Abbott Laboratories v. Finkel
ORDER Denying Defendant's 41 Motion to Dismiss. By Judge Christine M. Arguello on 11/17/2017. (athom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 17-cv-00894-CMA
ORDER DENYING DEFENDANT’S MOTION TO DISMISS
This matter is before the Court on Defendant Dustin Finkel’s Motion to Dismiss
Plaintiff Abbott Laboratories’ Conversion Claim. (Doc. # 41.) For the following reasons,
the Court denies the motion.
For purposes of resolving this motion, the Court, as it must, accepts the following
well-pled facts as true. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
On December 8, 2014, Plaintiff Abbott Laboratories hired Defendant Dustin
Finkel as a General Manager for its Nutrition Division. (Doc. # 1 at ¶ 7.) While
Defendant worked for Plaintiff, he received access to its confidential information and
trade secrets, including “communications, financial analyses, market proposals, and
strategic presentations that are not known outside of Abbott’s business.” (Id. at ¶ 27.)
To protect its confidential information and trade secrets, Plaintiff required Defendant to
sign confidentiality and non-disclosure agreements. (Id. at ¶ 29.) In addition, Plaintiff’s
Electronic Messages policy prohibited Defendant from backing up or storing digital
information on his “personal storage devices or any websites or systems that are not
managed or approved for use by Abbott.” (Id. at ¶¶ 30–32.) The policy also prohibited
any sharing of Plaintiff’s electronic media with “anyone outside of Abbott, including
family, friends, or business partners.” (Id. at ¶ 31.)
During the course of Defendant’s employment, he both disclosed Plaintiff’s
confidential information and trade secrets to a third party and transferred that
information to his personal online cloud storage Dropbox account. (Id. at ¶¶ 33, 35.)
On February 19, 2016, Plaintiff terminated Defendant’s employment. (Id. at
¶ 21.) Among the reasons cited for termination was that Defendant breached Plaintiff’s
policies by “misuse[ing] . . . Abbott’s confidential and proprietary information, trade
secrets, electronic information, and equipment.” (Id. at ¶ 22.) On the date of his
termination, Plaintiff’s IT personnel, with Defendant’s consent, deleted the confidential
information and trade secrets that Defendant transferred to his personal Dropbox
account. (Id. at 7, ¶ 37.)
However, Plaintiff later discovered that “Dropbox has a feature that allows a user
to restore any file or folder removed from an active user account in the past 30 days or
longer, depending on the version of Dropbox.” (Id. at ¶ 38.) Thereafter, Plaintiff
requested that Defendant certify:
(a). . . all Abbott documents or electronic files were
destroyed or deleted from any electronic or physical storage
location owned or used by the third party to whom Finkel
disclosed Abbott’s confidential information and trade secrets;
and (b) allow Abbott to monitor his Dropbox account activity
and ensure that the deletion restoration feature was not
(Id. at ¶ 40.)
Additionally, Plaintiff sought to have a third-party forensic consultant examine
Defendant’s Dropbox account to ensure that all of Plaintiff’s records and information
were deleted and not re-downloaded, “transferred, or forwarded to any other individual,
entity, electronic device, or cloud storage.” (Id. at ¶ 41.) Defendant did not provide the
certification, nor did he consent to Plaintiff’s request to have a third-party forensic
consultant examine his Dropbox account. (Id. at 8, ¶ 42.)
Plaintiff alleges that Defendant’s refusal to allow Plaintiff to monitor his Dropbox
account and ensure the deletion of Plaintiff’s information potentially contained therein or
transferred elsewhere, creates a risk that Defendant will further disclose its confidential
information and trade secrets. (Id. at ¶ 44.) Plaintiff further argues that Defendant’s
refusal deprives “[Plaintiff] of its efforts to maintain the secrecy of its confidential
information and trade secrets, which if disclosed further to a person or entity seeking to
compete with [Plaintiff] would cause substantial harm.” (Id. at ¶ 45.)
Plaintiff initiated this suit on April 12, 2017, asserting claims of breach of contract,
conversion, and misappropriation of trade secrets. (Doc. # 1 at 8–11.) On August 30,
2017, Defendant filed a motion to dismiss Plaintiff’s conversion claim under Federal
Rule of Civil Procedure 12(b)(6) arguing that (1) the claim is preempted by the Colorado
Uniform Trade Secrets Act (“CUTSA”), and (2) the allegations in the complaint show
that Defendant was authorized to access and use Plaintiff’s proprietary information and
that he returned it to Plaintiff upon its request. (Doc. # 41 at 4–5.)
STANDARD OF REVIEW
“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A claim is facially plausible “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).
When reviewing a motion to dismiss, a court’s function is “not to weigh potential
evidence that the parties might present at trial, but to assess whether the plaintiff’s
complaint alone is legally sufficient to state a claim for which relief may be granted.”
Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003) (citations and
quotations omitted). “Factual allegations must be enough to raise a right to relief above
the speculative level.” Twombly, 550 U.S. at 555.
A plaintiff must nudge his claims across the line from
conceivable to plausible in order to survive a motion to
dismiss. . . . Thus, the mere metaphysical possibility that
some plaintiff could prove some set of facts in support of the
pleaded claims is insufficient; the complainant must give the
court reason to believe that this plaintiff has a reasonable
likelihood of mustering factual support for these claims.
Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007).
To assert a claim of conversion, Plaintiff must show: (1) Plaintiff has a right to the
property at issue; (2) Defendant has exercised unauthorized dominion or ownership
over the property (3) Plaintiff has made a demand for possession of the property; and
(4) Defendant refuses to return it. See Glenn Arms Assocs. v. Century Mortg. & Inv.
Corp., 680 P.2d 1315, 1317 (Colo. App. 1984). “Although the act of conversion takes
place at the time the converter takes dominion over the property, predicates to a
successful claim for conversion are the owner’s demand for the return of property, and
the controlling party’s refusal to return it.” Id.
First, it is undisputed that Plaintiff has a right to the property at issue and that
Plaintiff has made a demand for possession of the property. The Court therefore
addresses only elements two and four.
With respect to element two, Plaintiff alleges that Defendant “exercised dominion
or ownership” over Plaintiff’s trade secrets and confidential information when Defendant
transferred the information, without authorization, to his personal Dropbox account and
provided that information to a third party. (Doc. # 45 at 7.) Although Plaintiff authorized
Defendant to access the information, Plaintiff argues that it did not authorize Defendant
to transfer the information to his Dropbox account and share it with third parties. (Id. at
7–8.) Moreover, Plaintiff asserts that, despite Plaintiff’s previous attempts to delete the
information, Defendant can still restore the trade secrets and confidential information at
any time and therefore has “dominion or ownership” over the documents. (Doc. # 45 at
7–9.) Taking these allegations as true, the Court finds that they are sufficient to state a
plausible cause of action with respect to element two of Plaintiff’s conversion claim.
With respect to element four, Plaintiff argues that Defendant’s refusal to allow
Plaintiff to re-access his Dropbox account and delete any potentially restored
information constitutes a refusal to return Plaintiff’s property for the purpose of Plaintiff’s
conversion claim. Defendant has also refused to certify that he has not recovered the
documents. The Court concludes that Plaintiff has sufficiently pled the fourth element.
Because Plaintiff’s complaint contains sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its face, Defendant’s motion to dismiss
Plaintiff’s conversion claim on these grounds is denied.
Defendant also contends that the Court should dismiss Plaintiff’s conversion
claim because it is preempted by the CUTSA.
Under the CUTSA, a plaintiff may recover damages for misappropriation of its
trade secrets. Colo. Rev. Stat. § 7-74-104(1). The CUTSA preempts common law
claims that “conflict” with its trade secret misappropriation provisions. Powell Prods.
Inc. v. Marks, 948 F. Supp. 1469, 1474 (D. Colo. 1996). The Tenth Circuit explained
this “conflict” as follows: if a common law claim is no more than a restatement of the
same operative facts which would plainly and exclusively spell out trade secret
misappropriation, preemption is appropriate. Id. “[T]he salient question . . . is whether
[the] challenged common law claim depends solely on a finding of trade secret status to
be actionable. Where it does not, the claim is not preempted.” Virtual Cloud Servs.,
Inc. v. CH2M Hill, Inc., No. 02-CV-01004, 2006 WL 446077, at *2 (D. Colo. Feb. 21,
2006) (quoting Powell, 948 F. Supp. at 1474.)
Plaintiff’s conversion claim is an example of a claim that may be preempted in
part by the CUTSA. Plaintiff alleges that Defendant stole proprietary “confidential
information and/or trade secrets,” which it defines as “among other things,
communications, financial analyses, market proposals, and strategic presentations that
are not known outside of Abbott’s business” as well as “marketing, tactical, and financial
information and business plans.” (Doc. # 1, ¶¶ 27, 34, 60.) To the extent that any of
this information qualifies as a “trade secret” under Colo. Rev. Stat. § 7-74-102(4), then,
Plaintiff’s conversion claim “would be no more than a restatement of the same operative
facts which would plainly and exclusively spell out trade secret misappropriation.”
Powell Prods. Inc., 948 F. Supp. at 1474. However, to the extent Plaintiff is seeking to
recover for confidential information that does not rise to the level of a trade secret or has
value “independent of its value as a trade secret,” Plaintiff’s claim would not be
preempted. Virtual Cloud, 2006 WL 446077, at *4.
At this stage in the litigation, the Court is without a sufficient record to determine
whether some, part, or all of Plaintiff’s conversion claim depends on a finding of trade
secret status and is, therefore, preempted by the CUTSA. 1 Indeed, none of the
allegedly converted information has been presented to the Court, nor has it been
described in much detail.
Moreover, as Plaintiff has argued, Federal Rule of Civil Procedure 8(e)(2) allows
a party to plead in the alternative, even where the alternative claims are inconsistent.
See Lawser v. Poudre Sch. Dist. R-1, 171 F. Supp. 2d 1155, 1158 (D. Colo. 2001)
The Court notes that Plaintiff’s claim for misappropriation of trade secrets does not expressly
invoke the CUTSA, nor does it distinguish which allegedly misappropriated information
constitutes a trade secret and which information does not. (Doc. # 1, ¶¶ 65–73.)
(there is no requirement that alternative theories be consistent). Thus, under Rule 8,
dismissal under Rule 12(b)(6) is inappropriate at this stage in the proceedings.
Accordingly, the Court denies Defendant’s request to dismiss Plainitiff’s claim on
Based on the foregoing analysis, the Court DENIES Defendant’s Motion to
Dismiss for Plaintiff’s Conversion Claim (Doc. # 41).
DATED: November 17, 2017
BY THE COURT:
CHRISTINE M. ARGUELLO
United States District Judge
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