ADP, LLC v. ULTIMATE SOFTWARE GROUP, INC.

Filing 65

OPINION/ORDER denying 30 Motion to Dismiss Counts IV & V ; administratively terminating 40 Motion to Dismiss Counterclaims; the letter application of USG (ECF no. 57) to amend the Counterclaims is GRANTED. USG shall file its Amended Answer, Affirmative Defenses and Counterclaims, substantially in the form proposed (ECF no. 57-2) as a separate document within five days. Signed by Judge Kevin McNulty on 6/8/17. (DD, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

ADP, LLC,

Civ. No. 16-8664 (KM)(MAH)
Plaintiff,
OPINION & ORDER

V.

ULTIMATE SOFTWARE GROUP,
INC.,
Defendant.
The complaint filed in this action by ADP, LLC, alleges that the
defendant, Ultimate Software Group, Inc. (“USG”), raided ADP’s sales force,
hired ADP’s ex—employees in violation of their non-competition and non
disclosure agreements, and thereby gained access to ADP’s trade secrets and
confidential information. USG counterclaims for tortious interference with
prospective economic benefit and unfair competition. This matter comes before
the Court on USG’s motion (ECF no. 30) to dismiss Counts IV and V of the
Complaint, USG’s letter application (ECF no. 57) to amend its Counterclaims,
and ADP’s motion (ECF no. 40) to dismiss the Counterclaims in their original
form. For the reasons stated herein, USG’s motion for partial dismissal of the
Complaint will be denied, USG’s motion to amend the Counterclaims will be
granted, and ADP’s motion to dismiss the Counterclaims will be
administratively terminated without prejudice to refiling in response to the
amended version of the Counterclaims.
I.

Motion to dismiss Counts IV and V of the Complaint
USG moves to dismiss Counts IV and V of the Complaint for failure to

state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6).
Count IV asserts a claim that Ultimate violated the Florida Deceptive and
Unfair Trade Practices Act (“FDUPTA”), Fla. Stat.
1

§ 501.204. Count V asserts a

New Jersey state law claim of “corporate raiding.” For the reasons stated
herein, the motion to dismiss will be denied.
Fed. R. Civ. P. 12(b)(6) provides for the dismissal of a complaint, in whole
or in part, if it fails to state a claim upon which relief can be granted. In
deciding such a motion to dismiss, a court must take all allegations in the
complaint as true and view them in the light most favorable to the plaintiff. See
Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels & Casino Resorts, Inc.
v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998); see also Phillips v.
County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (“reasonable inferences”

principle not undermined by later Supreme Court Twombly case, infra). The
factual allegations of the complaint must be sufficient to raise a plaintiff’s right
to relief above a speculative level, such that it is “plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). 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).
As to Count IV (FDUPTA), USG’s essential objection is that the complaint
fails to allege that any injury or wrongful conduct occurred in Florida. It
postures that objection variously as a choice-of-law, standing, or substantive
issue. The Complaint alleges, however, that USG has its principal place of
business in Florida, and that the wrongful acts were committed by USG’s
managers and employees. (E.g., Cplt. ¶J 2, 6) The Complaint further alleges
that USG poached an ADP employee who was “based out of the Florida
Panhandle covering the surrounding region for ADP’s National Account
Services division,” and a second employee who worked as a “geo district
manager for the Alabama/Mississippi/Florida region.” (Compl. 33(i), (n)) USG
¶
allegedly did so in order “to target and misappropriate ADP’s customers in
Florida and elsewhere.” (Cplt. ¶j 85, 87-88)
That is enough to go forward on Count IV. USG’s further substantive
objections involve matters of fact that must be resolved on summary judgment
2

or at trial.
As to Count V, USG essentially argues that the Complaint does not
adequately allege improper motive or improper means in connection with its
1
hiring of AD P’s ex-employees.
As to improper motive, the Complaint does allege that USG actions were
taken “with malice toward ADP and are without privilege or justification.” Not
enough, says USG; the case law has requires intent to destroy a competitor’s
business, for example by hiring away the entire sales force; here, by contrast,
USG has hired away approximately 15 ADP employees. Even under the
heightened Rule 9(b) standard for pleading fraud, however, “[m]alice, intent,
knowledge, and other conditions of a person’s mind may be alleged generally.”
Fed. R. Civ. P. 9(b). And malice is a protean, fact-dependent standard,
requiring the fact finder to distinguish between impermissible harm and the
routine, accepted harm that economic competitors inflict on one another. It is
2
ill-suited for resolution on a motion to dismiss.
As to improper means, USG argues that the alleged hiring away of 15
sales force members falls short of “improper” conduct. See, e.g., Avtec Indus.,
Inc. v. Sony Corp. of Am., 205 N.J. Super. 189, 195 (App. Div. 1985). It points
out that standards of commercial propriety are fairly forgiving, and states that
The parties dispute whether both are required, or whether either will do. That is
a dispute I need not resolve at present.
2

“[l]f the persuasion be used for the indirect purpose of injuring the plaintiff, or
of benefiting the defendant, at the expense of the plaintiff, it is a malicious act.”
Self-enrichment or fraternal interest, and not personal ill will, may well have
been the motive; but it is malice nevertheless. While ill will toward a person is
malice in its common acceptation or popular sense, in the technical, legal sense
it is the intentional doing of a wrongful act without justification or excuse. * * *
And a ‘wrongful act,’ within the intendment of this defmition, is any act which,
in the ordinary course, will infringe upon the rights of another to his damage....
Wear—EverAluminum, Inc. v. Townecraftlndus., Inc., 75 N.J. Super. 135, 14 1-42 (Ch.
Div. 1962),

3

it has found no example of liability for “corporate raiding” in New Jersey since
1962. But the Complaint alleges, for example, that USG deliberately placed
employees in positions that violated their non-compete agreements with ADP.
Once again, I find the allegations, qua allegations, to be sufficient; whether they
pan out as a claim of “improper means” must await factual development.
The motion to dismiss Counts IV and V is denied.
II.

Motions to dismiss/amend Counterclaims
ADP moves (ECF no. 40) to dismiss USG’s counterclaims for failure to

state a claim on which relief may be granted. See Fed. R. Civ. P. 12(b)(6). USG
has responded with a letter application to amend its counterclaims. (ECF no.
57) To that, ADP has responded with its own letter. (ECF No. 62)
Leave to amend is freely granted. Fed. R. Civ. P. 15(a)(2); Foman v. Davis,
371 U.S. 178 (1962). The proposed amended Counterclaims concern allegedly
improper and intimidating letters ADP’s counsel sent to USG employees. That
conduct, USG claims, is further evidence of ADP’s unfair business practices.
The request to amend comes just a few weeks after the May 5, 2017, deadline
set in the Scheduling Order. (ECF no. 34) To some degree, the amendments
rely on alleged intervening events. The amendments do not appear to be futile
on their face. There is no particular prejudice to the plaintiff. The motion to
amend is therefore granted.
ADP’s motion to dismiss, however, was filed in response to the
Counterclaims in their original form. I will therefore administratively terminate
that motion to dismiss without prejudice to refihing in response to the
Counterclaims as amended. Arguments as to the sufficiency of USG’s
counterclaims will be decided in the context of such a renewed motion, if
asserted, not strung out in letter briefs.

4

ORDER
The Court having considered the motions, oppositions, replies, and other
filings (ECF nos. 30, 40, 41, 43, 44, 45, 57, 58, 59, 64) For the reasons stated
in the foregoing Opinion,
IT IS this 8th day of June, 2017,
ORDERED as follows:
1.

The motion (ECF no. 30) of USG to dismiss Counts IV and V of the

Complaint for failure to state a claim is DENIED.
2.

The letter application of USG (ECF no. 57) to amend the
Counterclaims is GRANTED. USG shall file its Amended Answer, Affirmative
Defenses and Counterclaims, substantially in the form proposed (ECF no. 57-2)
as a separate document within five days.
2.

The motion of ADP (ECF no. 40) to dismiss the Counterclaims is

ADMINISTRATIVELY TERMINATED without prejudice to refiling in opposition
to the Counterclaims in their amended form.

Dated: June 8, 2017

Kevin McNulty
United States District Ju

5