Cartel Asset Management, Inc. v. Altisource Portfolio Solutions, S. A. et al
Filing
37
ORDER denying 21 Motion to Dismiss. Signed by Judge Thomas W. Thrash, Jr on 12/1/11. (dr)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
CARTEL ASSET MANAGEMENT,
INC., a Colorado corporation,
Plaintiff,
v.
CIVIL ACTION FILE
NO. 1:11-CV-2612-TWT
ALTISOURCE PORTFOLIO
SOLUTIONS, S. A. a corporation
chartered under the laws of the Grand
Duchy of Luxembourg, et al.,
Defendants.
ORDER
This is a misappropriation of trade secrets action. It is before the Court on the
Defendants Altisource Solutions, Inc., Altisource Portfolio Solutions, Inc., Altisource
US Data, Inc., and Altisource Valuation Advisors, Inc.’s (collectively “Subsidiary
Defendants”) Motion to Dismiss [Doc. 21] pursuant to Fed. R. Civ. P. 12(b)(6) for
failure to state a claim upon which relief can be granted. For the reasons set forth
below, the Court DENIES the Defendants’ Motion to Dismiss [Doc. 21].
I. Background
The Plaintiff, Cartel Asset Management, Inc. (“CAM”) developed a trade secret
(the “Trade Secret”)–a confidential list of experienced, responsive and competent
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Realtors who produce high-quality broker price opinions (“BPOs”) at acceptable
prices. (Am. Compl. ¶ 10.) In 2000, Ocwen Federal Bank (“OFB”), which was a large
customer of CAM, began to secretly copy the names and contact information of
Realtors identified on BPOs that OFB purchased from CAM. (Am. Compl. ¶ 13.)
OFB then embedded the stolen information into its own incomplete database of BPO
providers. (Am. Compl. ¶¶ 13-14.) As a result, OFB had Realtors in its BPO database
(the “Database”) that were identified as a direct result of the theft of the Trade Secret,
and was further able to find additional Realtors via referrals from the original Realtors
(“Derivative Brokers”). (Id.) CAM sued OFB and its affiliates for theft of the Trade
Secret under the Colorado Uniform Trade Secrets Act (“CUTA”) in the United States
District Court for the District of Colorado. (Am. Compl. ¶ 30.) In 2004, a jury
awarded CAM compensatory and punitive damages. (Am. Compl. ¶ 31.) While the
judgment was on appeal, Ocwen Financial Corporation (“OFC”) dissolved OFB and
transferred the Database to its wholly-owned subsidiary, Ocwen Loan Servicing, LLC
(“OLS”). (Am. Compl. ¶¶ 15-16.) OLS and/or OFB continued to use and profit from
CAM’s Trade Secret and OLS was added as a defendant after the Tenth Circuit
remanded for a new trial on damages. (Am. Compl. ¶ 33.) In September 2010, a jury
returned a verdict in CAM’s favor for more than $12.72 million in compensatory and
punitive damages based on the theft of the Trade Secret. (Am. Compl. ¶¶ 33, 35.)
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This jury verdict covered the period until August 10, 2009. On August 10, 2009, OFC
transferred the BPO product line and the Database to Altisource Portfolio Solutions,
S.A. (“APS”). (Am. Compl. ¶¶ 17, 28, 35-37.)
CAM filed a Complaint in this Court on August 8, 2011, asserting that APS and
the Subsidiary Defendants misappropriated its Trade Secret [Doc. 1], and amended the
Complaint on September 14, 2011 [Doc. 16]. Both the Subsidiary Defendants and
APS filed Motions to Dismiss [Docs. 20 & 21]. The Subsidiary Defendants’ Motion
to Dismiss [Doc. 21] asks the Court to dismiss the Plaintiff’s CUTA claim against it
on the grounds that the Plaintiff fails to state a plausible claim for relief.
II. Motion to Dismiss Standard
A complaint should be dismissed under Rule 12(b)(6) only where it appears that
the facts alleged fail to state a “plausible” claim for relief. Ashcroft v. Iqbal, 129 S.
Ct. 1937, 1949 (2009); Fed. R. Civ. P. 12(b)(6). A complaint may survive a motion
to dismiss for failure to state a claim, however, even if it is “improbable” that a
plaintiff would be able to prove those facts; even if the possibility of recovery is
extremely “remote and unlikely.” Bell Atlantic v. Twombly, 550 U.S. 544, 556
(2007). In ruling on a motion to dismiss, the court must accept the facts pleaded in
the complaint as true and construe them in the light most favorable to the plaintiff.
See Quality Foods de Centro America, S.A. v. Latin American Agribusiness Dev.
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Corp., S.A., 711 F.2d 989, 994-95 (11th Cir. 1983); see also Sanjuan v. American Bd.
of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994) (noting that at the
pleading stage, the plaintiff “receives the benefit of imagination”). Generally, notice
pleading is all that is required for a valid complaint. See Lombard's, Inc. v. Prince
Mfg., Inc., 753 F.2d 974, 975 (11th Cir. 1985), cert. denied, 474 U.S. 1082 (1986).
Under notice pleading, the plaintiff need only give the defendant fair notice of the
plaintiff's claim and the grounds upon which it rests. See Erickson v. Pardus, 551 U.S.
89, 93 (2007) (citing Twombly, 127 S. Ct. at 1964).
III. Discussion
The Plaintiff states a plausible claim for relief against the Subsidiary
Defendants, satisfying Rule 12(b)(6). The Plaintiff alleges that OFC, OFB, and OLS
misappropriated the Trade Secret by using the Trade Secret and Derivative Brokers
to develop a BPO provider database (the “Database”), which they continued to use
even after a jury found these actions to be in violation of CUTA. The Plaintiff alleges
that OFC then transferred the Database to APS. It is plausible that APS continues to
derive use from the Database.1 It is also plausible that APS’ subsidiaries, at least some
of which tender APS’ BPO services (according to APS’ website and Form 10-K), and
1
The fact that there is substantial overlap in the management group of Ocwen
Financial Corporation and APS lends a little more credibility to the notion that APS
is conducting business in a similar way to Ocwen. (Am. Compl. ¶¶ 20-24.)
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which also work at the office from which APS states that its BPO services are
rendered, are using the Database. (Am. Compl. ¶ 27.)
The Complaint does not state which subsidiaries did what and when; it details
no specific actions. Yet, the Court believes that the Complaint states “enough facts
to state a claim for relief that is plausible on its face.” Speaker v. U.S. Dep’t of Health
& Human Servs., 623 F.3d 1371, 1380 (11th Cir. 2010) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). The Plaintiff’s lack of knowledge regarding
which subsidiary is using the Database is not fatal to its case at the Motion to Dismiss
stage. See, e.g., Speaker, 623 F.3d at 1385 (finding that plaintiff satisfied Rule
12(b)(6)’s plausibility standard even though he did not know whether the defendant
“or a very limited number” of others had performed the actions that were alleged in
the complaint).
IV. Conclusion
For the reasons set forth above, the Court DENIES the Defendants’ Motion
to Dismiss [Doc. 21].
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SO ORDERED, this 1 day of December, 2011.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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