ACI Worldwide Corp. v. MasterCard Technologies, LLC et al

Filing 119

MEMORANDUM AND ORDER - Defendants' Motion to Dismiss (Filing No. 59 ) is granted in part, as follows: ACI's claims for fraud, tortious interference, conversion, and trespass to chattels are dismissed, with leave to amend. Defendants' ; Motion is otherwise denied. ACI is granted leave to file a second amended complaint on or before January 20, 2015. Defendants will respond to any second amended complaint, or to the surviving claims in the Amended Complaint (Filing No. 48 ) if no second amended complaint is filed, on or before February 6, 2015. Ordered by Chief Judge Laurie Smith Camp. (GJG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
ACI WORLDWIDE CORP.,
Plaintiff,

8:14CV31

vs.
MASTERCARD TECHNOLOGIES, LLC,
and MASTERCARD INTERNATIONAL,
INC.,

MEMORANDUM
AND ORDER

Defendants.

This matter is before the Court on the Motion to Dismiss (Filing No. 59) submitted
by Defendants MasterCard Technologies, LLC (“MasterCard Tech”) and MasterCard
International, Inc.’s (“MasterCard Int’l”) (collectively “Defendants”). For the following
reasons, the Defendants’ Motion will be granted in part.
FACTS
For purposes of the pending motion, the Plaintiff’s well-pled facts are accepted
as true, though the Court need not accept proposed conclusions of law. The following
is a summary of the Plaintiff’s factual allegations in the Amended Complaint (Filing No.
48).
Plaintiff ACI Worldwide Corp. (“ACI”) alleges that Defendants disclosed
confidential information regarding ACI’s NET24-XPNET middleware (“XPNET”) to
Baldwin Hackett & Meeks, Incorporated (“BHMI”).

ACI presents nine theories of

recovery: breach of contract, misappropriation of trade secrets, fraud, breach of the duty
of good faith and fair dealing, unjust enrichment, tortious interference with business
relations and expectations, conversion, trespass to chattels, and civil conspiracy.

MasterCard Tech provides transaction processing, telecommunications, and
related services to MasterCard Int’l for the benefit of the members and customers of
MasterCard Int’l.

MasterCard Int’l provides payment processing services between

merchant banks and purchasers’ card-issuing banks for purchases using “MasterCard”
brand debit or credit cards. ACI provides and markets a broad, integrated suite of
electronic payment software, and also powers electronic payments for hundreds of
financial institutions, retailers, and processors around the world. Starting in 1994 or
earlier, ACI licensed to Defendants a variety of software, including XPNET. Thereafter,
Defendants disclosed ACI’s proprietary intellectual property (“ACI’s IP”) to BHMI, and
Defendants and BHMI replicated XPNET.
In mid-2010, MasterCard Int’l notified ACI that it would not renew its license for
use of XPNET. Less than three months later, Defendants publically announced their
switch to BHMI’s middleware product known as Concourse-Transaction Messaging
System (“TMS”). In July 2011, ACI concluded that BHMI used ACI’s IP to develop TMS.
PROCEDURAL BACKGROUND
On August 26, 2014, ACI filed its Amended Complaint (Filing No. 48) with this
Court. Prior to filing this action, ACI initiated a proceeding in Nebraska state court
against BHMI (the “Nebraska State Action”) regarding BHMI’s alleged use of
confidential information to develop TMS. (Def. Br. in Support of Mot. to Dismiss Am.
Compl, Filing No. 60 at ECF 4 (citing ACI Worldwide Corp. v. BHMI, Inc., et al., No. CI
12-9038 (District Court of Douglas County, Nebraska) (J. Russell Derr, District Court
Judge)).) The Nebraska State Action went to trial in August of 2014. (Id.) The jury
rendered a verdict in ACI’s favor on the misappropriation of trade secret claims. (Id.)
2

Defendants then filed this motion to dismiss ACI’s action in this Court due to ACI’s
failure to join a necessary party pursuant to Federal Rule of Civil Procedure 12(b)(7),
and ACI’s failure to state a claim upon which relief can be granted, pursuant to Federal
Rule of Civil Procedure 12(b)(6). Defendants’ 12(b)(6) motion applies to ACI’s claims
for fraud, breach of duty of good faith and fair dealing, unjust enrichment, tortious
interference with business relations and expectations, conversion, trespass to chattels,
and civil conspiracy.
STANDARDS OF REVIEW
I. Fed. R. Civ. P. 12(b)(7), Failure to Join a Party
When deciding a motion to dismiss under Federal Rule of Civil Procedure
12(b)(7) for failure to join a party under Rule 19, the court must first determine whether
the absent party is a “necessary party” under Rule 19(a). Baker Grp., L.C. v. Burlington
N. & Santa Fe Ry. Co., 451 F.3d 484, 490 (8th Cir. 2006) (citing Fed. R. Civ. P. 19(a)).
If a party is necessary under Rule 19(a), that party must be joined if feasible. See id. If
the court determines that an absent party is not necessary, then the case must go
forward without that party, and there is no need to determine whether joinder is feasible
under Rule 19(b). Id. at 491. Dismissal based on failure to join a party is only proper in
cases where the absent party is necessary, joinder is not feasible, and the absent party
is indispensable.

See Provident Tradesmens Bank & Trust Co. v. Patterson, 108

(1968).
II. Fed. R. Civ. P. 12(b)(6), Failure to State a Claim
A complaint must contain “a short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[A]lthough a complaint need
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not include detailed factual allegations, ‘a plaintiff's obligation to provide the grounds of
his entitlement to relief requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.’” C.N. v. Willmar Pub. Sch.,
Indep. Sch. Dist. No. 347, 591 F.3d 624, 629-30 (8th Cir. 2010) (quoting Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007)). “Instead, the complaint must set forth ‘enough
facts to state a claim to relief that is plausible on its face.’” Id. at 630 (citing Twombly,
550 U.S. at 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.” Ritchie v. St. Louis Jewish Light, 630 F.3d 713, 716 (8th Cir.
2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)) (internal quotation marks
omitted).

“Courts must accept . . . specific factual allegations as true but are not

required to accept . . . legal conclusions.” Outdoor Cent., Inc. v. GreatLodge.com, Inc.,
643 F.3d 1115, 1120 (8th Cir. 2011) (quoting Brown v. Medtronic, Inc., 628 F.3d 451,
459 (8th Cir. 2010)) (internal quotation marks omitted). “A pleading that merely pleads
‘labels and conclusions,’ or a ‘formulaic recitation’ of the elements of a cause of action,
or ‘naked assertions’ devoid of factual enhancement will not suffice.” Hamilton v. Palm,
621 F.3d 816, 817-18 (8th Cir. 2010) (quoting Iqbal, 556 U.S. at 678). The complaint’s
factual allegations must be “sufficient ‘to raise a right to relief above the speculative
level.’” Williams v. Hobbs, 658 F.3d 842, 848 (8th Cir. 2011) (quoting Parkhurst v.
Tabor, 569 F.3d 861, 865 (8th Cir. 2009)).
When ruling on a defendant's motion to dismiss, a judge must rule “on the
assumption that all the allegations in the complaint are true,” and “a well-pleaded
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complaint may proceed even if it strikes a savvy judge that actual proof of those facts is
improbable, and ‘that a recovery is very remote and unlikely.’” Twombly, 550 U.S. at
555 & 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). The complaint,
however, must still “include sufficient factual allegations to provide the grounds on which
the claim rests.” Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir. 2009).
“Two working principles underlie . . . Twombly. First, the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly,
550 U.S. at 555). “Second, only a complaint that states a plausible claim for relief
survives a motion to dismiss.”

Id. at 679 (citing Twombly, 550 U.S. at 556).

“Determining whether a complaint states a plausible claim for relief will . . . be a contextspecific task that requires the reviewing court to draw on its judicial experience and
common sense.” Id.
DISCUSSION
I. Motion to Dismiss for Failure to Join BHMI
Under Federal Rule of Civil Procedure 19(a), a party is “necessary” if:
(A) in that person's absence, the court cannot accord complete relief
among existing parties; or
(B) that person claims an interest relating to the subject of the action and
is so situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to
protect the interest; or

5

(ii) leave an existing party subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations because of
the interest.
Fed. R. Civ. P. 19(a)(1). If the party is “necessary,” subject to service of process, and
joinder would not deprive the Court of subject matter jurisdiction, then “the court must
order that the person be made a party.” Fed. R. Civ. P. 19(a)(1),(2).
A. Fed. R. Civ. P. 19(a)(1)(A): Complete Relief Among Existing Parties
While a decision by a court is not binding on nonparties, see Parklane Hosiery
Co., Inc., v. Shore, 439 U.S. 322, 327 n. 7 (“It is a violation of due process for a
judgment to be binding on a litigant who was not a party or a privy and therefore has
never had an opportunity to be heard.”), Rule 19(a)(1)(A) asks whether “the court
cannot accord complete relief among the existing parties . . . .”

Fed. R. Civ. P.

19(a)(1)(A) (emphasis supplied); see also Davis Cos. v. Emerald Casino, Inc., 268 F.3d
477, 484 (7th Cir. 2001) (“[T]he term ‘complete relief’ refers only to ‘relief between the
persons already parties, and not as between a party and the absent person whose
joinder is sought.’”) (quoting Perrian v. O’Grady, 958 F.2d 192, 196 (7th Cir. 1992)).
ACI’s claims relate to Defendants’ allegedly tortious conduct and to the contracts
between ACI and MasterCard Int’l.

Defendants argue that the Court cannot grant

complete relief to ACI vis a vis the Defendants in the absence of BHMI because, in the
Amended Complaint, ACI asks the Court to award any “gains, profits and
advantages” which Defendants conferred on others and to enjoin “all those acting in
concert or participation with” Defendants from using TMS.

(Filing No. 60 at ECF

(internal marks omitted).) Defendants claim that granting such relief would impede

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BHMI’s ability to protect its interest in TMS and leave Defendants exposed to damages
for which BHMI is responsible.
Without BHMI as a party, the Court can neither enjoin BHMI from marketing TMS
nor order BHMI to disgorge its profits as a nonparty. However, the Court can grant
complete relief to ACI vis a vis the Defendants with regard to ACI’s tort and contract
claims. The granting of complete relief for these claims will not require the Court to
enjoin BHMI or order it to disgorge profits. Thus, under Rule 19(a)(1)(A), BHMI is not a
necessary party for the resolution of the claims ACI has asserted against Defendants.
B. Fed. R. Civ. P. 19(a)(1)(B): Nonparty Interests
Even if a court can grant complete relief in a nonparty’s absence, a nonparty may
still be deemed necessary if either Rule 19(a)(1)(B)(i) or (ii) is satisfied. Under Rule
19(a)(1)(B), if a party claims an interest in the litigation, it may be a necessary party if
disposing of the action without the nonparty would impair the nonparty’s ability to protect
its interest or expose an existing party to a substantial risk of incurring multiple or
inconsistent obligations. See Fed. R. Civ. P. 19(a)(1)(B). In evaluating necessity under
Rule 19(a)(1)(B), subsection (i) looks to the effect of non-joinder on the absent party
while subsection (ii) examines its effect on those already parties to the action. See id.
1. BHMI’s Interest in this Litigation
BHMI does not appear to claim an interest in the subject matter of the present
litigation. See Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 49 (2d Cir. 1996) (“It is the
absent party that must claim an interest [in the subject matter of the litigation.]”) (internal
marks omitted); see also Ohio Valley Envtl. Coal., Inc. v. Hobet Min., LLC, 723 F. Supp.
2d 886, 915 (S.D.W. Va. 2010) (“An interest does not qualify under Rule 19(a)(1)(B)
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unless claimed. Nonetheless, the interest referred to in the Rule is not so narrow as to
require the non-joined party attempt to intervene, or otherwise raise its interest in the
case at bar.”). Defendants have not argued that BHMI has made any affirmative claim
with regard to this action.

As such, Defendants have not met their burden as the

moving party, showing that BHMI has made the requisite claim.
Neither does BHMI have a legally protected interest in this litigation, because
ACI’s claims go to the Defendants’ alleged misconduct.1

ACI states that it “is not

seeking money damages from BHMI, any injunctive relief against BHMI, or any other
remedy against BHMI in this suit,” and “BHMI has and will continue to defend its alleged
rights in [TMS] in the State Court Action.” (Pl. Br. in Opp’n to Def.’s Mot. to Dismiss,
Filing No. 70 at ECF 8.)
Even if BHMI could be shown to claim or possess an interest in this action, there
does not appear to be any scenario in which BHMI would be impaired or impeded from
protecting that interest. As discussed above, the current litigation between Defendants
and ACI cannot bind BHMI. Furthermore, the risk that Defendants may be enjoined
from using TMS does not prejudice BHMI, even if BHMI will subsequently pursue
enforcement of its contract with Defendants. See MasterCard Int’l v. Visa Int’l Serv.

1

See Faiveley Transport USA, Inc. v. Wabtec Corp., 758 F. Supp. 2d 211 (S.D.N.Y. 2010)
(finding that nonparty subsidiary was not a necessary party in action between nonparty’s controlling
corporation and defendant corporation which allegedly misrepresented itself as licensee of nonparty’s
intellectual property); see also Pittsburgh Logistics Sys., Inc. v. C.R. England, Inc., 669 F. Supp. 2d 613,
619 (W.D. Pa. 2009) (“[Under Rule 19(a)(1)(B)], a party is only ‘necessary’ if it has a legally protected
interest, and not merely a financial interest, in the action.”) (internal citations and quotation marks
omitted); Davis Cos., 268 F.3d at 484 (“When a person is not a party to the contract in litigation and has
no rights or obligations under that contract, even though the absent party may be obligated to abide by
the result of the pending action by another contract that is not at issue, the absentee will not be regarded
as an indispensable party in a suit to determine obligations under the disputed contract.”) (quoting 7
Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1613 (3d ed.
2001)).

8

Ass’n, 471 F.3d 377, 385 (2nd Cir. 2006) (“While there is no question that further
litigation between [the nonparty] and [the defendant], and perhaps [the plaintiff] and [the
defendant], is inevitable if [the plaintiff] prevails in this lawsuit, Rule 19(a)(1) is
concerned only with those who are already parties.”).
2. Existing Parties’ Interests
ACI’s claims turn on Defendants’ contractual relationship with ACI. BHMI’s
absence should not subject Defendants to a substantial risk of inconsistent obligations.
Rather, all questions as to Defendants’ liability regarding their contract with ACI, and
their related allegedly tortious conduct, can be adjudicated in the present action. See
Helzberg’s Diamond Shops, Inc. v. Valley W. Des Moines Shopping Ctr., Inc., 564 F.2d
816, 819 (8th Cir. 1977) (“[A]ll of the rights and obligations arising under a lease can be
adjudicated where all of the parties to the lease are before the court.”).
In sum, BHMI is not a necessary party to this action under Rule 19(a)(1) because
ACI’s claims against Defendants are separate and distinct from its claims against BHMI,
and Defendants have not proved that BHMI’s interests, nor Defendants’ own legally
protected interests, will be impaired as a result of this lawsuit. Therefore, the Court will
not dismiss ACI’s Amended Complaint for failure to join a necessary party.
II. Motion to Dismiss for Failure to State a Claim
A.

ACI’s Third Claim: Fraud

Defendants argue that “ACI fails to state a claim for fraud because: (1) its fraud
claims are purely conclusory; (2) it does not properly allege the elements of fraud; (3) its
fraud allegations are not stated with the particularity required by Rule 9(b); and (4) it
fails to state a plausible fraud claim.” (Filing No. 60 at ECF 14-15.)
9

In Nebraska, when asserting a claim for fraudulent misrepresentation, a plaintiff
must allege the following:
(1) that a representation was made; (2) that the representation was false;
(3) that when made, the representation was known to be false or made
recklessly without knowledge of its truth and as a positive assertion; (4)
that the representation was made with the intention that the plaintiff should
rely on it; (5) that the plaintiff did so rely on it; and (6) that the plaintiff
suffered damage as a result.

Knights of Columbus Council 3152 v. KFS BD, Inc., 791 N.W.2d 317, 331 (Neb. 2010).
Pursuant to Federal Rule of Civil Procedure 9(b), Plaintiff must plead “‘the
circumstances constituting fraud . . . with particularity.’ ‘Circumstances’ include such
matters as the time, place and contents of false representations, as well as the identity
of the person making the misrepresentation and what was obtained or given up
thereby.” Bennett v. Berg, 685 F.2d 1053, 1062 (8th Cir. 1982).
1. Elements (1) and (2): Alleged Representation
In the Amended Complaint, ACI alleges that Defendants’ representatives
promised in “various agreements” to “maintain the confidence of and would not copy,
use, disclose, translate or otherwise reproduce or authorize any third party to copy, use,
disclose, translate or otherwise reproduce, [ACI’s IP], including licensed products,
manuals, confidential information, derivative works and other proprietary intellectual
property.” (Filing No. 48 at ECF 35-36 ¶103.)
Defendants raise several issues with respect to the sufficiency of these
allegations.

With respect to the first element of fraudulent misrepresentation,

Defendants argue that the alleged representations are not statements of fact and the
phrase “various agreements” is not sufficiently particular.
10

“To constitute fraud, a

misrepresentation must be an assertion of fact, not merely an expression of opinion.”
Ed Miller & Sons, Inc. v. Earl, 502 N.W.2d 444, 453 (Neb. 1993). “Generally, fraud
cannot be based on predictions or expressions of mere possibilities in reference to
future events.” NECO, Inc. v. Larry Price & Associates, Inc., 597 N.W.2d 602, 606
(Neb. 1999). However, “fraud may be predicated on the representation that an event,
which is in control of the maker, will or will not take place in the future, if the
representation as to the future event is known to be false when made . . . and the other
elements of fraud are present.” Id. at 606-07.
Although ACI does not specifically identify which agreements it refers to in its
claim for relief based on fraudulent misrepresentation, ACI does allege that: on
December 30, 2008, MasterCard Int’l and ACI entered into an agreement regarding
Amendment 5 to the BASE24 License and Service Agreement No. B1522 (the “B1522
Agreement”) (Filing No. 48 at ECF 10 ¶¶ 44, 45); pursuant to the B1522 Agreement,
ACI licensed, among other things, XPNET (Id. at ECF 10 ¶ 44.); the XPNET License
Agreement set forth various confidentiality and proprietary obligations to “insure that the
licensed products and confidential information remained the confidential and proprietary
property of

[ACI] and not subject to publication, disclosure, replication or

misappropriation,” (id. at ECF 11 ¶46.); and that BHMI and Defendants began
discussions regarding the development of TMS in 2008 and early 2009. (Id. at ECF 20
¶ 61.)2

2

In its brief, ACI states that earlier in 2008, prior to December 30, Defendants had already begun
disclosing ACI’s proprietary information to BHMI. Defendants point out that this assertion is not contained
in the Amended Complaint. While this assertion is not in the Amended Complaint, the Court concludes
that this reasonable inference may be drawn from the facts pled.

11

ACI argues that these facts are sufficient to plead fraud because on December
30, 2008, when MasterCard Int’l entered into the agreement regarding Amendment 5 to
the B1255 Agreement, MasterCard Int’l represented that an event in its control, i.e.,
maintaining the confidentiality of ACI’s IP, would take place in the future, and at the time
it made that representation, it knew it was false because Defendants already violated
the agreement.

Even if these facts are sufficient to plead misrepresentation with

particularity, ACI failed to allege that it detrimentally relied on Defendants’ alleged
misrepresentation.
2. Elements (3), (4), and (5): Detrimental Reliance
“[P]arties who allege fraud must plead detrimental reliance with particularity—
including ‘how the defendant intended plaintiffs to act in reliance on each of the alleged
misrepresentations,

the

nature

of

plaintiffs'

justifiable

reliance

misrepresentation, and the damage resulting from such reliance.’”

on

each

Stumm v. BAC

Home Loans Servicing, LP, 914 F. Supp. 2d 1009, 1013 (D. Minn. 2012) (quoting
Allison v. Security Ben. Life Ins. Co., 980 F.2d 1213, 1216 (8th Cir.1992) (internal marks
omitted).
With regard to elements (3), (4), and (5), the Court concludes that ACI did no
more than include threadbare recitals of these elements supported by mere conclusory
statements. The Amended Complaint is deficient because ACI failed to plead, much
less plead with particularity, how it relied to its detriment on the representations made
by Defendants in December of 2008 and thereafter. While ACI discussed its damages
resulting from Defendants’ alleged disclosure of ACI’s proprietary information, it failed to

12

plead facts connecting Defendants’ misrepresentations, ACI’s reliance, and ACI’s
damages.
The only alleged misrepresentations are reaffirmations of contracts made in and
after 2008. ACI has not alleged that it provided Defendants with any trade secrets that
are the subject of this litigation after MasterCard Int’l reaffirmed its contract in 2008, nor
has ACI provided the Court with any facts supporting an inference that ACI would not
have suffered its alleged damages had it not relied on Defendants’ promises in the 2008
agreement and thereafter. In contrast, the facts alleged in the Amended Complaint
support a reasonable inference that Defendants had access to ACI’s IP long before the
December 30, 2008 representation.3 ACI also has not alleged any facts supporting an
inference that Defendants made any promise knowing that promise was false, prior to
December 30, 2008. ACI failed to plead detrimental reliance on Defendants’ alleged
misrepresentations, and its claim for fraud will be dismissed.
B.

ACI’s Fourth Claim: Breach of Duty of Good Faith and Fair Dealing

Defendants contend that ACI failed to plead facts supporting a claim for breach
of duty of good faith and fair dealing and ACI’s claim contains no more than threadbare
recitals of the law.
“The implied covenant of good faith and fair dealing exists in every contract and
requires that none of the parties to the contract do anything which will injure the right of

3

ACI alleged that, in 1980, it licensed ACINET, a predecessor of XPNET, to the National Bank of
Detroit (“NBD”) to use with its Cirrus Debit Switch application. (Filing No. 48 at ECF 1 ¶2.) In 1999, NBD
Bank sold the Cirrus Debit Switch application to MasterCard Int’l and the switch was renamed the
MasterCard Debit Switch application (the “MDS”). (Id.) Defendants have had access to ACI’s IP since at
least 1994. (Id. at ECF 2 ¶3.) MasterCard Int’l had a long-standing license for ACI’s XPNET software.
(Id.)

13

another party to receive the benefit of the contract.” Cimino v. FirsTier Bank, N.A., 530
N.W.2d 606, 616 (Neb. 1995). “The nature and extent of an implied covenant of good
faith and fair dealing is measured in a particular contract by the justifiable expectations
of the parties.” RSUI Indem. Co. v. Bacon, 810 N.W.2d 666, 674 (Neb. 2011). “A
violation of the covenant of good faith and fair dealing occurs only when a party violates,
nullifies, or significantly impairs any benefit of the contract. The question of a party's
good faith in the performance of a contract is a question of fact.” Id.
Here, ACI alleged that it entered into various contracts with Defendants. ACI
also alleged that Defendants disclosed confidential information to BHMI so BHMI could
create replica software, TMS, performing the function of XPNET. ACI also alleged that
Defendants publicly announced use of TMS. These facts, among others alleged in the
Amended Complaint, are sufficient to raise a right to relief for breach of a duty of good
faith and fair dealing above the speculative level because they support reasonable
inferences that ACI had a justifiable expectation that Defendants would refrain from
using ACI’s IP to create a replica software, and Defendants violated ACI’s expectation,
allowing Defendants, and potentially others, to terminate contracts with ACI.
Accordingly, the Court will not dismiss this claim.
C.

ACI’s Fifth Claim: Unjust Enrichment

Defendants argue that ACI’s unjust enrichment claim should be dismissed
because “ACI alleges the existence of enforceable contracts between ACI and
MasterCard . . . .”

(Filing No. 60 at ECF 18.)

To recover on a claim for unjust

enrichment, a plaintiff must show that (1) the defendant received a benefit, (2) the
defendant retained possession of the benefit, and (3) the defendant in justice and
14

fairness ought to pay the plaintiff for the benefit. See Kanne v. Visa U.S.A. Inc., 723
N.W.2d 293, 302 (Neb. 2006). Here, ACI has alleged that Defendants received benefits
from using ACI’s IP improperly.

Defendants argue that ACI’s claim for unjust

enrichment should be dismissed because ACI also alleged the existence of a
contractual relationship between ACI and Defendants which ACI alleges governs
Defendants’ use of ACI’s IP.
“[T]he Nebraska Supreme Court has repeatedly held that a plaintiff is permitted
to plead both express contract and quasi-contract in the same petition.”

Byrne v.

Hauptman, O'Brien, Wolf & Lathrop, P.C., 608 N.W.2d 208, 213 (Neb. 2000). A motion
to dismiss ACI’s unjust enrichment claim on the grounds that ACI has also alleged a
contractual relationship is premature and the Court will not dismiss ACI’s claim on these
grounds.
D.

ACI’s Sixth Claim: Tortious Interference

Under Nebraska law, to plead a cause of action for tortious interference with a
business relationship or expectancy a plaintiff must plead the following:
(1) the existence of a valid business relationship or expectancy, (2)
knowledge by the interferer of the relationship or expectancy, (3) an
unjustified intentional act of interference on the part of the interferer, (4)
proof that the interference caused the harm sustained, and (5) damage to
the party whose relationship or expectancy was disrupted.
Macke v. Pierce, 661 N.W.2d 313, 317 (Neb. 2003) (internal citations and quotations
omitted).
ACI alleged that it has averaged two hundred and fifty (250) XPNET customers
per year. (Filing No. 48 at ECF 25 ¶74). ACI also alleged that Defendants replicated
XPNET, creating TMS with BHMI, and Defendants publically announced the transition
15

from XPNET to TMS. ACI argues that the introduction of TMS into the marketplace has
interfered with ACI’s business relationships. Defendants argue that ACI has failed to
identify any lost business resulting from Defendants’ alleged conduct.

The Amended

Complaint does not allege that ACI lost any customers, other than Defendants, nor has
ACI alleged facts showing harm caused by Defendants’ interference with ACI’s
relationships in some other way as a result of Defendants’ alleged wrongdoing. Thus,
ACI failed to plead facts supporting elements four and five, and this claim will be
dismissed.
E.

ACI’s Seventh Claim: Conversion

Defendants argue that ACI failed to plead conversion because ACI did not allege
that it was deprived of the use or possession of its IP.
Under Nebraska law, “[c]onversion is any unauthorized or wrongful act of
dominion exerted over another's personal property which deprives the owner of his
property permanently or for an indefinite period of time.” Roth v. Farmers Mut. Ins. Co.
of Nebraska, 371 N.W.2d 289, 291 (Neb. 1985).

Nebraska Courts also define

conversion as “any distinct act of dominion wrongfully asserted over another's property
in denial of or inconsistent with that person's rights.” Spear T Ranch, Inc. v. Knaub, 691
N.W.2d 116, 126-27 (Neb. 2005). “[T]he essence of conversion is not acquisition by the
wrongdoer, but the act of depriving the owner wrongfully of the property.” Zimmerman
v. FirsTier Bank, N.A., 585 N.W.2d 445, 452 (Neb. 1998) (quoting Terra Western Corp.
v. Berry and Co., 295 N.W.2d 693, 696 (Neb. 1980)).
ACI has not alleged that it was deprived of the use of its IP in any form nor has
ACI alleged that Defendants had access to some form of ACI’s IP that ACI did not
16

simultaneously have access to. Instead of addressing its failure to allege such facts,
ACI responds to Defendants’ argument by insisting that intangible property is subject to
conversion under Nebraska law. The Court recognizes that Nebraska law provides for
conversion actions with respect to intangible property under some circumstances.
Nonetheless, ACI’s claim for conversion is still flawed and will be dismissed because
ACI failed to allege that it was deprived of its property in any form.
Moreover, the case on which ACI relies to support its claim that intangible
property is subject to conversion and therefore ACI’s claim should not be dismissed—
Mundy v. Decker, No. A-97-882, 1999 WL 14479 (Neb. Ct. App. Jan. 5, 1999)—is
distinguishable. In Mundy, an employer’s former employee deleted stored files from her
work-computer’s hard drive. Id. at *1. As a result, the employer was deprived of access
to a computer directory that “save[d] time and effort by enabling retrieval of . . . stored
documents for fast and easy revisions.” Id. While some of the deleted files were
available in other forms, handwritten hard-copies and floppy disks, the court recognized
a distinction between the copies of the files in other forms and the files stored on the
former employee’s hard drive. Id. at *5. Prior to deletion, the deleted documents could
be accessed by a computer directory. Id. The directory allowed an employee to “avoid
completely retyping text in similar or repetitive situations, and [the] directory serve[d] as
a storage and reference mechanism. [The] directory also store[d] works in progress
which [could] later be completed or revised.”

Id. at *1.

As a result of the former

employee’s acts, the directory no longer existed.” Id.
Unlike the employer in Mundy, ACI has not demonstrated that it no longer has
access to its intangible property in some form because of Defendants’ alleged
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wrongdoing.

In Mundy, the former employee’s deletion of files clearly involved a

deprivation of property, while Defendants’ use of ACI’s IP does not. ACI’s claim for
conversion is not deficient because ACI pleaded conversion of intangible property.
Rather, ACI’s claim is wanting because it fails to allege Defendants’ “act of depriving
[ACI] wrongfully [its] property,” that is, “the essence” of a claim for conversion. See
Zimmerman, 585 N.W.2d at 452.

Accordingly, ACI’s claim for conversion will be

dismissed.
F.

ACI’s Eighth Claim: Trespass to Chattels

Defendants argues that ACI’s trespass to chattels claim should be dismissed
because ACI failed to allege a plausible claim that it was dispossessed or otherwise
deprived of the use of certain characteristics of XPNET or that XPNET itself was
impaired.
The Restatement (Second) of Torts identifies the following elements of a
trespass to chattel claim:
One who commits a trespass to chattel is subject to liability to the
possessor of the chattel if, but only if,
(a) he dispossesses the other of the chattel, or
(b) the chattel is impaired as to its condition, quality, or value, or
(c) the possessor is deprived of the use of the chattel for a substantial
time, or
(d) bodily harm is caused to the possessor, or harm is caused to some
person or thing in which the possessor has a legally protected interest.

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Restatement (Second) Torts § 218 (1965). 4 In SecureInfo Corp. v. Telos Corp., 387 F.
Supp. 2d 593, 621 (E.D. Va. 2005), the court considered the plaintiff’s trespass to
chattels claim based on the defendant’s alleged unauthorized download of plaintiff’s
software.

Applying the language in Restatement (Second) Torts § 218, the court

dismissed plaintiff’s trespass to chattels claim for failure to allege that plaintiff’s software
was impaired.

Id.

Here, the Court concludes that dismissal of ACI’s trespass to

chattels claim is appropriate because, as stated above, ACI did not allege that
Defendants deprived it of access to XPNET nor did ACI allege that XPNET itself was
impaired.
G.

ACI’s Ninth Claim: Civil Conspiracy

Defendants argue that ACI’s civil conspiracy claim should be dismissed because
MasterCard Tech and MasterCard Int’l, subsidiaries of the same parent, cannot
conspire.
Under Nebraska law, “[a] civil conspiracy is a combination of two or more
persons to accomplish by concerted action an unlawful or oppressive object, or a lawful
object by unlawful or oppressive means.” Eicher v. Mid Am. Fin. Inv. Corp., 748 N.W.2d
1, 15 (Neb. 2008). “A corporation acts through its agent and the acts of the agent are
the acts of the corporation.” Dixon v. Reconciliation, Inc., 291 N.W.2d 230, 234 (Neb.
1980) (internal citations and quotations omitted).

As a general rule, “a corporation

cannot conspire with itself.” Id. Thus, if all acts relevant to this action by MasterCard
Tech and MasterCard Int’l are acts as agents to their shared parent, then MasterCard

4

The parties have not identified any cases discussing claims for trespass to chattels under
Nebraska law, nor has the Court found any such cases.

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Tech and MasterCard Int’l cannot conspire.

However,

“[w]hether an agency

relationship exists depends on the facts underlying the relationship of the parties . . . .”
State of Nebraska ex rel. Medlin v. Little, 703 N.W.2d 593, 597 (Neb. 2005). A parentsubsidiary relationship existing between two corporations does not as a matter of law
create an agency relationship. See, e.g,. Stoehr v. American Honda Motor Co., Inc.,
429 F. Supp. 763, 766 (D. Neb. 1977) (“A parent-subsidiary relationship by itself is not
sufficient to justify service [on one corporation as an agent of another corporation
pursuant to Fed. R.Civ.P. 4(d)(3)].”); see also Restatement (Third) Of Agency § 1.01,
Reporter’s Notes e.(2) (2006) (listing cases that stand for the proposition that “a parentsubsidiary relationship does not in itself create a relationship of agency”).
While MasterCard Tech and MasterCard Int’l as subsidiaries of the same parent
corporation may also be agents of the same parent corporation, they are not agents of
their parent corporation as a matter of law.

If the acts of MasterCard Tech and

MasterCard Int’l are not the acts of the same parent corporation, then it is plausible that
the two might conspire.

ACI alleged that MasterCard Tech and MasterCard Int’l

developed and carried out a scheme to disclose ACI’s IP to BHMI.

Whether

MasterCard Tech and MasterCard Int’l were acting as agents of the same parent is a
question of fact, not properly decided on this motion to dismiss.

The Amended

Complaint does not identify the capacity in which MasterCard Tech and MasterCard Int’l
acted, that is, ACI has not stated whether Defendants acted as agents of the same
parent corporation. Giving ACI the benefit of every inference which may reasonably be
drawn from the allegations in the Amended Complaint, the Court concludes that ACI’s
allegations are sufficient to plead civil conspiracy.
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CONCLUSION
The Court concludes that BHMI is not a necessary party to this action, and
Defendants’ motion to dismiss based on ACI’s failure to join BHMI will be denied. For
the reasons stated above, ACI’s claims for fraud, tortious interference, conversion, and
trespass to chattels will be dismissed, with leave to amend. Defendants’ motion is
otherwise denied. Accordingly,
IT IS ORDERED:
1. Defendants’ Motion to Dismiss (Filing No. 59) is granted in part, as follows:
ACI’s claims for fraud, tortious interference, conversion, and trespass to
chattels are dismissed, with leave to amend;
2. Defendants’ Motion is otherwise denied;
3. ACI is granted leave to file a second amended complaint on or before
January 20, 2015; and
4. Defendants will respond to any second amended complaint, or to the
surviving claims in the Amended Complaint (Filing No. 48) if no second
amended complaint is filed, on or before February 6, 2015.
Dated this 31st day of December, 2014.
BY THE COURT:
s/Laurie Smith Camp
Chief United States District Judge

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