OAKWOOD LABORATORIES, LLC v. THANOO et al

Filing 67

MEMORANDUM AND ORDER granting 58 Motion to Dismiss ***CIVIL CASE TERMINATED. Signed by Judge Peter G. Sheridan on 1/31/2019. (jem)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Civil Action No.: 1 7-cv-05090(PGS)

OAKWOOD LABORATORIES, LLC.,

MEMORANDUM
AND ORDER

Plaint
V.

DR. BAGAVATHIKANUN THANOO, et al,
Defendants.

SHERIDAN, U.S.D.J.
This matter comes before this Court on Defendant’s motion to Dismiss Plaintiff’s Second
Amended Complaint. (ECF No. 58). This Court has previously dismissed Plaintiffs complaint
twice without prejudice. This Court’s prior opinions have discussed the underlying facts and
procedural history in detail, and will be adopted here. (See ECF Nos. 34, 46).
I
On a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 1 2(b)(6), the
Court is required to accept as true all allegations in the Complaint and all reasonable inferences
that can be drawn therefrom, and to view them in the light most favorable to the non-moving
party. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir. 1994). “To
survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Ad. Corp.

V.

Twombly, 550 U.S. 544, 570 (2007)). The Third Circuit set forth a

three-part analysis for determining whether not a complaint may survive a motion to dismiss for
failure to state a claim:
First, the court must “tak[e] note of the elements a plaintiff must plead to state a
claim.” Second, the court should identify allegations that, “because they are no
more than conclusions, are not entitled to the assumption of truth.” Finally, “where
there are well-pleaded factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an entitlement for relief.”
Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). “This means that [the] inquiry is
normally broken into three parts: (1) identifying the elements of the claim, (2) reviewing the
complaint to strike conclusory allegations, and then (3) looking at the well-pleaded components of
the complaint and evaluating whether all of the elements identified in part one of the inquiry are
sufficiently alleged.” Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). While a court will
accept well-pleaded allegations as true for the purposes of the motion, it will not accept bald
assertions, unsupported conclusions, unwarranted inferences, or sweeping legal conclusions cast
in the form of factual allegations. Iqbal, 556 U.S. at 678-79; see also Morse v. Lower Merion
School District, 132 F.3d 902, 906 (3d Cir. 1997). A complaint should be dismissed only if the
well-pleaded alleged facts, taken as true, fail to state a claim. See In re Warfarin Sodium, 214 F.3d
395, 397-98 (3d Cir. 2000). The question is whether the claimant can prove any set of facts
consistent with his or her allegations that will entitle him or her to relief, not whether that person
will ultimately prevail. Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir.), cert. denied,
531 U.S. 1149 (2001).
“The pleader is required to ‘set forth sufficient information to outline the elements of his
claim or to permit inferences to be drawn that these elements exist.” Kost v. Kozakewicz, 1 F.3d
176, 183 (3d Cir. 1993) (quoting 5A Wright & Miller, Fed. Practice & Procedure: Civil 2d

§ 1357

at 340). “While a complaint attacked by a Rule I 2(b)(6) motion to dismiss does not need detailed

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factual allegations, a plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[mentj to relief
requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of
Factual allegations must be enough to raise a right to relief above the

action will not do
speculative level,
doubtful in fact)

.

.

.

on the assumption that all the allegations in the complaint are true (even if
“

Twombly, 550 U.S. at 555 (internal citations and quotations omitted).
II

Defendants argue that the Second Amended Complaint has not offered any new factual
allegations that Defendants used or misappropriated Oakwood’s trade secrets, what the purposed
trade secrets were, or how the defendants allegedly used them. In response, Plaintiff argues that
it has sufficiently identified its trade secrets, and has sufficiently plead defendants’
misappropriation and use of Oakwood’s trade secrets.
To state a claim for misappropriation of a trade secret, a party must show: “(1) the existence
of a trade secret; (2) communicated in confidence by the plaintiff to the employee; (3) disclosed
by the employee in breach of that confidence; (4) acquired by the competitor with knowledge of
the breach of confidence, and (5) used by the competitor to the detriment of the plaintiff.” Merckle
GmbH v. Johnson & Johnson, 961 F.Supp. 721, 730 (D.N.J. 1997). The party who asserts the
trade secret bears the burden of proving that the information is a secret and not a matter of general
knowledge in the industry. Rohm & Haas Co. v. Adco Chem. Co., 689 F.2d 424, 431 (3d Cir.
1982).
Plaintiff claims that the Second Amended Complaint sets forth that after Aurobindo hired
Thanoo, Aurobindo obtained Oakwood’s trade secrets from Thanoo and the Leuprolide memo to
develop a product that is substantially similar and competitive with Oakwood’s Leuprolide
Products. (P1. br. at 19). However, Plaintiffs complaint does not meet the plausibility test. At

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best, the second amended complaint has alleged that Thanoo left Plaintiffs employ, and two years
later, Aurobindo announced it would be developing a Leuprolide product. The complaint does not
allege (1) which trade secrets were misappropriated to develop a product, (2) it does not describe
the product development, and (3) it does not allege that Plaintiffs research is the only source for
such research.
Plaintiff, in its second amended complaint, lists a number of trade secrets that it alleges
could have been misappropriated by Thanoo to develop its Microsphere project, (See Second Am.
Compi., ECF No. 51, at ¶ 29); but, Plaintiff has failed to identify which one or more of these trade
secrets defendants have misappropriated.

Simply listing trade secrets of which Thanoo had

knowledge does not show that Thanoo disclosed them to Aurobindo, or Aurobindo acquired the
trade secrets with knowledge of its confidence. Additionally, Plaintiffs have broadly alleged that
Defendants have developed a similar and competitive product based on the misappropriation of its
trade secrets. However, as best this Court can tell, there is no product that has been developed by
defendants. In fact, all defendants have stated is, during an investor call, that Aurobindo was
developing “four peptide-based microsphere products.” (Id. at

¶

55). Here, the complaint does

not allege that the products have been developed through the use of Oakwood’s trade secrets; and
Oakwood has not shown that it has been detrimentally affected to date, i.e. no such products have
been launched. Accordingly, Plaintiffs second amended complaint has done little to resolve the
issue of plausibility.
Regarding Plaintiffs breach of contract and tortious interference with contractual
relationship claims, to state a claim for breach of contract, Plaintiff must show: (1) the parties
entered into a valid contract; (2) the defendant failed to perform its contractual obligation; and as
a result (3) the plaintiff sustained damages. See Sheet Metal Workers

4

mt.

Ass ‘n Local Union No.

27, AFL dv. E.P. Donnelly, Inc., 737 F.3d 879, 900 (3d Cir. 2013). To state a claim for tortious

interference with contractual relationship, a plaintiff must show: (1) an existing contractual
relationship; (2) intentional and malicious interference with that relationship; (3) loss or breach of
a contract as a result of the interference; and (4) damages resulting from that interference. Printing
Mart-Morristown v. Sharp Elec. Corp., 563 A.2d 31, 37-38 (N.J. Supr. 1989).

Plaintiffs Second Amended Complaint does not remedy the issues previously noted in a
prior decision. That is, it could not discern any breach of contract or tortious interference because,
“it is unclear exactly what Plaintiff is alleging was misappropriated. Consequently, it is unclear
whether a contract was breached or interfered with.” (ECF No. 41). Here, Plaintiff has identified
trade secrets, but does not show if and how Defendants used these trade secrets. Accordingly, the
same defects that resulted in the dismissal of Plaintiffs first amended complaint warrant the
dismissal of plaintiffs second amended complaint.
III
Having carefully reviewed and taken into consideration the submissions of the parties, as
well as the arguments and exhibits therein presented, and for good cause shown, and for all of the
foregoing reasons, Defendants’ Motion to Dismiss Plaintiffs Second Amended Complaint is
GRANTED.
The Court grants Plaintiff thirty days to amend the Complaint.

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ORDER
This matter, having been brought before the Court on Defendants’ motion to dismiss {ECF
No. 58], and the Court having considered the briefs and submissions of the parties, and having
heard oral argument;
IT IS on this 31st day of January, 2019;
ORDERED that Defendant’s motion to dismiss (ECF No. 58) is GRANTED; and it is
further
ORDERED that Plaintiff may file an amended complaint within 30 days.

PETER G. SHERIDAN, U.S.D.J.

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