MEYN AMERICA LLC v. TARHEEL DISTRIBUTORS INC et al

Filing 19

ORDER GRANTING in part and DENYING in part 15 Motion to Dismiss for Failure to State a Claim. The Defendants' motion to dismiss Zajac for lack of personal jurisdiction or lack of individual liability is DENIED, and the Defendants' motio n to dismiss the Plaintiff's GTSA claim is also DENIED. However, the Plaintiff's GTSA claim preempts its common law claims and remedies sought in counts two through nine. that extent, the Defendants' motion is GRANTED, and those claims are dismissed without prejudice. Ordered by U.S. District Judge MARC THOMAS TREADWELL on 8/4/2014. (tlh)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
MEYN AMERICA, LLC,
Plaintiff,
v.
TARHEEL DISTRIBUTORS, INC., and
JOSEPH P. ZAJAC,
Defendants.

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CIVIL ACTION NO. 5:14-CV-41(MTT)

ORDER
This is a diversity case in which the Plaintiff alleges violations of the Georgia
Trade Secrets Act of 1990, O.C.G.A. §§ 10-1-760 et seq. (“the Act” or “GTSA”), and
related claims arising out of the Defendants’ acquisition of drawings the Plaintiff uses to
manufacture parts for poultry processing machines. Defendant Joseph P. Zajac moves
to dismiss (Doc. 15) the Plaintiff’s amended complaint (Doc. 14) under Fed. R. Civ. P.
12(b)(2) for lack of personal jurisdiction. Both Defendants also argue the Plaintiff has
failed to state a claim for relief under Fed. R. Civ. P. 12(b)(6). For the following
reasons, the motion is GRANTED in part and DENIED in part.
I. FACTS
A. The Parties
The Plaintiff is a Georgia limited liability company with its principal place of
business in Ball Ground, Georgia. (Doc. 14, ¶ 10). It is a wholly-owned subsidiary of
Meyn LLC, also a Georgia limited liability company. Meyn LLC is a wholly-owned
subsidiary of Meyn Beheer BV, a company that is incorporated and has its principal

place of business in the Netherlands. Meyn Beheer BV is owned by yet another Dutch
company, Meyn Holdings BV, which also is incorporated and has its principal place of
business in the Netherlands. (Doc. 14, ¶¶ 19-20). The Plaintiff, like the other Meyn
companies, manufactures, sells, and services poultry processing machines and parts.
(Doc. 14, ¶¶ 11, 21).
Tarheel Distributors Inc. is a North Carolina corporation with its principal place of
business in Sanford, North Carolina. (Doc. 14, ¶ 12). The company was founded in
1991 and specializes in aftermarket replacement parts for manufacturing industries.
Although it initially targeted the textile industry, in recent years it has turned its focus to
poultry processors. (Doc. 14, ¶ 13). Zajac is the president of Tarheel and is its primary
decision maker. He is a Raleigh, North Carolina resident. (Doc. 11, ¶ 1; Doc. 14, ¶¶
15-16). He does not personally transact business in Georgia, nor does he own or
possess personal or real property in Georgia. (Doc. 11, ¶¶ 5-7). His only travel to
Georgia since 2008 has consisted of “a few connecting flights” at the Hartsfield-Jackson
Atlanta International Airport and one day at a poultry trade show. Otherwise, he has not
traveled to Georgia for purposes of marketing or selling Tarheel’s replacement parts.
(Doc. 11, ¶ 4).
B. Background Events
In June 2006, Meyn Holding BV purchased Systemate Group, BV, a company
that also made and sold poultry processing machines and parts. (Doc. 14, ¶ 23).
Systemate owned Dapec Inc., and on the date it was purchased, Systemate sold all of
Dapec’s stock to Meyn Beheer BV, which in turn passed the stock to Meyn LLC, the
sole owner of the Plaintiff. (Doc. 14, ¶ 24). In October 2006, Dapec was merged into

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the Plaintiff so that the Plaintiff was the only surviving entity. At that point, the Plaintiff
owned all of Dapec’s assets, which included a number of drawings for machine parts as
well as drawings indicating how the parts fit together into machines. The drawings had
Systemate’s name on them. (Doc. 14, ¶¶ 25, 26).
In 2008, the Plaintiff began to “adapt” the Systemate drawings for Dapec
machines and parts. A former Dapec employee, Doug Lee, who had become an
employee of the Plaintiff after the merger, worked on the project. (Doc. 14, ¶¶ 28-29).
Lee’s work gave him access to the drawings, which provide the blueprint the Plaintiff
uses to make the parts and machines it sells to customers. (Doc. 14, ¶¶ 4, 29). The
Plaintiff took steps to ensure the drawings remained confidential by storing them on a
password-protected computer system. (Doc. 14, ¶ 33). If the drawings had to be
disclosed, the Plaintiff deleted certain information so they could not be used to make the
depicted part. In other circumstances, the Plaintiff required the recipient to sign a
nondisclosure agreement. (Doc. 14, ¶ 34). The Plaintiff did not sell the drawings or
make them available as a collection to third parties. (Doc. 14, ¶ 35). In the hands of a
third party, the drawings would enable a competitor to undercut the Plaintiff by selling
the parts at a lower price because the competitor would not incur research and
development expenses associated with designing and testing the parts. (Doc. 14, ¶
37).
In 2009, as the project to adapt the drawings was ending, the Plaintiff fired Lee.
(Doc. 14, ¶ 31; Doc. 12, ¶ 5). Before leaving his job, Lee signed an agreement in which
he promised he had returned all of the Plaintiff’s confidential information or other
property. (Doc. 14, ¶ 32; Doc. 1-1). He further promised he would not personally or on

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behalf of another company use or disclose “any trade secrets, confidential or
competitive business information [he] may have acquired during [his] relationship with
[the Plaintiff].” (Doc. 1-1 at 3). Lee then began looking for work elsewhere in the
industry and discovered Tarheel. (Doc. 12, ¶ 5).
At that time, Tarheel’s aftermarket replacement parts business model involved
obtaining sample parts from end-users. Tarheel then sent the part to a Taiwanese
company, O E Co., Ltd., which would try to reverse engineer it. If successfully reverse
engineered, Tarheel could then make and sell the part for replacement in Dapec
equipment. In 2009, Tarheel offered some 60 Dapec replacement parts. (Doc. 14, ¶¶
5-6, 40).
After speaking by phone with Zajac, Lee traveled to North Carolina in August
2009 for two in-person interviews. (Doc. 12, ¶ 5). While interviewing, Zajac asked Lee
whether he had entered into any agreements with the Plaintiff that would restrict his
employment with Tarheel. Lee said he had not. Nor during the interview, according to
Lee and Zajac, did they discuss the drawings.1 (Doc. 11, ¶ 9; Doc. 12, ¶ 6). However,
after he was hired and started working at Tarheel, Lee showed Zajac some of the
drawings. Both men assert that Lee told Zajac the drawings were not a trade secret or
in any way confidential. (Doc. 11, ¶ 10; Doc. 12, ¶ 7). Lee says he believed this to be
true. (Doc. 12, ¶ 7). Lee also met with the principal of O E Co., Webster Huang.
Following this meeting, which also included Zajac, Zajac informed Tarheel employees
that Lee had brought with him the drawings for every Dapec part. (Doc. 14, ¶ 42).

1

The Defendants inject these facts and others through affidavits by Lee and Zajac. Although
the Court considers this evidence on Zajac’s motion to dismiss for lack of personal jurisdiction,
the Court does not treat these affidavits as evidence supporting the Defendants’ motion to
dismiss for failure to state a claim.
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Zajac later told employees and contractors that Tarheel was now able to make any
Dapec replacement part because of the drawings it had acquired from Lee, and that
Tarheel was going to “make a lot of money” off the drawings. (Doc. 14, ¶ 43).
In the years that followed, Lee sent emails to Huang attaching the Plaintiff’s
drawings so that Huang could manufacture the depicted parts without having to reverse
engineer them. Zajac was routinely copied on the emails. (Doc. 14, ¶ 44). Sometimes
Lee sent the drawings to Huang immediately after a Tarheel salesperson had let him
know a customer needed the replacement part. (Doc. 14, ¶ 45). Meanwhile, the
frequency of Tarheel’s reverse engineering requests to Huang declined. (Doc. 14, ¶
46).
By 2013, Tarheel was offering nearly 560 Dapec replacement parts, an increase
presumably due to its ability to make the parts based on the drawings rather than an
expensive, time-consuming reverse engineering process. (Doc. 14, ¶ 46-47, 49). The
Plaintiff contends it has been substantially damaged – to the tune of $5 million –
because the sales of the Plaintiff’s Dapec parts have dropped significantly since Lee
took the drawings to Tarheel. (Doc. 14, ¶ 50). The Plaintiff accuses Zajac and Tarheel
of misappropriating trade secrets under the GTSA because they obtained the drawings
from Lee even though they “knew or had reason to know that the [d]rawings were
acquired and retained by Lee using improper means.” (Doc. 14, ¶ 53). Alternatively,
the Plaintiff alleges claims for common law unfair competition, unjust enrichment,
tortious interference with economic relations, and conversion. The Plaintiff seeks an
accounting, injunctive relief, punitive damages, and attorney’s fees. (Doc. 14, ¶¶ 5195).

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II. DISCUSSION
The Defendants have moved to dismiss the complaint. They contend the Court
does not have personal jurisdiction over Zajac and that he cannot be held individually
liable for his actions. They further contend the allegations do not state an actionable
GTSA claim against either him or Tarheel because they do not show “misappropriation.”
Finally, the Defendants argue that the Plaintiff’s GTSA claim provides the Plaintiff with
its exclusive remedy and preempts any common law claims.
A. Personal Jurisdiction over Zajac
1. Burden of Proof
“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.” Diamond Crystal Brands, Inc. v. Food Movers
Int'l, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (internal quotation marks omitted)
(citation omitted). “Where, as here, the defendant challenges jurisdiction by submitting
affidavit evidence in support of its position, ‘the burden traditionally shifts back to the
plaintiff to produce evidence supporting jurisdiction.’” Id. (citation omitted). “‘Where the
plaintiff's complaint and supporting evidence conflict with the defendant's affidavits, the
court must construe all reasonable inferences in favor of the plaintiff.’” Id. (citation
omitted).
2. Diamond Crystal Jurisdictional Analysis
“A federal court sitting in diversity undertakes a two-step inquiry in determining
whether personal jurisdiction exists: the exercise of jurisdiction must (1) be appropriate
under the state long-arm statute and (2) not violate the Due Process Clause of the

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Fourteenth Amendment to the United States Constitution.” Id. at 1257-58 (internal
quotation marks omitted)(citation omitted).2 This two-step inquiry is necessary because
the long-arm statute does not provide jurisdiction to federal courts in Georgia that is
coextensive with procedural due process. Id. at 1259. Rather, the statute “imposes
independent obligations that a plaintiff must establish for the exercise of personal
jurisdiction that are distinct from the demands of procedural due process.” Id. In short,
jurisdiction that might appear to be conferred by statute may be negated by due process
concerns, and vice versa. See id. at 1261.
a. The Long-Arm Statute
The Plaintiff argues that the Court has jurisdiction over Zajac under subsection
(1) of the Georgia long-arm statute, which states: “A court of this state may exercise
personal jurisdiction over any nonresident … in the same manner as if he…were a
resident of this state, if in person or through an agent, he ... [t]ransacts any business
within this state ... .” O.C.G.A. § 9-10-91(1). Diamond Crystal instructs federal courts to
2

As the Defendants have observed, the Plaintiff completely disregarded Diamond Crystal,
blending the long-arm statute and constitutional due process jurisdictional analysis and going so
far as to assert the two tests are the same. The Plaintiff’s assertion is incorrect in that it does
not follow Eleventh Circuit precedent. Be that as it may, there is clearly tension between
Diamond Crystal and Georgia courts' interpretation of the Georgia long-arm statute following
Innovative Clinical & Consulting Services, LLC v. First National Bank of Ames, 279 Ga. 672, 620
S.E.2d 352 (2005). According to Diamond Crystal, Innovative Clinical holds that O.C.G.A. § 9–
10–91(1) is not coextensive with due process limitations and must be analyzed independently
therefrom. Yet Georgia courts do not appear to read Innovative Clinical the same way. See,
e.g., Ralls Corp. v. Huerfano River Wind, LLC, 2014 WL 2916443, at *7 (N.D. Ga.)(observing
that Georgia courts continue to incorporate the due-process inquiry into their three-part test for
determining whether personal jurisdiction lies under subsection (1) of the long-arm statute);
Amerireach.com, LLC v. Walker, 290 Ga. 261, 269, 719 S.E.2d 489, 494 (2011) (considering
due process concerns in its long-arm statute assessment); Vibratech, Inc. v. Frost, 291 Ga.
App. 133, 137, 661 S.E.2d 185, 188 (2008) (citing Innovative Clinical for the proposition that
“the language of O.C.G.A. § 9–10–91(1) must be construed as reaching ‘to the maximum extent
permitted by procedural due process'”). Moreover, prior to Diamond Crystal at least one federal
district court read Innovative Clinical to extend § 9–10–91(1) to the limits of the Due Process
Clause. See, e.g., Global Payments Direct, Inc. v. Am. Bank of Commerce, 2006 WL 269967, at
*2 n.2 (N.D. Ga.).
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interpret Georgia's long-arm statute literally. 593 F.3d at 1264. Georgia courts have
said that as part of the traditional three-part test used to decide whether long-arm
jurisdiction exists under subsection (1), courts must determine whether “the nonresident
defendant has purposefully done some act or consummated some transaction in this
state … .”3 Amerireach.com, LLC v. Walker, 290 Ga. 261, 269, 719 S.E.2d 489, 496
(2011) (quoting Aero Toy Store, LLC v. Grieves, 279 Ga. App. 515, 517-18, 631 S.E.2d
734, 737 (2006)). Significantly, to transact business “a defendant need not physically
enter the state” to subject himself to the long-arm statute. Diamond Crystal, 593 F.3d at
1264. And courts may further consider the nonresident's mail, telephone calls, and
other intangible acts that occur while the defendant is outside of Georgia. Id. The
question is whether, upon analysis of all the defendant's tangible and intangible
conduct, “it can fairly be said that the nonresident [defendant] has transacted any
business within Georgia.” Id.4
The Plaintiff asserts this Court has jurisdiction over Zajac based on his
involvement in Tarheel’s decisions to (1) hire Lee from Georgia; (2) accept and use
trade secrets stolen by Lee from Georgia; and (3) sell and store in Georgia products
derived from the Plaintiff’s trade secrets. (Doc. 14, ¶ 16). That is, the Plaintiff argues
3

The rest of the test states that jurisdiction exists “if the cause of action arises from or is
connected with such act or transaction, and [ ] if the exercise of jurisdiction by the courts of this
state does not offend traditional fairness and substantial justice.” Aero Toy Store, 279 Ga. App.
at 517-18, 631 S.E.2d at 737. Diamond Crystal interprets the first prong of the test as reflecting
the requirement of subsection (1) of the long-arm statute and the second and third prongs as
comprising the traditional due process inquiry. 593 F.3d at 1260 n.11.

4

In Diamond Crystal, the court adopted a literal definition of the words in the statute, such that
“any” means “to any extent” or “in any degree.” 593 F.3d at 1264 n.18. “‘Transact’ means ‘to
prosecute negotiations,’ to ‘carry on business,’ ‘to carry out,’ or ‘to carry on.’” “‘Business’ means
‘activity directed toward some end,’ or ‘a usually commercial or mercantile activity customarily
engaged in as a means of livelihood,’ or ‘transactions, dealings, or intercourse of any nature.’”
Id.

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that Tarheel’s transactions should be attributed to Zajac for purposes of asserting
jurisdiction over him. The Defendant responds that transactions by Tarheel are not
reasons to require Zajac to answer the suit in his individual capacity.
Georgia courts have rejected the so-called “fiduciary shield” doctrine, which
prohibits a court from exercising personal jurisdiction over a nonresident individual
based solely upon acts taken in his capacity as a corporate officer. In Amerireach.com,
the Georgia Supreme Court held that the doctrine conflicts with the literal language of
subsection (1) of O.C.G.A. § 9-10-91. 290 Ga. at 266, 719 S.E.2d at 494.5 However,
“jurisdiction over a corporate employee or officer ‘does not automatically follow from
jurisdiction over the corporation[.]’ ” Id. (quoting Keeton v. Hustler Magazine, Inc., 465
U.S. 770, 780 n.13 (1984)). Zajac’s contacts with Georgia should not be judged
according to the corporate Defendants' activities in this state but, rather, must be
assessed individually. Calder v. Jones, 465 U.S. 783, 790 (1984).
The Court may exercise jurisdiction over Zajac if he was a “primary participant[ ]
in an alleged wrongdoing intentionally directed at a [Georgia] resident.” Id. “It is
axiomatic that a corporation like [Tarheel] cannot act other than through its officers,
employees, and agents.” United Techs. Corp. v. Mazer, 556 F.3d 1260, 1271 (11th Cir.
2009) (citing Palazzo v. Gulf Oil Corp., 764 F.2d 1381, 1385 (11th Cir.1985)). While a
corporate officer is not personally liable for a corporation's acts solely because he
serves in that capacity, personal participation in a corporation’s wrongful activities
subjects both the officer and the corporation to liability. Ga. Cash Am., Inc. v. Greene,
318 Ga. App. 355, 367-68, 734 S.E.2d 67, 76 (2012).
5

This Court is required to “interpret and apply Georgia's long-arm statute in the same way as
would the Georgia Supreme Court.” Diamond Crystal, 593 F.3d at 1258.
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In this case, the Plaintiff alleges that as president of Tarheel, Zajac is the
“primary decision-maker” for the company. (Doc. 14, ¶ 16). Zajac has not specifically
rebutted this description and notes that “[a]ll of [his] work and involvement in the poultry
processing replacement parts business is done through Tarheel.” (Doc. 11, ¶ 2). More
significantly, the Plaintiff alleges Zajac is a central actor in Tarheel’s acquisition of the
Plaintiff’s drawings. Aside from interviewing and hiring Lee, the Plaintiff outlines Zajac’s
participation as follows: Zajac engaged in a meeting with Lee and Huang shortly after
hiring Lee, after which Zajac informed Tarheel employees that Lee had brought with him
the drawings for every Dapec part; on subsequent occasions, Zajac informed Tarheel
employees and contractors that Tarheel was able to manufacture any Dapec
replacement part based on the drawings Lee provided, and that Tarheel was going to
“make a lot of money” because of this; when Lee sent emails to Huang attaching
drawings for manufacture, Zajac was routinely copied with the correspondence. (Doc.
14, ¶¶ 42-44). These are allegations that, construed in the Plaintiff’s favor, reveal
intentional participation in a scheme that goes beyond mere knowledge of Tarheel’s
activity.
Although Zajac has submitted affidavits challenging the Court's jurisdiction, the
affidavits focus on his lack of contacts with Georgia. They do not rebut the Plaintiff's
accusations that he was a driving force behind Tarheel’s alleged misappropriation of
trade secrets from a Georgia company.6 As Georgia courts have observed, subsection

6

Both Zajac and Lee do state in their affidavits that they did not believe the drawings to be
confidential or trade secrets. (Doc. 11, ¶ 10; Doc. 12, ¶ 7). If this is in fact true, this could
potentially absolve them of “misappropriation” under the GTSA, and to that extent, the
jurisdictional question becomes entwined with the merits of the case. But at this stage in the
proceedings, their bare assertions on this point are insufficient evidence to preclude this Court
from exercising jurisdiction over Zajac.
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(1) of the long-arm statute has “no explicit legislative limiting conditions[,]” and courts
must give “appropriate breadth” to the “transacting any business” language.
Amerireach.com, 290 Ga. at 265-66, 719 S.E.2d at 493-94. To meet the requirements
under subsection (1), a nonresident defendant must purposefully do some act or
consummate some transaction in the state. In this case, the Plaintiff’s unrebutted
allegations, with all reasonable inferences construed in its favor, show Zajac has met
these requirements. He was a primary participant when Tarheel transacted business in
Georgia by using drawings taken from a Georgia company to construct and sell Dapec
parts in Georgia. Therefore, the personal jurisdiction requirements of Georgia’s longarm statute are satisfied.
b. Due Process
For the Court to exercise jurisdiction over nonresident defendants, it is not
enough that the long-arm statute is satisfied. Personal jurisdiction must also adhere to
the Due Process Clause of the Fourteenth Amendment. “The Due Process Clause
protects an individual's liberty interest in not being subject to the binding judgments of a
forum with which he has established no meaningful ‘contacts, ties, or relations.’” Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (quoting Int'l Shoe Co. v.
Washington, 326 U.S. 310, 319 (1945)). “The heart of this protection is fair warning –
the Due Process Clause requires ‘that the defendant's conduct and connection with the
forum State [be] such that he should reasonably anticipate being haled into court
there.’” Diamond Crystal, 593 F.3d at 1267 (quoting Burger King, 471 U.S. at 474).
“Therefore, states may exercise jurisdiction over only those who have established
certain minimum contacts with [the forum] such that the maintenance of the suit does

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not offend traditional notions of fair play and substantial justice.” Id. (quoting
Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408, 414 (1984) (internal
quotation marks removed)).
At issue is whether Zajac is subject to specific personal jurisdiction.7 “[T]he fair
warning requirement is satisfied if the defendant has purposefully directed his activities
at residents of the forum ... and the litigation results from alleged injuries that arise out
of or relate to those activities.” Diamond Crystal, 593 F.3d at 1267 (internal quotation
marks omitted) (citation omitted). “Put differently, the defendant must have
‘purposefully availed’ itself of the privilege of conducting activities – that is, purposefully
establishing contacts – in the forum state and there must be a sufficient nexus between
those contacts and the litigation.” Id. Once the plaintiff makes this showing, “a
defendant must make a ‘compelling case’ that the exercise of jurisdiction would violate
traditional notions of fair play and substantial justice.” Id. (citations omitted).
Given the allegations that Zajac exercised substantial control over Tarheel
operations and was a primary participant in the harm it directed at a Georgia company,
he is subject to essentially the same minimum contacts analysis as Tarheel would be.
See U.S. SEC v. Carrillo, 115 F.3d 1540, 1548 (11th Cir. 1997); Gregory v. Preferred
Fin. Solutions, 2013 WL 5725991, at *7 (M.D. Ga.). As indicated above, the Plaintiff’s
specific allegations are that Zajac was a primary participant in Tarheel’s scheme to
7

Two types of personal jurisdiction exist: general and specific. General jurisdiction arises from
a defendant's contacts with the forum state that “are unrelated to the cause of action being
litigated.” Consol. Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1292 (11th Cir. 2000). General
jurisdiction further requires continuous and systematic contacts between the defendant and the
forum state. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1274 (11th Cir. 2002). General
jurisdiction does not exist here. Zajac is a resident of North Carolina, he does not own property
or have any accounts based in Georgia, and has only been present in Georgia to change planes
in Atlanta or to attend a trade show. Further, the Plaintiff has not alleged facts to suggest that
general jurisdiction exists. (Doc. 11, ¶¶ 4-7).
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misappropriate the trade secrets of the Plaintiff, a Georgia company. That this
deliberate targeting of a Georgia company may have originated in North Carolina does
not matter. Moreover, the Plaintiff alleges that Tarheel stores and sells to customers in
Georgia parts designed from the drawings. (Doc. 14, ¶ 14). Thus, Zajac and Tarheel
purposefully availed themselves of the privilege of conducting activities in this state, and
this lawsuit arises from those activities, providing Zajac and Tarheel fair warning their
conduct would subject them to personal jurisdiction in Georgia. Furthermore, exercising
this jurisdiction comports with traditional notions of fair play and substantial justice as
outlined by Burger King’s “fairness factors.” See 471 U.S. at 477.
Consequently, personal jurisdiction over Zajac is proper under the Due Process
Clause of the Fourteenth Amendment just as it is proper under Georgia’s long-arm
statute. Zajac’s motion to dismiss for lack of personal jurisdiction is DENIED.
B. Zajac’s Individual Liability
Zajac argues he cannot be held individually liable for torts Tarheel committed. In
Georgia, the general rule is that
an officer of a corporation who takes part in the commission of a tort by
the corporation is personally liable therefor, and an officer of a corporation
who takes no part in the commission of a tort committed by the
corporation is not personally liable unless he specifically directed the
particular act to be done or participated or co-operated therein.
Dempsey v. Se. Indus. Contracting Co., 309 Ga. App. 140, 144, 709 S.E.2d 320, 324
(2011). Here, as discussed above, the complaint alleges Zajac’s direct participation in a
scheme to use drawings taken from the Plaintiff to manufacture replacement Dapec
parts. To the extent Tarheel engaged in this activity, and accepting the Plaintiff’s facts
as true with all reasonable inferences construed in its favor, Zajac was a central figure
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in that endeavor. Under the facts alleged, it simply cannot be said that he did not take
part in the acquisition and use of the Plaintiff’s drawings. Accordingly, Zajac’s motion to
dismiss claims against him as an individual is DENIED.
C. Failure to State a Claim
1. Standard
To avoid dismissal pursuant to Fed. R. Civ. P. 12(b)(6), a complaint must contain
sufficient factual matter to “‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). “At the motion to dismiss stage, all well-pleaded facts are accepted as
true, and the reasonable inferences therefrom are construed in the light most favorable
to the plaintiff.” Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006)
(internal quotation marks and citation omitted). However, “where the well-pleaded facts
do not permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged – but it has not ‘shown’ – that the pleader is entitled to relief.”
Iqbal, 556 U.S. at 679. “[C]onclusory allegations, unwarranted deductions of facts or
legal conclusions masquerading as facts will not prevent dismissal.” Oxford Asset
Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002). Where there are
dispositive issues of law, a court may dismiss a claim regardless of the alleged facts.
Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir.
1993) (citation omitted).
As noted above, the Defendants have submitted affidavits from Zajac and Lee
that the Court has considered in regard to Zajac’s motion to dismiss for lack of personal
jurisdiction. However, the affidavits are not appropriate support for the Defendants’

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motion to dismiss for failure to state a claim, where the Plaintiff’s well-pleaded
allegations are accepted as true. See Fuller v. SunTrust Banks, Inc., 744 F.3d 685,
695-96 (11th Cir. 2014) (recognizing that courts do not consider anything beyond the
face of the complaint and documents attached thereto when analyzing a motion to
dismiss under Fed. R. Civ. P. 12(b)(6)). Even if the Court accepted the claims made in
the affidavits, that would merely create a factual dispute.
2. Analysis
a. Alleging “Misappropriation”
To obtain relief under the Act, the Plaintiff must allege both that the drawings are
a “trade secret” as defined by the Act and that the Defendants “misappropriated” that
trade secret. Wachovia Ins. Servs., Inc., v. Fallon, 299 Ga. App. 440, 445, 682 S.E.2d
657, 662 (2009). The Defendants do not argue the drawings are not “trade secrets” but
contend the Plaintiff has not alleged facts to show misappropriation. Under the statute,
misappropriation means:
(A) Acquisition of a trade secret of another by a person who knows or has
reason to know that the trade secret was acquired by improper means; or
(B) Disclosure or use of a trade secret of another without express or
implied consent by a person who:
(i) Used improper means to acquire knowledge of a trade secret;
(ii) At the time of disclosure or use, knew or had reason to know that
knowledge of the trade secret was:
(I) Derived from or through a person who had utilized improper
means to acquire it;
(II) Acquired under circumstances giving rise to a duty to maintain
its secrecy or limit its use; or
(III)Derived from or through a person who owed a duty to the
person seeking relief to maintain its secrecy or limit its use; or
(iii) Before a material change of position, knew or had reason to know
that it was a trade secret and that knowledge of it had been acquired
by accident or mistake.
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O.C.G.A. § 10-1-761(2). The Defendants specifically insist the Plaintiff cannot satisfy
the definition of “misappropriation” because the Plaintiff cannot establish that Lee
acquired the drawings by “improper means.” Means that are improper include “theft,
bribery, misrepresentation, breach or inducement of a breach of a confidential
relationship or other duty to maintain secrecy or limit use….” O.C.G.A. § 10-1-761(1).
For support, the Defendants rely on Putters v. Rmax Operating, LLC, 2014 WL
1466902 (N.D. Ga.). Putters, a sales manager, resigned from Rmax, a company that
made and sold building insulation materials. During his 26 years of employment there,
Putters had access to confidential information concerning Rmax’s customers, pricing,
and business strategy, and he had knowledge of Rmax’s proprietary work on wall
insulation. Putters then went to work for an Rmax competitor. After he resigned, Rmax
discovered Putters had downloaded documents containing proprietary and confidential
information to an external hard drive before turning in his computer and phone. 2014
WL 1466902, at *1. The court determined that, even assuming Putters obtained the
documents after his resignation, there was no misappropriation because Putters initially
acquired the alleged trade secrets during his employment. That is, he did not gain
knowledge of any new trade secrets following his resignation. Therefore, he did not
acquire trade secrets using improper means. 2014 WL 1466902, at *3.
This case is not the same as Putters. It is true that, as in Putters, the Plaintiff
provided Lee access to the drawings while he was employed there. The key distinction
here is that when the Plaintiff fired Lee, Lee signed an agreement that he would not
personally or on behalf of another company use or disclose “any trade secrets,
confidential or competitive business information [he] may have acquired during [his]
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relationship with [the Plaintiff].” (Doc. 1-1 at 3). Significantly, “[a] non-disclosure
agreement can be the basis for imposing a duty not to disclose a trade secret.”
Purchasing Power, LLC v. Bluestem Brands, Inc., --- F. Supp.2d ---, 2014 WL 1870734,
at *8 (N.D. Ga.) (citing Penalty Kick Mgmt. Ltd., v. Coca Cola Co., 318 F.3d 1284, 1292
(11th Cir. 2003)). There was no such agreement in Putters. And it is Lee’s violation of
this agreement that makes his acquisition of the Plaintiff’s drawings “improper” despite
the fact he had permission to use the drawings before he was fired; he breached a
confidential relationship and duty to maintain the secrecy of the drawings.
Of course, Lee is not a defendant in this case even though he is the focus of the
Defendants’ argument on this point. Not until their reply brief do the Defendants
suggest their own acquisition of the drawings from Lee should be evaluated to
determine whether it was improper. And even then, the argument is made only by way
of a cursory declaration that “hiring the former employee of a competitor is not improper
means.” (Doc. 18 at 7). However, the facts support a claim for misappropriation at
least on the grounds that the Defendants used improper means to acquire the drawings
by inducing Lee to breach a confidential relationship or duty he owed the Plaintiff to
maintain the drawings’ secrecy. See O.C.G.A. §§ 10-1-761(1), 10-1-761(2)(B)(i). And
at this stage of the proceedings, it could be inferred that if Zajac and Tarheel did not
acquire the drawings improperly from Lee, it is plausible they knew or had reason to
know that Lee acquired them improperly or that the drawings were trade secrets that
had come into their possession by accident or mistake.

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b. GTSA Preemption
The Defendants argue the GTSA preempts the Plaintiff’s common law claims.
They are correct. The Act “supersede[s] conflicting tort, restitutionary, and other laws of
this state providing civil remedies for misappropriation of a trade secret.” O.C.G.A.
§ 10-1-767(a). The Plaintiff protests that this preemption should not apply on a motion
to dismiss because it has not yet been determined whether the drawings are in fact
“trade secrets.” The Plaintiff’s argument is not unreasonable and has been adopted by
some courts outside of Georgia.
However, the Georgia Supreme Court has made clear that the breadth of the
Act’s preemption is such that even in the absence of a finding that the drawings are
“trade secrets,” there is no basis for alternative forms of relief. “The fact that the
drawings [are] not ultimately found to be trade secrets under the act [does] not make the
preemption clause inapplicable. Rather the key inquiry is whether the same factual
allegations of misappropriation are being used to obtain relief outside the GTSA.”
Robbins v. Supermarket Equip. Sales, LLC, 290 Ga. 462, 466-67, 722 S.E.2d 55, 58
(2012); see also Putters, 2014 WL 1466902, at *2 (applying Robbins on a motion to
dismiss and finding that the Act preempted the defendant’s counterclaim for breach of
fiduciary duty because it was based on essentially the same allegations as its GTSA
counterclaim); Diamond Power Int’l, Inc. v. Davidson, 540 F. Supp. 2d 1322, 1345 (N.D.
Ga. 2007) (finding plaintiff’s common law claims superseded by the Act where plaintiff
did not assert independent conduct beyond the facts supporting its GTSA claim);
Opteum Fin. Servs., LLC v. Spain, 406 F.Supp 2d 1378, 1380 (N.D. Ga. 2005) (holding
that courts can determine whether the Act supersedes a plaintiff’s common law claims

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even though the issue of whether the information qualifies as trade secrets under the
Act remains disputed and unresolved and concluding a plaintiff cannot plead an
alternative theory of recovery should the information ultimately not qualify as a trade
secret). Although, as the Plaintiff observes, only Putters was decided on a motion to
dismiss, the thrust of these cases demonstrates that waiting to address the preemption
issue until the drawings’ status as “trade secrets” is determined is futile. “[A] plaintiff
cannot be allowed to plead a lesser and alternate theory of restitution simply because
the information does not qualify as a trade secret under the act.” Robbins, 290 Ga. at
465, 722 S.E.2d at 58.
Here, the Plaintiff does not contend its claims for unfair competition, unjust
enrichment, tortious interference with economic relations, and conversion, along with
the remedies it seeks in counts six through ten, are based on different factual
allegations than its claim under the GTSA. Indeed, these are claims the Plaintiff has
pled in the alternative in case there is “a finding that the drawings are not entitled to
protection as trade secrets.” (Doc. 14, ¶¶ 58, 66, 70, 78). Consequently, the Plaintiff’s
non-GTSA claims are superseded and may be dismissed.8
III. CONCLUSION
For the foregoing reasons, the Defendants’ motion to dismiss (Doc. 15) Zajac for
lack of personal jurisdiction or lack of individual liability is DENIED, and the Defendants’
motion to dismiss the Plaintiff’s GTSA claim is also DENIED. However, the Plaintiff’s
GTSA claim preempts its common law claims and remedies sought in counts two

8

Therefore, the Court does not address the Defendants’ argument that the Plaintiff’s claim for
conversion independently fails as a matter of law.

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through nine.9 To that extent, the Defendants’ motion is GRANTED, and those claims
are dismissed without prejudice.
SO ORDERED, this 4th day of August, 2014.
S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT

9

This does not preclude the Plaintiff from seeking injunctive relief, damages, or attorney’s fees
under the GTSA as provided by O.C.G.A. §§ 10-1-762, 10-1-763, and 10-1-764.
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