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TRUSTID, Inc v. Next Caller Inc.

United States District Court, D. Delaware

November 26, 2018

TRUSTID, INC., Plaintiff,
v.
NEXT CALLER, INC., Defendant.

          REPORT AND RECOMMENDATION

          CHRISTOPHER J. BURKE UNITED STATES MAGISTRATE JUDGE

         Presently pending before the Court in this suit is Defendant Next Caller, Inc.'s ("Defendant" or "Next Caller") motion seeking dismissal of Plaintiff TRUSTID, Inc.'s ("Plaintiff or "TRUSTID") operative First Amended Complaint ("FAC"), filed pursuant to Federal Rule of Civil Procedure 12(b)(6) (the "Motion"). (D.I. 25) With the Motion, Defendant seeks dismissal of all of Plaintiff s claims in the FAC: (1) Plaintiffs claims for trade secret misappropriation under the Federal Defend Trade Secrets Act ("DTSA") (Count II), the Delaware Uniform Trade Secrets Act ("DUTSA") (Count III), and the Oregon Uniform Trade Secrets Act ("OUTSA") (Count IV) (collectively, the "trade secret misappropriation claims"); (2) Plaintiffs claims for tortious interference with prospective economic advantage under Delaware law (Count VII) and intentional interference with economic relations under Oregon law (Count VIII) (collectively, the "interference claims"); (3) Plaintiffs claims for false advertising in violation of the Lanham Act (Count IX) and the Delaware Uniform Deceptive Trade Practices Act ("DUDTPA") (Count X) (collectively, the "false advertising claims"); and (4) Plaintiffs claims for infringement of United States Patent Nos. 9, 001, 985 (Count I), 8, 238, 532 (Count V), and 9, 871, 913 (Count VI) (collectively, the "patent infringement claims"). (Id.) This Report and Recommendation will address the Motion as it relates to the non-patent claims, [1] and with regard to those claims, recommends that the Motion be GRANTED-IN-PART and DENIED-IN-PART.

         I. PROCEDURAL BACKGROUND

         Plaintiff filed this case on January 30, 2018, (D.I. 1), and thereafter filed the FAC on April 13, 2018, (D.I. 16). Defendant filed the instant Motion on May 29, 2018, (D.I. 25), which was fully briefed as of June 19, 2018, (D.I. 30). The Court, which has been referred the Motion by Chief Judge Leonard P. Stark, (D.I. 20), heard oral argument on November 20, 2018.

         II. STANDARD OF REVIEW

         When presented with a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court conducts a two-part analysis. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, the court separates the factual and legal elements of a claim, accepting "all of the complaint's well-pleaded facts as true, but [disregarding] any legal conclusions." Id. at 210-11. Second, the court determines "whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'" Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. In assessing the plausibility of a claim, the court must '"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.'" Fowler, 578 F.3d at 210 (quoting Phillips v. Cty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)).

         III. DISCUSSION

         Below the Court will first address the trade secret misappropriation and interference claims. Thereafter, it will discuss the false advertising claims.

         A. Trade Secret Misappropriation and Interference Claims

         With regard to the trade secret misappropriation and interference claims, Defendant argues that all of the claims were brought "in the wrong forum" and that several were brought "under the wrong law[.]" (D.I. 26 at 3) The argument is premised on the content of paragraph 9 of a Referral Agreement ("the Agreement") that the parties entered into in December 2016.[2]

         This paragraph reads as follows:

9. Governing Law. This Agreement shall be governed in all respects by the laws of Oregon. Any dispute that may arise in connection with the interpretation or implementation of this Agreement shall be submitted to a court of competent jurisdiction located in Colorado.

(D.I. 16, ex. 1 at 4) Defendant's primary argument is that Paragraph 9's second sentence (the "forum selection clause") should be interpreted to mean that the trade secret misappropriation and interference claims may only proceed in courts located in Colorado (and thus, that they must be dismissed from this suit). (See D.I. 26 at 3)[3] The Court agrees.[4]

         With regard to the trade secret misappropriation claims, these are claims that, inter alia, "arise in connection with the interpretation ... of [the] Agreement[.]"[5] In pleading the elements of the various trade secret misappropriation claims, Plaintiff asserts, inter alia, that: (1) certain "customer lists, pricing information, technical information, value analyses, and sales and marketing materials" that Defendant allegedly misappropriated amount to "confidential information" that "constitute[s] trade secrets[, ]" (D.I. 16 at ¶¶ 57, 73, 88)[6]; and (2) that Defendant misappropriated those trade secrets, in that Defendant had a duty to maintain the confidentiality of this information, but failed to do so, (id. at ¶¶ 60, 62, 76, 78, 91, 93).[7] And, in order to explain why both of these things are so, Plaintiff invites the reader to examine and interpret the words of the Agreement. For example, in the FAC, Plaintiff explains that the Agreement included a definition of "confidential information[, ]" and that this definition was broad enough to encompass the customer lists, pricing information, technical information, value analyses, and sales and marketing materials at issue. (Id. at ¶¶ 23-24 (quoting Section 8, paragraph 1 of the Agreement)) And in articulating how it is that the Defendant had a "duty" to maintain the confidentiality of this information, the FAC explains that, in the Agreement, Defendant specifically promised to keep this information close to the vest. (Id. at ¶ 24 (quoting Section 8, paragraph 4 of the Agreement) (stating Defendant "agreed (i) not to make TRUSTID's confidential information 'available in any form to any third party' and (ii) not to use TRUSTID's confidential information 'for any purpose other than in the performance of the referral agreement[]"); see also, e.g., Id. at ¶¶ 60, 62 (Plaintiff pleading that Defendant improperly obtained, used and disclosed Plaintiffs trade secrets "in violation of [Defendant's] own duties, including but not limited to those provided in the referral agreement")) In these ways, Plaintiff made it clear that the Court must interpret the Agreement in order to understand how the trade secret misappropriation claims have arisen. See TK Prods., LLC v. Buckley, No. 3:16-cv-803-SI, 2016 WL 7013470, at *5 (D. Or. ...


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