American Registry, LLC v. Hanaw et al
Filing
35
OPINION AND ORDER granting 22 Defendant Michael Levy's Motion to Dismiss; granting 23 Defendants Yonah Hanaw, Showmark Holdings, LLC, and Showmark Media, LLC's Motion to Dismiss. See Opinion and Order for details. Signed by Judge John E. Steele on 12/5/2013. (MAB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
AMERICAN REGISTRY, LLC, a Delaware
limited liability company,
Plaintiff,
vs.
Case No.
2:13-cv-352-FtM-29UAM
YONAH HANAW
a/k/a
John
Hanaw;
MICHAEL LEVY; SHOWMARK HOLDINGS,
LLC, a Delaware limited liability
company; and SHOWMARK MEDIA, LLC, a
Delaware limited liability company,
Defendants.
___________________________________
OPINION AND ORDER
This matter comes before the Court on Defendant Michael Levy’s
Motion to Dismiss Plaintiff’s Second Amended Complaint (Doc. #22)
and Defendants Yonah Hanaw, Showmark Holdings, LLC, and Showmark
Media, LLC’s Motion to Dismiss Plaintiff’s Second Amended Complaint
(Doc. #23) filed on July 11, 2013.
Plaintiff filed Responses to
the motions (Docs. ## 24, 25) on July 23, 2013.
Defendants filed
Replies (Docs. ## 31, 32) on August 10, 2013.
I.
American Registry, LLC (American Registry or plaintiff) sells
customized
achievement
recognition
items,
such
marquees, crystals, counter displays, and banners.
as
plaques,
Plaintiff
utilizes sales agents who are independent contractors to pursue and
hopefully convert qualified leads into sales.
Defendant Yonah Hanaw, a citizen and resident of Israel,
worked as a sales agent from November 2003 until his termination on
March 26, 2010.
As a sales agent, Hanaw was required to sign a
Sales Agent Program Agreement on November 1, 2009.1
The Sales
Agent Program Agreement provides, in relevant part, that the sales
agent agrees to treat all confidential business information and
trade secrets as confidential and proprietary to plaintiff and is
prohibited from using such information for his own benefit or for
the benefit of another.
(Doc. #7, Exh. #2.)
Following his termination from American Registry, Hanaw met
with Michael Levy, also a citizen and resident of Israel, to
discuss the formation and organization of a company that would sell
customized achievement recognition items through an e-commerce
website.
On May 12, 2010, Hanaw and Levy formed Showmark Media,
LLC, a Florida limited liability company, but dissolved it on July
19, 2010.
After the dissolution of the Florida limited liability
company, Hanaw and Levy formed Showmark Media, LLC, a Delaware
limited liability company.
Plaintiff now believes that Hanaw is utilizing and disclosing
American Registry’s confidential business information and trade
secrets
in
the
operation
of
Showmark
Media.
Following
the
disclosure of trade secrets, defendants Levy, Showmark Media, and
1
Prior to signing this agreement, Hanaw was bound by a Sales
Agent Program Agreement signed on January 13, 2008.
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Showmark Holdings2 used the confidential information and trade
secrets for their own purposes in the formation and operation of
Showmark Media.
The Second Amended Complaint sets forth the following claims:
breach of contract (Count I); violation of the Florida Uniform
Trade Secrets Act (FUTSA) (Count II); violation of the Florida
Deceptive and Unfair Trade Practices Act (FDUTPA) (Count III); and
tortious interference with business relationships (Counts IV and
V). Defendant Michael Levy seeks dismissal from this lawsuit under
Fed. R. Civ. P. 12(b)(2) on the grounds that plaintiff has failed
to
allege
facts
that
establish
personal
jurisdiction.
The
remaining defendants contend that the plaintiff has failed to state
a claim for misappropriation and breach of contract, and that the
remaining counts are preempted by the FUTSA.
II.
The Court will first address defendants Hanaw, Showmark Media,
and Showmark Holding’s motion to dismiss.
A.
Motion to Dismiss Standard
Under Federal Rule of Civil Procedure 8(a)(2), a complaint
must contain a “short and plain statement of the claim showing that
the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(2).
This
obligation “requires more than labels and conclusions, and a
2
Plaintiff believes that Hanaw owns a 75 percent interest in
Showmark Media by and through Showmark Holdings, LLC, a Delaware
limited liability company.
-3-
formulaic recitation of the elements of a cause of action will not
do.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(citations omitted). To survive dismissal, the factual allegations
must be “plausible” and “must be enough to raise a right to relief
above the speculative level.”
Id. at 555.
See also Edwards v.
Prime Inc., 602 F.3d 1276, 1291 (11th Cir. 2010).
“more
than
accusation.”
an
unadorned,
Ashcroft
v.
This requires
the-defendant-unlawfully-harmed-me
Iqbal,
556
U.S.
662,
678
(2009)
(citations omitted).
In deciding a Rule 12(b)(6) motion to dismiss, the Court must
accept all factual allegations in a complaint as true and take them
in the light most favorable to the plaintiff, Erickson v. Pardus,
551 U.S. 89, 94 (2007), but “[l]egal conclusions without adequate
factual support are entitled to no assumption of truth.” Mamani v.
Berzain, 654 F.3d 1148, 1153 (11th Cir. 2011) (citations omitted).
“Threadbare
recitals
of
the
elements
of
a
cause
of
action,
supported by mere conclusory statements, do not suffice.”
556 U.S. at 678.
with
a
“Factual allegations that are merely consistent
defendant’s
plausible.”
Iqbal,
liability
fall
short
of
being
facially
Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th
Cir. 2012) (internal quotation marks and citations omitted). Thus,
the Court engages in a two-step approach: “When there are wellpleaded factual allegations, a court should assume their veracity
-4-
and
then
determine
whether
entitlement to relief.”
B.
they
plausibly
give
rise
to
an
Iqbal, 556 U.S. at 679.
Breach of Contract
Count I of the Second Amended Complaint alleges that Hanaw
breached the Sales Agent Program Agreement by using or disclosing
trade secrets and confidential business information.
A claim for
breach of contract under Florida law requires proof of three
elements: (1) the existence of a valid contract; (2) a material
breach; and (3) damages.
Havens v. Coast Fla., P.A., 117 So. 3d
1179, 1181 (Fla. 2d DCA 2013).
Hanaw asserts that the allegations
regarding the breach are inadequate.
The Court agrees.
According to the complaint, Hanaw was privy to confidential
information during his relationship with American Registry, agreed
not to
use
or
disclose
the
confidential
information,
currently acting as a competitor in the same market.
and
is
Plaintiff
then alleges, upon information and belief, that Hanaw is using the
confidential
information
in
the
operation
of
Showmark
Media.
Plaintiff, however, has failed to provide any factual content that
allows
the
Court
to
reasonably
infer
that
confidential information to act as a competitor.
Hanaw
is
using
Although Hanaw’s
use of confidential information is certainly conceivable, the
plausibility standard requires “more than a sheer possibility that
a defendant has acted unlawfully.”
Iqbal, 556 U.S. at 678.
Because the allegations are conclusory and merely consistent with
-5-
Hanaw’s liability and lack an adequate factual basis, Count I of
the Second Amended Complaint will be dismissed without prejudice.
C.
Violation of the FUTSA
Count
II
of
the
Second
Amended
Complaint
alleges
that
defendants misappropriated American Registry’s trade secrets in
violation of the FUTSA.
Defendants Hanaw, Showmark Media, and
Showmark Holdings contend that plaintiff has failed to identify the
trade secrets with any particularity and the allegations regarding
the alleged misappropriation are merely conclusory.
Defendants
further assert that the complaint, as it stands, would allow
plaintiff to embark on a fishing expedition for anything relevant
to the broad categories of information identified in the complaint
without specifying the trade secrets that have allegedly been
misappropriated.
In order to state a claim for misappropriation of trade
secrets under the FUTSA, Fla. Stat. § 688.001 et seq., a plaintiff
must allege that (1) it possessed secret information and took
reasonable steps to protect its secrecy and (2) the secret it
possessed was misappropriated, either by one who knew or had reason
to know that the secret was improperly obtained or by one who used
improper means to obtain it.
VAS Aero Servs., LLC v. Arroyo, 860
F. Supp. 2d 1349, 1358 (S.D. Fla. 2012) (citing Del Monte Fresh
Produce Co. v. Dole Food Co., 136 F. Supp. 2d 1271, 1291 (S.D. Fla.
2001)).
“To qualify as a trade secret, the information that the
-6-
plaintiff seeks to protect must derive economic value from not
being readily ascertainable by others and must be the subject of
reasonable efforts to protect its secrecy.”
Supp. 2d at 1291.
Del Monte, 136 F.
“A plaintiff has the burden to describe the
alleged trade secret with reasonable particularity.”
Treco Int’l
S.A. v. Kromka, 706 F. Supp. 2d 1283, 1286 (S.D. Fla. 2010) (citing
Levenger Co. v. Feldman, 516 F. Supp. 2d 1272, 1287 (S.D. Fla.
2007)).
Moreover,
whether
a
particular
type
constitutes a trade secret is a question of fact.
of
information
See Furmanite
America, Inc. v. T.D. Williamson, Inc., 506 F. Supp. 2d 1134, 1141
(M.D. Fla. 2007).
It is not common for a trade secret misappropriation plaintiff
to know, prior to discovery, the details surrounding the purported
misappropriation.
The plaintiff, however, is still required to
provide “more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.”
Iqbal, 556 U.S. at 678 (citations omitted).
Here,
plaintiff’s list of trade secrets does not adequately inform
defendants
what
they
supposedly
misappropriated,
and
the
allegations regarding the misappropriation are without adequate
factual support. Plaintiff alleges that its trade secrets include,
but are not limited to:
[C]ustomer lists, customer identity, customer contact
information and confidential information about each
customer’s business, purchase and credit information,
sales and operation procedures, software, system
architecture, financial data, sales and marketing
strategies and data, lists, statistics, programs,
-7-
research, development, employee, personnel and contractor
data, information and records, and information relating
to products offered by AMERICAN REGISTRY.
(Doc. #7, ¶ 22.)
This list is nearly identical to the list of
confidential and proprietary information contained in the Sales
Agent Program Agreement and is so broad as to be meaningless.
Plaintiff need not disclose secret information in its pleadings,
but must identify it with enough specificity as to give defendants
notice of what was misappropriated.
For example, “software,”
“financial data,” “lists,” and “information and records” are broad
and generic categories of information and provide insufficient
notice as to the actual trade secrets misappropriated.
As to the alleged misappropriation, the allegations suffer
from the same deficiencies as the previous count. Plaintiff relies
on the same allegations regarding Hanaw’s conduct and alleges that
the remaining defendants misappropriated the trade secrets by using
them in the formation and operation of Showmark Media.
The
complaint is devoid of any factual allegations supporting this
assertion.
As such, the Court concludes that plaintiff has failed
to state a claim under the FUTSA.
See Knights Armament Co. v.
Optical Sys. Tech., 568 F. Supp. 2d 1369, 1377 (M.D. Fla. 2008)
(dismissing misappropriation of trade secrets counter-claim when
the counter-claim plaintiff gave no details on how the trade
secrets
were
misappropriated);
All
Bus.
Solutions,
Inc.
v.
NationsLine, Inc., 629 F. Supp. 2d 553, 558-59 (W.D. Va. 2009)
-8-
(dismissing Virginia Uniform Trade Secrets Act claim consisting of
conclusory allegations that the defendant misappropriated trade
secrets because it lacked supporting factual allegations).
Count
II will be dismissed without prejudice.
D. Violation of the FDUTPA and Tortious Interference with Business
Relations
Defendants Hanaw, Showmark Media, and Showmark Holding contend
that the remaining claims in the Second Amended Complaint are
preempted by the FUTSA because they are based solely on the
misappropriation of trade secrets.
The Court, however, will not
address preemption at this time because the remaining counts are
inadequately pled.
Although Counts III - V assert separate causes of action, the
underlying misconduct is the use or misappropriation of plaintiff’s
trade secrets or proprietary information. As previously discussed,
the allegations regarding this conduct are inadequate and no
additional allegations are provided; therefore, Counts III - V will
be dismissed without prejudice.
III.
A court is obligated to dismiss an action against a defendant
over which it has no personal jurisdiction.
Co., 178 F.3d 1209, 1214 n.6 (11th Cir. 1999).
Posner v. Essex Ins.
Whether a court has
personal jurisdiction over a defendant is governed by a two-part
analysis.
Mutual Serv. Ins. Co. v. Frit Indus., 358 F.3d 1312,
1319 (11th Cir. 2004).
The Court must first determine whether the
-9-
exercise of jurisdiction is appropriate under the forum state’s
long-arm statute. Future Tech. Today, Inc. v. OSF Healthcare Sys.,
218 F.3d 1247, 1249 (11th Cir. 2000) (citing Sculptchair, Inc. v.
Century Arts, Ltd., 94 F.3d 623, 626 (11th Cir. 1996).
If the
Court determines that the long-arm statute is satisfied, it must
then determine “whether the extension [of] jurisdiction comports
with the due process requirements of the Fourteenth Amendment.”
Meier ex rel. Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1269
(11th Cir. 2002) (citing Posner, 178 F.3d at 1214).
The reach of Florida’s long-arm statute is a question of
Florida law and federal courts must construe it as would the
Florida Supreme Court.
United Techs. Corp. v. Mazer, 556. F.3d
1260, 1274 (11th Cir. 2009) (citations omitted).
Absent some
indication that the Florida Supreme Court would hold otherwise,
this Court is bound to the decisions of Florida’s intermediate
courts.
Id.
Under Florida law, “[a] plaintiff seeking the exercise of
personal
jurisdiction
over
a
nonresident
defendant
bears
the
initial burden of alleging in the complaint sufficient facts to
make out a prima facie case of jurisdiction.”
United Techs. Corp.
v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009) (citing Posner, 178
F.3d
at
1214).
If
the
plaintiff’s
factual
allegations
are
sufficient to support the exercise of personal jurisdiction, the
burden then shifts to the defendant to challenge the allegations
-10-
with affidavits or other evidence to the contrary. Meier, 288 F.3d
at 1269 (citations omitted).
The burden then shifts back to the
plaintiff to produce evidence supporting jurisdiction.
Here, the burden shifting framework does not apply because
Levy has not submitted any evidence challenging the allegations in
the complaint.
complaint,
Rather, Levy contends that the allegations in the
even
jurisdiction.
if
taken
as
Therefore,
true,
the
do
Court
not
must
establish
determine
personal
whether
plaintiff’s allegations are sufficient to invoke the Florida longarm statute.
Florida’s long-arm statute provides for specific and general
jurisdiction.
of
specific
In this case, plaintiff relies solely on the theory
jurisdiction.
“Specific
jurisdiction
refers
to
‘jurisdiction over causes of action arising from or related to a
defendant’s actions within the forum.’”
PVC Windoors, Inc. v.
Babbitbay Beach Constr., N.V., 598 F.3d 802, 808 (11th Cir. 2010)
(quoting Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210,
1220 n.27 (11th Cir. 2009)).
Florida law provides that a court
must determine whether the allegations in the complaint state a
cause of action before analyzing specific jurisdiction under the
long-arm statute.
Id.
As detailed in Section II above, plaintiff has failed to state
a claim for relief against any of the defendants.
-11-
In the absence
of tortious conduct, specific jurisdiction cannot be invoked.
Therefore, Levy will be dismissed from this case without prejudice.
Accordingly, it is now
ORDERED:
1.
Defendant Michael Levy’s Motion to Dismiss Plaintiff’s
Second Amended Complaint (Doc. #22) is GRANTED.
Defendant Michael
Levy is DISMISSED WITHOUT PREJUDICE.
2.
Defendants Yonah Hanaw, Showmark Holdings, LLC, and
Showmark Media, LLC’s Motion to Dismiss Plaintiff’s Second Amended
Complaint (Doc. #23) is GRANTED.
The Second Amended Complaint is
DISMISSED WITHOUT PREJUDICE.
3.
Plaintiff may file a third amended complaint WITHIN
FOURTEEN (14) DAYS of this Opinion and Order.
DONE AND ORDERED at Fort Myers, Florida, this
December, 2013.
Copies:
Counsel of record
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5th
day of
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