Trust Safe Pay, LLC et al v. Dynamic Diet, LLC et al
Magistrate Judge M. Page Kelley: ORDER entered. MEMORANDUM AND ORDER: "For all of the reasons stated, Defendants' Motion to Dismiss for Failure to State a Claim(# 52 ) is ALLOWED without prejudice to Trust Safe's filing of a second amended complaint. Plaintiff shall file its second amended complaint within 21 days of this Order."(Moore, Kellyann)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
TRUST SAFE PAY, LLC,
CIVIL ACTION NO. 17-10166-MPK1
DYNAMIC DIET, LLC, KOSTAS
VADOKLIS, and VILMA VADOKLIS,
MEMORANDUM AND ORDER ON
DEFENDANTS’ MOTION TO DISMISS (#52).
On April 7, 2017, plaintiff Trust Safe Pay, LLC (Trust Safe)3 filed the operative first
amended complaint (#48) against defendants Dynamic Diet, LLC (Dynamic)4 and Vilma and
On March 21, 2017, with the parties’ consent, this case was reassigned to the undersigned for all
purposes, including trial and the entry of judgment, pursuant to 28 U.S.C. § 636(c). (#42.)
The amended complaint also lists “Does 1-10” as defendants. See #48 at 1. These defendants have been
voluntarily dismissed. (#63.)
Trust Safe is the only plaintiff in this action, see #48 ¶¶ 1-2, even though the amended complaint refers
to the plaintiff in both the singular and plural forms. See, e.g., id. ¶ 20 (“In performing the work . . . for
Plaintiffs, Vilma had access to . . . the number of customers Plaintiff had and was acquiring daily, the
location of Plaintiff’s biggest customer base, and the profit margin realized by Plaintiff.”).
Dynamic is referred to as a limited liability company (LLC) in the amended complaint, but is defined as
a corporation. See #48 ¶¶ 3 (“[Dynamic] is a corporation organized and existing under the laws of the
Commonwealth of Massachusetts . . . .”), 32 (“In January 2015, Defendants incorporated [Dynamic]”).
Kostas Vadoklis (the individual defendants) alleging copyright infringement, Count I,
contributory infringement, Count II, and vicarious infringement, Count III, all in violation of the
Copyright Act of 1976, as amended, 17 U.S.C. § 101, et seq.; misappropriation of trade secrets,
Count IV, in violation of Mass. Gen. Laws ch. 93, §§ 42 and 42A; intentional fraud, Count V;
common law misappropriation of trade secrets, Count VI; and violation of Mass. Gen. Laws ch.
93A, § 11, Count VII. (#48.) This action stems from a friendship gone awry between plaintiff’s
principal, Evelina Juchneviciute, her partner and co-member of Trust Safe, Darius Kersulis, and
the individual defendants. The problems allegedly resulted in the individual defendants
surreptitiously stealing proprietary information relating to Trust Safe, which information was
then used to open and operate a competing company, Dynamic. Id.
Presently before the court is defendants’ motion to dismiss the amended complaint for
failure to state a claim (##52, 53). Plaintiff has responded in opposition (#59), and defendants
have replied (#62).
II. The Facts.
The facts as set forth in the amended complaint are as follows. In 2007, plaintiff’s
principal, Evelina, hired defendant Vilma to assist with a house cleaning business which Evelina
owned. (#48 ¶ 7.) For the next seven years, Evelina, Darius, and the individual defendants
interacted socially and became friends. Id. ¶ 8.
In 2009, Evelina and Darius began a business “representing weight loss products.” Id. ¶
9. As part of this process, they created an “algorithm” to facilitate the online marketing of their
business. Id. ¶ 12. According to plaintiff, “the algorithm had a significant value” because it
“generated substantially improved visitor intention accuracy, visitor time retention on the
websites, increased percentage of sales for any given visitor amount (new end users to Plaintiff’s
websites) and new sales generated.” Id. ¶ 14. In an effort to protect the algorithm, Evelina and
Darius locked the basement of their home – the room out of which the business was operating –
and password protected the computer that held “the passwords to all the third party advertising
accounts and the secret words and word combinations that formed the algorithm.” Id. ¶ 16.
In April of 2012, Evelina and Darius needed someone to run the packaging and shipping
portion of the business while they took a vacation. Id. ¶ 17. Vilma offered her assistance and was
paid for the work she performed. Id. ¶¶ 18, 19. Vilma was afforded access to confidential
information to include: “revenues generated, the costs of the business, the number of customers
Plaintiff had and was acquiring daily, the location of Plaintiff’s biggest customer base, and the
profit margin realized by Plaintiff.” Id. ¶ 20.
It is plaintiff’s position that, after learning the inner workings of the business, the
individual defendants decided to “misappropriate the algorithm and all other proprietary
information [that] made Plaintiff a successful business” and “to start their own diet/supplement
internet business.” Id. ¶ 21. Thereafter, Vilma offered repeatedly to babysit Evelina and Darius’s
children and was allowed to do so. Id. ¶¶ 23, 24. According to plaintiff, Vilma, who knew the
location of the key to the locked basement from her prior work for the business, used her time
babysitting to attempt to learn the password to plaintiff’s computers5 “by trying combinations of
numbers and/or letters and symbols until she succeeded . . . .” Id. ¶ 26; see also id. ¶ 25. Once
she gained access to plaintiff’s computers, Vilma began to purloin a substantial amount of
information and eventually used it “to create a copycat business of Plaintiff’s websites and
business system using the Plaintiff’s algorithm.” Id. ¶ 27.
The amended complaint references both a single computer and multiple computers. See, e.g., #48 ¶¶ 16,
26. The number of computers has no bearing on the court’s analysis.
From April 2012 through January 2013, Kostas spoke with Darius regularly regarding
Kostas’s intention to start an online electronic cigarette business, asking Darius how to run such
a business and increase sales. Id. ¶ 28. During this same period, Vilma spoke regularly with
Evelina about Trust Safe and what “solutions [Evelina] [was] implementing to advance her
In April and July of 2014, the individual defendants purchased domain names for their
“copycat” websites. Id. ¶ 30. In January 2015, the individual defendants incorporated Dynamic.
Id. ¶ 32. At this point plaintiff became aware of “a new competitor that was bidding on the same
keywords Plaintiff used in its algorithms.”6 Id. Through research, plaintiff came to learn that the
individual defendants were the owners of these competing websites. Id. ¶¶ 33, 34. “Since
January 2015, Plaintiff has monitored Defendants and the company to whom they outsourced
their website build for visits to Plaintiff’s websites as well as the changes Defendants were
making to their websites based on Plaintiff’s . . . changes on their [sic] websites.” Id. ¶ 35. Based
on this information, plaintiff asseverates that, from January 2015 through the date the amended
complaint was filed, “Defendants and/or the website build company has visited Plaintiff’s
website several times per week, sometimes multiple times per day, accounting for hundreds of
separate visits and tens of thousands of page views[,]” and that “Defendants’ websites would be
changed in the exact ways Plaintiff would change its website.” Id. ¶ 36.
Some confusion arises as to whether the use of the plural form of “algorithm” in the amended complaint
refers to the existence of other algorithms or is merely a typographical error. See #48 ¶ 32. Regardless,
the amended complaint only advances allegations based on defendants’ misappropriation of a single
In similar fashion to its use of both “plaintiff” and “plaintiffs,” the amended complaint uses
interchangeably the terms “defendant” and “defendants.” As such, it is unclear whether plaintiff
monitored the individual defendants, Dynamic, or both.
Plaintiff contends that since the launch of defendants’ competing websites, in January
2015, Trust Safe’s revenue generated from California, which is the location from which it
obtains the largest portion of its customer base and sales, has shown the “largest decline.” Id. ¶¶
III. Standard of Review.
A Rule 12(b)(6) motion to dismiss challenges a party’s complaint for failing to state a
claim. In deciding such a motion, a court must “‘accept as true all well-pleaded facts set forth in
the complaint and draw all reasonable inferences therefrom in the pleader’s favor.’” Haley v.
City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (quoting Artuso v. Vertex Pharm., Inc., 637 F.3d
1, 5 (1st Cir. 2011)). When considering a motion to dismiss, a court “may augment these facts
and inferences with data points gleaned from documents incorporated by reference into the
complaint, matters of public record, and facts susceptible to judicial notice.” Haley, 657 F.3d at
46 (citing In re Colonial Mortg. Bankers Corp., 324 F.3d 12, 15 (1st Cir. 2003)).
In order to survive a motion to dismiss under Rule 12(b)(6), the plaintiff must provide
“enough facts to state a claim to relief that is plausible on its face.” See Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). The “obligation to provide the grounds of [the plaintiff’s]
entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Id. at 555 (internal quotation marks and alteration
omitted). The “[f]actual allegations must be enough to raise a right to relief above the speculative
level,” and to cross the “line from conceivable to plausible.” Id. at 555, 570.
“A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). However, the
court is “‘not bound to accept as true a legal conclusion couched as a factual allegation.’” Id. at
678 (quoting Twombly, 550 U.S. at 555). Simply put, the court should assume that well-pleaded
facts are genuine and then determine whether such facts state a plausible claim for relief. Id. at
A. Copyright Infringement – Count I.
“To establish copyright infringement under the Copyright Act, ‘two elements must be
proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work
that are original.’” Johnson v. Gordon, 409 F.3d 12, 17 (1st Cir. 2005) (quoting Feist Publ’ns,
Trust Safe levies allegations against all three defendants for their supposed involvement in the harm to
plaintiff. See #48 at 7-15. However, plaintiff fails to delineate who specifically is accused of each illicit
action or in what capacity they were acting, attributing liability to all three generally. See id. at 7-15
(levying allegations against “Defendants”). While the court is able to discern, in certain instances, where
the individual defendants are the accused by relying on context – e.g., the theft of the algorithm occurred
before Dynamic existed – the majority of Trust Safe’s allegations do not differentiate between the actions
of Dynamic, Vilma, or Kostas. While this general levying of allegations does not afford each defendant
the opportunity to know exactly what it is that she/he/it is accused of, equally troubling is Dynamic’s
potential status as a LLC.
Under Massachusetts law,
the debts, obligations and liabilities of [a LLC], whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the [LLC]; and no
member or manager of [a LLC] shall be personally liable, directly or indirectly, . . . for
any such debt, obligation or liability of the [LLC] solely by reason of being a member or
acting as a member of the [LLC].
CMI Assocs., LLC v. Reg’l Fin. Co., LLC, 775 F. Supp. 2d 281, 288 (D. Mass. 2011) (quoting Mass. Gen.
Laws ch. 156C, § 22) (some alteration in original). There thus exists the potential that some of the claims
asserted against the individual defendants are statutorily barred if they were acting in their official
capacity as members of Dynamic. Dynamic’s status as a LLC is unclear, and therefore the court need not
address the potential of piercing the corporate veil at this time. Should Trust Safe choose to file a
repleader, the issues concerning Dynamic’s LLC status and the lack of specificity in the amended
complaint’s allegations must be addressed. Trust Safe’s bald assertion that “Defendants . . . conspired and
. . . act[ed] pursuant to said conspiracy” (#48 ¶ 6), does not ameliorate these problems.
Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)). Plaintiff bears the burden of proof on
both elements. Id.
1. Ownership of a Valid Copyright.
Subsection (A) of 17 U.S.C. § 411 states that “no civil action for infringement of the
copyright in any United States work shall be instituted until preregistration or registration of the
copyright claim has been made in accordance with this title.” Nowhere in the amended complaint
does Trust Safe claim to be the owner of a validly registered copyright. Thus, plaintiff’s claim, if
viable, must satisfy the “preregistration” component of the statute. The amended complaint
asserts that “Plaintiff is the assignee of three (3) applications for copyright registrations in works
of visual art, which include various web-pages of Plaintiff’s websites, application numbers 13998164856; 1-3998164250; 1-4018230311 . . . .” (#48 ¶ 41.) Trust Safe takes the position that
this allegation is sufficient to pass muster under § 411. See #59 at 10.9 While the court need not
decide the issue at this juncture – plaintiff’s claim fails on other grounds, see infra Section 2 – it
notes that a plaintiff relying on the “application approach”10 must demonstrate that it “sent the
requisite application (together with deposit and fee) to the Copyright Office.” Alicea v. Machete
Music, 744 F.3d 773, 779 (1st Cir. 2014) (internal citation omitted); see also Concordia
Partners, LLC v. Pick, No. 2:13-CV-415-GZS, 2013 WL 6817627, at *2 (D. Me. Dec. 23, 2013)
(“As Defendants acknowledge, Plaintiff has alleged that they have applied for copyright
registration and satisfied all of the necessary formalities to obtain the registration certificates.”).
Contrary to Trust Safe’s assertion that such information is “readily verifi[able] . . . through the
The court will cite to the parties’ submissions as paginated on the docket.
The application approach to § 411 deems the registration requirement satisfied “at the time the
copyright holder’s application is received by the Copyright Office.” Alicea v. Machete Music, 744 F.3d
773, 779 (1st Cir. 2014).
Copyright Office website[,]” (#59 at 10), should plaintiff choose to replead its copyright
infringement claim, such a showing must be made in the repleader or via documents attached to
2. Copying of Constituent Elements.
The mere allegation that a defendant copied the work of a plaintiff is insufficient, on its
own, to establish a claim for copyright infringement. See Johnson, 409 F. 3d at 18 (“copying
does not invariably constitute copyright infringement”) (citing Feist, 499 U.S. at 361).
To show actionable copying ‘involves two steps: (a) that the defendant actually
copied the work as a factual matter, . . . and (b) that the defendant’s copying of
the copyrighted material was so extensive that it rendered the infringing and
copyrighted works “substantially similar.”’ Situation Mgmt. Sys., Inc. v. Asp.
Consulting LLC, 560 F.3d 53, 58 (1st Cir. 2009) (citation and quotation marks
omitted). ‘The plaintiff bears the burden of proof as to both elements.’ Johnson v.
Gordon, 409 F.3d 12, 17 (1st Cir. 2005).
McGee v. Benjamin, No. CIV.A. 08-11818-DPW, 2012 WL 959377, at *5 (D. Mass. Mar. 20,
2012) (alteration in original); Calden v. Arnold Worldwide LLC, No. CIV.A. 12-10874-FDS,
2012 WL 5964576, at *4 (D. Mass. Nov. 27, 2012).
a. Actual Copying.
Actual copying may be shown via direct or circumstantial evidence. Johnson, 409 F.3d at
18 (citing Segrets, Inc. v. Gillman Knitwear Co., 207 F.3d 56, 60 (1st Cir. 2000)).
Plagiarists rarely work in the open and direct proof of actual copying is seldom
available. To fill that void, the plaintiff may satisfy his obligation indirectly by
adducing evidence that the alleged infringer enjoyed access to the copyrighted
work and that a sufficient degree of similarity exists between the copyrighted
work and the allegedly infringing work to give rise to an inference of actual
Id. (citing Lotus Dev. Corp. v. Borland Int’l, Inc., 49 F.3d 807, 813 (1st Cir. 1995), aff’d, 516
U.S. 233 (1996)). Taking the facts alleged in a light most favorable to plaintiff, defendants,
through Vilma’s babysitting and/or defendants’ repeated visits to plaintiff’s website, may well
have had access to plaintiff’s protected material.11
The next step in establishing actual copying requires plaintiff to demonstrate the
existence of some probative similarity12 between the “original, protected expressive elements” of
Trust Safe’s works and defendants’ allegedly infringing material. Johnson, 409 F.3d at 19. The
amended complaint alleges that defendants “copied the original expressions contained in the Art
without permission and used them in their websites[,] which are distributed worldwide and
displayed for the public. . . . Defendants used the original expressions contained in the Art with
the pre-existing knowledge that such original expression was owned by Plaintiff.” (#48 ¶¶ 42,
43.) Defendants argue that plaintiff fails to identify its website or defendants’ websites, nor does
it make any comparison between the allegedly protected material and defendants’ infringement
of that material. (#53 at 13-14.) In an effort to rebuff this supposed inadequacy, plaintiff directs
the court to the above-quoted paragraphs of the amended complaint as well as five paragraphs
concerning plaintiff’s algorithm. See #59 at 13 (citing (#48 ¶¶ 10-14, 41-44)). These additional
paragraphs fail to bolster plaintiff’s position.
As a threshold matter, it is unclear whether plaintiff’s algorithm is even included in its
copyright applications. More troubling is the amended complaint’s failure to allege with any
specificity how defendants copied these protected materials. Plaintiff merely asserts that
defendants visited plaintiff’s website repeatedly, and that “Defendants’ websites would be
As is established below, it is unclear exactly what material was entitled to copyright protection.
Therefore, it is impossible to identify whether – and if so, when – defendants had access to the material.
“This requirement of probative similarity is somewhat akin to, but different than, the requirement of
substantial similarity that emerges at the second step in the progression.” Johnson, 409 F.3d at 18.
changed in the exact ways Plaintiff would change its website.” (#48 ¶ 36); see also #59 at 13
(“the [amended complaint] details the facts and circumstances of the misappropriation and that
Defendants have been copying the website, verbatim, each time any alteration was made. This
simultaneously illustrates the substantial similarity between Plaintiff’s protectable works and
Defendants’ infringement of the works.”) (internal citation omitted).13
Plaintiff’s conclusory assertions, without identification of the specific content that was
protected or any explanation as to how defendants’ conduct violated plaintiff’s copyright
protection, frustrate any effort to compare the parties’materials. See Iqbal, 556 U.S. at 678; see
also McGee, 2012 WL 959377, at *6 (addressing a plaintiff’s claim for copyright infringement
with respect to animated television programs, the court concluded that “the plaintiff must point
to some more specific similarities than ‘location, characters, content, format, and dramatis
personnae’ for his claim to survive.”) (emphasis in original). As plaintiff fails to proffer any
specific similarities, it thus fails to show that defendants actually copied its protected material.14
b. Substantial Similarity.
The substantial similarity requirement focuses holistically on the works in
question and entails proof that the copying was so extensive that it rendered the
works so similar that the later work represented a wrongful appropriation of
While plaintiff’s argument in its opposition references the amended complaint’s supposed showing of
“substantial similarity” – the second prong of actionable copying – rather than “probative similarity,” the
takeaway remains the same: plaintiff is of the opinion that the amended complaint evidences overlap
between the parties’ materials. Notably, the only other references to plaintiff’s satisfaction of the
similarity requirements of its copyright claim, as stated in Trust Safe’s opposition, are two citations to the
first sixty-one paragraphs of the amended complaint accompanied by the bald statement that the amended
complaint meets these requirements. See #59 at 14.
For these same reasons, the amended complaint also fails to comply with Fed. R. Civ. P. Rule 8’s
requirement that the complaint include “‘enough detail to provide a defendant with fair notice of what the
. . . claim is and the grounds upon which it rests.’” Silverstrand Investments. v. AMAG Pharmaceutical.,
Inc., 707 F.3d 95, 101 (1st Cir. 2013) (quoting Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 12 (1st
Cir. 2011) (alteration in original) (citation and further internal quotation marks omitted)). It is unclear
exactly what defendants are accused of copying beyond “visual art” and “various web-pages of Plaintiff’s
websites.” (#48 ¶ 41.)
expression. See Yankee Candle Co. v. Bridgewater Candle Co., 259 F.3d 25, 33
(1st Cir. 2001); Segrets, 207 F.3d at 60. [. . .]
The ‘ordinary observer’ test [. . .] supplies a framework for gauging
substantial similarity. Under that metric, the defendant’s work will be said to be
substantially similar to the copyrighted work if an ordinary person of reasonable
attentiveness would, upon [viewing] both, conclude that the defendant unlawfully
appropriated the plaintiff’s protectable expression. See Concrete Mach. Co. v.
Classic Lawn Ornaments, 843 F.2d 600, 607 (1st Cir. 1988); Educ. Testing Servs.
v. Katzman, 793 F.2d 533, 541 (3d Cir. 1986). Works can be substantially similar
despite the presence of disparities. The key is whether ‘the ordinary observer,
unless he set out to detect the disparities, would be disposed to overlook them,
and regard [the works’] aesthetic appeal as the same.’ Peter Pan Fabrics, Inc. v.
Martin Weiner Corp., 274 F.2d 487, 489 (2d Cir. 1960).
Johnson, 409 F.3d at 18 (some alteration in original).
The court need not, and cannot, address the question of substantial similarity in this case.
See Calden, 2012 WL 5964576, at *5 (“A court must only address the question of substantial
similarity if it identifies any probative similarity from which it can infer actual copying. Because
the complaint fails to sufficiently allege actual copying and the Court is unable to identify any
probative similarity, the Court need not determine whether the complaint adequately alleges
substantial similarity.”) (citing McGee, 2012 WL 959377, at *5). In like manner to its failure to
satisfy the probative similarity component of actual copying, the amended complaint fails to
provide enough detail with respect the works in issue to allow for any analysis of their supposed
substantial similarity. As such, the amended complaint, as pled, fails to state a viable claim for
copyright infringement. Plaintiff’s claim for copyright infringement is dismissed without
B. Contributory and Vicarious Infringement – Counts II and III.
As explained above, Trust Safe fails to make a prima facie showing of direct copyright
infringement by defendants: it is unclear whether plaintiff has satisfied the preregistration
requirement; Trust Safe has not identified adequately the protected material or defendants’
infringement of it; and the court is unable to discern any similarity between the parties’
materials. Given these deficiencies in the amended complaint, Trust Safe’s claims of secondary
liability crumble. See Greenspan v. Random House, Inc., 859 F. Supp. 2d 206, 219 (D. Mass.
2012), aff’d sub nom. Greenspan v. Random House, Inc., No. 12-1594, 2012 WL 5188792 (1st
Cir. Oct. 16, 2012) (“Absent an actionable claim for direct copyright infringement, the claims for
contributory or vicarious infringement must also fail.”).
One infringes contributorily by intentionally inducing or encouraging direct
infringement, see Gershwin Pub. Corp. v. Columbia Artists Management, Inc.,
443 F.2d 1159, 1162 (C.A. 2 1971), and infringes vicariously by profiting from
direct infringement while declining to exercise a right to stop or limit it, Shapiro,
Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (C.A. 2 1963). Although
‘[t]he Copyright Act does not expressly render anyone liable for infringement
committed by another,’ Sony Corp. v. Universal City Studios, 464 U.S. [417,]
434, 104 S.Ct. 774 [(1984)], these doctrines of secondary liability emerged from
common law principles and are well established in the law, id., at 486, 104 S.Ct.
774 (Blackmun, J., dissenting); Kalem Co. v. Harper Brothers, 222 U.S. 55, 62–
63, 32 S.Ct. 20, 56 L.Ed. 92 (1911); Gershwin Pub. Corp. v. Columbia Artists
Management, supra, at 1162; 3 M. Nimmer & D. Nimmer, Copyright § 12.04[A]
Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930–31 (2005) (alteration in
original) (footnote omitted).
‘As these definitions suggest, in order to hold a defendant secondarily liable
someone else must have directly infringed on the copyright holder’s rights.’ Wolk
v. Kodak Imaging Network, Inc., 840 F. Supp. 2d 724, 750 (S.D.N.Y. 2012)
(citing Faulkner v. Nat’l Geographic Enters., Inc., 409 F.3d 26, 40 (2[d] Cir.))
(‘[T]here can be no contributory infringement absent actual infringement.’), cert.
denied, 546 U.S. 1076, 126 S.Ct. 833, 163 L.Ed.2d 707 (2005); Matthew Bender
& Co. v. West Publ’g Corp., 158 F.3d 693, 706 (2[d] Cir.1998) (rejecting
plaintiff’s contributory infringement claim, in part, because the plaintiff ‘has
failed to identify any primary infringer’), cert. denied, 526 U.S. 1154, 119 S.Ct.
2039, 143 L.Ed.2d 1048 (1999); see also Elsevier Ltd. v. Chitika, Inc., 826 F.
Supp. 2d 398, 403 (D. Mass. 2011).
Greenspan, 859 F. Supp. 2d at 219 (some alteration in original). For these reasons, Trust Safe’s
secondary liability claims are dismissed without prejudice.15
C. Misappropriation of Trade Secrets – Counts IV and VI.
Trust Safe advances claims for the misappropriation of trade secrets under Mass. Gen.
Laws ch. 93, §§ 42 and 42A as well as the common-law equivalent. See #48 ¶¶ 62-68, 78-85.
When such claims are premised on the same factual basis, as is the case here, they may be
deemed essentially equivalent. See Incase Inc. v. Timex Corp., 488 F.3d 46, 59 n. 10 (1st Cir.
2007); Burten v. Milton Bradley Co., 763 F.2d 461, 462 (1st Cir. 1985) (“Appellants amended
complaint alleged . . . two counts of trade secret misappropriation, one based on common law
tort and the other on Mass. Gen. Laws Ann. ch. 93, § 42, which essentially codifies the common
law.”) (footnote omitted); Karter v. Pleasant View Gardens, Inc., No. CV 16-11080-RWZ, 2017
WL 1224543, at *8 n. 8 (D. Mass. Mar. 31, 2017).
Under Massachusetts General Laws,
[w]hoever embezzles, steals or unlawfully takes, carries away, conceals, or
copies, or by fraud or by deception obtains, from any person or corporation, with
intent to convert to his own use, any trade secret, regardless of value, shall be
liable in tort to such person or corporation for all damages resulting therefrom.
Mass. Gen. Laws ch. 93, § 42.
To prevail on a claim of misappropriation of trade secrets, a plaintiff must show:
1) the information is a trade secret; 2) the plaintiff took reasonable steps to
preserve the secrecy of the information; and 3) the defendant used improper
means, in breach of a confidential relationship, to acquire and use the trade secret.
While the court need not address the substance of Trust Safe’s secondary liability claims at this stage, it
notes that the amended complaint fails to delineate clearly the bases for these claims. The confusion arises
as a result of the amended complaint’s liberal use of the term “defendants.” See, e.g., #48 ¶¶ 51-52
(“Defendants, and each of them, had reason to know that the Defendants were infringing Plaintiff’s
original expression by way of Vilma’s [sic] and Kostas’[s] position[s] of control in [Dynamic].
Defendants materially contributed induced [sic] the infringing activity by supplying the resources for the
infringement and by directing the infringing activities of Defendants.”); see also id. ¶¶ 57-58.
Incase Inc., 488 F.3d at 52; Karter, 2017 WL 1224543, at *8. Defendants contend that plaintiff
fails to establish the existence of a trade secret, and the court agrees.
“A trade secret may consist of any formula, pattern, device or compilation of information
which is used in ones business, and which gives him an opportunity to obtain an advantage over
competitors who do not know or use it.” J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc.,
357 Mass. 728, 736 (1970) (citing Restatement of Torts, § 757, comment b); see also Mass. Gen.
Laws ch. 266, § 30(4) (“The term ‘trade secret’ . . . means and includes anything tangible or
intangible or electronically kept or stored, which constitutes, represents, evidences or records a
secret scientific, technical, merchandising, production or management information, design,
process, procedure, formula, invention or improvement.”). “It is hornbook law that the parties
and the court cannot accurately decide the question of whether a trade secret exists without first
understanding what precisely is asserted as a secret. . . . Analysis becomes difficult, however,
when a plaintiff is unable or simply refuses to identify its alleged trade secret adequately.” Sutra,
Inc. v. Iceland Exp., ehf, No. CIV.A. 04-11360-DPW, 2008 WL 2705580, at *3 (D. Mass. July
10, 2008) (internal citation and quotation marks omitted).
The burden is on the party claiming trade secret status to identify the specific
trade secrets at issue ‘with clarity that can be understood by a lay person and
distinguish what is protectable from that which is not.’ Sutra, Inc. v. Iceland
Express, EHF, No. 04-11360-DPW, 2008 WL 2705580, at *4 (D. Mass. July 10,
2008) (quotations, citation and punctuation omitted). ‘In determining what is an
adequate description of a trade secret, courts have required specificity, although
that specificity is highly fact dependent.’ Id., and cases cited.
EMC Corp. v. Pure Storage, Inc., No. CV 13-12789-JGD, 2016 WL 7826662, at *5 (D. Mass.
Aug. 19, 2016).
The crux of both of Trust Safe’s misappropriation claims is that defendants wrongfully
took and used its algorithm.16 See #48 ¶¶ 62-68, 78-85.
As stated in the amended complaint,
[Evelina and Darius] created [the] algorithm, using multiple, supporting websites,
website layout structure, element placement, color scheme, specific topic themes,
tone of language, and specific words and word combinations on Bing Ads,
Google Adwords, and Facebook platforms, that would maximize revenues and
reduce advertising costs while maintaining same high standards for the internet
arm of her [sic] business. Evelina and Darius tested many variables and engaged
in substantial research to modify and hone the algorithm.
(#48 ¶ 12.)17 The amended complaint goes on to asseverate that the algorithm had a positive
effect on Trust Safe and was therefore valuable. Id. ¶¶ 13, 14. These descriptions do not
“distinguish what is protectable from that which is not.” Sutra, Inc., 2008 WL 2705580, at *4.
There is no satisfactory explanation as to what the algorithm is or what it does, save for its
alleged cost-saving benefits and a resulting increase in plaintiff’s sales. The remainder of the
amended complaint does little to illuminate the discussion. Instead, Trust Safe merely asserts that
defendants acquired and used the algorithm, see #48 ¶¶ 21-27, 65, 66, 81, 82, and that it “is a
secret and confidential electronically stored process, formula, design, technical information,
scientific information, proprietary information not known to other businesses in the Plaintiff’s
industry that provides Plaintiff with a competitive advantage over others who do not know the
While the amended complaint asserts that defendant Vilma was afforded access to “revenues generated,
the costs of the business, the number of customers Plaintiff had and was acquiring daily, the location of
Plaintiff’s biggest customer base, and the profit margin realized by Plaintiff,” (#48 ¶ 20), the amended
complaint does not allege this information is the basis for either of plaintiff’s misappropriation claims.
Rather, both claims are specifically confined to the algorithm.
Trust Safe, in its opposition, posits that this paragraph evidences that the algorithm “is a formula of
words, combinations o[f] words, placement of words and protocols when driving end users to a content
driven website in the weight loss industry.” (#59 at 17.) Even if one were to accept plaintiff’s
interpretation, which strains credibility given that the paragraph in question pertains to the way in which
the algorithm was created, not its use, this definition does little to elucidate matters. The court is still left
to guess to what extent, if any, the algorithm is protected and how defendants were supposedly using the
algorithm.” (#48 ¶ 63); see also id. ¶ 79 (same). While the amended complaint asserts that
defendants were “bidding on the same keywords Plaintiff used in its algorithms,” id. ¶ 32, it does
not make clear whether these words themselves are a product of the algorithm and thus
confidential; if the parties’ bidding on the same words demonstrates defendants’ possession and
use of the algorithm; or if these words are not common to the diet industry. See J.T. Healy &
Son, Inc., 357 Mass. at 736 (“Matters of public knowledge or of general knowledge in an
industry cannot be appropriated by one as his secret.”) (quoting Restatement of Torts § 757
comment b) (internal quotation mark omitted); contra Blake v. Prof’l Coin Grading Serv., 898 F.
Supp. 2d 365, 381, 394 (D. Mass. 2012) (finding the plaintiff’s explanation of his “market test”
marketing plan sufficient to satisfy the trade secret element and defendants’ alleged actions in
accordance with the plan enough to make out a claim for misappropriation of the trade secret). In
short, the court is unable to identify what is protected.
Trust Safe’s misappropriation claims fail for want of adequate identification of the trade
secret in issue. See Sutra, Inc., 2008 WL 2705580, at *4 (“A plaintiff has no cognizable trade
secret claim until it has adequately identified the specific trade secrets that are at issue.”) (citing
Cambridge Internet Solutions v. Avicon Group, No. 99-1841, 1999 WL 959673, at *2 (Mass.
Super. Sept. 21, 1999) (internal quotation marks omitted)). Given that plaintiff may well have a
valid claim, and the basis for dismissal is a lack of detail in the allegations, Trust Safe’s
misappropriation of trade secrets claims, Counts IV and VI, are dismissed without prejudice.
D. Intentional Fraud – Count V.
To make out a viable claim for fraud, plaintiff “must establish that the defendants 
made a false representation of material fact,  with knowledge of its falsity,  for the purpose
of inducing the plaintiffs to act on this representation,  that the plaintiffs reasonably relied on
the representation as true, and  that they acted upon it to their damage.” Cumis Ins. Soc’y, Inc.
v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 471 (2009) (citing Masingill v. EMC Corp., 449
Mass. 532, 540, 870 N.E.2d 81 (2007)). Rule 9(b), Fed. R. Civ. P., mandates that a heightened
pleading standard be applied to fraud claims, including state law fraud claims asserted in federal
court. See N. Am. Catholic Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st
Cir. 2009). “The heightened requirement serves ‘(1) to place the defendants on notice and enable
them to prepare meaningful responses; (2) to preclude the use of a groundless fraud claim as a
pretext to discovering a wrong or as a “strike suit”; and (3) to safeguard defendants from
frivolous charges which might damage their reputations.’” Enercon v. Glob. Computer Supplies,
Inc., 675 F. Supp. 2d 188, 191 (D. Me. 2009) (quoting New England Data Servs., Inc. v. Becher,
829 F.2d 286, 289 (1st Cir. 1987)).
The fraudulent representations as alleged in the amended complaint are twofold: 1)
Vilma’s offer to babysit Evelina and Darius’s children; and 2) Kostas’s18 seeking advice from
Darius regarding Kostas’s starting an electronic cigarette business. See #48 ¶ 70; see also id. ¶
28. The harm that resulted from defendants’ representations was “lost revenues because the fraud
allowed Defendants to misappropriate Plaintiff’s trade secrets and confidential information and
become direct competitors in the same, small niche market within the same particular advertising
platform.” (#48 ¶ 75.) Because the amended complaint fails to identify sufficiently the trade
secrets and the confidential information that defendants fraudulently obtained, nor does it explain
with specificity how defendants used these secrets and information to the detriment of Trust
Under the intentional fraud claim section of the amended complaint, plaintiff asserts that “Defendants .
. . approached Darius over the phone between April 2012 to [sic] January 2013 and represented [that]
Defendants were starting an electronic cigarette internet based business.” (#48 ¶ 70.) However, in the fact
section of the amended complaint, Trust Safe alleges that it was Kostas alone who called Darius about the
electronic cigarette business. See id. ¶ 28.
Safe, plaintiff’s claim for fraud fails to meet the pleading requirements.19 Trust Safe’s fraud
claim may well, with additional detail, withstand scrutiny. Thus, plaintiff’s intentional fraud
claim, Count V, is dismissed without prejudice.
E. Violation of Mass. Gen. Laws ch. 93A, § 11 – Count VII.
“A party will be liable under Chapter 93A if it engages in an ‘unfair method of
competition’ or an ‘unfair or deceptive act or practice.’” Incase Inc., 488 F.3d at 56 (quoting
Mass. Gen. Laws ch. 93A, § 11). Understanding that Trust Safe’s 93A claim is tethered to
defendants’ actions as limned in the preceding six claims, and that those claims are dismissed
without prejudice for want of detail, the court is unable to address the merits of plaintiff’s 93A
claim. As such, Trust Safe’s 93A claim, Count VII, is dismissed without prejudice.
For all of the reasons stated, Defendants’ Motion to Dismiss for Failure to State a Claim
(#52) is ALLOWED without prejudice to Trust Safe’s filing of a second amended complaint.20
Plaintiff shall file its second amended complaint within 21 days of this Order.21
/s / M. Page Kelley
M. Page Kelley
United States Magistrate Judge
September 8, 2017
While the amended complaint identifies confidential information to which Vilma was afforded access
when she volunteered to assist with the packaging and shipping portion of the business, see #48 ¶ 20, this
occurred prior to any allegedly fraudulent misrepresentation and is not connected to the fraud claim as
advanced in the amended complaint.
Any amendment shall be limited to the extent necessary to comply with the deficiencies as identified in
this Order. No further amendment is allowed.
Plaintiff’s request for attorney’s fees in relation to its response to the motion to dismiss, as advanced in
its opposition, is DENIED.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?