NVR, INC. v. DAVERN

Filing 221

OPINION. Signed by Judge Noel L. Hillman on 11/29/2016. (TH, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

NVR, INC.
Plaintiff,
v.

Civ. No. 15-5059 (NLH/KMW)

JONATHAN DAVERN,
OPINION
Defendant.

APPEARANCES:
JAMES S. YU
BARRY J. MILLER (Pro Hac Vice)
SEYFARTH SHAW, LLP
620 EIGHTH AVENUE
NEW YORK, NY 10018-1405
On behalf of Plaintiff NVR, Inc.
EDWARD T. KANG
DANIEL D. HAGGERTY
KANG HAGGERTY & FETBROYT LLC
123 S. BROAD STREET, SUITE 1670
PHILADELPHIA, PA 19109
On behalf of Defendant Jonathan Davern

HILLMAN, District Judge
In June, 2015, Defendant Jonathan Davern left the employ of
Plaintiff NVR, Inc. homebuilders to work for one of NVR’s
largest direct competitors, non-party D.R. Horton.

This

particular event, in and of itself, undisputedly does not give
rise to liability; Davern and NVR did not have a non-compete
agreement of any kind.

However, according to NVR, Davern took

with him more than 97,000 documents and emails belonging to NVR
which allegedly contained NVR’s confidential and proprietary
information. (Amend. Compl. ¶ 139)

Moreover, NVR alleges that

Davern acted maliciously in taking the documents, doing so “for
the specific purpose of doing harm to NVR’s competitive position
in the Delaware Valley region.” (Amend. Compl. ¶ 1)

In short,

NVR thinks Davern engaged in corporate espionage; that Davern
deliberately stole proprietary information so that he could give
it to his new employer, NVR’s competitor, D.R. Horton.
However, since the complaint was filed, and since this
Court entered a preliminary injunction, see NVR., Inc. v.
Davern, 2015 U.S. Dis. LEXIS 171428 (D.N.J. Dec. 23, 2015), a
second, competing narrative has emerged.

Davern contends that

NVR’s primary objective is to get Davern fired from D.R. Horton,
sabotage Davern’s relationship with Horton, and/or injure
Horton’s competitive position in the market, and that NVR has
attempted to accomplish its goal by (1) over-litigating and
prolonging this case, and doing so in a manner calculated to
needlessly embarrass and burden Davern; and (2) directly
contacting Horton on four separate occasions concerning Davern’s
alleged disloyalty to NVR.

Accordingly, Davern now asserts

three counterclaims: (1) tortious interference with his
contractual relationship with Horton; (2) abuse of process; and
(3) defamation.
2

Presently before the Court is NVR’s motion to dismiss the
counterclaims, and Davern’s motion to seal portions of NVR’s
brief in connection with a previous motion, which NVR opposes.
For the reasons set forth herein, NVR’s Motion will be
denied and Davern’s motion will be granted.
I.
Davern asserts that a reasonable factfinder could conclude
that NVR is not really concerned with the documents and
information Davern allegedly took with him.

His counterclaims

assert the following facts to support such an inference:
•

Between 2005 and 2015, NVR did not have a
policy or practice of training or educating
new employees on “what NVR considers to be
confidential, proprietary, or trade secret
information;” nor did it train employees on
how to handle or share such information
(Counterclaim ¶ 9-10)

•

Despite high attrition rates, “NVR does
nothing to retrieve confidential, proprietary
or trade secret information residing on
personal
computing
devices
of
departing
employees,” (Counterclaim ¶ 26-27) and NVR has
no policy prohibiting storage of information
on personal devices. (Counterclaim ¶ 25)

•

Four days before Davern resigned from NVR,
NVR’s IT Department learned that Davern had
emailed more than 270 messages from his work
email to his personal email. That same day,
the IT Department emailed NVR’s Vice President
for Audit and Corporate Governance, Michael
Kotowski, to report the activity, but he did
nothing. (Counterclaim ¶ 46-47)

•

Discovery in this suit has revealed that NVR’s
potential damages is very limited.
NVR
3

admitted during its deposition that it has not
lost any sales or land opportunities as a
result of Davern’s alleged conduct, nor has
NVR lost any employees. (Counterclaim ¶ 9394) Moreover, a forensic analysis of Davern’s
digital devices and email accounts revealed
that Davern did not access any NVR information
after his resignation. (Counterclaim ¶ 95)
•

Despite what has been learned in discovery,
“NVR has needlessly pursued this litigation
and
deliberately
escalated
its
costs.”
(Counterclaim ¶ 120)

Davern further asserts that a reasonable factfinder could
conclude that NVR’s filing and pursuit of this litigation is
nothing more than pretext for its true motive, which is revenge
against Davern and/or to deprive Horton of Davern’s services.
His counterclaims assert the following facts to support such an
inference:
•

“[R]ight after filing this lawsuit,” NVR’s
General
Counsel
called
Horton’s
General
Counsel to tell Horton about “‘the vast number
of documents’ that Davern took from NVR” but
did not explain that “over 70% of these
documents were Davern’s personal documents.”
(Counterclaims ¶ 111-13)

•

In that same conversation, NVR’s General
Counsel did not ask Horton to return any
confidential
or
proprietary
information
Davern might possess. (Counterclaims ¶ 115)

•

Despite Davern’s deposition transcript being
designated
“confidential,”
NVR’s
counsel
asked that the confidential designation be
removed so that NVR’s counsel could show the
transcript to Horton. (Counterclaims ¶ 117)

4

•

When Davern’s counsel declined to change the
confidential designation of the deposition
transcript, NVR’s counsel wrote to Horton’s
president, its CEO, its COO, and its Chief
Legal Officer suggesting that Horton may be
interested in what was said in Davern’s
deposition, and suggesting that if Davern’s
counsel “reconsiders his position,” NVR might
better “avoid undue disruption to your
business” through formal legal “claims against
D.R. Horton” or “through subpoenas or other
formal discovery requests promulgated to D.R.
Horton.” (Counterclaims Ex. 9)

•

“Davern believes that [NVR] has contacted
Horton at least four times regarding Davern”
and those communications have had the effect
of “limit[ing] Davern’s impact at Horton.”
(Counterclaims ¶ 122)

II.
A. Motion to Dismiss Standard
When considering a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted
pursuant to Federal Rule of Civil Procedure 12(b)(6), a court
must accept all well-pleaded allegations in the complaint as
true and view them in the light most favorable to the plaintiff.
Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005).

It is well

settled that a pleading is sufficient if it contains “a short
and plain statement of the claim showing that the pleader is
entitled to relief.”

Fed. R. Civ. P. 8(a)(2).

Under the liberal federal pleading rules, it is not
necessary to plead evidence, and it is not necessary to plead

5

all the facts that serve as a basis for the claim. Bogosian v.
Gulf Oil Corp., 562 F.2d 434, 446 (3d Cir. 1977).

However, “the

Federal Rules of Civil Procedure . . . do require that the
pleadings give defendant fair notice of what the plaintiff’s
claim is and the grounds upon which it rests.” Baldwin Cnty.
Welcome Ctr. v. Brown, 466 U.S. 147, 149-50 n.3 (1984)
(quotation and citation omitted).
A district court, in weighing a motion to dismiss, asks
“‘not whether a plaintiff will ultimately prevail but whether
the claimant is entitled to offer evidence to support the
claim.’” Bell Atlantic v. Twombly, 550 U.S. 544, 563 n.8 (2007)
(quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974)); see also
Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009)(“Our decision in
Twombly expounded the pleading standard for ‘all civil actions’
. . . .”); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.
2009)(“Iqbal . . . provides the final nail in the coffin for the
‘no set of facts’ standard that applied to federal complaints
before Twombly.”).
B.

Motion to Seal Standard
In deciding whether to seal documents filed on the public

docket, the Court considers “(a) the nature of the materials or
proceedings at issue, (b) the legitimate private or public
interests which warrant the relief sought, (c) the clearly
defined and serious injury that would result if the relief
6

sought is not granted, and (d) why a less restrictive
alternative to the relief sought is not available.” L. Civ. R.
5.3(c)(2).
The Court should also consider “1) whether disclosure will
violate any privacy interests; 2) whether the information is
being sought for a legitimate purpose or for an improper
purpose; 3) whether disclosure of the information will cause a
party embarrassment; 4) whether confidentiality is being sought
over information important to public health and safety; 5)
whether the sharing of information among litigants will promote
fairness and efficiency; 6) whether a party benefitting from the
order of confidentiality is a public entity or official; and
7) whether the case involves issues important to the public.”
Glenmede Trust Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995).
III.
A.
NVR’s Motion to Strike Davern’s Counterclaims as Untimely
Filed and Without Leave of Court
NVR asserts two arguments in support of its Motion: (1)
Davern’s Amended Answer containing the counterclaims was filed 7
days late; and (2) Davern failed to seek leave of Court to file
the counterclaims.
Both arguments fail.

NVR does not assert that the 7-day

delay resulted from any bad faith.

Indeed, Davern’s counsel

explains that the delay resulted from an internal calendaring

7

error and nothing more.

Additionally, NVR identifies no

prejudice attributable to the 7-day delay.
The Court also declines to dismiss the counterclaims due to
Davern’s failure to seek leave.

Rather, the Court will grant

leave nunc pro tunc to the counterclaims’ filing date. 1

“The

court should freely give leave [to amend a pleading] when
justice so requires.” Fed. R. Civ. P. 15(a)(2).

The grant or

denial of leave is within the discretion of the District Court,
and a court may deny leave to amend in the presence of “undue
delay, bad faith, dilatory motive, prejudice, [or] futility.” In
re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d
Cir. 1997)(internal citations omitted).
The Court discerns no undue delay or dilatory motive in
amendment.

The counterclaims are based on events that happened

after the initiation of this suit and have developed over the
course of this litigation. See Fed. R. Civ. P. 13(e)(“The court
may permit a party to file a supplemental pleading asserting a
counterclaim that matured or was acquired by the party after
serving an earlier pleading.”).
The Court rejects NVR’s assertion that it will be
prejudiced by allowing amendment.

1

While NVR asserts that

Davern disputes that leave was required under the
circumstances. The Court assumes without deciding that leave
was required.
8

“substantial new discovery” will be needed, the Court disagrees
that, within the context of this suit, such new discovery will
be so substantial as to rise to the level of prejudicial.
Lastly, there is nothing before the Court suggesting the
counterclaims are made in bad faith, and for the reasons set
forth next, amendment would not be futile.
B.

NVR’s Motion to Dismiss
NVR asserts that all three counterclaims are barred by the

litigation privilege, and that each counterclaim fails to state
a claim.
1.

The Court addresses each argument in turn.

The litigation privilege
Under New Jersey law, the litigation privilege “applies to

any communication (1) made in judicial or quasi-judicial
proceedings; (2) by litigants or other participants authorized
by law; (3) to achieve the object of the litigation; and (4)
that have some connection or logical relation to the action.”
Hawkins v. Harris, 141 N.J. 207, 216 (1995); see also Loigman v.
The Township Committee of the Township of Middletown, 185 N.J.
566, 585 (2006).
The Court holds that the litigation privilege does not
apply to bar Davern’s counterclaims because all three
counterclaims are premised on the theory that this entire
litigation is pretextual.

According to Davern, all of NVR’s

actions were not designed to achieve the object of the
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litigation-- i.e., the retrieval of confidential information and
money damages-- but rather, to get Davern fired from Horton,
sabotage Davern’s relationship with Horton, and/or harm Horton’s
competitive position in the market.

In light of such

allegations, the litigation privilege cannot shield NVR from
liability for filing and pursuing alleged sham litigation, nor
from making out-of-court statements to a non-party, which
statements are alleged to have been made for purposes unrelated
to the litigation.
2.
Tortious interference with Davern’s contractual
relationship with Horton
Davern must allege facts establishing that he “had a
reasonable expectation of economic advantage that was lost as a
direct result of defendants’ malicious interference, and that
[he] suffered losses thereby.” Lamorte Burns & Co. v. Walters,
167 N.J. 285, 305-06 (2001).
NVR argues that Davern’s tortious interference claim fails
because Davern has not alleged that he has lost any economic
advantage as a result of NVR’s alleged tortious conduct.
Basically, NVR argues that because Davern remains employed with
Horton, his claim must fail.

The Court disagrees.

Davern has adequately alleged that NVR’s actions have
hampered Davern’s ability “to fully perform his employment
duties[,] has led to Davern earning less from Horton than he

10

otherwise would have, and has diminished Davern’s reputation
within the company, affecting his future prospects with Horton.”
(Opposition Breif, p. 20)

Specifically, the crossclaim alleges

that “NVR’s tortious conduct prevented Davern from performing
his duties for Horton fully and completely, which effectively
limited Davern’s impact at Horton,” (Counterclaim ¶ 122) and
“diminished Davern’s reputation with Horton.” (Counterclaim ¶
124)
The Motion to Dismiss the tortious interference
counterclaim will be denied.
3.

Abuse of process
“An action for malicious abuse of process will lie against

one who uses a writ after its issuance solely to coerce or
injure the defendant.” Tedards v. Auty, 232 N.J. Super. 541, 549
(App. Div. 1989)(citing Ash v. Cohn, 119 N.J.L. 54, 58 (E. & A.
1937)).

“[P]rocess has not been abused unless after its

issuance the defendant reveals an ulterior purpose he had in
securing it by committing further acts whereby he demonstrably
uses the process as a means to coerce or oppress the plaintiff.”
Id. at 550.
As already set forth, Davern alleges that NVR has an
ulterior motive in filing suit and continuing to pursue this
suit in the manner in which it has: to get Davern fired from
Horton, sabotage Davern’s relationship with Horton, and/or harm
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Horton’s competitive position in the market.

This states a

claim for abuse of process.
NVR, however, relying on Jewett v. IDT Corp., argues that
an abuse of process claim “does not apply broadly to all
proceedings in a legal action.

Rather, it is limited to certain

products of litigation that a court issues, such as a summons,
mandate, or writ used by a court to compel the appearance of the
defendant in a legal action or compliance with its orders.” 2007
U.S. Dist. LEXIS 67284 at *19 (D.N.J. Sept. 11, 2007).
Therefore, NVR asserts, Davern’s counterclaim fails.
The Court disagrees.

Davern asserts that NVR never needed

to file this suit in the first place because prior to the filing
of the complaint, Davern agreed to give back all of the
documents and information to NVR.

(Opposition Brief p. 22)

Indeed, the counterclaim alleges, “NVR instigated this lawsuit
against Davern notwithstanding the fact that before filing suit,
NVR knew that Davern had agreed to return all NVR information in
his possession and had . . . turned over to counsel all his
digital devices for this purpose.” (Counterclaim ¶ 128)

Thus,

the summons issued to Davern when NVR filed this suit fulfills
the “process” requirement. See also Avaya, Inc. v. Cisco Sys.,
2012 U.S. Dist. LEXIS 79219 at *9 (D.N.J. June 6, 2012)(“The
typical abuse of process claim involves leveraging some

12

attachment process or complaint in order to achieve some other
end.”).
The Court also rejects NVR’s argument that Davern alleges
no “further acts” after the issuance of process that would
plausibly support a conclusion that NVR has pursued this suit
solely to injure Davern.

Davern alleges that discovery in this

suit has revealed that NVR’s potential damages recovery is
limited.

NVR admitted during its deposition that it has not

lost any sales or land opportunities as a result of Davern’s
alleged conduct, nor has NVR lost any employees. (Counterclaim ¶
93-94)

Moreover, a forensic analysis of Davern’s digital

devices and email accounts revealed that Davern did not access
any NVR information after his resignation. (Counterclaim ¶ 95)
Yet this Court has observed first-hand how NVR continues to
litigate this case in a manner inconsistent with any realistic
potential damages recovery. 2
Accordingly, the Motion to Dismiss the abuse of process
counterclaim will be denied.
4.

Defamation
NVR argues that Davern fails to identify any defamatory

statements, and therefore the defamation counterclaim fails to

2

NVR’s opposition to Davern’s Motion to Seal, discussed infra,
is but one example of NVR’s conduct in this regard.
13

give NVR fair notice of the nature of the claim.

The Court

disagrees.
Detailed pleading is not required under Fed. R. Civ. P.
8(a)(2).

Davern alleges that NVR’s General Counsel told Horton

that “Davern stole 97,000 documents constituting NVR’s trade
secrets or confidential information” (Counterclaim ¶ 151), and
the counterclaim further explains why that statement was
allegedly misleading-- approximately 70,000 of those documents
are allegedly personal documents (see counterclaim ¶ 151, 153);
and also false-- Davern denies that any of the information
contained in the documents constituted NVR’s trade secrets (see
counterclaim ¶ 152).
The Motion to Dismiss the defamation counterclaim will be
denied.
C.

Davern’s Motion to Seal
Davern proposes that certain redactions be made to NVR’s

reply brief, and accompanying exhibit B-4 (Docket #91), filed in
connection with NVR’s previous Motion for a Temporary
Restraining Order. 3

Davern asserts that these limited redactions

are appropriate because the information contained therein is
subject to the parties’ Discovery Confidentiality Agreement and
because NVR seeks disclosure of such materials for no legitimate

3

The specific proposed redactions are set forth at p. 4-5 of
Davern’s moving brief, docket #124.
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purpose, but rather simply to embarrass Davern and harm his
relationship with his current employer.
In opposition, NVR submits a 20-page brief in which it
argues Davern consented to the materials being publicly filed,
and further advocates for an overly narrow and hyper-technical
view of what may be sealed under the Court’s Local Rule and
relevant caselaw.

Notably, nowhere in the 20-page brief does

NVR explain why the information at issue should be available to
the public; rather, it simply asserts that Davern has not met
his burden to overcome the presumption of public access.
The Court finds both of NVR’s arguments entirely
unpersuasive.
As to the issue of consent, defense counsel adequately
explains that consent was inadvertent and resulted from a
miscommunication occurring over various email exchanges.

The

Court concludes that Davern’s counsel did not truly consent,
which is logically implicit in the fact that Davern’s counsel
filed the Motion to Seal in the first place. 4

4

The Court does not know whether counsel for the parties
attempted to clarify the apparent miscommunication prior to NVR
filing its opposition. The Court would expect, however, in the
normal course of litigation conducted in a manner consistent
with this Court’s Guidelines for Litigation Conduct, L. Civ. R.
App’x R, that once Davern’s counsel filed the Motion to Seal,
NVR’s counsel would have noted the apparent inconsistency
between Davern’s counsel’s informal position over email and
formal position in the motion to seal, and would have reached
out to Davern’s counsel to attempt to resolve the issue prior to
15

The Court also concludes that the information sought to be
sealed has little to no value to the public at large, and
further, would embarrass Davern if disclosed.

Moreover, while

the Court makes no factual finding, the Court does note that
Davern asserts that NVR opposes sealing this information for an
improper purpose, which is to negatively impact Davern’s
employment relationship with Horton.
Accordingly, the Motion to Seal will be granted.

Dated: November 29, 2016
At Camden, New Jersey
___s/ Noel L. Hillman
_
NOEL L. HILLMAN, U.S.D.J.

taking the position NVR has in its opposition. Cf. L. Civ. R.
37.1(b)(“Discovery motions must be accompanied by an affidavit,
or other document complying with 28 U.S.C. § 1746, certifying
that the moving party has conferred with the opposing party in a
good faith effort to resolve by agreement the issues raised by
the motion without the intervention of the Court and that the
parties have been unable to reach agreement.”).
16