Creative Compounds, LLC v. S103, Inc. et al

Filing 25

ORDER: Defendants' (Doc. 20 ) Motion to Dismiss is granted. The Complaint is dismissed without leave to amend. Plaintiffs' (Doc. 21 ) Ex Parte Application for an extension of time to file an opposition to the Motion to Dismiss is granted. Signed by Judge William Q. Hayes on 8/29/2011. (mdc) Modified on 9/1/2011 - Corrected minor typographical error in text entry; NEF was not regenerated. (mdc)

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2011, Plaintiff filed an Opposition.

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Reply. (ECF No. 24).

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(ECF No. 23). On May 26,2011, Defendant filed a

ALLEGATIONS OF THE FIRST AMENDED COMPLAINT

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Plaintiff Creative Compounds, LLC is a Nevada limited liability company with its

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principal place of business in Missouri. (ECF No.1 at 1). PlaintiffSl03, Inc: is a Delaware

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corporation with its principal place of business in Missouri. Defendant Matthias Boldt is a

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resident of California and President ofS.A.N. Nutrition Corp., a Nevada corporation with its

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principal place ofbusiness in California. Defendant Joseph Rodrigues is "currently" a resident

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of California. ld. at 2.

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Syntrax Innovations, Inc. was a manufacturer and wholesaler of consumer dietary

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supplements and sports nutrition foods, founded and owned by Derek Cornelius. Cornelius

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also assisted in the startup and acted as an independent technical consultant to Plaintiff

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Creative Compounds. Plaintiff Creative Compounds and Syntax worked closely together.

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Defendant Rodrigues was employed by Syntrax as its National Sales Manager from

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2001 to March 2002 and he had access to information regarding products in development and

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trade secrets. In 2002, Defendant Rodrigues conspired with Defendants S .A.N. Nutrition and

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its president Matthias Boldt to misappropriate trade secrets from Plaintiff Creative Compounds

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and Syntrax. "One such piece of confidential information disclosed by Rodrigues to [S.A.N.

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Nutrition Corp.] and Boldt related to salts of creatine and malic acid ... and their use as an

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ingredient in a nutritional supplement." ld. at 4.

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Plaintiffs reformulated the product Swole to contain creatine malate salts and

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introduced it to the market in the fall of 2002. "Sometime after the reformulation of Swole,

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in approximately the fall of 2002, [S.A.N. Nutrition Corp.] introduced a product called Vl2

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that included creatine malate salts." ld.
In December 2002, Syntrax initiated an action against S.A.N. Nutrition Corp., Boldt,

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I On May 17, 2011, Plaintiffs filed an Ex Parte Application for an extension of time to
file an opposition to the Motion to Dismiss. (ECF No. 21). The Ex Parte Application is
GRANTED.

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S 103, Inc. acquired Syntrax, including the right to sue for past damages and claims.
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Id.
Plaintiffs assert one claim under Missouri Uniform Trade Secrets Act, RSMo. 417.450

3 et seq., based on misappropriation and disclosure of trade secrets by Rodrigues to Boldt and
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S.A.N. Nutrition Corp. regarding the creatine malate salts.
CONTENTIONS OF THE PARTIES

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Defendants move to dismiss the Complaint on the grounds that the complaint is barred

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by California's three year statute of limitations. Defendants contend that California law

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applies to this case on the grounds that California has a significant interest in protecting its

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residents from "stale claims" which outweighs Missouri's interest in extending the statute of

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limitations. (ECF No. 24 at 4).

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Plaintiffs contend the claim was timely filed. Plaintiffs contend that Missouri's five

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year statute oflimitations applies to this case on the grounds that the misappropriation oftrade

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secrets occurred in Missouri and Defendant Rodrigues lived and was employed in Missouri at

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the time of the misappropriation.

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DISCUSSION

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Federal Rule ofCivil Procedure 12(b)(6) permits dismissal for "failure to state a claim

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upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). When considering a motion to

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dismiss, a court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal,

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--- U.S. ----, 129 S. Ct. 1937, 1950 (2009).

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A federal court sitting in diversity jurisdiction applies the conflict of law rules of the

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forum state to determine whether the law ofthe fonlm state, or some other law, should govern

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the case. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-97 (1941). In

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California, courts apply a three-part governmental interest test. In re Nucorp Energy Sec.

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Litig., 661 F.Supp. 1403,1412 (S.D. Cal. 1987) (citing Hurtado v. Super. Ct., 11 Ca1.3d 574,

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579-80 (1974»; see also Abogados v. AT&T, Inc., 223 F.3d 932, 934 (9th Cir. 2000). "First,

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the court must determine whether there is in fact a conflict between the competingjurisdictions

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since 'there is obviously no problem where the laws of the two states are identical. '" In re

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Nucorp Energy Sec. Litig., 661 F.Supp. at 1412 (quoting Hurtado, 11 Cal.3d at 580). If a
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1 the statute of limitations period for California, the forum state, should be applied. Id.; see also

2 Deutsch v. Turner Corp., 324 F .3d 692, 717 (9th Cir. 2003 ) (explaining that where a California
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statute of limitations would bar a claim "the governmental interest approach generally leads

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California courts to apply California law[] ... because a state has a substantial interest in

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preventing the prosecution in its courts of claims which it deems to be 'stale."') (citations

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omitted).
In this case, the Court finds that California and Missouri each have an interest in

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having their law applied to this case. The Court concludes that California's interest would be

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more impaired ifits laws did not govern this case on the grounds that: (1) the complaint alleges

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that a California citizen and a California corporation solicited and received misappropriated

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trade secrets; (2) the case was filed in the United States District Court for the Southern District

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of California; (3) the defendants are two California citizens and a California corporation; and

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(4) the claim would be barred under California's statute oflimitations. Accordingly, the Court

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concludes that the laws of California govern this case.

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Plaintiffs allege that on September 19, 2006, Defendant Boldt's patent application

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regarding creatine malate salts was issued. (ECF No. 19 at 6). Plaintiffs allege: "Shortly

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before the Boldt patent issued, [S.A.N. Nutrition Corp.] disclosed to the public for the first

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time that it had sought and was being granted a patent on creatine malate salts." Id. Plaintiffs

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allege that following the public disclosure of by S.A.N. Nutrition Corp., "[Plaintiffs Creative

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Compounds and Syntrax] were first able to ascertain that Rodrigues, in cooperation with Boldt

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and [S.A.N. Nutrition Corp.] had misappropriated the trade secrets."

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initiated on July 6, 2010, over three years after September 19, 2006. The Court finds that

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Plaintiffs' claim is barred by the statute of limitations.

Id. This case was

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A claim should be dismissed with prejudice only where it is clear that the complaint

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cannot be saved by any amendment. See Gompper v. VISX, 298 F.3d 893,898 (9th Cir. 2002).

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The Court finds that Plaintiffs' failure to file this claim within the statute of limitations period

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cannot be remedied by repleading the claim.

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II
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