W. Short Home, LLC v. Graeser
| Docket Number | CIVIL ACTION NO. 1:22-CV-499 |
| Decision Date | 14 March 2023 |
| Citation | 661 F.Supp.3d 356 |
| Parties | WEST SHORT HOME, LLC f/k/a West Shore Window & Door, Inc., Plaintiff v. Michael Brett GRAESER, Joshua Penn, and P.J. Fitzpatrick, LLC, Defendants |
| Court | U.S. District Court — Middle District of Pennsylvania |
Sara E. Myirski, Thomas G. Collins, Buchanan Ingersoll & Rooney PC, Harrisburg, PA, for Plaintiff.
Alexander Nemiroff, Jonathan R. Avolio, Joseph C. Monahan, Gordon Rees Scully Mansukhani, Philadelphia, PA, for Defendants Michael Brett Graeser, P.J. Fitzpatrick, LLC.
Joseph C. Monahan, Gordon Rees Scully Mansukhani, Philadelphia, PA, for Defendant Joshua Penn.
Plaintiff West Shore Home, LLC ("West Shore"), brings this action against its former employees, defendants Michael Graeser and Joshua Penn, and their current employer, defendant P.J. Fitzpatrick, LLC ("Fitzpatrick"), for misappropriation of trade secrets in violation of state and federal law, and related state-law claims. Defendants move to dismiss West Shore's amended complaint on different grounds. Graeser seeks to compel arbitration. Fitzpatrick and Penn both argue West Short has failed to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Penn also suggests the court lacks subject matter jurisdiction under Rule 12(b)(1). We will grant Penn's motion to dismiss for want of jurisdiction and deny Graeser's and Fitzpatrick's motions.
West Shore is a privately held home-remodeling company specializing in windows, doors, and bathroom renovation. (See Doc. 9 ¶¶ 1-2). It has approximately 30 locations in 15 states and is headquartered in Mechanicsburg, Pennsylvania. (See id. ¶ 1). Fitzpatrick is West Shore's direct competitor. (See id. ¶ 16). The home-remodeling industry is a highly competitive market with many companies vying for scarce resources. (See id. ¶ 15). That competition has only intensified since the COVID-19 pandemic hampered global supply chains. (See id.) West Shore and Fitzpatrick offer similar services and prices, and their service areas overlap in parts of Pennsylvania, New Jersey, and Maryland. (See id. ¶¶ 16-17). Given the similarities between their businesses, both companies sell some of the same products and compete for the same vendors, materials, and skilled laborers. (See id. ¶¶ 18-19).
West Shore "invested substantial time, effort, and money" in acquiring and developing "Confidential Information and Trade Secrets." (See id. ¶ 116). Although the company "shares information generally regarding its aggressive growth strategy," it does not divulge details about vendors, materials costs, utilization methods, or procurement strategies, all of which it designates as confidential. (See id. ¶ 14). West Shore maintains its confidential information electronically and limits access to it internally to certain employees on a need-to-know basis. (See id. ¶ 115). Designated employees may only access confidential materials with a password; they are prohibited from downloading them to personal devices or forwarding them to personal or third-party email addresses. (See id.) West Shore also utilizes nonsolicitation and non-disclosure agreements to further protect its confidential information and trade secrets from third parties. (See id.) The company requires all employees to review the company's handbook and acknowledge its confidentiality rules on a yearly basis. (See id.)
West Shore hired Graeser on or about September 17, 2018. (See id. ¶ 20). Five months later, on February 12, 2019, Graeser executed an employment agreement with West Shore "in consideration of their mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged." (See Doc. 9-1 at 1). The agreement contains nonsolicitation and confidentiality provisions. (See Doc. 9 ¶ 23). Graeser agreed not to disclose any confidential information or trade secrets both during and after the term of his employment; he also pledged to return any information in his possession to West Shore upon expiration or termination of the agreement. (See id. ¶ 24; see also Doc. 9-1 at 2-3).
To avoid potentially irreparable harm from the "disclosure or alteration" of confidential information, the agreement expressly authorizes West Shore to "seek and obtain injunctive relief against the breach or threatened breach of" the confidentiality provisions, "in addition to any other legal remedies that may be available." (See Doc. 9-1 at 3). The parties also agreed "[a]ny claim may, at the option of either [West Shore] or [Graeser], be adjudicated by final and binding arbitration." (See id. at 6). The arbitration portion of the agreement concludes:
BOTH COMPANY AND EMPLOYEE ARE HEREBY AGREEING TO CHOOSE ARBITRATION, RATHER THAN LITIGATION OR SOME OTHER MEANS OF DISPUTE RESOLUTION, TO ADDRESS THEIR GRIEVANCES OR ALLEGED GRIEVANCES WITH THE EXPECTATION THAT THIS RESOLUTION PROCESS MAY BE MORE COST-EFFECTIVE AND EXPEDIENT FOR THE PARTIES THAN LITIGATION. BY ENTERING INTO THIS AGREEMENT AND THE ARBITRATION PROVISIONS OF THIS SECTION, BOTH PARTIES ARE GIVING UP THEIR CONSTITUTIONAL RIGHT TO HAVE ANY DISPUTE DECIDED IN A COURT OF LAW BEFORE A JURY, AND INSTEAD ARE ACCEPTING THE USE OF ARBITRATION, OTHER THAN AS SET FORTH IMMEDIATELY BELOW. THE PARTIES AGREE THAT DUE TO THE POSSIBLE IMMEDIATE AND IRREPARABLE HARM FROM A VIOLATION OF THE RESTRICTIVE COVENANT SECTIONS OF THIS AGREEMENT, THESE ARBITRATION REQUIREMENTS SHALL NOT APPLY TO ANY NON-SOLICITATION OR NON-DISCLOSURE PROVISIONS, RIGHTS, AND LEGAL REMEDIES CONTAINED ELSEWHERE IN THIS AGREEMENT.
(See id. at 6-7 (emphasis in original)).
Graeser served as West Shore's procurement manager, a high-ranking position responsible for overseeing the sourcing of materials for the company's installation projects throughout its service network. (See Doc. 9 ¶ 21). He had access to "valuable, confidential, proprietary and/or trade secret information" by virtue of his position, including vendor information and capacities, strategies for sourcing materials and supply chain optimization, purchasing trends, pricing information for materials, locations for and stock of company remodeling materials, material utilization rates, market research, and expansion plans and strategies. (See id. ¶ 22). Graeser resigned from West Shore on November 24, 2021. (See id. ¶ 26). He told several West Shore employees he was going to work for Masonite, a door manufacturer and distributor, but in fact he became Fitzpatrick's director of procurement and inventory management. .
In early 2022, West Shore discovered Graeser had forwarded three emails containing the company's confidential information and trade secrets from his work email address to personal email accounts a few weeks before he quit. (See id. ¶ 38). On October 8, 2021, Graeser forwarded "a strategic Warehouse Distribution Plan" that West Shore commissioned from a third-party. (See id. ¶¶ 39-40). The plan relied upon "highly confidential and proprietary information" and was intended to guide West Shore's efforts to optimize its performance and growth strategies. . The creator listed then-current locations of West Shore's product warehouses and distribution centers with accompanying notations describing the measurements and square footage needed to successfully operate each location. (See id. ¶ 41). The plan also identified target locations for new warehouses and distribution centers. (See id. ¶ 42). On October 21, Graeser forwarded an email to a personal address belonging to his wife and attached a spreadsheet detailing the tool list for West Shore's installation trucks. (See id. ¶ 44). The spreadsheet identified product numbers, costs, and quantities for all tools maintained in the company's truck fleet. (See id. ¶ 45). Graeser forwarded a third and final email, this one containing confidential pricing information from one of West Shore's vendors, on November 17, just one week before his resignation. (See id. ¶ 46). West Shore avers Graeser forwarded the three emails for Fitzpatrick's benefit. (See id. ¶ 48).
A West Shore vendor attempted to email Graeser on January 4, 2022, but inadvertently used his old work address, which the company still maintained. (See id. ¶ 49). The January 4 email chain contained references by Graeser to "historical data" and "sales trends" related to consumer preferences and confidential information about specific vendors' capabilities—information West Shore asserts he only could have learned through his previous employment. . Graeser also mentioned having Fitzpatrick develop strategic purchasing methods, with direct references to West Shore's methods. (See id. ¶ 53).
West Shore sent Graeser a cease-and-desist letter upon discovering his emails and asked him to preserve all documents and communications he may have shared with Fitzpatrick and its vendors or suppliers. (See id. ¶¶ 55-56; see also Doc. 9-3). Graeser replied he "destroyed (deleted) the documents" identified in West Shore's letter and would honor his employment agreement. (See Doc. 9 ¶¶ 57-58 (quoting Doc. 9-4)). West Shore sent a similar letter to Fitzpatrick. (See id. ¶ 59 (citing Doc. 9-5)). Fitzpatrick continued to use or disclose the information Graeser gleaned from his time at West Shore notwithstanding the letter's demands. . In March 2022, a vendor who supplied both companies notified West Shore it would no longer supply the company's branches. (See id. ¶¶ 61-62). West Shore had to pay more to procure the same materials elsewhere. (See id. ¶ 63).
West Shore hired Penn in April 2019 as a lead installer, a position that oversees the company's home renovation projects and supervises less-experienced installers on job sites....
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