FSP, Inc. et al v. MJM Fantasy Sports, LLC et al

Filing 19

ORDER Denying 13 Motion to Dismiss. Signed by Judge Roger L. Hunt on 12/14/2011. (Copies have been distributed pursuant to the NEF - SLR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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FSP, INC. A Nevada corporation; MARK
VALENTI, an individual,

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Plaintiffs,
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vs.
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MJM FANTASY SPORTS LLC, a Washington )
limited liability company; and MARC A.
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MALONE, an individual,
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Defendants.
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_______________________________________)
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MJM FANTASY SPORTS LLC, a Washington )
limited liability company,
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Third-party Plaintiff,
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vs.
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UPROAR, INC., a Nevada corporation,
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Third-party Defendant. )
_______________________________________)

Case No.: 2:11-cv-00747-RLH-RJJ
ORDER
(Motion to Dismiss–#13)

Before the Court is Plaintiffs FSP, Inc. and Mark Valenti and Third-party

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Defendant UpRoar, Inc.’s Motion to Dismiss Counterclaims (#13, filed Aug. 8, 2011) based on a

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failure to state a claim. The Court has also considered Defendant/Third-party Plaintiff MJM

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Fantasy Inc.’s Opposition (#14, filed Aug. 25). No reply was filed.

AO 72
(Rev. 8/82)

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BACKGROUND

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The dispute arises out of the alleged breach of contracts entered into between Mark

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Valenti, UpRoar, FSP, Malone, and MJM. Malone (who owns MJM) and MJM allegedly agreed

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to disclose certain proprietary information to Valenti (who owns FSP and UpRoar), FSP, and

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UpRoar in order to facilitate a possible business deal. That deal fell through, but Malone and

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MJM claim that Valenti, UpRoar, and FSP have improperly used the proprietary information they

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gained through the contracts. Valenti and FSP then filed a declaratory judgment action in this

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Court requesting the Court declare that they did not breach the contracts, and alleging fraud in the

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inducement and breach of contract against Malone and MJM. In response, Malone and MJM filed

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counterclaims and a third-party complaint for misappropriation of trade secrets and breach of

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contract. Now before the Court is Valenti, FSP, and UpRoar’s motion to dismiss the

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counterclaims and third-party complaint. For the reasons discussed below, the Court denies the

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motion.

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DISCUSSION
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Standard

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A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which

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relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “a short

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and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.

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8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require

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detailed factual allegations, it demands “more than labels and conclusions” or a “formulaic

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recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)

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(citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). “Factual allegations must be enough to rise

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above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a

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complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its

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face.” Iqbal, 129 S. Ct. at 1949 (internal citation omitted).

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AO 72
(Rev. 8/82)

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In Iqbal, the Supreme Court recently clarified the two-step approach district courts

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are to apply when considering motions to dismiss. First, a district court must accept as true all

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well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the

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assumption of truth. Id. at 1950. Mere recitals of the elements of a cause of action, supported only

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by conclusory statements, do not suffice. Id. at 1949. Second, a district court must consider

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whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 1950. A

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claim is facially plausible when the plaintiff’s complaint alleges facts that allows the court to draw

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a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 1949. Where

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the complaint does not permit the court to infer more than the mere possibility of misconduct, the

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complaint has “alleged—but not shown—that the pleader is entitled to relief.” Id. (internal

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quotation marks omitted). When the claims in a complaint have not crossed the line from

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conceivable to plausible, the complaint must be dismissed. Twombly, 550 U.S. at 570.

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II.

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Analysis
MJM asserts claims for misappropriation of trade secrets under NRS § 600A.030,

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et. seq., and breach of contract. “The elements of a misappropriation of trade secrets claim

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include: (1) a valuable trade secret; (2) misappropriation of the trade secret through use,

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disclosure, or nondisclosure of use of the trade secret; and (3) the requirement that the

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misappropriation be wrongful because it was made in breach of an express or implied contract or

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by a party with a duty not to disclose.” Frantz v. Johnson, 999 P.2d 351, 358 (Nev. 2000)

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(citations and footnotes omitted). In arguing that MJM failed to assert a claim for

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misappropriation of trade secrets FSP focuses on MJM’s failure to specifically identify the alleged

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trade secret and failure to identify how they protected the trade secret. FSP cites no law for why

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these failures require dismissal of the counterclaims. These issues may become important later in

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the case, but they are insufficient reason to warrant dismissal at the pleading stage. Thus, the

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Court declines to dismiss the misappropriation claim.

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AO 72
(Rev. 8/82)

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FSP also focuses on MJM’s failure to disclose the trade secret and any other

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confidential information in relation to MJM’s breach of contract claim. Again, FSP cites no law

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for why such a failure requires the court to dismiss a run of the mill breach of contract claim and

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the Court refuses to do so. The Court does not find it necessary for a party to disclose confidential

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information in a public pleading in order to assert claims related to the confidential information, at

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least not in this case.

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CONCLUSION

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Accordingly, and for good cause appearing,

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IT IS HEREBY ORDERED that Valenti, FSP, and UpRoar’s Motion to Dismiss

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(#13) is DENIED.
Dated: December 14, 2011.

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____________________________________
ROGER L. HUNT
United States District Judge

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AO 72
(Rev. 8/82)

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