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Zoppas Industries v. Backer EHP, Inc.

United States District Court, D. Delaware

December 5, 2019

ZOPPAS INDUSTRIES de MEXICO, S.A. de C.V., Plaintiffs,
v.
BACKER EHP INC. d/b/a BACKER-SPRINGFIELD, INC., Defendant.

          REPORT AND RECOMMENDATION

          CHRISTOPHER J. BURKE UNITED STATES MAGISTRATE JUDGE.

         Pending before the Court is a motion filed pursuant to Federal Rule of Civil Procedure 12(b)(6) by Defendant Backer EHP Inc. d/b/a/ Backer-Springfield, Inc. ("Backer" or "Defendant") seeking dismissal of Plaintiff Zoppas Industries de Mexico, S.A. de C.V.'s ("Zoppas" or "Plaintiff) Complaint alleging trade secret misappropriation and unjust enrichment (the "Motion"). (D.I. 7) For the reasons that follow, the Court recommends that the Motion be DENIED-IN-PART and GRANTED-IN-PART.

         I. BACKGROUND

         Plaintiff filed its Complaint on October 29, 2018. (D.I. 1) Defendant filed the instant Motion on December 19, 2018, (D.I. 7), and the Motion was fully briefed as of February 7, 2019, (D.I. 13). On October 7, 2019, the Motion was referred to the Court by United States District Judge Colm F. Connolly. (D.I. 15) Thereafter, at Plaintiffs request, (D.I. 14), the Court held oral argument on the Motion on December 3, 2019, (D.I. 17).

         The Court will detail the relevant factual background relating to the Motion below in Section III of this Report and Recommendation.

         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. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). As such, a well-pleaded complaint may not be dismissed simply because "it strikes a savvy judge that actual proof of [the alleged] facts is improbable, and that a recovery is very remote and unlikely." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007) (internal quotation marks and citation omitted). Determining whether a claim is plausible is '"a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" Fowler, 578 F.3d at 211 (quoting Iqbal, 556 U.S. at 679).

         III. DISCUSSION

         In its Complaint, Plaintiff asserts the following claims: (1) a claim for Misappropriation of Trade Secrets under the Federal Defend Trade Secrets Act of 2016 ("DTSA"), 18 U.S.C. § 1836, et seq. (the "First Cause of Action"); (2) a claim for Misappropriation of Trade Secrets under the Tennessee Uniform Trade Secrets Act ("TUTSA"), Term. Code Ann. § 47-25-1702, et seq. (the "Second Cause of Action"); and (3) a state law claim for Unjust Enrichment (the "Third Cause of Action"). (D.I. 1 at ¶¶ 43-60) With its Motion, Defendant argues that each of these three claims should be dismissed. (D.I. 8)

         In response, Plaintiff did not contest Defendant's Motion with regard to the Unjust Enrichment claim in the Third Cause of Action, (D.I. 12), and thus, the Court recommends that this claim be dismissed.[1] Plaintiff did contest Defendant's Motion as it relates to the other two claims (the "Trade Secret claims"). Thus, the Court will address those two claims below.

         With regard to the Trade Secret claims, the legal elements for the two causes of action are essentially the same. See Great Am. Opportunities, Inc. v. Cherry Bros., LLC, No. 3:17-cv-1022, 2018 WL 418567, at *3 (M.D. Term. Jan. 16, 2018) ("The requirements for establishing misappropriation of a trade secret are largely the same under the DTSA and the [TUTSA]."); see also (D.I. 8 at 3-4; D.I. 12 at 4). The DTSA and the TUTSA define a "trade secret" as, inter alia., "technical" and other information that "derives independent economic value . . . from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information" and whose owner "has taken reasonable measures to keep such information secret[.]" 18 U.S.C. § 1839(3); see also Term. Code Arm. § 47-25-1702(4) (defining "[t]rade secret" in a materially similar way). Both statutes also define "misappropriation" of a trade secret to be:

(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was ...

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