Connectus LLC v. Ampush Media, Inc.

Filing 188

ORDER granting 114 Motion for Judgment on the Pleadings; denying without prejudice 161 Motion for summary judgment; granting 167 motion to amend/correct; denying without prejudice 168 Motion for summary judgment. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 1/20/2017. (DRW)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
CONNECTUS LLC,
Plaintiff,
v.

Case No. 8:15-cv-2778-T-33JSS

AMPUSH MEDIA, INC., et al.,
Defendants.
_____________________________/
ORDER
This matter comes before the Court upon consideration of
Defendant DGS Edu, LLC’s Motion for Judgment on the Pleadings
(Doc. # 114), filed on November 22, 2016. That same day,
Defendant Ampush Media, Inc. filed its Notice of Joinder in
Defendant DGS Edu, LLC’s Motion for Judgment on the Pleadings,
which includes additional, separate substantive arguments
than

those

raised

by

DGS

Edu.

(Doc.

#

115).

Plaintiff

Connectus LLC filed its response to DGS Edu’s Motion and
Ampush’s Joinder, which Connectus construed as a Rule 12(c)
motion, on December 22, 2016. (Doc. ## 164, 166). DGS Edu and
Ampush filed their respective replies on January 5, 2017.
(Doc. ## 178, 181).
Also pending before the Court is Connectus’s Conditional
Motion to Amend Complaint. (Doc. # 167). Defendants timely

filed a response in opposition. (Doc. # 177). For the reasons
that follow, the Rule 12(c) Motion and Ampush’s Joinder, which
the Court also construes as a Rule 12(c) motion, are granted.
Connectus’s Conditional Motion to Amend is granted.
I.

Background
Connectus provides an informational service that seeks

to

connect

prospective

students

with

post-high

school

educational institutions, such as universities. (Doc. # 106
at ¶ 12). To do so, Connectus engages in lead generation, a
process which generates data on prospective students through
the use of opt-in websites. (Id. at ¶ 13). The data generated
during

lead

generation

is

“extraordinarily

proprietary.”

(Id.). If, during the lead generation process, a prospective
student agrees to be contacted, a Connectus representative
from its call center contacts the prospective student to
collect more information. (Id. at ¶ 14). The goal is to match
a prospective student to a university or universities and
then

sell

that

“lead”

to

the

matched

university

or

universities. (Id. at ¶¶ 14, 18).
Connectus has its own list of universities with which it
directly does business; however, if a prospective student
does not match with one of the universities that directly do
business with Connectus, Connectus turns to an aggregator.

2 

(Id. at ¶ 15). An aggregator is an intermediary that has
business relationships with one or several universities;
Ampush

is

one

such

aggregator.

(Id.).

Each

aggregator

maintains its own database, or portal, detailing the programs
offered

by

its

affiliate

universities.

(Id.

at

¶

16).

Connectus will “ping,” i.e., search, an aggregator’s portal
to determine if that aggregator has a business relationship
with

a

university

that

is

a

potential

match

for

the

prospective student. (Id. at ¶ 17). If a potential match is
found,

Connectus

prospective

gathers

student,

more

confirms

information

the

match,

from

the

obtains

the

prospective student’s consent to “various disclosures,” and
then sells the lead to the aggregator, which in turn sells
the lead to the matched university. (Id. at ¶¶ 17-18). “Under
no circumstances does [Connectus] submit or sell Leads to
Aggregators at the Ping/Search Stage.” (Id. at ¶ 19).
To govern the sale of its leads to aggregators, Connectus
enters into contracts with its aggregators. (Id. at ¶ 20).
Connectus entered into one such contract with Ampush. In
relevant part, the contract stated:
1.1

Scope

This
Service
Level
Agreement
(this
“Agreement”), entered into on May 31, 2013, by and
between
Ampush
Media,
Inc.
(“AMPUSH”)
and

3 

EDegreeAdvisor, LLC[1](“VENDOR”) governs the rights
and responsibilities of the foregoing parties with
respect to the call center services provided by
VENDOR to AMPUSH at all times throughout the course
of their business relationship (the “Service
Period”).
. . . .
1.4

Definitions

. . . .
Confidential Information:
Means
any
confidential or proprietary information, source
code, software tools, designs, schematics, plans or
any other information relating to any research
project, work in process, future development,
scientific, engineering, manufacturing, marketing
or business plan or financial or personnel matter
relating to either party, its present or future
products, sales, supplies, clients, client lists or
other client information, employees, investors or
business, disclosed by one party to the other
party, whether in oral, written, graphic or
electronic
form,
and
whose
confidential
or
proprietary nature is identified at the time of
such
disclosure
or
by
the
nature
of
the
circumstances
surrounding
disclosure
should
reasonably be understood to be confidential.
. . . .
5.1

Non-Disclosure

Each party agrees that it will not make use
of, disseminate or in any way disclose the other
party’s Confidential Information to any person,
firm or business, except as authorized in this
Agreement and to the extent necessary for
performance of this Agreement. Each party agrees
that it will disclose Confidential Information only
to those of its employees and contractors who need

1

Connectus does business as EDegreeAdvisor.

4 

to know such information and who have previously
agreed to be bound by the terms and conditions of
this Agreement. Each party agrees that it will
treat all Confidential Information of the other
party with the same degree of care as it accords
its own confidential information; each party
represents that it exercises reasonable care to
protect its own confidential information.
. . . .
6.

GOVERNING LAW & ATTORNEYS’ FEES

The interpretation and construction of this
Agreement and all matters relating hereto shall be
governed by the laws of the State of California. .
. .
. . . .
13.

LIABILITY

IN NO EVENT SHALL EITHER VENDOR OR AMPUSH BE
LIABLE FOR ANY LOST PROFITS, LOST REVENUES OR ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES ARISING OUT OF OR RELATED TO THIS
AGREEMENT, EVEN IF SUCH DAMAGES ARE FORESEEABLE AND
WHETHER OR NOT THE OTHER PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL
EITHER PARTY’S LIABILITY HEREUNDER EXCEED THE
PAYMENTS MADE BY AMPUSH TO VENDOR IN THE TWELVE
(12) MONTHS PRECEEDING THE EVENT GIVING RISE TO THE
CLAIM.
(Doc. # 106, Ex. A at ¶¶ 1.1, 1.4, 5.1, 6, 13) (emphasis
added).
On October 31, 2013, DGS Edu acquired Ampush’s education
business, including the agreement entered into by Connectus
and Ampush. (Doc. # 106 at ¶ 21). After DGS Edu acquired
Ampush’s

education

business,

5 

Connectus

began

receiving

complaints from its universities and other aggregators that
the leads being sold to them had been called multiple times
before the lead could be utilized by the purchaser. (Id. at
¶ 22). As such, Connectus began to investigate what was
causing the complaints. (Id. at ¶ 23). Connectus’s
investigation revealed that rather than purchasing
the Leads at the end of the client verification
process, [Ampush and DGS Edu] had been scraping,
digitally copying or otherwise misappropriating
[Connectus’s] proprietary Lead generation data
early in [Connectus’s] Lead generation process, at
the Ping/Search Stage, but before [Connectus] had
submitted or sold the Lead to [Ampush or DGS Edu].
(Id. at ¶ 25). The investigation also “revealed that [Ampush
and DGS Edu] . . . sold the misappropriated Lead generation
data to several of [their] third party partners”; Ampush and
DGS Edu, “and entities to which [they] sold . . . Lead
generation data, had been calling every Prospective Student
whose

information

[Connectus]

had

utilized

to

conduct

a

Ping/Search on [Ampush and DGS Edu’s] portal, regardless of
whether the Lead had ultimately been submitted or sold to
[Ampush or DGS Edu]”; and Ampush and DGS Edu, along with the
entities to which they sold the lead generation data, “have
called

as

improperly

many

as

obtaining

838,853

Prospective

[Connectus’s]

Students

after

proprietary

Lead

generation data . . . .” (Id. at ¶¶ 27-29).

6 

While

Ampush

and

DGS

Edu

paid

Connectus

for

“approximately 39,975” leads, they did not pay Connectus for
any of the 838,853 leads alleged to have been misappropriated.
(Id. at ¶ 31). Furthermore, Connectus values each lead as
being worth between $18 and $24 and calculates its damages as
“exceed[ing] $19,000,000.00, without taking into account the
damage to [its] reputation and goodwill.” (Id.).
Connectus

instituted

this

action

against

Ampush

on

December 3, 2015, (Doc. # 1), and shortly thereafter amended
its Complaint to include DGS Edu (Doc. # 9). Ampush filed its
Answer on January 29, 2016, and DGS Edu, after having its
motion to dismiss denied, filed its Answer on March 11, 2016.
(Doc. ## 30, 36, 45, 46). With leave of Court, Connectus filed
its Second Amended Complaint on November 11, 2016. (Doc. ##
105, 106). The Second Amended Complaint brings claims for
conversion

(Count

I),

misappropriation

of

trade

secrets

(Count II), unfair competition (Count III), unjust enrichment
(Count IV), breach of contract (Count V), and injunctive
relief (Count VI) against both Ampush and DGS Edu. (Doc. #
106). Ampush and DGS Edu filed their respective Amended
Answers on November 22, 2016. (Doc. ## 112, 113).
Also on November 22, 2016, DGS Edu filed the pending
Motion. (Doc. # 114). Ampush joined in DGS Edu’s Motion, but

7 

asserted additional substantive arguments in support. (Doc.
# 115). Connectus responded to the Motion and Joinder (Doc.
## 164, 166), and Defendants replied. (Doc. ## 178, 181).
Connectus also filed its Conditional Motion to Amend,
seeking leave to amend its trade-secrets claim (switching it
from one based on Florida law to one based on California law)
in the event the Court determines that California law governs.
(Doc. # 167). The Defendants responded in opposition. (Doc.
# 177). As such, the Rule 12(c) Motion, the Joinder, and the
Conditional Motion to Amend are ripe for review.
II.

Standards
A.

Rule 12(c)

“After the pleadings are closed—but early enough not to
delay trial—a party may move for judgment on the pleadings.”
Fed. R. Civ. P. 12(c). “Federal district courts have applied
a ‘fairly restrictive standard in ruling on motions for
judgment on the pleadings.’” ThunderWave, Inc. v. Carnival
Corp., 954 F. Supp. 1562, 1564 (S.D. Fla. 1997) (quoting Bryan
Ashley Int’l, Inc. v. Shelby Williams Indus., Inc., 932 F.
Supp. 290, 291 (S.D. Fla. 1996)). “Judgment on the pleadings
is appropriate where there are no material facts in dispute
and the moving party is entitled to judgment as a matter of
law.” Cannon v. City of West Palm Beach, 250 F.3d 1299, 1301

8 

(11th Cir. 2001); see also Hawthorne v. Mac Adjustment, Inc.,
140 F.3d 1367, 1370 (11th Cir. 1998) (“Judgment on the
pleadings is appropriate when there are no material facts in
dispute, and judgment may be rendered by considering the
substance

of

the

pleadings

and

any

judicially

noticed

facts.”).
“A motion for judgment on the pleadings is governed by
the same standard as a Rule 12(b)(6) motion to dismiss.”
StoneEagle Servs., Inc. v. Pay-Plus Sols., Inc., No. 8:13cv-2240-T-33MAP, 2015 WL 518852, at *1 (M.D. Fla. Feb. 9,
2015) (citations omitted); ThunderWave, 954 F. Supp. at 1564
(“The standard of review for Rule 12(b)(6) and Rule 12(c)
motions are identical.”) (citations omitted). “In determining
whether a party is entitled to judgment on the pleadings, [a
court] accept[s] as true all material facts alleged in the
non-moving party’s pleading, and [the court] view[s] those
facts in the light most favorable to the non-moving party.”
Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir.
2014); see also Dozier v. Prof’l Found. for Health Care, Inc.,
944 F.2d 814, 816 n.3 (11th Cir. 1991) (“A motion for judgment
on the pleadings ‘admits the plaintiff’s factual allegations
and impels the district court to reach a legal conclusion
based on those facts.’”). “A complaint may only be dismissed

9 

under Rule 12(c) if ‘it is clear that the plaintiff would not
be entitled to relief under any set of facts that could be
proved consistent with the allegations.’” Flanigan’s Enters.,
Inc. of Ga. v. City of Sandy Springs, Ga., 831 F.3d 1342,
1345 (11th Cir. 2016).
“If, on a motion under . . . 12(c), matters outside the
pleadings are presented to and not excluded by the court, the
motion must be treated as one for summary judgment under Rule
56.” Fed. R. Civ. P. 12(d). “‘The court has a broad discretion
when deciding whether to treat a motion [for judgment on the
pleadings] as a motion for summary judgment even though
supplementary materials are filed by the parties and the court
is not required to take cognizance of them.’” StoneEagle
Servs., 2015 WL 518852, at *2 (citations omitted). The Court
exercises its broad discretion and excludes matters outside
of the pleadings, but it will consider documents attached to
the Second Amended Complaint, Bank of Camilla v. St. Paul
Mercury Ins. Co., 531 Fed. Appx. 993, 994 (11th Cir. 2013)
(holding that a court may consider documents attached to the
pleadings without converting the motion if the documents are
central to the claim and undisputed (citing Horsley v. Feldt,
304 F.3d 1125, 1134 (11th Cir. 2002)).

10 

B.

Rules 15 and 16

“The grant or denial of an opportunity to amend is within
the discretion of the district court.” Foman v. Davis, 371
U.S. 178, 182 (1962). But, “a motion to amend filed after the
deadline established by the Case Management and Scheduling
Order, as in this case, will only be granted upon a showing
of

good

cause

under

Rule

16(b)(4).”

Hess

v.

Coca-Cola

Refreshments USA, Inc., No. 8:13-cv-3136-T33EAJ, 2014 WL
5080258, at *2 (M.D. Fla. Sept. 29, 2014). An untimely motion
to amend a pleading is distinctly disfavored under the Local
Rules of this District. See M.D. Fla. L.R. 3.05(c)(2)(E). In
order “[t]o show good cause, a party must establish that,
despite its diligence, the deadline could not be met.” Id.
(citation omitted).
“Once good cause is shown, the court may consider whether
leave should be granted under Rule 15.” Thorn v. Blue Cross
& Blue Shield of Fla., Inc., 192 F.R.D. 308, 309-10 (M.D.
Fla. 2000). “In the absence of . . . undue delay, bad faith
or dilatory motive on the part of the movant, repeated failure
to cure deficiencies . . ., undue prejudice to the opposing
party by virtue of allowance of the amendment, [or] futility
of amendment, . . . the leave sought should, as the rules
require, be freely given.” Foman, 371 U.S. at 182.

11 

III. Analysis
A.

Choice of Law
1.

Waiver

Connectus argues that Defendants waived any argument or
attempt

to

enforce

the

choice-of-law

provision

because

Defendants waited too long to file the Rule 12(c) Motion and
Joinder. Under the Court’s Case Management and Scheduling
Order, the parties had until December 13, 2016, to file Rule
12(c)

motions.

(Doc.

#

40

at

2).

That

deadline

was

subsequently extended to December 20, 2016. (Doc. # 134). The
instant Rule 12(c) Motion and Joinder were filed well before
the expiration of even the original deadline. (Doc. ## 114,
115) (filed on November 22, 2016). It should also be noted
that Defendants had filed a Rule 12(c) motion in early
November of 2016, (Doc. ## 98, 103), but that motion was
denied without prejudice in light of the fact that Connectus
was granted leave to dismiss certain Counts from its Amended
Complaint and to file its Second Amended Complaint (Doc. #
107).
Furthermore, DGS Edu and Ampush have consistently pled,
as an affirmative defense, that Connectus’s claims based on
Florida law should be dismissed because of the agreement’s
choice-of-law provision. (Doc. ## 30 at 23-24; 46 at 32; 112

12 

at 21; 113 at 22). Thus, the record reflects that Defendants
have,

from

notice

that

their
they

initial

pleadings,

intended

to

placed

argue

the

Connectus

on

choice-of-law

provision precluded claims based on Florida law. The record
also demonstrates that the Rule 12(c) Motion and Joinder are
timely and that they were filed early enough so as not to
delay trial, which is still several months away. The Court
will, therefore, not deem Defendants’ choice-of-law arguments
waived.
2.

Propriety of Ampush’s Joinder

Connectus argues that Ampush’s Joinder is inappropriate
because

it

raises

additional

substantive

arguments

and

violates the Local Rules by exceeding the page limitation via
its

incorporation

of

DGS

Edu’s

Motion.

Although

Ampush

essentially filed its own motion rather than a mere notice of
joinder, the deadline for filing Rule 12(c) motions had not
passed when Ampush filed its Joinder. In addition, Connectus
responded to the substance of Ampush’s additional arguments
and thus was not prejudiced. The Court therefore declines to
strike the Joinder. See M.D. Fla. L.R. 1.01(c).
3.

The Choice-of-Law Provision
a.

What’s in a word?

13 

The parties dispute the scope of the agreement’s choiceof-law provision, which states: “[t]he interpretation and
construction
hereto

of

shall

be

this

Agreement

governed

by

and

the

all

laws

matters
of

the

relating
State

of

California. . . .” (Doc. # 106, Ex. A at ¶ 6). Defendants
argue

the

plain

language

of

the

choice-of-law

provision

covers this action because “Connectus’ claims all arise out
of the call center services provided by Connectus to Ampush,
and the business relationship of the parties acting pursuant
to that agreement . . . .” (Doc. # 114 at 11). Connectus
retorts that the phrase “relating hereto” refers only to the
interpretation and construction of the agreement, rather than
the agreement as a whole, and thus, while California law
governs the interpretation and construction of the agreement,
it does not dictate the substantive law under which claims
may be brought.
Connectus’s argument that “hereto” derives its meaning
from

the

antecedent

noun

phrase

“interpretation

and

construction of this Agreement” ignores the word’s plain
meaning. As to the plain meaning of “hereto,” that word means
“[t]o this document.” Hereto, BLACK’S LAW DICTIONARY (10th ed.
2014); Hereto, BLACK’S LAW DICTIONARY (8th ed. 2004) (same); see

14 

also WEBSTER’S NEW COLLEGIATE DICTIONARY 536 (Henry Bosley Woolf et
al. eds. 1977) (“to this writing or document”).
The Court recognizes some dictionaries define “hereto”
in a manner suggesting that the word’s definition may be
dependent on or refer back to an antecedent noun. See, e.g.,
OFFICE EDITION, WEBSTER’S II NEW RIVERSIDE DICTIONARY 324 (rev. ed.
Houghton Mifflin Co. 1996) (“To this document, matter or
proposition”); THE RANDOM HOUSE COLLEGE DICTIONARY 619 (Stuart B.
Flexner

et

al.

eds.,

rev.

ed.

1982)

(“to

this

matter,

document, subject, etc.”). But, the context in which “hereto”
is used in the agreement, along with cannons of construction,
preclude such dependence in this instance.
The agreement’s choice-of-law provision reads, “[t]he
interpretation and construction of this Agreement and all
matters relating hereto shall be governed by the laws of the
State of California. . . .” (Doc. # 106, Ex. A at ¶ 6). As
evident from the plain language, the clause “interpretation
and construction of this Agreement” is not limited by a
modifying

adjective.

Connectus’s

definition

of

“hereto”

though treats that clause as if it were limited. In so doing,
Connectus’s definition of “hereto” renders the word redundant
as used in the choice-of-law provision. A court, however,
should not adopt an interpretation that renders a word or

15 

clause useless. Golden Door Jewelry Creations, Inc. v. Lloyds
Underwriters Non-Marine Ass’n, 117 F.3d 1328, 1338 (11th Cir.
1997); Crews v. State, 183 So. 3d 329, 335 (Fla. 2015); ACL
Techs., Inc. v. Northbrook Prop. & Cas. Ins. Co., 22 Cal.
Rptr. 2d 206, 214 (Cal. 4th Dist. Ct. App. 1993).
Moreover, the very spectrum of choice-of-law provisions
drawn by Connectus—ranging from those that are construed
narrowly

to

those

that

are

construed

broadly—undercuts

Connectus’s argument as to the meaning of “hereto” in the
agreement. As Connectus points out, the Eleventh Circuit
differentiates between a clause that addresses merely the
interpretation of a contract and as such does not encompass
related tort claims (e.g., “[t]his release shall be governed
and construed in accordance with the laws of the State of
[X]”) and a clause that encompasses everything related to or
connected with a contract (e.g., “all disputes arising out of
or in connection with the agreement shall be construed with
and shall be governed by the Dutch law”). Cooper v. Meridian
Yachts, Ltd., 575 F.3d 1151, 1162 (11th Cir. 2009) (internal
quotation marks omitted).
Using Cooper as a guidepost, the Court finds that the
agreement’s choice-of-law provision should be interpreted
broadly. The first clause of the choice-of-law provision—

16 

“[t]he interpretation and construction of this Agreement”—
governs just the agreement. For its part, the second clause—
“all matters relating hereto”—reaches beyond the agreement
and captures everything else related to the document, i.e.,
related

tort

“matters”

claims.

rather

That

than

the

“dispute”

agreement
does

uses

not

the

preclude

word
the

provision from being interpreted broadly because the term
“matter” encompasses “dispute.” Compare Matter, BLACK’S LAW
DICTIONARY (10th ed. 2014) (“A subject under consideration,
esp. involving a dispute or litigation; CASE),” with Dispute,
BLACK’S

LAW

DICTIONARY

(10th

ed.

2014)

(“A

conflict

or

controversy, esp. one that has given rise to a particular
lawsuit.”). As such, the provision at issue here is more
analogous to the provision at issue in Cooper, 575 F.3d at
1162.
b.

Related: a fairly direct result

Connectus goes on to argue that, even if the choice-oflaw

provision

encompasses

all

matters

relating

to

the

agreement, its trade-secrets claim would not relate to the
agreement. The Court disagrees.
A claim “relates to” a contract when “the dispute
occurs as a fairly direct result of the performance
of contractual duties.” . . . Moreover, the fact
that a dispute could not have arisen but for an
agreement
does
not
mean
that
the
dispute

17 

necessarily “relates to” that agreement. . . . The
phrase “‘related to’ marks a boundary indicating
some direct relationship.” . . . Requiring a direct
relationship between the claim and the contract is
necessary because, “[i]f ‘relate to’ were taken to
extend
to
the
furthest
stretch
of
its
indeterminacy, it would have no limiting purpose
because
really,
universally,
relations
stop
nowhere.”
Bailey v. ERG Enters., LP, 705 F.3d 1311, 1317-18 (11th Cir.
2013) (internal citations omitted).
In this case, the agreement formed the basis of the
parties’ relationship, governed the sale and use of leads
generated by Connectus, and set forth a detailed framework
for the parties to follow in the course of their transactions.
In light of the facts as alleged in the Second Amended
Complaint, which the Court must accept as true, the tradesecrets claim relates to, i.e., is a fairly direct result of,
the

alleged

(non)performance

of

duties

imposed

by

the

agreement. As such, California law governs the interpretation
of and claims related to the agreement. Because California
law governs, Connectus’s trade-secrets claim brought under
Florida law is dismissed.
c.

Pled in the alternative

Connectus further argues it should be allowed to plead
its Florida trade-secrets claim in the alternative. But, this
argument is equally unpersuasive. While Rule 8(d) does allow

18 

a party to plead in the alternative, even if the Court were
to construe the claim as being pled in the alternative, the
trade-secrets claim based on Florida law would still be
dismissed.

Contrary

to

Connectus’s

argument,

even

if

Defendants show the agreement did not preclude their alleged
appropriation and use of scrapped lead data, the Florida
trade-secrets claim would still arise as a fairly direct
result of the agreement. Thus, the choice-of-law provision
would control and preclude the Florida trade-secrets claim.
B.

Common-Law Claims

Counts I, III, and IV, which are common-law claims, do
not specify whether they are brought under the common law of
California or Florida. However, given that California law
governs per the parties’ choice-of-law provision, in the
event the common-law claims are brought under Florida common
law, they are dismissed. The common-law claims are also
dismissed to the extent they are brought under California
common law for the reasons discussed more fully below.
“It is well established under California law that [the
California Uniform Trade Secrets Act, Cal. Civ. Code § 3426,

19 

et seq.,] preempts[2] state law claims that are ‘“based on
the same nucleus of facts as the misappropriation of trade
secrets claim for relief.”’” TMC Aerospace, Inc. v. Elbit
Sys. of Am. LLC, No. CV 15-07595-AB(EX), 2016 WL 3475322, at
*6 (C.D. Cal. Jan. 29, 2016) (quoting K.C. Multimedia, Inc.
v. Bank of Am. Tech. & Operations, Inc., 171 Cal. App. 4th
939, 958 (2009)); see also Gems v. Diamond Imports, Inc., No.
15-cv-3531-MMC, 2016 WL 6902804, at *2 (N.D. Cal. Nov. 22,
2016) (“all ‘common law claims that are based on the same
nucleus of facts as the misappropriation of trade secrets
claim for relief’ are displaced.”) (citation omitted). “If
there

is

no

material

distinction

between

the

wrongdoing

alleged in a [C]UTSA claim and that alleged in a different
claim, the [C]UTSA preempts the other claim.’” Gabriel Techs.
Corp.

v.

Qualcomm

Inc.,

No.

08cv1992-MMA(POR),

2009

WL

3326631, at *11 (S.D. Cal. Sept. 3, 2009) (citation omitted).
“[T]he only remedies that CUTSA ‘does not affect’ are ‘(1)
contractual remedies . . ., (2) other civil remedies that are
not based upon misappropriation of a trade secret, or (3)

2

Although California’s Supreme Court uses “displace” rather
than “preempt,” Zengen, Inc. v. Comerica Bank, 158 P.3d 800,
804 n.5 (Cal. 2007), the Court will use “preempt.”

20 

criminal remedies . . . .’” Gems, 2016 WL 6902804, at *2
(quoting Cal. Civ. Code § 3426.7(b)) (emphasis in original).
Connectus argues it is premature to decide whether the
common-law claims are preempted because the Court must first
determine if the information at issue constitutes a trade
secret. However, courts have rejected similar arguments. See,
e.g., Gabriel Techs., 2009 WL 3326631, at *11 (rejecting
assertion that whether information is a trade secret must be
determined

before

addressing

issue

of

preemption

on

the

grounds that the “majority of cases hold that determining
whether allegedly misappropriated information constitutes a
trade secret is irrelevant for preemption purposes because
CUTSA preempts all claims based upon the unauthorized use of
information,

even

if

the

information

does

not

meet

the

statutory definition of a trade secret”); see also Artec Grp.,
Inc. v. Klimov, No. 15-cv-3449-EMC, 2016 WL 7157635, at *7
(N.D. Cal. Dec. 8, 2016) (“‘The majority of district courts
that have considered Silvaco have held that CUTSA supersedes
claims based on the misappropriation of information that does
not satisfy the definition of trade secret under CUTSA.’”)
(citation omitted); Total Recall Techs. v. Luckey, No. C 1502281 WHA, 2016 WL 199796, at *7-8 (N.D. Cal. Jan. 16, 2016);

21 

AirDefense, Inc. v. AirTight Networks, Inc., No. C 05-4615JF,
2006 WL 2092053, at *3 (N.D. Cal. July 26, 2006).
Even

a

perfunctory

reading

of

the

Second

Amended

Complaint reveals that Connectus’s common-law claims share
and derive from the same nexus of facts as the trade-secrets
claim. Connectus states, “Plaintiff brings this action based
upon the Defendants’ systematic practice of misappropriating
and converting Plaintiff’s proprietary lead generation data
and

exploiting

the

misappropriated

proprietary

lead

generation data by mass calling Plaintiff’s customers and .
. . selling the misappropriated data to third parties who
mass call Plaintiff’s customers.” (Doc. # 106 at ¶ 1).
Connectus then lays out its factual allegations in paragraphs
12 through 25 of the Second Amended Complaint. Notably, Counts
I (common law), II (statutory trade secrets), III (common
law), and IV (common law), all share the same factual basis.
(Id. at ¶¶ 33, 42, 48, 56). Thus, on the basis of Gabriel
Technologies, 2009 WL 3326631, at *11-12, and the other cases
cited above, Connectus’s common-law claims, to the extent
they were brought under California common law, are preempted
and dismissed. Because the Court has found the common-law
claims to be preempted, it need not address Ampush’s argument

22 

that the common-law claims are barred by the economic loss
rule.
C.

Limitation-of-Liability Clause

The parties’ agreement contains a paragraph addressing
liability, which states:
IN NO EVENT SHALL EITHER VENDOR OR AMPUSH BE LIABLE
FOR ANY LOST PROFITS, LOST REVENUES OR ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR
EXEMPLARY DAMAGES ARISING OUT OF OR RELATED TO THIS
AGREEMENT, EVEN IF SUCH DAMAGES ARE FORESEEABLE AND
WHETHER OR NOT THE OTHER PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL
EITHER PARTY’S LIABILITY HEREUNDER EXCEED THE
PAYMENTS MADE BY AMPUSH TO VENDOR IN THE TWELVE
(12) MONTHS PRECEEDING THE EVENT GIVING RISE TO THE
CLAIM.
(Doc. # 106, Ex. A at ¶ 13). Ampush argues that, with respect
to the breach-of-contract claim, any damages awarded must be
limited in accordance with the agreement’s limitation-ofliability clause. For its part, Connectus argues that the
agreement’s

limitation-of-liability

clause

contravenes

Section 1668, Cal. Civ. Code, and is contrary to an equitable
interpretation of the clause because it removes Defendants’
duty to adhere to a minimal standard of care.
“California

contract

law

establishes

that

‘the

fundamental goal of contractual interpretation is to give
effect to the mutual intentions of the parties.’” Nat’l Rural
Telecommns. Coop. v. DIRECTV, Inc., 319 F. Supp. 2d 1040,

23 

1046 (C.D. Cal. 2003) (citation omitted). “The language of a
contract is to govern its interpretation, if the language is
clear and explicit, and does not involve an absurdity.” Cal.
Civ. Code § 1638.
“Under

California

law,

parties

may

agree

by

their

contract to the limitation of their liability in the event of
a breach.” Nat’l Rural Telecomms. Coop., 319 F. Supp. 2d at
1048; see also Food Safety Net Servs. v. Eco Safe Sys. USA,
Inc., 147 Cal. Reptr. 3d 634, 641-42 (Cal. 2d Dist. App. Ct.
2012) (“Clauses of this type ‘have long been recognized as
valid

in

California.’”)

(citation

omitted).

However,

a

limitation-of-liability clause is unenforceable if it is
“unconscionable, that is, the improper result of unequal
bargaining power or contrary to public policy,” or is asserted
against a claim for fraud or misrepresentation. Id. at 642;
see also Cal. Civ. Code § 1668 (“All contracts which have for
their object, directly or indirectly, to exempt anyone from
responsibility for his own fraud, or willful injury to the
person or property of another, or violation of the law,
whether willful or negligent, are against the policy of the
law.”).
Connectus’s breach-of-contract claim (Count V) does not
allege a willful breach of contract. (Doc. # 106 at ¶¶ 62-

24 

64); cf. (Id. at ¶¶ 46, 53, 59) (alleging willful conduct for
Counts II-IV). As such, Section 1668, Cal. Civ. Code, does
not

bar

enforcement

of

the

agreement’s

limitation-of-

liability clause. Furthermore, Connectus has made no showing
that

the

limitation-of-liability

clause

is

otherwise

unconscionable, i.e., the result of an unequal bargaining
position.
Connectus’s additional arguments also fail to persuade.
Connectus argues the limitation-of-liability clause removes
Defendants’ duty to adhere to a minimal standard of care. But
this argument is unpersuasive since the plain language of the
clause allows for direct damages, albeit capped at the sum
equal to the payments made by Ampush to Connectus in the 12
months preceding the event giving rise to the claim. In
addition, Connectus’s attempt to defeat dismissal by arguing
its unfair competition claim is based on violations of the
Telephone Consumer Protection Act, 47 U.S.C. § 227, relies on
allegations not pled in the Second Amended Complaint. (Doc.
# 106). As such, and because the Court has exercised its broad
discretion not to go beyond the pleadings, the Court declines
to entertain that argument at this stage. Therefore, the
limitation-of-liability

clause

found

in

the

agreement is enforceable with respect to Count V.

25 

parties’

D.

Injunctive Relief

Count VI of the Second Amended Complaint asserts a claim
for injunctive relief. (Doc. # 106 at ¶¶ 65-70). However, as
Ampush correctly notes by way of citation, “[a]n injunction
is a remedy, not a separate claim or cause of action. A
pleading can . . . request injunctive relief in connection
with a substantive claim, but a separately pled claim or cause
of action for injunctive relief is inappropriate.” Jensen v.
Quality Loan Serv. Corp., 702 F. Supp. 2d 1183, 1201 (E.D.
Cal. 2010). Accordingly, Count VI is dismissed.
Nevertheless, the Court will permit Connectus to seek
injunctive relief as a remedy in connection to its breachof-contract claim. The wherefore clause of Count V reads:
“Plaintiff . . . respectfully requests that this Court . . .
grant

Plaintiff

all

other

relief

the

Court

deems

appropriate.” (Doc. # 106 at 11). While injunctive relief is
not explicitly sought in the aforementioned wherefore clause,
it is sought by implication through Connectus’s use of the
catch-all provision “all other relief.” In addition, the
Defendants were on notice from the beginning of this suit
that Connectus would be seeking injunctive relief. See (Doc.
# 9 at 14-15). Thus, the basic tenant of Rule 8—notice—has

26 

been met and Connectus may seek injunctive relief with respect
to Count V.
E.

Amendment

Connectus

moves

for

leave

to

file

a

third

amended

complaint should the Court find that California law governs
the parties’ agreement so that Connectus may replead its
Florida trade-secrets claim under California law. (Doc. #
167). Defendants oppose Connectus’s Conditional Motion to
Amend. (Doc. # 177).
According to Connectus, it pled its trade-secrets claim
under Florida law on the good-faith belief that such a claim
was governed by Florida, rather than California, law. (Doc.
# 167 at 1). Connectus also argues that a ruling from this
Court as to which law governs would constitute good cause for
amending the Case Management and Scheduling Order’s deadline
for amending pleadings.
Lacking from Connectus’s Conditional Motion to Amend,
however, is a discussion regarding why it did not plead the
CUTSA claim in the alternative. Indeed, the best practice in
light of the circumstances would have been for Connectus to
plead

its

California

trade-secrets
law,

for

claim

doing

so

under
would

both
have

situation in which Connectus now finds itself.

27 

Florida

and

precluded

the

Nevertheless, and in spite of Connectus’s less than
ideal

pleading

repleading
draconian

its
of

a

practices,

prohibiting

trade-secrets
result.

In

claim

addition,

Connectus

would
the

produce
Court

from
too

accepts

Connectus’s representation as to its good-faith belief and
agrees that the Court’s ruling constitutes good cause because
it was issued after the deadline for amending pleadings
passed,

see

Perea

v.

Avnet,

Inc.,

No.

12-cv-80257-

RYSKAMP/HOPKINS, 2012 WL 12868748, at *2 (S.D. Fla. Sept. 14,
2012) (finding Rule 16(b)(4)’s good-cause standard satisfied
where court issued ruling on “a complex interpretation of
contract law and the employment agreement’s choice-of-law
provision” after the deadline for amending pleadings had
passed). As such, the Court now turns to whether the standard
under Rule 15 is satisfied.
The default position of Rule 15 is that leave to amend
should be freely given, except where, for example, amendment
would be futile. Foman, 371 U.S. at 182. That futility
exception requires the Court to address Ampush’s argument
that Connectus’s CUTSA claim would be barred by the economic
loss rule. “Under California law, the economic loss doctrine
bars tort claims based on the same facts and damages as breach
of

contract

claims.

The

doctrine

28 

precludes

recovery

for

purely economic loss due to disappointed expectations, unless
the plaintiff can demonstrate harm above and beyond a broken
contractual promise.” Alvarado Orthopedic Research, L.P. v.
Linvatec Corp., No. 11cv246-IEG (RBB), 2012 WL 404775, at *7
(S.D. Cal. Feb. 8, 2012) (citations and internal quotation
marks omitted). The purpose of the rule is to “prevent[] the
law of contract and the law of tort from dissolving one into
the other.” Robinson Helicopter Co. v. Dana Corp., 102 P.3d
268, 273 (Cal. 2004) (citation omitted). “[C]onduct amounting
to a breach of contract becomes tortious only when it also
violates a duty independent of the contract arising from
principles of tort law” and “exposes a plaintiff to liability
for personal damages independent of the plaintiff’s economic
loss.” Id. (citation omitted).
Relying on WeBoost Media S.R.L. v. LookSmart Ltd., No.
C 13-5304 SC, 2014 WL 824297, at *4-5 (N.D. Cal. Feb. 28,
2014), Ampush argues that California’s economic loss rule
bars a statutory claim that derives from the same facts giving
rise to a breach-of-contract claim. To be sure, the court in
WeBoost dismissed a statutory claim for unfair competition as
being barred by the economic loss rule. Id. However, the
WeBoost court does not address the specific argument raised
by Connectus: whether a statutory claim may be barred by a

29 

judicially created doctrine such as the economic loss rule.
And, while one case cited by Connectus is more persuasive
in that it provides a thorough discussion of the exact issue
with which the Court is currently faced, the case is not
interpreting California law. (Doc. # 166 at 11) (citing New
Lenox Indus., Inc. v. Fenton, 510 F. Supp. 2d 893, 909 (M.D.
Fla. 2007)). Given the incomplete briefing and the paucity of
case law, both as cited by the parties and found by the
Court’s independent research, it is far from certain the
California Supreme Court would hold that a claim under CUTSA
would

be

barred

by

the

economic

loss

rule.

Therefore,

amendment is not futile and the Court sees no reason to depart
from Rule 15’s freely-given standard.
Connectus may file a third amended complaint by January
30, 2017. In the third amended complaint, Connectus may
replead its statutory trade-secrets claim under California
law. Connectus should also omit its common-law claims and
stand-alone

claim

for

injunctive

relief

from

the

third

amended complaint as they have been dismissed. In addition,
Connectus may amend its breach-of-contract claim in order to
plead injunctive relief as a requested remedy. Connectus may
not otherwise alter its factual allegations or theories of
liability.

30 

Because the Court has granted Connectus leave to file a
third amended complaint, and has disposed of several counts,
Defendants’ pending motions for summary judgment (Doc. ##
161, 168) are denied without prejudice. Defendants shall
respond to the third amended complaint by February 13, 2017.
In addition, in light of the fact that the Court has granted
Connectus leave to amend, the Court will allow the Defendants
to file amended motions for summary judgment, addressing only
those issues that remain; Defendants are free to raise the
issue of whether CUTSA is barred by the economic loss rule
again, but are cautioned any such briefing will need to
address the concerns addressed by the Court in this Order.
The parties are directed to file a joint briefing schedule
for summary judgment by January 25, 2017. If the parties
determine refiling their pending motions to strike or exclude
expert testimony, which the Court has construed as Daubert
motions, would be in the interests of judicial economy, they
should indicate as much in their joint briefing schedule.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Defendant DGS Edu, LLC’s Motion for Judgment on the
Pleadings (Doc. # 114) is GRANTED. The plain language of
the parties’ choice-of-law provision controls and, as

31 

such, California law governs. Accordingly, Count II,
which is based on Florida law, is DISMISSED. Counts I,
III, and IV are brought under preempted causes of action
and therefore are DISMISSED.
(2)

Defendant Ampush Media, Inc.’s Notice of Joinder in
Defendant DGS Edu, LLC’s Motion for Judgment on the
Pleadings, which the Court construes as a Rule 12(c)
motion, (Doc. # 115) is GRANTED to the extent that any
damages awarded shall be limited according to paragraph
13 of the parties’ agreement, i.e., the limitation-ofliability clause. Furthermore, Count VI is dismissed
insofar as it seeks to assert a stand-alone claim to
injunctive

relief;

however,

Connectus

may

seek

injunctive relief as a remedy to its breach-of-contract
claim.
(3)

Plaintiff Connectus LLC’s Conditional Motion to Amend
Complaint (Doc. # 167) is GRANTED. Connectus may file a
third

amended

complaint,

which

conforms

to

the

limitations addressed herein, by January 30, 2017.
(4)

Defendants’ pending motions for summary judgment (Doc.
## 161, 168) are DENIED WITHOUT PREJUDICE.

(5)

Defendants shall respond to the third amended complaint
by February 13, 2017.

32 

(6)

The

parties

are

directed

to

file

a

joint

briefing

schedule for summary judgment by January 25, 2017. If
the parties determine refiling their pending motions to
strike or exclude expert testimony, which the Court has
construed as Daubert motions, would be in the interests
of judicial economy, they should indicate as much in
their joint briefing schedule and the Court will then
decide whether the pending Daubert motions should also
be denied without prejudice.
DONE and ORDERED in Chambers in Tampa, Florida, this
20th day of January, 2017.

33