Connectu, Inc. v. Facebook, Inc. et al

Filing 112

RESPONSE to Motion re 82 MOTION to Seal Memorandum of Points and Authorities In Support of Defendants' Motion to Strike Demands, 91 MOTION to Dismiss For Failure to State a Claim Pursuant to Fed.R.Civ.P. 12(B)(6), 89 MOTION to Dismiss PURSUANT TO FED.R.CIV.P. 12(B)(6), 83 MOTION to Dismiss, 81 MOTION to Seal Memorandum of Points and Authorities In Support of Motion for Summary Judgment, and Exhibit 5 to the Declaration of Monte Cooper ISO Same, 84 MOTION to Strike Demands in Prayer For Relief in First Amended Complaint, 85 MOTION for Summary Judgment on Plaintiffs' Claims for Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing, and Promissory Estoppel, 80 MOTION to Seal Memorandum of Points and Authorities In Support of Mark Zuckerberg's Motion to Dismiss filed by Connectu, Inc.. (Fernands, Anastasia)

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Connectu, Inc. v. Facebook, Inc. et al Doc. 112 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 1 of 51 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS CONNECTU, INC., CAMERON WINKLEVOSS, TYLER WINKLEVOSS, AND DIVYA NARENDRA, Plaintiffs, v. District Judge Douglas P. Woodlock FACEBOOK, INC., MARK ZUCKERBERG, EDUARDO SAVERIN, DUSTIN MOSKOVITZ, ANDREW MCCOLLUM, AND THEFACEBOOK LLC, Defendants. Magistrate Judge Robert B. Collings 1:07-CV-10593 (DPW) Related Action: Civil Action No. 04-CV11923 (DPW) PLAINTIFFS' CONSOLIDATED MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANTS' MOTIONS TO DISMISS, MOTION TO STRIKE AND MOTION FOR SUMMARY JUDGMENT Dockets.Justia.com Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 2 of 51 TABLE OF CONTENTS Page I. II. III. INTRODUCTION ...............................................................................................................1 FACTS .................................................................................................................................2 ARGUMENT ON MOTIONS TO DISMISS......................................................................5 A. THE FAC SUFFICIENTLY PLEADS ALL CAUSES OF ACTION AGAINST ALL DEFENDANTS ............................................................................5 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Breach of Contract .......................................................................................7 Duty of Good Faith and Fair Dealing ........................................................10 Fraud ..........................................................................................................11 Promissory Estoppel ..................................................................................12 Breach of Fiduciary Duty...........................................................................13 Unjust Enrichment .....................................................................................15 Copyright Infringement .............................................................................16 Trade Secret Misappropriation ..................................................................17 Unfair Trade Practices ...............................................................................20 Successor Liability.....................................................................................22 (a) Plaintiffs' FAC Sufficiently Pleads Successor Liability................22 (i) (ii) (iii) B. The Facebook Entities Assumed Their Predecessors' Liability.......................................................23 The Facebook Entities Are a Continuation of the De Facto Partnership ...............................................................24 De Facto Merger................................................................25 THE FRAUD AND BREACH OF FIDUCIARY DUTY CLAIMS ARE TIMELY ................................................................................................................26 1. The Addition of the Individual Plaintiffs is Proper ...................................26 i Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 3 of 51 2. C. The Claims Against the Facebook Entities Relate Back ...........................28 THE COPYRIGHT ACT DOES NOT PREEMPT ANY CLAIMS .....................29 1. 2. 3. Contract Claims Have The Extra Element of Promise ..............................29 Unfair Competition Seeks to Vindicate Rights Different From Copyright. ..................................................................................................30 Unjust Enrichment is Not Limited to the Copying of Source Code ..........30 D. THE FOUNDERS' CLAIMS ARE PROPERLY ASSIGNED TO CONNECTU..........................................................................................................31 1. 2. Plaintiffs Adequately Plead That The Founders Assigned Their Partnership Interests to ConnectU .............................................................32 Plaintiffs Adequately Plead Claims That Were Assignable From The Founders to ConnectU ........................................................................32 IV. ARGUMENT ON MOTION FOR SUMMARY JUDGMENT ........................................34 A. B. There is a Disputed Issue of Material Fact Over the Existence of a Partnership Between Zuckerberg and the Founders ..............................................34 Defendants' Summary Judgment Arguments on Good Faith and Fair Dealing and Promissory Estoppel Are Contingent on Their Contract Indefiniteness Argument........................................................................................37 V. ARGUMENT ON MOTION TO STRIKE........................................................................37 C. D. Motions to Strike Are Disfavored..........................................................................37 Plaintiffs' Request For Relief Satisfies Fed.R.Civ.P. 8(a)(3) Pleading Requirements .........................................................................................................37 1. 2. 3. Plaintiffs Adequately Plead a Basis For Imposing a Constructive Trust ...........................................................................................................38 Plaintiffs Adequately Plead a Basis For Enjoining The Facebook.com Website ..............................................................................39 Plaintiffs Adequately Plead a Basis For Damages.....................................39 ii Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 4 of 51 TABLE OF AUTHORITIES Page CASES Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d 1546 (1st Cir. 1994)............................................................................................. 16 Aretakis v. Gen. Signal, Inc., Civ. A. No. 05-10257-DPW, 2006 WL 1581781 (D. Mass. June 7, 2006) ..................... 36 Baker v. Allen, 197 N.E. 521 (Sup. Ct. Mass. 1935) ................................................................................. 33 Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007)........................................................................................................ 5 Billings v. GTFM, LLC, 449 Mass. 281 (2007) ....................................................................................................... 32 Boreri v. Fiat, S.P.A., 763 F.2d 17 (1st Cir. 1985)............................................................................................... 37 Boutiette v. Dickinson, 768 N.E.2d 562 (Mass. App. 2002) .................................................................................. 27 Boyer v. Bowles, 310 Mass. 134 (1941) ......................................................................................................... 8 Braga v. Genlyte, Inc., 57 Fed. Appx. 451 (1st Cir. 2003) .................................................................................... 22 Brennan v. Employees Liab. Assur. Corp., Ltd., 213 Mass. 365, 100 N.E. 633 (1913) ................................................................................ 10 Burten v. Milton Bradley Co., 763 F.2d 461 (1st Cir. 1985)............................................................................................. 20 Bushkin Assocs., Inc. v. Raytheon Co., 906 F.2d 11 (1st Cir. 1990)............................................................................................... 15 Cambridge Plating Co., Inc. v. NAPCO, Inc., 876 F. Supp. 326 (D. Mass. 1995) .................................................................................... 21 Cardullo v. Landau, 329 Mass. 5 (1952) ............................................................................................................. 8 Cargill, Inc. v. Beaver Coal & Oil Co., 424 Mass. 356 (1997) ....................................................................................................... 26 iii Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 5 of 51 Cataldo Ambulance Serv. v. City of Chelsea, 688 N.E.2d 959 (Mass. 1998) ........................................................................................... 13 Cataldo v. Zuckerman, 20 Mass. App. Ct. 731, 482 N.E.2d 849 (1985) ............................................................... 10 Central Nat'l Gottesman, Inc. v. Rodman & Rodman, P.C., Civ. A. No. 97-4791, 1998 Mass. Super. LEXIS 542 (Super. Ct. Mass. Sept. 30, 1998) ................................................................................................................................. 33 Chongris v. Bd. of Appeals of Andover, 811 F.2d 36 (1st Cir. 1987)................................................................................................. 6 Christensen v. Kingston School Committee, 360 F. Supp. 2d 212 (D. Mass. 2005) ............................................................................... 10 Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99 (1957)......................................................................................... 7 Corliss v. City of Fall River, 397 F. Supp. 2d 260 (D. Mass. 2005)........................................................................ 27, 28 Curley v. North American May Boy Love Assoc., Civ. A. No. 00-10956-GAO, 2003 WL 21696547 (D. Mass. Mar. 31, 2003).................. 27 Curtis-Wright Corp. v. Edel-Brown Tool & Die Co., 407 N.E.2d 319 (Mass. 1980) ........................................................................................... 20 Cygan v. Megathlin, 326 Mass. 732, 96 N.E.2d 702 (1951) ................................................................................ 9 Data Gen. Corp. v. Grumman Sys. Support Corp., 795 F. Supp. 501 (D. Mass. 1992) .................................................................................... 29 Delorafano v. Delorafano, 333 Mass. 684, 132 N.E.2d 668 (1956) ...................................................................... 10, 36 Dennison v. Lapointe, Civ. A. No. 06-40100, 2006 U.S. Dist. LEXIS 93883 (D. Mass. Dec. 21, 2006) ............ 37 Diomed, Inc. v. Vascular Solutions, Inc., 417 F. Supp. 2d. 137 (D. Mass. 2006) ............................................................................. 18 DM Research, Inc. v. College of Am. Pathologists, 170 F.3d 53 (1st Cir. 1999)................................................................................................. 5 Evans v. Lorillard Tobacco Co., Civ. A. No. 04-2840A, 2007 WL 796175 (D. Mass. 2007).............................................. 12 Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, P.C., 107 Mich. App. 509, 309 N.W.2d 645 (Mich. App. 1981)............................................... 14 Fenton v. Bryan, 33 Mass. App. Ct. 688 (1982)............................................................................................. 8 iv Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 6 of 51 Ferris v. Boston & Maine R.R., 291 Mass. 529, 197 N.E. 506 (1935) ................................................................................ 10 Garber's Auto Rental Inc. v. Genoa Packing Co., 2 Mass. App. Ct. 298 (1974)............................................................................................. 34 Garrett v. Tandy Corp., 295 F.3d 94 (1st Cir. 2002)................................................................................................. 5 General Elec. Co. v. Chien-Min Sung, 843 F. Supp. 776 (D. Mass. 1994) .................................................................................... 39 Gens. v. Resolution Trust Corp., 112 F.3d 569 (1st Cir. 1997)............................................................................................. 16 Goldsmith v. City of Atmore, 996 F.2d 1155 (11th Cir. 1993) ........................................................................................ 37 Greaney v. Heritage Hosp., Inc., Civ. A. No. 952547, 1995 WL 1146185 (Mass. Super. Dec. 28, 1995)........................... 22 Hanover Ins. Co. v. Sutton, 705 N.E.2d 279 (Mass. App. Ct. 1999) ............................................................................ 13 Harris v. Carter, 147 Mass. 313, 17 N.E. 649 (1888) .................................................................................... 9 Hastings Assoc., Inc. v. Local 369 Bldg. Fund, Inc., 42 Mass. App. Ct. 162, 675 N.E.2d 403 (1997) ................................................................. 9 Hazen v. Warwick, 256 Mass. 302 (1926) ....................................................................................................... 32 Herrick v. Essex Regional Retirement Bd., 68 Mass. App. Ct. 187 (2007)........................................................................................... 29 Household Retail Serv.., Inc. v. Comm'r of Revenue, 448 Mass. 226 (Mass. 2007) ............................................................................................. 33 Howard v. Cycare Systems, Inc., 128 F.R.D. 159 (D. Mass. 1989)....................................................................................... 11 Incase Inc. v. Timex Corp., 488 F.3d 46 (1st Cir. 2007)................................................................................................. 9 Int'l Private Satellite Partners, L.P. v. Lucky Cat Ltd., 975 F. Supp. 483 (W.D.N.Y. 1997) .................................................................................. 22 J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., 260 N.E.2d 723 (Mass. 1970) ........................................................................................... 19 Jessie v. Boynton, 361 N.E.2d 1267 (Mass. 1977) ......................................................................................... 12 v Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 7 of 51 Jet Spray Cooler, Inc. v. Crampton, 377 Mass. 159 (1979) ....................................................................................................... 39 John Alden Transp. Co., Inc. v. Bloom, 11 Mass. App. Ct. 920, 415 N.E.2d 250 (1981) ................................................................. 8 Jordan v. Commissioners of Bristol County, 167 N.E. 652 (Mass. 1929) ............................................................................................... 28 JSB Indus. v. Nexus Payroll Servs., Inc., 463 F. Supp. 2d 103 (D. Mass. 2006) ............................................................................... 24 Kaufman v. Magid, 539 F. Supp. 1088 (D. Mass. 1982) .................................................................................... 6 Knapp Schenck & Co. Ins. Agency, Inc. v. Lancer Mgmt. Co., Inc., Civ. A. No. 02-12118-DPW, 2004 WL 57086 (D. Mass. Jan. 13, 2004) ........................ 20 Larabee v. Potvin Lumber Co., 390 Mass. 636 (1983) ....................................................................................................... 33 Lee v. Mt. Ivy Press, 827 N.E.2d 727 (Mass. App. 2005) .................................................................................. 29 Lewis v. Anderson, 477 A.2d 1040 (1984) ....................................................................................................... 32 Lexington Savings Bank v. Linnehan, Civ. A. No. 96-2890, 1998 Mass. Super. LEXIS 348 (Mass. Super. Feb. 9, 1998) ......... 31 Liberace v. Conway, 31 Mass. App. Ct. 40 (1991)............................................................................................. 27 Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1 (1997) ........................................................................................................... 21 Loomer v. Dionee, 338 Mass. 348 (1959) ....................................................................................................... 27 Lubin & Meyer, P.C. v. Lubin, 427 Mass. 304, 693 N.E.2d 136 (1998) .............................................................................. 8 Mass Cash Register, Inc. v. Comtrex Sys. Corp., 901 F. Supp. 404 (D. Mass. 1995) ...................................................................................... 7 Mass. v. Mylan Labs., 357 F. Supp. 2d 314 (D. Mass. 2005) ............................................................................... 16 Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 412 F.3d 215 (1st Cir. 2005)............................................................................................. 20 McCarthy v. Litton Indus. Inc., 570 N.E.2d 1008 (Mass. 1991) ......................................................................................... 24 vi Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 8 of 51 McCarthy v. Litton Indus., Inc., 410 Mass. 15 (1991) ......................................................................................................... 22 McMurtrie v. Guiler, 183 Mass. 451, 67 N.E. 358 (1903) .............................................................................. 9, 36 Mid Am. Title Co. v. Kirk, 991 F.2d 417 (7th Cir. 1993) ........................................................................................... 16 Moore v. Marty Gilman, Inc., 965 F. Supp. 203 (D. Mass 1997) .................................................................................... 19 Nat'l Gypsum Co. v. Continental Brands Corp., 895 F. Supp. 328 (D. Mass. 1995) .................................................................................... 25 Noble v. Joseph Burnett Co., 208 Mass. 75, 94 N.E. 289 (1911) .............................................................................. 10, 36 Old Republic Ins. Co. v. Hansa World Cargo Serv., 170 F.R.D. 361 (S.D.N.Y.) ............................................................................................... 22 One Beacon Ins. Co. v. Electrolux, 223 F.R.D. 21 (D. Mass. 2004)......................................................................................... 28 Patricia Kennedy & Co., Inc. v. Zam-Cul Enterprises Inc., 830 F. Supp. 53 (D. Mass 1993) ....................................................................................... 30 Picker Int'l Corp. v. Imaging Equip. Serv., 931 F. Supp. 18 (D. Mass 1995) ....................................................................................... 19 Pino v. Protection Maritime Ins. Co., Ltd., 599 F.2d 10 (1st Cir. 1979)............................................................................................... 39 Pittsfield General Hosp. v. Markus, 355 Mass. 519 (1969) ....................................................................................................... 24 Portfolioscope, Inc. v. I-Flex Solutions Ltd., 473 F. Supp.2d 252 (D. Mass. 2007) ................................................................................ 31 Qestec, Inc. v. Krummenacker, 367 F. Supp. 2d 89 (D. Mass. 2005) ................................................................................. 13 Raytheon Co. v. Cont'l Cas. Co., 123 F. Supp.2d 22 (D. Mass. 2000) .................................................................................. 20 Rubin v. Brooks/Cole Publishing Co., 836 F. Supp. 909 (D. Mass. 1993)................................... 30 Salamon v. Terra, 394 Mass. 857, 477 N.E.2d 1029 (1985) .......................................................................... 15 Samia v. Central Oil Co. of Worcester, 339 Mass. 101 (1959) ....................................................................................................... 32 vii Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 9 of 51 Scott v. Harris, 127 S. Ct. 1769 (2007)...................................................................................................... 34 SEC v. Durgarian, 477 F. Supp. 2d 342 (D. Mass. 2007) ............................................................................... 37 SEC v. Nothern, 400 F. Supp. 2d 362 (D. Mass 2005) ................................................................................ 37 Shain Investment Co., Inc. v. Cohen, 15 Mass. App. Ct. 4 (1982)................................................................................................. 8 Sibley v. Nason, 196 Mass. 125 (1907) ....................................................................................................... 33 Silver v. Graves, 210 Mass. 26, 95 N.E. 948 (1911) .................................................................................... 10 Simons v. Amer. Dry Ginger Ale Co., 335 Mass. 521, 140 N.E.2d 649 (1957) .............................................................................. 9 Singletary v. Pa. Dep't of Corr., 266 F.3d 186 (3d Cir. 2001).............................................................................................. 29 Slaney v. Westwood Auto, Inc., 322 N.E.2d 768 (Mass. 1975) ........................................................................................... 11 Standard Fire Ins. Co. v. Crosby Yacht Yard, Inc., Civ. A. No. 04-12244-GAO, 2007 WL 4465152 (D. Mass. Feb. 8, 2007) ...................... 27 Swartz v. Schering-Plough Corp., 53 F. Supp. 2d 95 (D. Mass 1999) .................................................................................... 19 Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002)............................................................................................................ 6 Szalla v. Locke, 421 Mass. 448 (1995) ....................................................................................................... 21 Triangle Trading Co. v. Robroy Indus., 200 F.3d 1 (1st Cir. 1999)................................................................................................. 34 USM Corp. v. Marson Fastener Corp., 379 Mass. 90 (1979) ......................................................................................................... 20 Van Brode Group, Inc. v. Bowditch & Dewey, 633 N.E.2d 424 (Mass. 1994) ........................................................................................... 14 Veranda Beach Club Ltd. Partnership v. Western Sur. Co., 936 F.2d 1364 (1st Cir. 1991)........................................................................................... 20 Whitcomb v. Converse, 119 Mass. 38, 1875 WL 9260 (1875) ................................................................................. 9 viii Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 10 of 51 Winchester v. Glazier, 152 Mass. 316, 25 N.E. 728 (1890) .................................................................................... 9 Young v. Lepone, 305 F.3d 1 (1st Cir. 2002)................................................................................................. 28 STATUTES FED. R. CIV. P. 56(c) ..................................................................................................................... 34 Fed. R. Civ. P. 9(b) ....................................................................................................................... 11 ix Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 11 of 51 This memorandum responds to: (a) Zuckerberg's Motions to Dismiss; (b) Facebook, Inc. and TheFacebook LLC's Motion to Dismiss; (c) Moskovitz and McCollum's Motion to Dismiss; (d) Zuckerberg, Facebook, Inc., and TheFacebook LLC's Motion for Summary Judgment; and (e) Defendants' Motion to Strike Demands in Prayer for Relief. I. INTRODUCTION As alleged in detail in the Amended Complaint ("FAC"), in 2003, three Harvard students (the "Founders") were working as partners on developing Harvard Connection, a unique niche social network website for university students that would change the way students find and interact with each other on the Internet. With their efforts to develop and launch the website nearing completion and with no competitive websites having been launched or on the horizon, the three partners recruited a fourth student, defendant Zuckerberg, to their team. Having reached agreement on the essential terms of their relationship, they entrusted their new partner with their creative ideas and business plan and with the substantial amount of code that had been written for the website. He in turn agreed to work with them for their mutual benefit and to help them to complete and rapidly launch the website into a market that conferred a tangible and substantial "first mover" advantage on the first operative website using the Founders' ideas. The FAC pleads that defendant Zuckerberg betrayed his partners' trust and stole their brainchild. While assuring the Founders that he was working on the partnership's website, Zuckerberg was stealing his partners' confidential code, ideas, and plan; recruiting a different team to implement and capitalize on the Founders' ideas and plan; writing code for a competitive website; and establishing the first of a series of entities to capture the economic value of his partners' ideas and plan. Zuckerberg schemed in secret to preemptively launch ­ and ultimately did preemptively launch ­ a website to do exactly what the Founders' website was supposed to GL590/2222490.8 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 12 of 51 do. Zuckerberg's preemptive launch of a competitive website prevented the partnership from achieving its objective of launching a website that would have been the first of its kind and producing economic value that the four partners would have shared. As the Founders had hoped, the competitive website was phenomenally successful; unfortunately, others have wrongfully reaped the enormous financial benefits. Defendants' motions to dismiss ignore the well-pleaded factual allegations of the FAC and rest on erroneous legal arguments. The motion to strike ignores plaintiffs' factual allegations and asks the Court to resolve disputed factual issues in defendants' favor ­ which is plainly inappropriate at the pleading stage. The summary judgment motion is patently frivolous. All of the pending motions should therefore be denied. II. FACTS Operating as a partnership from December 2002 onward, the Founders came up with a novel idea for a new type of niche social network website for university students, developed a business plan around that idea, and made substantial progress toward designing and launching their website ­ including hundreds of hours of development time. (FAC, ¶¶ 24-27, 267). Zuckerberg, through his counsel, acknowledged in February 2004 that the Founders were operating as a partnership (e.g., id., ¶ 250), and defendants have conceded that they understood that the Founders' efforts were always directed to establishing a for-profit business, starting first at Harvard and then expanding to other schools. (Id., ¶¶ 301-03; see id., ¶ 25). In November 2003, at a time when Zuckerberg had not conceived of or done any work on a niche social network website for university students, the Founders offered ­ and Zuckerberg accepted ­ the opportunity to become their partner. (E.g., id., ¶¶ 28-29, 56). Offered the option of taking an equity stake in the Founders' venture, Zuckerberg did so enthusiastically. (Id., ¶ 2 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 13 of 51 177). After doing so, Zuckerberg was afforded complete and unfettered access to the Founders' confidential business information, computer code, and other trade secrets and intellectual property, and he agreed to maintain that confidentiality. (E.g., id., ¶¶ 30-31, 57-58, 177, 248-49, 270-72). Although the Founders and Zuckerberg did not execute a formal written contract, by their words and conduct, they entered into a partnership with the understanding that they would share in the proceeds if their social network website was successful. (E.g., id., ¶¶ 33, 46, 62-63, 65, 67-68, 77). Zuckerberg acknowledged in writing (through his counsel) that there was an agreement and that he had confidentiality obligations. (Id., ¶¶ 66, 288, Ex. 17). While assuring the Founders in multiple meetings, calls, and emails that he was working diligently to complete the planned website for their partnership, Zuckerberg had decided to steal the Founders' creative ideas and business plan and to use them in a hastily completed and preemptively launched competitive website with different partners. Toward this end, in midDecember 2003, Zuckerberg and defendants McCollum, Moskovitz, and Saverin founded thefacebook.com and formed their own de facto partnership to operate it. (Id., ¶¶ 13, 215, 217, 224). As early as December 22, 2003, Zuckerberg and Moskovitz were writing code for thefacebook.com website. (Id., ¶ 127; Ex. TFB000086). On January 11, 2004, Zuckerberg registered the domain name "thefacebook.com." (FAC, ¶ 129). By January 12, 2004, thefacebook.com website was substantially complete (id., ¶ 130), although Zuckerberg has falsely claimed that he only began writing code for the website after January 14, 2004. (Id., ¶ 256). Instead of doing the work he had agreed to do with the Founders and sharing it with them, Zuckerberg secretly worked on a competitive website with another group of partners while 3 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 14 of 51 misleading the Founders and failing to disclose that he had ceased work on their website and had no intention to deliver the code he had worked on with the Founders. He did this to buy time to usurp the "first mover" advantage that the Founders had told him, and that he understood, was critical to success for a venture of this kind. (E.g., id., ¶¶ 32, 34-35, 37, 71, 74, 77, 79, 118, 124, 126, 128-130, 185, 274, 281-82, 285). expectations. As Zuckerberg hoped and expected, the Founders reasonably and detrimentally relied on Zuckerberg's material misrepresentations and omissions concerning his work on the partnership's website and his secret work with a different group of partners on a competitive website. (E.g., id., ¶¶ 101-02, 107, 111, 113-14, 153-54). In February 2004, with no prior notice to the Founders and without their consent, Zuckerberg and his new, secret partners launched their website, which was directly competitive with the website on which Zuckerberg had agreed to partner with the Founders. (Id., ¶ 36). Defendants' competitive website incorporated the Founders' ideas and business plan, had substantially all the features of the website for which Zuckerberg had agreed to partner with the Founders, incorporated code provided to Zuckerberg by the Founders (or written by Zuckerberg or his co-defendants based thereon or derived therefrom), used additional code that Zuckerberg had purportedly written for the Founders' website under his agreement with them, and usurped the Founders' valuable business opportunity. (Id., ¶¶ 36, 191, 200). After its launch, Zuckerberg's plan succeeded beyond his wildest thefacebook.com grew virally and is currently a very profitable business. (Id., ¶ 38). Its success is directly attributable to the wrongdoing alleged in this case, and it is a fair inference from the FAC that it would not exist but for that wrongdoing. (E.g., id., ¶¶ 36, 40-41, 80, 92, 141, 146, 180, 184, 186-89, 191, 255-58). 4 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 15 of 51 As a result of Zuckerberg's deception and failure to deliver a completed website, the Founders were unable to launch their website in the expedited manner they had informed Zuckerberg ­ and Zuckerberg fully understood ­ was necessary to ensure a first mover advantage and a strong potential for success. (Id., ¶ 159). In fact, they were unable to launch until May 21, 2004, by which time Zuckerberg's competing website (which would not have existed but for the wrongdoing alleged by plaintiffs) had already preempted the field. (Id., ¶ 38). Zuckerberg prevented the Founders from obtaining the first mover advantage they otherwise would have enjoyed by stealing the Founders' confidential ideas, business plan, and work product; breaking his promises to them; launching his own website incorporating the Founders' ideas and using their business plan and code; and refusing to give them the work product that he had generated as their partner. (Id., ¶¶ 40-41, 159). As a result, the Founders suffered substantial damages. (Id., ¶ 324). III. ARGUMENT ON MOTIONS TO DISMISS A. THE FAC SUFFICIENTLY PLEADS ALL CLAIMS AGAINST ALL DEFENDANTS Defendants' motions to dismiss should be denied because the FAC alleges facts that show plaintiffs are entitled to relief under each of the claims asserted. The Supreme Court recently explained in Bell Atlantic Corp. v. Twombly that to survive a motion to dismiss under Rule 12(b)(6) the allegations must cross the line between "possibility and plausibility of `entitle[ment] to relief.'" 127 S. Ct. 1955, 1966 (2007), citing DM Research, Inc. v. College of Am. Pathologists, 170 F.3d 53, 56 (1st Cir. 1999). This "plausibility" standard "does not impose a probability requirement; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of [the allegations]." 127 S. Ct. at 1965; see also Garrett v. Tandy Corp., 295 F.3d 94, 105 (1st Cir. 2002) ("At the Rule 12(b)(6) stage, then, it is enough for the plaintiff to sketch a scenario which, if subsequently fleshed out by means of appropriate 5 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 16 of 51 facts, could support an actionable claim.") (internal citations omitted). In this regard, the facts pleaded in the FAC should be taken as true and construed in the light most favorable to plaintiffs' case. Id.; Chongris v. Bd. of Appeals of Andover, 811 F.2d 36, 37 (1st Cir. 1987). Thus, even if this Court believes that proof of the facts as alleged is "very remote and unlikely," it should not dismiss. Bell Atlantic Corp., 127 S. Ct. at 1965; Swierkiewicz v. Sorema N.A., 534 U.S. 506, 515 (2002). The standard described in Bell Atlantic echoes the long recognized standard in the First Circuit, it does not alter it. Defendants' argument that Bell Atlantic somehow imposes a higher pleading standard is wrong. In Swierkiewicz, which was cited with approval by Bell Atlantic (127 S. Ct. at 1969), the Supreme Court held that a court of appeals had impermissibly applied a heightened pleading standard by insisting that the plaintiff allege "specific facts" beyond those necessary to state a claim under Rule 8. 534 U.S. at 514. In approving Swierkiewicz, the Bell Atlantic Court noted that it also "do[es] not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face." Bell Atl., 127 S. Ct. at 1974.1 Defendants spend much of their memoranda on feigned complaints about the structure and detail of the FAC. They are simply wrong in arguing that the length of a complaint justifies dismissal. See Kaufman v. Magid, 539 F. Supp. 1088, 1092 (D. Mass. 1982) (complaint's complexity, verbosity, and repetition did not, standing alone, justify dismissal).2 Moreover, as Here, the evidence is far from fully developed, which further supports denial of the motions. Rosa v. Park West Bank & Trust Co., 214 F.3d 213, 215 (1st Cir. 2000). Among other things, Zuckerberg has remained silent and has not been subjected to cross-examination on what are ­ at bottom ­ fundamentally issues of credibility. See also Massachusetts Hosp. Ass'n v. Harris, 500 F. Supp. 1270, 1282 (D. Mass. 1980) (although complaint contained 70 paragraphs, it gave defendants fair notice of claims); Government Guarantee Fund v. Hyatt Corp., 166 F.R.D. 321, 324 (D.V.I. 1996) (while the 98 page complaint was hardly a "paragon of pithiness," it was accepted because it was quite comprehensible); Atwood v. Humble Oil & Ref. Co., 243 F.2d 885, 888 (5th Cir. 1957) (brevity 2 1 6 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 17 of 51 requested by the Court during the July 25, 2007 hearing, the FAC sets forth the elements of each claim and alleges facts supporting each element of each claim. (See Dkt. 80 at 6-8). It is uniquely improper for defendants to argue the FAC should be dismissed for complying with defendants' requests for greater specificity. The FAC is structured to give defendants adequate notice of the claims against them and the facts upon which those claims rest, and that is all that the law requires. Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99 (1957). 1. Breach of Contract To state a claim for breach of contract, plaintiffs must plead: (1) the existence of an agreement, written or oral; (2) valid consideration; (2) breach; and (3) damages proximately caused by the breach. 17 MASSACHUSETTS PRACTICE SERIES § 2.1 (2007); Mass Cash Register, Inc. v. Comtrex Sys. Corp., 901 F. Supp. 404, 415 (D. Mass. 1995). The FAC adequately pleads the Founders' offer of partnership and potential profit to Zuckerberg in the form of an equal financial interest in the venture (FAC, ¶¶ 28-29, 56); Zuckerberg's acceptance of that offer (id., ¶ 56); the subject matters on which the Founders and Zuckerberg agreed (id., ¶ 34, 46, 62-63, 6768, 77); consideration (id., ¶¶ 28-29, 56); Zuckerberg's multiple breaches of the agreement (id., ¶¶ 32, 34-35, 37, 71, 74, 77, 79, 118, 124, 126, 128-30, 185, 274, 281-82, 285); and damages proximately caused by the breach (id., ¶ 87). Zuckerberg agreed to enter into a commercial venture with the Founders in exchange for a share of the profits and to perform certain duties as a partner. He breached his agreement. Therefore, plaintiffs have sufficiently pleaded a claim for breach of contract. Defendants' arguments about lack of definiteness must be rejected. does not rank in importance with the right and duty of a litigant to present the claims according to his own notions of their merits); Niles v. Nelson, 72 F. Supp. 2d 13, 24 (N.D.N.Y. 1999) (declining to dismiss lengthy, rambling, and repetitive complaint because it adequately notified defendant of plaintiff's claims, and thus enabled defendant to answer and prepare for trial); 7 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 18 of 51 Partnership agreements, a subset of contracts, are defined as an association of two or more persons to carry on as co-owners of a business for profit, Boyer v. Bowles, 310 Mass. 134, 138 (1941), and may be created through an oral agreement. See Lubin & Meyer, P.C. v. Lubin, 427 Mass. 304, 307, 693 N.E.2d 136, 139 (1998) ("The partnership had been created in 1974 by Lubin and Meyer, who maintained at all times an informal, oral agreement to share equally the net income generated from the firm."). A joint venture is, in effect, a partnership for a particular endeavor. Shain, 443 N.E.2d at 130. Joint ventures give rise to the same rights and duties as partnerships. Cardullo v. Landau, 329 Mass. 5, 8 (1952). Whether or not a partnership exists is a question of intent that must be proved by an express agreement, either written or oral, or be inferred from the acts or conduct of the parties. See Fenton v. Bryan, 33 Mass. App. Ct. 688, 691 (1982); John Alden Transp. Co., Inc. v. Bloom, 11 Mass. App. Ct. 920, 921, 415 N.E.2d 250 (1981). Intent may be proved through the existence of an agreement to act as partners, a sharing of losses or profits, and/or participation by the parties in the control or management of the enterprise. Boyer, 310 Mass. at 138; Fenton, 33 Mass. App. Ct at 691; Shain, 15 Mass. App. Ct. at 7-10. All of these factors are present and pleaded here, (FAC, ¶¶ 30-31, 57-58, 177, 248-49, 270-72), and therefore the FAC clearly states a claim for breach of contract. Defendants' principal argument in support of their motion is that the alleged contract is not sufficiently definite to state a claim. In particular, defendants argue that the consideration to Zuckerberg is not pled with sufficient specificity. See Section IV, infra. The FAC specifically pleads that Zuckerberg was a partner in the venture and that he would receive a share of profits. (FAC, ¶¶ 28-29, 33, 46, 56, 66, 83). No more is required to state a claim. Massachusetts law clearly enforces contracts such as the one alleged here. As a general Wolfson v. Lewis, 68 F.R.D. 530, 534 (E.D. Pa. 1996) (108 pages, more than 600 paragraphs, not 8 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 19 of 51 matter, "a contract is not to be held unenforceable `if, when applied to the transaction and construed in the light of the attending circumstances,' the meaning can be ascertained with reasonable certainty." Simons v. Amer. Dry Ginger Ale Co., 335 Mass. 521, 140 N.E.2d 649 (1957), quoting Cygan v. Megathlin, 326 Mass. 732, 734, 96 N.E.2d 702 (1951). In fact, "reasonable certainty" exists unless "the promise given and relied on was so vague that it can be given no effect." Hastings Assoc., Inc. v. Local 369 Bldg. Fund, Inc., 42 Mass. App. Ct. 162, 170, 675 N.E.2d 403, 411 (1997), quoting Simons, 335 Mass. at 524; see also Incase Inc. v. Timex Corp., 488 F.3d 46 (1st Cir. 2007) (holding that a jury could find a contract was formed despite clause putting off final negotiation of a price point until later). Here, there is nothing vague about the benefit to Zuckerberg from entry into this agreement. He was specifically promised he would receive a share of the proceeds from the venture. (FAC, ¶¶ 28-29, 33, 46, 62-63, 65, 67-68, 77). This alone should end the analysis. However, even if Zuckerberg's share was not specified, it is long-established precedent in Massachusetts courts that partnership agreements silent on the way in which profits shall be split are not indefinite as a matter of law. McMurtrie v. Guiler, 183 Mass. 451, 454, 67 N.E. 358 (1903). "Where the [partnership] contract is silent, equity will adjust the rights of the partners to profits on the basis of what their intention was as shown from all the facts of the case." Id., citing Whitcomb v. Converse, 119 Mass. 38, 42, 1875 WL 9260 (1875); Harris v. Carter, 147 Mass. 313, 17 N.E. 649 (1888); Winchester v. Glazier, 152 Mass. 316, 325, 25 N.E. 728 (1890). This same result would be reached in a non-partnership context. For example, Massachusetts courts have long held that a missing or indefinite consideration them is not, in and of itself, fatal to the contract's validity. See Cygan, 326 Mass. at 734 (holding that oral considered defective, particularly where defendants had asked for more specificity). 9 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 20 of 51 employment contract was not void for indefiniteness despite agreement that plaintiff would receive extra compensation once the defendants "got on their feet"); Delorafano v. Delorafano, 333 Mass. 684, 132 N.E.2d 668 (1956) (upholding contract for increased wages should the business "improve"); Hastings Assoc., 42 Mass. App. Ct. at 162 (enforcing contract that left price to be determined by a third party); Cataldo v. Zuckerman, 20 Mass. App. Ct. 731, 482 N.E.2d 849 (1985) (finding that formula to determine compensation was sufficiently definite for an enforceable contract). The courts have long made it a point to fill in missing terms in contracts with such language as: (i) "a fair and equitable share of the profits," Noble v. Joseph Burnett Co., 208 Mass. 75, 94 N.E. 289 (1911); (ii) a sum which would be "right and satisfactory," Silver v. Graves, 210 Mass. 26, 95 N.E. 948 (1911); and (iii) additional compensation to make or treat an injured employee "right," Brennan v. Employees Liab. Assur. Corp., Ltd., 213 Mass. 365, 100 N.E. 633 (1913); Ferris v. Boston & Maine R.R., 291 Mass. 529, 197 N.E. 506 (1935). Thus the FAC states a claim for breach of contract. Defendants concede as much by making a frivolous summary judgment motion attacking the same issue. See Section IV, infra. 2. Duty of Good Faith and Fair Dealing A claim for breach of the covenant of good faith and fair dealing requires: (1) a contract; and (2) that the breaching party's conduct was in bad faith "either to deprive a party of the fruits of labor already substantially earned or unfair leveraging of the contract terms to secure undue economic advantage." Christensen v. Kingston School Comm., 360 F. Supp. 2d 212, 227 (D. Mass. 2005). The FAC pleads that there was a contract between Zuckerberg and the Founders (FAC, ¶ 33, 46, 62-63, 65, 67-68, 77, discussed supra, section A.2); Zuckerberg breached the contract by not performing his duties and by misusing the confidential information he received 10 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 21 of 51 under the contract (id., ¶¶ 32, 34-35, 37, 71, 74, 77, 79, 118, 124, 126, 128-30, 185, 274, 281-82, 285); Zuckerberg deceived and misled his partners (id.; see also id., ¶¶ 101-02, 107, 111, 113-14, 153-54); he did so to obtain greater economic value for himself than he would have been entitled to under the contract (id., ¶ 38); and his conduct damaged plaintiffs (id., ¶ 95). Defendants' only argument against this claim is that there was no contract. As discussed in Section A.2., supra, this argument is without merit. 3. Fraud To make out a claim for fraud, plaintiffs must plead (1) a false representation or omission of a material fact, (2) made with knowledge of its falsity for purposes of inducing the plaintiffs to act thereon, and (3) actual reliance. Slaney v. Westwood Auto, Inc., 322 N.E.2d 768, 779 (Mass. 1975). In addition, fraud must be pleaded with sufficient particularity to provide the defendant with notice of the conduct giving rise to the fraud. FED. R. CIV. P. 9(b); Howard v. Cycare Sys., Inc., 128 F.R.D. 159, 163 (D. Mass. 1989). Defendants posit three arguments regarding plaintiffs' fraud pleadings. First, they allege no fraudulent statement was pleaded, although the basis for this argument is an interpretation of the facts and, thus, improper for a Rule 12(b)(6) motion. Second, defendants allege plaintiffs unreasonably relied upon Zuckerberg's statements, yet fail to explain exactly why it was unreasonable to rely upon the statements cited in the Amended Complaint. Finally, defendants assert Zuckerberg had no duty to disclose his work on Facebook to his partners. (Dkt. 80 at 16-18). These arguments are remarkably (though not surprisingly) inconsistent with the reality of the Amended Complaint. The FAC pleads that Zuckerberg knowingly made both affirmative representations and omissions of material fact regarding the work he was supposedly doing for the partnership and about his activities with his other, secret partners (e.g., FAC, ¶¶ 142-43, 145, 317); the date, 11 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 22 of 51 time, place, and manner of the fraudulent misrepresentations and omissions (id., ¶¶ 108-09, 11218, 120, 122-23, 126, 129, 132-34, 137-38); that Zuckerberg intentionally deceived his partners to gain time to misappropriate the Harvard Connection code and trade secrets and secure the critical first mover market advantage for his competing website (id., ¶¶ 32, 34-35, 37, 71, 74, 77, 79, 118, 124, 126, 128-30, 185, 274, 281-82, 285); that Zuckerberg owed his partners a fiduciary duty which obligated him to disclose material information (id., ¶¶ 165-67; see Jessie v. Boynton, 361 N.E.2d 1267, 1273 (Mass. 1977)); that plaintiffs reasonably and actually relied on Zuckerberg's material misrepresentations (FAC, ¶¶ 101-02, 107, 111, 113-14, 153-54; see Evans v. Lorillard Tobacco Co., Civ. A. No. 04-2840A, 2007 WL 796175 (D. Mass. 2007), (holding that it is improper to dismiss claims based on reasonable reliance if the facts, as alleged, demonstrate plaintiffs could prove such reliance); and that plaintiffs suffered financial losses as a result of their reliance (id., ¶ 147). No more is required to plead fraud, even under the more stringent standards of Fed. R. Civ. P. 9(b). 4. Promissory Estoppel A claim for promissory estoppel requires: (1) a representation or conduct amounting to a representation intended to induce a course of conduct by the person to whom the representation is made; (2) an act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made; and (3) detriment to the person as a consequence. Mass Cash Register, 901 F. Supp. at 420. The FAC pleads that Zuckerberg made repeated promises and assurances that he intended to complete the code to launch harvardconnection.com (FAC, ¶¶ 37, 67, 72, 74, 77-78, 152-53); that he made such promises and assurances to induce plaintiffs to believe he was still acting as their partner and in the best interests of the venture (id.); that Zuckerberg did not intend to honor his promise (id., ¶¶ 86, 93- 12 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 23 of 51 94, 197, 200, 239, 260, 289); and that plaintiffs actually relied on Zuckerberg's material representations to their detriment (id., ¶¶ 101-02, 107, 113-14, 153-54). This states a legally viable promissory estoppel claim, and defendants do not seriously contend otherwise. Instead, defendants argue that "under this set of facts" plaintiffs' reliance on Zuckerberg cannot be reasonable. (Dkt. 80 at 15). The question whether the Founder's reliance on Zuckerberg's promise was reasonable is a jury question, and is irrelevant to this motion. Cataldo Ambulance Serv. v. City of Chelsea, 688 N.E.2d 959, 962 (Mass. 1998). Even if the Court were to consider the merits at this juncture, however, the FAC alleges many assurances by Zuckerberg that he would fulfill his promise (FAC, ¶¶ 67-70, 72-78) and defendants fail to address why reliance on such assurances is unreasonable. 5. Breach of Fiduciary Duty A claim for breach of fiduciary duty requires: (1) a fiduciary duty arising from a relationship between the parties; (2) breach of that duty; (3) damages; and (4) a causal relationship between the breach and the damages. Qestec, Inc. v. Krummenacker, 367 F. Supp. 2d 89, 97 (D. Mass. 2005), citing Hanover Ins. Co. v. Sutton, 705 N.E.2d 279, 288-89 (Mass. App. Ct. 1999). Zuckerberg argues that because "fraud is not pled, a breach is not pled." (Dkt. 80 at 18). This makes no sense; fraud and breach of fiduciary duty are different claims. Not only have plaintiffs sufficiently pleaded fraud (see Section III.A.3, supra), but the FAC also details conduct that constitutes a separate breach of Zuckerberg's fiduciary duty (FAC, ¶¶ 16269). Zuckerberg also argues that plaintiffs failed to plead that he entered into a partnership or joint venture which, he implicitly concedes, would give rise to a fiduciary duty. (Dkt. 80 at 19). 13 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 24 of 51 The FAC pleads, however, that Zuckerberg entered into such an agreement.3 (FAC, ¶¶ 30-31, 57-58, 177, 248-49, 270-72). This argument must therefore be rejected. Zuckerberg also disputes whether the special relationship alleged by virtue of his special expertise and special position on the development team gave rise to a duty (Dkt. 80 at 19). "A fiduciary relationship arises when one reposes faith, confidence, and trust in another's judgment and advice." Fassihi v. Sommers, Schwartz, Silver, Schwartz & Tyler, P.C., 107 Mich. App. 509, 515, 309 N.W.2d 645, 648 (Mich. App. 1981). The FAC pleads that Zuckerberg knew he had special expertise in computer programming necessary to the success of the partnership's venture and upon which his partners relied (id., ¶¶ 52-53), and that Zuckerberg maintained sole control over the code, its completion, and whether and when the website would launch (id., ¶ 35). The special expertise Zuckerberg committed to the project coupled with his assurances that he intended to fulfill his essential role give rise to an actionable duty. (FAC ¶¶ 49-52, 67-70, 7278).4 Zuckerberg also argues that even if the special relationship creates a fiduciary duty, he must have knowingly accepted that duty. (Dkt. 80 at 19). Once again, the FAC specifically alleges that Zuckerberg knowingly undertook his responsibility, (FAC, ¶¶ 30-31, 57-58, 177, 248-49, 270-72); and that he knowingly deceived his partners by making repeated assurances to gain plaintiffs' "faith, confidence and trust" in his abilities as a programmer and his promise to complete the website for a timely launch. (FAC ¶¶ 49-52, 67-70, 72-78). Van Brode Group, Inc. v. Bowditch & Dewey, 633 N.E.2d 424, 428 (Mass. 1994) (finding the existence of a fiduciary 3 Defendants mislead the Court by claiming that plaintiffs pleaded that Zuckerberg was a freelance developer, and therefore had no fiduciary duty. That allegation was expressly pled in the alternative to support plaintiffs' § 93A claim (FAC, ¶¶ 296, 298, 305) and is therefore immaterial to the breach of fiduciary duty claim. Ball v. Harrison, cited by defendants, is inapplicable to this case. 50 N.E.2d 31, 33 (Mass. 1943). In Ball, the court held that an employer does not have a duty to keep an accounting of profits generated from one employee. This has no bearing on whether Zuckerberg, who made promises to gain the Founders' "faith, confidence, and trust" owed them a duty. 4 14 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 25 of 51 duty where the defendant knew the plaintiff intended to rely on the services provided). This being the case, there is no merit to his argument. 6. Unjust Enrichment The elements of a claim for unjust enrichment are "`unjust enrichment of one party and unjust detriment to the other party.'" Bushkin Assocs., Inc. v. Raytheon Co., 906 F.2d 11, 15 (1st Cir. 1990), quoting Salamon v. Terra, 394 Mass. 857, 859, 477 N.E.2d 1029, 1031 (1985). The FAC pleads that, after Zuckerberg agreed to complete the harvardconnection.com website and become a member of the Harvard Connection team, Zuckerberg, Moskovitz, Saverin, and McCollum began to develop a competing website using Harvard Connection assets and trade secrets, and operated in secret to usurp the first mover advantage from harvardconnection.com. (FAC, ¶¶ 175-99, 207-23). The FAC details defendants' launch of facebook.com and the benefits defendants unfairly gained and retained as a result of their deceit. (Id., ¶¶ 180-97, 20723). The unjust nature of defendants' enrichment arises from defendants' deceitful and fraudulent actions and the misappropriation of Harvard Connection assets and trade secrets (Id., ¶¶ 180-83, 192). Contrary to defendants' argument, unjust enrichment does not require knowledge or appreciation of the benefit conferred. (Dkt. 93 at 8). Massachusetts law only requires that the circumstances surrounding the receipt of the benefit are unjust. Brandt, 242 F.3d at 16; Linton, 392 F. Supp. 2d at 42. Nonetheless, the FAC pleads that Moskovitz and McCollum were aware that thefacebook.com was the "fruits of a poisonous tree" (FAC ¶¶ 214, 222), and that Zuckerberg acted with knowledge that the Harvard Connection assets and trade secrets did not belong to him (id., ¶¶ 180-83, 192). Similarly, the proposition that plaintiffs cannot plead both a breach of contract and unjust enrichment claim is unsupportable. First, the unjust enrichment claim addresses a broader range 15 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 26 of 51 of conduct than plaintiffs' breach of contract claim such that plaintiffs may be able to recover for some conduct under a contract theory and for other conduct under an unjust enrichment theory. See, e.g., Mass. v. Mylan Labs., 357 F. Supp. 2d 314, 324 (D. Mass. 2005) ("[A] suit in equity will lie where the remedy at law is not clear or as adequate and complete as that which equity can afford."). Second, the assertion that plaintiffs may not be able to recover under an unjust enrichment theory at a later stage in this case has no bearing on whether plaintiffs may plead a claim for unjust enrichment. Pleading in the alternative is squarely permitted by Rule 8(e)(2). Gens. v. Resolution Trust Corp., 112 F.3d 569, 573 & n.4 (1st Cir. 1997). Moreover, alternate theories should not be precluded before discovery is complete. Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d 1546, 1555 (1st Cir. 1994). Therefore, "[c]ourts have been flexible regarding when in the trial they require the plaintiff to choose its avenue of recovery." Id. 7. Copyright Infringement Defendants' lead argument for dismissing the copyright claim is that plaintiffs have "not alleged particularized facts." (Dkt. 93 at 5). While a copyright claim normally does not require plaintiff to plead with heightened degree of particularity (5 Charles A. Wright & Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 1237; Mid Am. Title Co. v. Kirk, 991 F.2d 417, 421-22 (7th Cir. 1993)), here the claim is spelled out in more than sufficient detail to satisfy a higher standard. Defendants also argue that the allegations of copying are "speculative" and not supported by evidence. (Dkt. 93 at 7). Defendants have apparently forgotten that this is a pleading motion. All plaintiffs need do is plead the elements, not prove them. Defendants next contend that the "entirety" of the copyright infringement claim is that ConnectU registered for a copyright in certain code; ConnectU obtained an assignment; and 16 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 27 of 51 Zuckerberg had access. (Dkt. 93 at 6). The FAC does in fact plead that plaintiff has a registered copyright in the Harvard Connection Code (FAC, ¶¶ 243-47), but importantly, the FAC also pleads that defendants copied the code (id., ¶¶ 257-58). That is all that need be pleaded. "Access" and "substantial similarity" are means of proving copyright infringement, but none of the cases cited in the motion hold that "access" and "substantial similarity" are requisites to pleading copyright infringement. Indeed, none of the cases cited by defendants had anything at all to do with pleading.5 Finally, defendants assert that the allegations "against Moskovitz and McCollum serve to disprove copying." They contend that allegations of defendants' involvement in the infringing work creates "inferences" that "lead to a conclusion of independent development." (Dkt. 93 at 7). But the FAC alleges that these defendants "copied the copyrightable subject matter of the Harvard Connection Code." (FAC, ¶ 258). Defendants do not explain their logic as to how a simple, plain allegation of copying somehow leaves an "inference" that "leads" to the exact opposite conclusion that no copying occurred. 8. Trade Secret Misappropriation To demonstrate misappropriation of a trade secret, plaintiffs must plead: (1) the Lotus Dev. Corp. v. Borland Int'l, Inc., 49 F.3d 807 (1st Cir. 1995) was an appeal after summary judgment. This issue was "only whether the Lotus menu command hierarchy is copyrightable." Id. at 813. Hutchins v. Zoll Medical Corp., 430 F. Supp. 2d 24 (D. Mass. 2006) was a ruling on a motion for summary judgment. It had nothing to do with the requirements for pleading copyright infringement. That court found that five short phrases and certain "basic protocol" were not copyrightable. Finally, Maddog Software, Inc. v. Sklader¸ 382 F. Supp. 2d 268 (D.N.H. 2005) was a ruling on a motion for a preliminary injunction. To obtain the injunction the plaintiff had "the burden of demonstrating that [the defendant] has copied something original." Id. at 279. The failure to address that point was fatal to the preliminary injunction. None of the three cases is even remotely related to the proposition for which defendants cite them i.e., that a complaint must "plead particularized facts establishing substantial similarity." See Dkt. 93 at 5. Nor do they support defendants' assertion that the FAC 5 17 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 28 of 51 information in question is a trade secret as defined under M.G.L. Ch. 266, § 30(4); (2) plaintiffs took reasonable steps to preserve the secrecy of that information; and (3) defendants used improper means, in breach of a confidential relationship, to acquire and use that trade secret. Diomed, Inc. v. Vascular Solutions, Inc., 417 F. Supp. 2d. 137, 143-44 (D. Mass. 2006); Mass. G.L. ch. 93, § 42.6 The FAC pleads that Harvard Connection's source code, business plan, and marketing plan constitute trade secrets (FAC, ¶¶ 36, 266-67); that these trade secrets were maintained in secrecy by means of a secure, password-protected server, private meeting sites, and limited disclosure of information (id., ¶¶ 268, 270-71), and that defendants fraudulently converted such trade secrets for their own benefit in the launch and growth of the facebook.com website (id., ¶¶ 272, 276-82, 287-91). The FAC also alleges that defendant Saverin, who was involved in the business management of facebook.com, knowingly executed Harvard Connection's confidential business plan and growth strategy, both pre- and post-launch, which he understood were acquired by Zuckerberg through fraudulent conduct. (Id., ¶¶ 289, 292). These allegations sufficiently plead trade secret misappropriation against all defendants. Nonetheless, defendants advance several meritless arguments based on their version of the facts, not the facts as alleged in the FAC. Specifically, defendants argue ConnectU's trade secrets are not trade secrets, that plaintiffs did not maintain confidentiality, and that plaintiffs have not offered sufficient pre-discovery facts about what Saverin, Moskovitz, and McCollum knew and when (Dkt. 93 at 9-15). While these arguments are inappropriate at this juncture, must include an "actual comparison" of the infringing work to the copyrighted work. See id. at 6. It is unclear whether Massachusetts law requires continuous use of a trade secret, see Storage Tech. Corp. v. Custom Hardware Eng'g & Consulting, Ltd., 2006 U.S. LEXIS 43690, at *34 (D. Mass. June 28, 2006), but, in any event, this is not a pleading requirement. 6 18 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 29 of 51 plaintiffs will briefly address them.7 First, defendants debate the existence of any trade secrets here. Contrary to defendant's assertions, however, Massachusetts expressly recognizes unique compilations as trade secrets. M.G.L. ch. 93 § 42; Picker Int'l Corp. v. Imaging Equip. Serv., 931 F. Supp. 18, 38 (D. Mass 1995); J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., 260 N.E.2d 723, 729 (Mass. 1970). The case cited by defendants, Moore v. Marty Gilman, Inc., 965 F. Supp. 203, 216 (D. Mass 1997), was merely a fact-specific determination that the "trade secret" at issue was a list of widely known ideas that did not, when combined, constitute a novel idea. Id. at 216. Plaintiffs assert, and history upholds, the notion that their combination of website features was novel enough to create a billion-dollar business. Even if parts of their idea were not have been overly unique, the combination was, to put it bluntly, a stroke of genius. Second, defendants dispute plaintiffs' allegations that the trade secrets were kept confidential. Not only is defendants' merits argument inappropriate, but the cases they cite are wholly inapplicable to this case. In Swartz v. Schering-Plough Corp., 53 F. Supp. 2d 95, 100 (D. Mass 1999), plaintiff alleged that the purportedly secret subject matter "was used over a wide area" before plaintiff engaged in negotiations with defendant. Here, ConnectU does not plead that it widely disseminated its trade secrets, but instead alleges that it maintained confidentiality. (FAC, ¶¶ 30-31, 56-57, 266-67, 270-72, 288). Likewise, defendants' argument that they never signed a confidentiality agreement ignores the established law of Massachusetts, as recognized by the First Circuit, that written confidentiality agreements are not required and "[a] confidential relationship generally arises by operation of law from the affiliations of the parties and the context in which the disclosures are 7 The Facebook defendants argue that ch. 266, § 30 is inapplicable here (Dkt. 93, at 9), but M.G.L. c. 93, § 42 , the civil trade secret statute, adopts and incorporates the definition of "trade secret" found in § 30 ("The term `trade secret' as used in this section shall have the same meaning as is set forth in section thirty of chapter two hundred and sixty-six."). 19 Case 1:07-cv-10593-DPW Document 112 Filed 09/21/2007 Page 30 of 51 offered." Burten v. Milton Bradley Co., 763 F.2d 461, 463 (1st Cir. 1985); Knapp Schenck & Co. Ins. Agency, Inc. v. Lancer Mgmt. Co., Inc., Civ. A. No. 02-12118-DPW, 2004 WL 57086, at * 9 (D. Mass. Jan. 13, 2004). The existence of a confidential relationship is a highly factual issue, properly left for a jury. Knapp Schenck, 2004 WL 57086, at *7. The same is true with respect to whether plaintiffs' efforts of maintain confidentiality were "proper and reasonable" under the circumstances. USM Corp. v. Marson Fastener Corp., 379 Mass. 90, 97 (1979). The FAC sufficiently pleads that a confidential relationship existed between Zuckerberg and the Founders that is plausible on its face. (FAC, ¶¶ 270-271). Defendants' reliance on Curtis-Wright Corp. v. Edel-Brown Tool & Die Co., 407 N.E.2d 319 (Mass. 1980), is similarly misplaced. While finding that a defendant must have notice that the information is a trade secret and that the source of the information was not at liberty to disclose it, the court concluded that "notice of the one is also notice of the other." Id. at 323 (internal citations omitted). "Thus, if the actor knows (or should know) that the informatio

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