association, Inc., a not-for-profit incorporated in New York ("USTA"); Rossetti Inc., a Michigan Corporation, ("Rossetti"); Hunt Construction Group, Inc., and Indiana corporation, ("Hunt"); Hardesty & Hanover, LLC, a Delaware limited liability corporation; Hardesty & Hanover, LLP, a New York limited liability corporation (together, "Hardesty & Hanover"); Morgan Engineering Systems, Inc. ("Morgan"), and Ohio Corporation; and Geiger Engineers, P.C. ("Geiger"), a New York professional corporation (collectively, "Defendants"). (See ECF No. 1, Complaint ("Compl.").) The Complaint alleged infringement by all defendants of two Uni-Systems patents, U.S. Patent No. 6,789,360 (the "Retention Mechanism patent") and U.S. Patent No. 7,594,360 (the "Lateral Release patent"), in connection with defendants' roles as either owner, architect, engineer, designer, or builder of the retractable roof at Arthur Ashe Stadium in Flushing Meadows, New York (the "Ashe Retractable Roof") and Hunt's role in sending out bid notifications for a retractable roof to be built over the Louis Armstrong Stadium that appeared to infringe Uni-System's intellectual property. (Id. ¶¶ 42-84.) The Complaint also alleged trade secret misappropriation by Hunt and Hardesty & Hanover under the Federal Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq., and New York common law, as well as unfair competition, based on Hunt and Hardesty & Hanover's alleged misappropriation of Uni-Systems' trade secrets and other confidential and proprietary information. (Id. ¶¶ 85-117.)

On October 20, 2017, Plaintiff moved to amend the complaint. (See ECF No. 151, Motion to Amend the Complaint; 151-2, First Amended Complaint ("Amended Complaint" or "FAC").) The Amended Complaint alleges eight separate causes of action against the named defendants except where stated: Count I - infringement of the Retention Mechanism patent at Arthur Ashe Stadium; Count II - Infringement of the Lateral Release patent at Arthur Ashe Stadium; Count III - infringement of the Lateral Release patent at Louis Armstrong Stadium, against USTA, Hunt, Rossetti, Morgan and Geiger; Count IV - federal misappropriation of trade secrets under 18 U.S.C. § 1836, against Hardesty & Hanover and Hunt; Count V - New York misappropriation of trade secrets, against Hardesty & Hanover and Hunt; Count VI New York unfair competition, against Hardesty & Hanover & Hunt; Count VII breach of contract against Hunt for breach of the Subcontract regarding the Arizona Cardinals Stadium Retractable Roof and Count VIII breach of contract against Hardesty & Hanover for breach of the confidentiality agreement for the Florida Marlins Stadium peer review.

The Amended Complaint pleads three additional claims for relief based on the additional facts discovered by plaintiff during discovery:

(1) a claim for patent infringement of the Lateral Release patent at the new Louis Armstrong Stadium, (see FAC ¶¶ 152-169); (2) a claim for breach of the Subcontract Agreement between Hunt and Uni-Systems at Cardinals Stadium, (see FAC ¶¶ 205-214); and (3) a claim for breach of the Confidentiality Agreement governing Hardesty & Hanover's peer review of the Marlins Ballpark retractable roof, (see FAC ¶¶ 215-223).

(ECF No. 151-1, Pl. Mem. Supp. Mot. to Amend Compl. at 10.) The Amended Complaint also adds three new parties: Matthew L. Rossetti Architect, P.C. ("Matthew Rossetti P.C."), a New York professional corporation and an entity related to existing Defendant Rossetti, Inc., as well as Morgan Kinetic Structures, Inc. ("Morgan Kinetic") and Morgan Automation, Inc. ("Morgan Automation"), both Ohio corporations and divisions of Defendant Morgan. (See FAC ¶¶ 3, 6.)

On October 24, 2018, the court held a pre-motion conference where the parties agreed that plaintiff's Motion to Amend the Complaint would be evaluated using the Fed. R. Civ. P. 12(b)(6) standard for a motion to dismiss. On November 17, 2017, defendants opposed plaintiff's Motion to Amend and moved to dismiss the existing and proposed First Amended Complaint ("Amended Complaint" or "FAC"). Briefing on plaintiff's motion to amend and defendants' motions to dismiss was completed on January 19, 2018.

BACKGROUND

The well-pleaded factual allegations in the proposed First Amended Complaint are taken as true for purposes of deciding defendants' motions pursuant to Fed. R. Civ. P. 12(b)(6), and determining whether plaintiff, Uni-Systems, shall be granted leave to amend the Complaint. See Roth v. Jennings , 489 F.3d 499, 501 (2d Cir. 2007).

Uni-Systems describes itself as the, "leading designer of retractable roof systems in the United States" and has designed and implemented retractable roof systems for major stadiums including Minute Maid Ballpark and Reliant Stadium in Houston, Texas; Marlins Ballpark in Miami, Florida; Lucas Oil Stadium in Indianapolis, Indiana; Cowboys Stadium near Dallas, Texas; and University of Phoenix (Cardinals) Stadium in Glendale, Arizona. (FAC ¶ 12).

In connection with its retractable roof designs, Uni-Systems developed valuable intellectual property including " U.S. Patent Nos. 6,789,360 ("the Retention Mechanism patent") and 7,594,360 ("the Lateral Release patent"), and trade secrets in at least nine categories that were incorporated in the Arthur Ashe and Louis Armstrong retractable roofs. (See FAC ¶¶ 13–30.) Uni-Systems made a significant investment of money and time for the research, development and testing of systems for the retractable roofs. (Id. ¶¶ 11–12.)

In January 2015, Hunt retained Uni-Systems to "design, fabricate, and install" the retractable roof at the Arizona Cardinals Stadium, and the Arizona Cardinals retained Uni-Systems to maintain and repair the retractable roof, once it was installed. (Id. ¶ 57.) For the duration of the project, Uni-Systems took careful measures to protect the confidentiality of its "software, mechanization design principles and criteria, methods for implementing the same using engineered solutions, and other information." (Id. ¶ 198.) Uni-Systems did this by limiting access to confidential information and requiring its customers and clients to sign confidentiality agreements that prohibited "unauthorized access, use, and disclosure" of the confidential information. (Id. )

Hunt was the general contractor on a number of projects Uni-Systems worked on as the "sole supplier of retractable roof services," but after years of working together, Hunt informed Uni-Systems that it was seeking to establish a second supplier. (Id. ¶¶ 31–34, 52–55.) In order to establish Hardesty & Hanover as a viable competitor with Uni-Systems, beginning in or around 2009, Hardesty & Hanover allegedly conspired with Hunt to misappropriate Uni-Systems' "trade secret and confidential and proprietary software, mechanization design principles and criteria." Hardesty & Hanover was retained to conduct a peer review for the Florida Marlins Ballpark roof, and to provide maintenance services for the Cardinals Retractable Roof, in order to obtain plaintiff's highly valuable trade secrets and proprietary information in violation of state and federal law. (Id. ¶¶ 32-71, 170-204.) Hardesty & Hanover was inexperienced in designing retractable roofs for stadiums at the time. (Id. ¶ 32.) Hunt and Hardesty & Hanover's misappropriation also constituted breaches of their respective contracts with Uni-Systems. (FAC ¶¶ 205–23.)

In or around 2011, Uni-Systems discovered that USTA intended to construct a retractable roof for Arthur Ashe Stadium and had hired Hunt to serve as the designer-builder. (Id. ¶¶ 72-73.) Hunt contracted with Matthew Rossetti P.C., for the design and to serve as the official project architect for the Ashe Retractable Roof. Hunt also contracted with Morgan Kinetic to supply roof mechanization design and construction services for the Ashe Retractable Roof. (Id. ¶¶ 72-75.) Morgan Kinetic was a division of Morgan Engineering, and Morgan Engineering also...