Flame-Spray Industries Inc. v. GTV Automotive GmbH et al

Filing 30

MEMORANDUM AND ORDER denying 21 Motion to Dismiss. For the reasons stated herein, defendants' motion to dismiss is denied. (Ordered by Judge Leonard D. Wexler on 8/14/2017.) (Fagan, Linda)

FILED
IN CLERK'S OFFICE
U.S. DISTRICT COURT E.D.N.Y.

*

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

*

----------------------------------------------------------------){

LONG ISLAND OFFICE

FLAME-SPRAY INDUSTRIES INC.,

AUG 14 2017

MEMORANDUM AND ORDER
Plaintiff,

cv 15-6664

-against(Wexler, J.)
GTV AUTOMOTIVE GmbH, GTV Gmbh & CO. KG,
GTV-mbH, and GTV VERSCHLEIBSCHUTZ GmbH,
Defendants.

----------------------------------------------------------------){
APPEARANCES:
ULMER & BERNE LLP
By:
Robert E. Chudakoff, Esq. and Nicholas B. Wille, Esq.
1660 West Second Street, Suite 1100
Cleveland, Ohio 44113
and
RIVKIN RADLER LLP
By:
Stephen J. Smirti, Jr., Esq., and Michael C. Cannata, Esq.
926 R){R Plaza
Uniondale, New York 11556
Attorneys for Plaintiff
SMITH, GAMBRELL & RUSSELL, LLP
By:
John G. McCarthy, Esq. and Jason S. Bell, Esq.
1301 Avenue ofthe Americas, 2Pt Floor
New York, New York 10019
Attorneys for Defendants
WE){LER, District Judge:
Plaintiff Flame-Spray Industries Inc. ("Flame-Spray" or "plaintiff') commenced this
diversity action alleging, inter alia, breach of contract and misappropriation of trade secrets as
well as violations of the Lanham Act by defendants GTV Automotive GmbH ("GTV
Automotive"), GTV GmbH & Co KG ("GTV & Co"), GTV-mbH ("GTV -mbH"), and GTV
VerschleiBschutz GmbH ("GTV VerschleiBschutz") (collectively "defendants"). Currently
before the Court is defendants' motion to dismiss the amended complaint pursuant to Rule

12(b)(2), (6), and (7) of the Federal Rules of Civil Procedure. Motion, Docket Entry ("DE") [21]
For the reasons set forth below, the motion is denied.

I. BACKGROUND
The facts are taken from the amended complaint and are assumed to be true for purposes
of this motion. Plaintiff is a New York corporation with its principal place of business in New
York. All the defendants are partnerships or limited liability companies organized under the
laws of Germany, with principal places of business in Germany, and whose partners or members
are citizens of Germany. Plaintiff alleges that the Defendants "have common principals, officers
and managers." Amended Complaint ("Am. Compl.") ~7, DE [15].

A. Factual History
Flame-Spray and its predecessors developed advanced thermal spray technologies for the
application of metallic and composite coatings onto a surface. The technology is referred to as
Plasma Transferred Wire Arc ("PTWA") technology and it is used to coat automotive and heavy
equipment engines. In the 1990s, Ford Motor Company ("Ford") acquired all the patents
concerning PTWA technology in existence at the time of the acquisition, and then licensed the
technology to Flame-Spray as its sole licensee. As the sole licensee of the Ford PTWA patents,
Flame-Spray "is the only source, absent Flame-Spray authorization, for potential PTWA
customers to obtain torch systems and components utilizing the full range of Ford and FlameSpray PTWA technology and proprietary Confidential Information and know-how belonging to
Flame-Spray." Am. Compl.

~15.

Some of Flame-Spray's improvements to the technology have

been patented, while others have been "maintained confidentially as trade secrets." Id ~16.

2

.-..

1. Agreements Between the Parties
Flame-Spray entered into a "business relationship with GTV to manufacture and supply
PTWA technology to Flame-Spray approved customers in Europe and elsewhere." Am. Compl.
~17.

Before this relationship was established, GTV had had "no experience with PTWA

technology, no experience with rotating torches, and no experience with coating of engine blocks
or engine bores." !d. ~18. Flame-Spray and the GTV entities entered into a series of four
Mutual Non-Disclosure Agreements ("NDA"), beginning in 2003, that governed their
relationship. 1 The NDAs, which govern the treatment of the exchange of confidential
information between the parties, are essentially identical, except as discussed below.
The 2003 NDA purports to be between Flame-Spray and GTV -mbH and was signed by
Klaus Nassenstein on behalf of GTV -mbH. The NDA contains a choice of law provision stating
that the agreement "shall be construed under the laws of the State of New York."
The 2006 NDA purports to be between Flame-Spray and GTV GmbH & Co. KG, and is
again signed by Nassenstein. It also contains the identical choice of New York law provision.
The parties concurrently entered into an agreement that "outlined additional formal terms of the
parties' working relationship." Am. Compl. ~34. This agreement, referred to by plaintiff as the
"Production Agreement," is signed by both parties and contains details concerning the supplying
of technology by Flame-Spray to GTV. It states that improvements and/or developments made
by Flame-Spray are owned by it, and "improvements/developments relating to PTWA or similar
technology that is developed by GTV will be owned by GTV." Production Agreement, p. 2.

1

All the NDAs were attached to the Amended Complaint and are incorporated by reference.
3

GTV's improvements/developments are, however, subject to "a royalty free license" to be
provided to Flame-Spray.
The 2009 NDA states in its initial paragraph that it is an agreement between Flame-Spray
and simply "GTV" having a place of business at Gewerbegebit, Luckenbach, Germany, but a
stamp next to the signature says "GTV VerschleiBschutz GmbH." This NDA also contains the
choice of law provision regarding application of New York law.
The 2011 NDA also states in its initial paragraph that it is an agreement between FlameSpray and, as in the 2009 NDA, "GTV" having a place of business at Gewerbegebit,
Luckenbach, Germany. In the 2011 NDA, however, the stamp next to the signature says "GTV
Automotive GmbH." In addition to the choice of law language regarding the agreement's
construction under New York law, the 2011 NDA also contains a forum selection clause stating
that "any disputes arising under this Agreement shall be resolved in a court sitting in the State of
New York. The parties agree to personal jurisdiction in New York and waive any and all
objections to personal jurisdiction in New York."
2. Dispute Between the Parties
For years, the parties engaged in business pursuant to the NDAs and the Production
Agreement. GTV would identify a potential client and Flame-Spray would provide written
authorization for GTV to sell PTW A equipment to that customer. GTV then manufactured and
supplied the equipment, and paid Flame-Spray a commission.
At some point, GTV began working separately with Ford's Germany affiliate ("Ford
Germany") to patent modifications and improvements to the PTWA technology. In 2010, Ford
Germany and GTV filed a joint international patent application for a modified PTWA torch.

4

GTV began selling its PTWA equipment to customers without obtaining Flame-Spray approval.
In March 2013, GTV declared its intention to stop selling PTWA equipment.
Flame-Spray alleges that GTV did not stop selling PTWA equipment, but rather
continues to manufacture and sell its modified version, which GTV calls Rotating Single Wire
("RSW") technology. Plaintiff alleges that the RSW torch "is based upon the fundamental
original PTWA design that is part of the original Ford patent package of which Flame-Spray is
the sole licensee and to which GTV had access only from Flame-Spray, subject to the Production
Agreement and NDAs." Am. Compl. ~59. The RSW technology relies upon and utilizes
confidential information and know-how, constituting trade secrets, that was provided by FlameSpray to GTV under the agreements between the parties.

B. Procedural History
After commencing this action, plaintiff amended its complaint. The Amended Complaint
asserts nine causes of action: (I) breach of contract; (II) unjust enrichment; (Ill) promissory
estoppel; (IV) misappropriation of trade secrets; (V) unfair competition; (VI) tortious
interference with business relationships; (VII) false designation under Lanham Act; (VIII) false
advertising under the Lanham Act; and (IX) accounting. Defendants have moved to dismiss the
amended complaint for lack of personal jurisdiction over the corporate entities, forum non
conveniens, and failure to join a necessary party. They further move to dismiss the claims for
breach of contract, misappropriation of trade secrets, unfair competition, and tortious
interference with business relationships for failure to state a claim.

5

II. DISMISSAL FOR LACK OF PERSONAL JURISDICTION
A. Legal Standards
When opposing a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2),
plaintiff bears the burden of showing that the court has jurisdiction over the defendant. Metro.

Life Ins. Co. v. Robertson-Ceca Corp., 84 F.3d 560, 566 (2d Cir. 1996). Before discovery has
been conducted, "a plaintiff challenged by a jurisdiction testing motion may defeat the motion by
pleading in good faith, legally sufficient allegations of jurisdiction. At that preliminary stage, the
plaintiff's prima facie showing may be established solely by allegations." Dorchester Fin. Sec.,

Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84-85 (2d Cir. 2013) (quoting Ball v. Metallurgie
Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)); see also Thomas v. Ashcroft, 470
F.3d 491,495 (2d Cir. 2006) ("In order to survive a motion to dismiss for lack of personal
jurisdiction, a plaintiff must make a prima facie showing that jurisdiction exists.").

B.

Personal Jurisdiction Over Defendants
Defendants indicate that GTV VerschleiBschutz is the successor in interest to both GRV

& Co. and GTV-mbH, but argue that GTV Automotive is a separate and distinct company. 2 See
Declaration of Klaus Nassenstein, ~6. While conceding that GTV Automotive is subject to the
forum selection clause in the 2011 NDA, defendants argue that GTV VerschleiBschutz is not a
signatory to that agreement and thus cannot be bound by it, and that there are insufficient
contacts permitting long-arm jurisdiction over it. Plaintiff counters that all the GTV defendants

2

For purposes of the legal analysis of this opinion, defendants GTV-mbH, GTV & Co., and GTV
VerschleiBschutz will be referred to collectively as "GTV VerschleiBschutz," the current corporate name
indicated by defendants. The remaining defendant will be referred to as "GTV Automotive," as
previously defined.

6

acted as a single entity throughout the relationship with Flame-Spray and that long-arm
jurisdiction is appropriate. The Court analyzes the bases for personal jurisdiction separately.
1. Forum Selection Clause
For a forum selection clause to apply, the party seeking enforcement must demonstrate
that: "(1) the clause was reasonably communicated to the party resisting enforcement; (2) the
clause was mandatory and not merely permissive; and (3) the claims and parties involved in the
suit are subject to the forum selection clause." Altvater Gessler-J.A. Baczewski Int'l (USA) Inc. v.

Sobieski Destylarnia S.A., 572 F.3d 86, 89 (2d Cir. 2009). A party resisting enforcement of a
forum selection clause may rebut "the presumption of enforceability by making a sufficiently
strong showing that 'enforcement would be unreasonable or unjust, or that the clause was invalid
for such reasons as fraud or overreaching."' Phillips v. Audio Active Ltd., 494 F.3d 378, 383-84
(2d Cir. 2007) (quoting MIS Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S. Ct. 1907
(1972)). Defendants do not dispute that Plaintiffs claims against GTV Automotive are
governed by the forum selection clause, but argue that GTV VerschleiBschutz was not a
signatory to the 2011 NDA and thus is not bound by the clause. Plaintiff alleges that defendants
"operated under each of the NDAs as one entity" and that the parties understood that each NDA
and the Production Agreement applied to and was binding on each GTV entity. Am. Comp.
~~21,

36. Moreover, plaintiff alleges that the confidential information disclosed by Flame-Spray

under the NDAs was routinely and regularly shared "among and across the various GTV entities
without regard to corporate formalities." !d.

~22.

The Court finds that for purposes of this motion, plaintiff has sufficiently alleged that
there is no distinction between the GTV entities that would allow GTV VerschleiBschutz to

7

avoid application of the forum selection clause. Noting the importance of enforcing valid forum
selection clauses, the Second Circuit has stated that "where the alleged conduct of the nonparties
is closely related to the contractual relationship, a range of transaction participants, parties and
nonparties, should benefit from and be subject to forum selection clauses." Magi XXI, Inc. v.

Stato Della Citta Del Vaticano, 714 F.3d 714, 722 (2d Cir. 2013) (quoting Holland Am Line Inc.
v. Warsila N Am., Inc., 485 F.3d 450, 456 (9th Cir. 2007)). The Magi court reasoned that
requiring a non-signatory successor party to be held to a forum selection clause would prevent
parties from "using evasive, formalistic means lacking economic substance to escape contractual
obligations." 714 F.3d at 722 (quoting Aguas Lenders Recovery Grp. LLC v. Suez, S.A., 585
F.3d 696 701 (2d Cir. 2009)). Although the Magi court expressly did not "reach the question of
when a signatory may enforce a forum selection clause against a non-signatory," 714 F.3d at 723
n.1 0, its reasoning is equally applicable in the current situation.
Defendants do not allege that the clause was procured by fraud, and any argument that
enforcement of the forum selection clause would be unreasonable or unjust fails as insufficient to
contradict the choice made by the parties when they executed their agreement. See At/.

Container Line AB v. Volvo Car Corp., No. 14-cv-1811, 2014 WL 4730152, at *7 (S.D.N.Y.
Sept. 22, 2014) (forum selection clause enforceable since "[m]ere inconvenience and expense of
travel are not, standing alone, adequate reasons to disturb the parties' contractual choice of
forum, because such matters presumably were contemplated by the parties when they entered
into the contract."). Thus for purposes of this motion, the Court finds that plaintiff makes a
prima facie case that all defendants are subject to the forum selection clause. 3

3

As the Court finds below that long-arm jurisdiction is also appropriate, it declines to determine at this
juncture whether the tort claims fall within the scope of the forum selection clause.

8

2. Long Arm Jurisdiction
Even assuming that the forum selection clause is not applicable to GTV
VerschleiBschutz, those defendants are subject to the jurisdiction in New York pursuant to the
long-arm statute, C.P.L.R. §302(a)(1). To determine whether there is personal jurisdiction under
this section, "a court must decide (1) whether the defendant 'transacts any business' in New York
and, if so, (2) whether this cause of action 'aris[es] from' such a business transaction." Best Van

Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007) (citing Deutsche Bank Sec., Inc. v. Mont.
Bd ofinvs., 7 N.Y.3d 65, 71,818 N.Y.S.2d 164, 850 N.E.2d 1140 (2006)). Section 302(a)(1) is
typically invoked where an out-of-state defendant breaches a contract with plaintiff or commits a
commercial tort against plaintiff in the course of transacting business in New York. See Thorsen
v. Sons ofNorway, 996 F. Supp. 2d 143, 157 (E.D.N.Y. 2014) (internal quotation and citation
omitted).
To determine whether a non-resident transacts business in New York sufficient to satisfy
C.P.L.R. §302(a)(1), several factors should be considered including:
(i) whether the defendant has an on-going contractual relationship
with a New York corporation; (ii) whether the contract was
negotiated or executed in New York and whether, after executing a
contract with a New York business, the defendant has visited New
York for the purpose of meeting with parties to the contract
regarding the relationship; (iii) what the choice-of-law clause is in
any such contract; and (iv) whether the contract requires
franchisees to send notices and payments into the forum state or
subjects them to supervision by the corporation in the forum state.

Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22-23 (2d Cir. 2004) (quoting Agency Rent A
Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25,29 (2d Cir. 1996)). No one factor is
determinative, and the decision is based on the totality of the circumstances. The Court finds

9

that analysis of these factors in this case leads to the determination that defendants did indeed
transact business in New York.

An ongoing course of conduct or relationship may be sufficient to satisfy this provision.
Plaintiff and defendants enjoyed a business relationship over the course of several years, and by
agreement of the parties, this relationship was always governed by New York law. See Licci ex

rei. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 62 (2d Cir. 2012) (citing Fischbarg v.
Doucet, 9 N.Y.3d 375, 382-83, 849 N.Y.S.2d 501, 880 N.E.2d 22 (2007) (long-arm jurisdiction
supported where defendants "established a substantial ongoing professional commitment
between themselves and plaintiff, governed by the laws" ofNew York)). Indeed, the most
significant factor favoring jurisdiction is the existence of the New York choice of law provision
in each NDA executed by the parties "because the parties, by so choosing, invoke the benefits
and protections ofNew York law." Sunward Elecs., 362 F.3d at 23. Several other allegations
also support a finding of jurisdiction including inter alia, that the parties maintained a continuous
business relationship for a period of years, defendants made payments under the agreements to
plaintiff in New York, and there was at least one visit to the forum by a representative of
defendants. Based on the totality of the circumstances, the Court concludes that defendants
transacted business in New York for the purposes of jurisdiction under CPLR §302(a)(l).
In addition to the transaction of business, each cause of action alleged must arise from
that transaction such that it has an "articulable nexus" or "substantial relationship" with it. D &

R Glob. Selections, S.L. v. Bodega 0/egario Falcon Pineiro, 29 N.Y.3d 292,289-99,2017 WL
2466661, at *4 (2017) ("At the very least, there must be a relatedness between the transaction
and the legal claim such that the latter is not completely unmoored from the former, regardless of

10

the ultimate merits of the claim." (internal quotation and citation omitted)). Jurisdiction under
CPLR 302(a)(1) is not limited to contract actions, but may also apply to tort claims where it is
established that the tort arose out of the relevant transaction. See Kreutter v. McFadden Oil
Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 522 N.E.2d 40 (1988); Bank Brussels Lambert v.
Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 787 n.3 (2d Cir. 1999). "Claims sounding in tort
may properly 'arise from' the transaction of business in New York, even when the acts
underlying the cause of action took place outside ofNew York, as long as they are sufficiently
related to that transaction of business." United Feature Syndicate, Inc. v. Miller Features
Syndicate, Inc., 216 F. Supp. 2d 198,206 (S.D.N.Y. 2002). Here, plaintiffs claims, whether
sounding in contract or tort, all arise from the business relationship between it and defendants.
As such, the Court finds that there is a sufficiently close connection between the acts constituting
the transacting of business under §302(a)(1) and plaintiffs claims in this action to allow the
exercise of personal jurisdiction over defendants.
The Court concludes that plaintiff has made a prima facie showing of personal
jurisdiction over the defendants under CPLR §302(a)(1). 4
3. Due Process
In addition to satisfying New York's long-armjurisdiction statute, requirements of due
process must be met such that the exercise of jurisdiction does not offend traditional notions of
fair play and substantial justice. In making this determination, a court examines two issues:
minimum contacts and reasonableness. See Chloe v. Queen Bee ofBeverly Hills, LLC, 616 F.3d
158, 171 (2d Cir. 2010).

4

Upon finding that there is personal jurisdiction over the defendants pursuant to C.P.L.R. 302(a)(l), the
Court declines to decide whether jurisdiction may also be found under C.P.L.R. 302(a)(3).

11

While the existence of contracts between the parties does not automatically establish
sufficient minimum contacts, factors such as "prior negotiations and contemplated future
consequences, along with the terms of the contract and the parties' actual course of dealing ...
must be evaluated in determining whether the defendant purposefully established minimum
contacts within the forum." Burger King Corp. v. Rudzewicz, 471 U.S. 462,479, 105 S. Ct.
2174, 85 L. Ed. 2d 528 (1985). The same facts supporting the conclusion that defendants
transacted business in New York under CPLR 302(a)(l ), viewed in their totality, also suffice to
show that minimum contacts exist. In addition, the presence of the choice ofNew York law
provisions in all the NDAs, coupled with the ongoing, years-long relationship enjoyed by
defendants with the New York plaintiff establishes that defendants purposefully invoked the
benefits and protections of New York laws and created the reasonable foreseeability that
litigation could take place in that state. See Burger King, 471 U.S. at 479,487 (finding that
exercise of jurisdiction did not offend due process where parties had a substantial and continuing
relationship, defendant "received fair notice from the contract documents and the course of
dealing that he might be subject to suit" in another forum, and "failed to demonstrate how
jurisdiction in that forum would otherwise be fundamentally unfair").
As to reasonableness, defendants argue only that it would be unfair to "drag" them
"across an ocean for litigation here when New York has minimal interest in regulating these
affairs." Defs' Memorandum of Law at 11, DE [21-1]. As discussed above, New York has an
interest where a party invokes its benefits and protections by expressly choosing to be bound by
its laws. Defendants' generalized complaints of inconvenience do not rise to the level of a

12

constitutional violation. See, e.g., Chloe, 616 F.3d at 173; LaChapelle v. Torres, 1 F. Supp. 3d
163, 179 (S.D.N.Y. 2014).
For all the foregoing reasons, the Court concludes that plaintiff has established a prima
facie case for the exercise of personal jurisdiction over defendants.

C. Forum Non Conveniens
Defendants also claim that regardless of this Court's jurisdiction over them, Germany is
the proper forum under the doctrine of forum non conveniens. In determining a motion to
dismiss based on forum non conveniens, the court typically considers three steps: (1) "the
degree of deference properly accorded the plaintiffs choice of forum," (2) "whether the
alternative forum proposed by the defendants is adequate to adjudicate the parties' dispute," and
(3) the balance between "the private and public interests implicated in the choice of forum."

Norex Petroleum, Ltd v. Access Indus., 416 F.3d 146, 163 (2d Cir. 2005).
The existence of a valid forum selection clause, however, changes the analysis, as that
clause should be "given controlling weight in all but the most exceptional circumstances." .At/.

Marine Constr. Co. v. U.S. Dis!. Court for W Dist. ofTexas, --U.S.--, 134 S. Ct. 568, 581, 187
L. Ed. 2d 487 (2013) (internal quotation and citation omitted). "Once the Court determines that
a forum-selection clause is valid, the only remaining inquiry is whether there are public interest
considerations-such as the desire to avoid court congestion or the preference for adjudicating
local controversies locally-that weigh against its enforcement." Midamines SPRL Ltd. v. KBC

Bank NV, No. 12 Civ. 8089,2014 WL 1116875, at *3 (S.D.N.Y. Mar. 18, 2014) (citation
omitted); see also At/. Marine Constr., 134 S. Ct. at 582 (when the parties have agreed to a
forum selection clause, "they waive the right to challenge the preselected forum as inconvenient

13

or less convenient for themselves or their witnesses, or of their pursuit of the litigation" and
therefore the court "must deem the private-interest factors to weigh entirely in favor of the
preselected forum"). Neither party has suggested that court congestion is an issue here. As to
the interests of the locality, the interests ofNew York jurors in adjudicating the rights of a New
York corporation are at least as great as the interests of a German court. As this factor does not
clearly weigh in favor of either party, it does not constitute an exceptional circumstance that
would override a valid forum selection clause. Accordingly, the Court gives controlling weight
to the parties' contractual choice of forum.
The Court further finds that, even if the forum selection clause did not apply to GTV
VerschleiBschutz, application of the traditional forum non conveniens analysis also leads to
denial of defendants' motion. That analysis begins with a determination of the deference to be
given plaintiff's choice of forum, "with the assumption that the plaintiffs choice of forum will
stand," and that greater deference is accorded this choice when the plaintiff has sued in its home
forum. Iragorri v. United Techs. Corp., 274 F.3d 65, 71 (2d Cir. 2001). Clearly, plaintiff has
chosen to initiate suit in its home forum. Defendants' accusation of forum shopping on the part
of plaintiff is, at best, disingenuous. The Second Circuit has cautioned district courts to "arm
themselves with an appropriate degree of skepticism" since it is possible that "defendants also
may move for dismissal under the doctrine offorum non conveniens not because of genuine
concern with convenience but because of similar forum-shopping reasons." !d. at 75. Despite
the written agreement containing an express forum selection clause, defendants now argue that
they face "major obstacles to defending themselves in this forum" including, inter alia, the
"expense of the American adversarial system," with its "wide-ranging compulsory discovery,"

14

and the "risk involved in submitting a complex civil case to a jury," which, they note exhibit
"habitual generosity." Defs." Mem. at 14-15. In light of the voluntary execution of an NDA
selecting a New York forum as well as the presence of a choice ofNew York law clause in all
the agreements, defendants' claim that plaintiffs choice of forum is "an attempt to gain an unfair
and illegitimate tactical advantage," id at 15, rings hollow. Since plaintiff has commenced this
litigation in its home state, the Court affords significant deference to its choice of forum.
A determination of whether Germany would be an adequate alternative forum is
unnecessary as plaintiff does not appear to contest this point. The existence of an adequate
alternative forum is not, in and of itself, determinative. An action may be dismissed on forum
non conveniens grounds "only if the chosen forum is shown to be genuinely inconvenient and
the selected forum significantly preferable." Iragorri, 274 F.3d at 74-75.
Turning to the remaining considerations, the Court has determined above that the public
factors do not favor granting defendants' motion. As to the private factors, generally, the
following are considered: (I) ease of access to evidence; (2) the availability of compulsory
process to compel the attendance of unwilling witnesses and the cost of willing witnesses'
attendance; (3) the possibility of a view of premises, if relevant; and (4) all other practical
problems that might make the trial quicker or less expensive. In re Herald, 540 F. App'x 19,28
(2d Cir. 2013) (summary order) (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S. Ct.
839,91 L.Ed. 1055 (1947)).
Application of the private factors does not override plaintiffs choice of forum. Many of
the potential problems cited by defendants exist regardless of where the case is litigated -documents in German will likely be translated to English, interpreters will be necessary to bridge

15

language gaps. This Court is confident that concerns regarding discovery hurdles and expenses
can be capably addressed by the Magistrate Judge during discovery through various means such
as cost-sharing and/or the use of video-conferencing. Finally, as the claims against GTV
Automotive clearly are properly here by the undisputed application of the forum selection clause,
it would be inefficient to conduct a parallel litigation in Germany against GTV VerschleiBschutz.

III.

DISMISSAL FOR FAILURE TO NAME A NECESSARY PARTY
Defendants also seek dismissal under Rule 12(b)(7) for failure to name Ford Germany as

a necessary party under Rule 19. In considering this motion, the Court must apply the two-part
test set forth in Rule 19. First, the Court determines whether Ford Germany is a required party
under Rule 19(a). If the answer to that inquiry is "yes" and Ford Germany cannot be joined for
jurisdictional or other reasons, the Court must consider whether it is indispensable under Rule
19{b).
Plaintiff alleges in the amended complaint that GTV worked with Ford Germany to
patent a modified PTWA torch, and that the patent application "expressly acknowledges that the
claimed invention incorporates PTWA technology" and uses drawings from the original PTWA
patents. Am. Compl.

~~48-49.

Defendants argue that plaintiff is attempting to make an end-run

attack on those patents, and thus claim that Ford Germany must be present to protect itself. In
addition, defendants suggest that plaintiff is attacking the licensing agreement that exists
between defendants and Ford Germany regarding the RSW technology. The Court finds that
plaintiffs allegations do not lead to the conclusion that Ford Germany is a necessary party to this
litigation.

16

A party is required if, in that party's absence, "the court cannot afford complete relief
among existing parties." FED. R. CIV. P. 19(a)(1)(A). The allegations in the amended complaint
do not expressly challenge any patent or agreement involving Ford Germany, but rather
constitute factual allegations in support of the claims asserted against GTV. Whether or not
plaintiff eventually pursues Ford Germany for any relief is not relevant to the current inquiry.

See MasterCard Int'l Inc. v. Visa Int'l Serv. Ass'n, Inc., 471 F.3d 377,385 (2d Cir. 2006)
(finding that although litigation with missing party may be "inevitable," Rule 19(a) "is concerned
only with those who are already parties"). If plaintiff prevails here, it is only GTV that may need
to compensate Flame-Spray, not Ford Germany.
"A party cannot be indispensable unless it is a 'necessary party' under Rule 19(a)."

Jonesjilm v. Lion Gate Int'l, 299 F.3d 134, 139 (2d Cir. 2002). Since the Court has determined
that Ford Germany is not a necessary party to this litigation, it need not decide whether it is
indispensable under Rule 19(b). See MasterCard, 471 F.3d at 389. Defendants' motion to
dismiss for failure to join a necessary party is also denied.

IV. DISMISSAL FOR FAILURE TO STATE A CLAIM
Defendants also challenge several causes of action as failing to state a claim. Specifically,
they move to dismiss the claims for breach of contract, misappropriation of trade secrets, unfair
competition, and tortious interference with business relations.

A. LegaiStandards
In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6),
the court must accept the factual allegations in the complaint as true and draw all reasonable
inferences in favor of Plaintiff. Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106,

17

113 (2d Cir. 2013) (citations omitted); Ruston v. Town Bd.for Town ofSkaneateles, 610 F.3d 55,
58-59 (2d Cir. 201 0). The plaintiff must plead enough facts "to state a claim for relief that is
plausible on its face." Bell At!. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). A "formulaic recitation of the elements of cause of action will
not do," and "[fJactual allegations must be enough to raise a right to relief above the speculative
level." Twombley, 550 U.S. at 555. "Determining whether a complaint states a plausible claim
for relief' is a "context-specific task that requires the reviewing court to draw on its judicial
experience and common sense." Iqbal, 556 U.S. at 679. Reciting bare legal conclusions is
insufficient, and "[w]hen there are well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal,
at 679. In determining the motion, the Court may consider documents that are incorporated by
reference in the complaint and documents upon which plaintiff relied in bringing suit. See
Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002).

B. Breach of Contract
"Under New York law, a breach of contract claim requires proof of (1) an agreement, (2)
adequate performance by the plaintiff, (3) breach by the defendant, and (4) damages." Fischer &
Mandell, LLP v. Citibank, NA., 632 F.3d 793, 799 (2d Cir. 2011). The Court finds that the
amended complaint adequately states a claim for breach of contract.
There is no dispute that the parties entered into various agreements. To the extent
defendants argue that specific entities were not bound by agreements that they did not execute,
the argument fails for the same reasons as discussed above. For purposes of this motion to
dismiss, plaintiff has adequately alleged that defendants acted as a single entity.

18

Plaintiff alleges that it performed under the agreements and defendants do not claim
otherwise on this motion. As to the breach, plaintiff has alleged that defendants failed to pay it
commissions and/or royalties due under the agreements and that such failures constituted a
breach and caused it damage. Whether there is a breach of any of these agreements and whether
plaintiff suffered damages are questions of fact that cannot be decided on a motion to dismiss.
Finally, defendants raise various issues regarding the timing of their receipt of information from
plaintiff that may ultimately raise issues such as application of the statute of limitations. These
arguments are better addressed once the factual record has been further developed.

C. Misappropriation of Trade Secrets
A claim under New York law for the misappropriation of trade secrets requires plaintiff
to demonstrate "(1) that it possessed a trade secret, and (2) that the defendants used that trade
secret in breach of an agreement, confidential relationship or duty, or as a result of discovery by
improper means." Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 117 (2d Cir.
2009) (internal quotation and citation omitted). "A trade secret is any formula, pattern, device or
compilation of information which is used in one's business, and which gives the owner an
opportunity to obtain an advantage over competitors who do not know or use it." Id (internal
quotation marks and brackets omitted). In addition, "confidential proprietary data relating to
pricing, costs, systems, and methods are protected by trade secret law." In re Dana Corp., 574
F.3d 129, 152 (2d Cir. 2009).
Defendants argue that they have "no idea" what plaintiff is alleging when it claims that
they have misappropriated "information and know-how concerning the design and
implementation ofPTWA technology." To the contrary, plaintiff has alleged that GTV has

19

misappropriated confidential information including technical drawings and designs, controls
manual, software, drawings and testing procedures. The Court finds these allegations to be
sufficient to raise a plausible claim for relief.

D. Unfair Competition
Defendants also seek to dismiss plaintiffs claim of unfair competition. Under New York
law, a claim of"unfair competition may be predicated 'upon the alleged bad faith
misappropriation of a commercial advantage belonging to another by exploitation of proprietary
information or trade secrets."' Alzheimer's Disease Res. Ctr., Inc. v. Alzheimer's Disease &
Related Disorders Ass 'n, Inc., 981 F. Supp. 2d 153, 162 (E.D.N.Y. 2013) (quoting Beverage
Mktg. USA, Inc. v. South Beach Beverage Co., 20 A.D.3d 439,440,799 N.Y.S.2d 242 (2d Dep't
2005) (internal quotation and citation omitted)). While an unfair competition claim may be
broadly construed, the essence of such a claim is that "defendant misappropriated the fruit of
plaintiff's labors and expenditures by obtaining access to plaintiffs business idea either through
fraud or deception, or an abuse of a fiduciary or confidential relationship." Telecom Int 'I Am.,
Ltd v. AT & T Corp., 280 F.3d 175, 197 (2d Cir. 2001) (internal quotation and citation omitted).
Plaintiff has sufficiently alleged conduct by defendants concerning the latter's
misappropriation of plaintiffs work and abuse of the confidential relationship between the
parties. As such, plaintiff has sufficiently alleged a cause of action for unfair competition.

E. Tortious Interference with Business Relations
To state a claim for tortious interference with a business relationship, a cause of action
also referred to as tortious interference with prospective economic advantage, a plaintiff must
allege "(1) the plaintiff had business relations with a third party; (2) the defendant interfered with

20

those business relations; (3) the defendant acted for a wrongful purpose or used dishonest, unfair,
or improper means; and (4) the defendant's acts injured the relationship." Catskill Dev., LLC v.
Park Place Entm 't Corp., 54 7 F.3d 115, 132 (2d Cir. 2008). "A properly pleaded complaint for
this tort must allege relationships with specific third parties with which the respondent
interfered." AIM Int'l Trading, L.L.C. v. Valcucine S.p.A., No. 02 CIV. 1363,2003 WL
21203503, at *6 (S.D.N.Y. May 22, 2003) (citing cases).
Plaintiff alleges that defendants have "interfered with Flame-Spray's relationships with its
customers and potential customers ... to market and sell a competing PTWA torch to FlameSpray customers and potential customers." Am. Compl. ~102. Plaintiff identifies two clients
that had already purchased Flame Spray PTWA equipment to which defendants subsequently
sold their product. See id.

~~64-65.

It further claims that RSW technology has been sold to

General Motors, "whom GTV knows to be a previous customer of Flame-Spray." /d.

~66.

Thus,

plaintiff claims, defendants' "improper sales" deprived Flame Spray of "sales, commissions and
license fees." /d. ~67. The Court finds these allegations sufficient to withstand a motion to
dismiss.

V. CONCLUSION
For the reasons stated above, defendants' motion to dismiss is denied.
SO ORDERED.

/1/l
( / ~
/
L/LEONARD D. WEXLER
I
UNITED STATES DISTRICT)UDGE

Dated: Central Islip, New York
August 14, 201 7
21

/1

-·