West v. eBay, Inc.
MEMORANDUM-DECISION AND ORDER denying 17 Motion to Dismiss for Failure to State a Claim. Signed by U.S. District Judge Mae A. D'Agostino on 12/1/2017. (ban)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
ANDREW D. WEST,
THE WEST FIRM, PLLC
Albany, New York 12207
Attorneys for Plaintiff
GREGORY ALYN MOUNTAIN, ESQ.
THOMAS S. WEST, ESQ.
QUINN, EMANUEL LAW FIRM
51 Madison Avenue
New York, New York 10010
Attorneys for Defendant
CORY DANIEL STRUBLE, ESQ.
QUINN, EMANUEL LAW FIRM
865 South Figueroa Street
Los Angeles, California 90017
Attorneys for Defendant
DAVID M. GRABLE, ESQ.
Mae A. D'Agostino, U.S. District Judge:
MEMORANDUM-DECISION AND ORDER
On February 8, 2017, Plaintiff Andrew D. West ("Plaintiff" or "West") filed a complaint
in New York State Supreme Court, Saratoga County, alleging causes of action for breach of
contract, misappropriation of property, unfair competition, promissory estoppel, and unjust
enrichment. See Dkt. No. 2 at 1. On March 13, 2017, Defendant eBay, Inc. ("Defendant" or
"eBay") removed the action to this Court pursuant to 28 U.S.C. § 1446, asserting jurisdiction
pursuant to 28 U.S.C. § 1332(a) by virtue of the fact that complete diversity exists between the
parties and the amount in controversy exceeds $75,000. See Dkt. No. 1.
Currently before the Court is Defendant's motion to dismiss. For the following reasons,
the motion is denied.
An internet auction valet ("valet") is a service that simplifies the process for sellers on
virtual marketplaces. See Dkt. No. 2 at ¶¶ 6, 9. A valet service operates as follows: a seller
photographs an item that they would like to sell; the seller sends the photograph to the valet
service; the valet services responds with an estimate of what the item will sell for at auction; if the
seller wishes to proceed, the valet provides the seller with the means for the seller to ship the item
to the valet; the valet will list the item on an auction website and provide value added services
such as taking professional photos, writing a description, and answering questions from buyers;
finally, if the item sells, the valet will ship the item to the buyer and pay the seller. See id. at ¶ 10;
id. at 25.
In or around 1997, Plaintiff began providing valet services. See id. at ¶ 6. He developed
various businesses, including but not limited to, US Ski Traders and auctionPAL, LLC, which
provided auction valet services. See id. at ¶¶ 6, 8-9, 12, 19. Over the next thirteen years,
Plaintiff's companies spent approximately $3 million to "develop the . . . internal processes and
business plan" for his valet service. Id. at ¶ 11.
In 2007, auctionPAL, LLC ("auctionPAL") entered into an agreement with Defendant to
use Defendant's auction site to facilitate auctionPAL's valet service. Id. at 27. In 2010,
Defendant stopped Plaintiff from using its auction website due to their concerns that
auctionPAL's customers were unable to prove the authenticity of certain merchandise. See id.; id.
at ¶ 19. "In 2011, [Plaintiff] was hired by Defendant as a consultant for its fashion department."
Id. at ¶ 22.
In the course of providing consulting services, Plaintiff had multiple discussions with
Defendant's Business Strategy and Program Manager, Jamie Dalton ("Dalton"). See id. at ¶¶ 2324. Dalton told Plaintiff that "Defendant was trying to develop applications to increase seller
participation on Defendant's website." Id. at ¶ 22. Plaintiff told Dalton of about his "prior
business experiences selling items in the virtual marketplace, including Defendant's platform" and
"provided Dalton with a general solution to increase seller participation on Defendant's website."
Id. at ¶¶ 23-24, 26. Dalton asked Plaintiff to provide him with copies of his business plan (the
"West Plan"). Id. at ¶ 27. The West Plan was comprised of the valet service described supra, a
plan for a remote terminal for the valet service ("Mobile Device Process"), a "spoke and hub
model, which provided for a partnership with a shipping company with existing shipping
infrastructure to allow the client to ship the item to the valet service with efficiency and relative
ease," as well as previously undisclosed proprietary questions and market research on optimal
listing parameters. Id. at ¶¶ 11, 38-39. According to Plaintiff, "no other entity (including
Defendant) was utilizing [Plaintiff's] unique business model" at that time. Id. at ¶ 33. Even
Plaintiff "had not implemented these models prior to disclosing" them to Dalton. Id. at ¶ 41.
Plaintiff was reluctant to provide Dalton with these documents. See id. at ¶ 28. Dalton
promised Plaintiff that he would "keep any disclosed business plan in confidence and that it
would not be acted upon without West's financial involvement or approval." Id. at ¶ 29. This
promise induced Plaintiff to send Dalton his business plans via email. Id. at ¶ 30.
During the subsequent email exchange, Dalton asked Plaintiff if he could keep the
business plan. See id. at 22. Plaintiff responded, "[h]mmm...if [sic] we can do a project with it
and I can be involved! Otherwise DELETE ;)." Id. Dalton agreed, stating "[o]f course" and
indicated that Plaintiff did a "brilliant job" and that he did not want to delete the plan until he
knew that a deal was "absolutely not possible." Id. at 21.
As a result of the disclosure, Dalton arranged a meeting between Plaintiff and one of
Defendant's senior counsel regarding Plaintiff's business plan. Id. at ¶¶ 41-45. According to
Plaintiff, at the conclusion of the ninety minute meeting, Defendant's counsel assured Plaintiff
that the information disclosed during the meeting would not be acted upon without compensating
and involving Plaintiff. See id. at ¶ 44.
In June 2014, Defendant launched a mobile application called "eBay Valet." Id. at ¶ 46.
According to Plaintiff, Defendant used the West Plan to develop their service, which "mimics the
West Plan and the variations of the model described by [Plaintiff] to Defendant's employees." Id.
at ¶¶ 47, 50. On October 10, 2014, Plaintiff sent Defendant a letter directing it to "cease and
desist from engaging in unfair competition as a result of the bad-faith misappropriation" of
Defendant's business plan. Id. at ¶ 52. On November 24, 2014, Defendant responded that the
"eBay Valet was independently conceived" of by employees who had no connection to Plaintiff.
Id. at ¶ 53. On May 10, 2016, Defendant partnered with FedEx, a partnership that Plaintiff
believes mimics his previously undisclosed idea for a hub and spoke model. Id. at ¶ 56.
Currently before the Court is Defendant's motion to dismiss.
Standard of Review
A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure tests the legal sufficiency of the party's claim for relief. See Patane v.
Clark, 508 F.3d 106, 111-12 (2d Cir. 2007). In considering the legal sufficiency, a court must
accept as true all well-pleaded facts in the pleading and draw all reasonable inferences in the
pleader's favor. See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007)
(citation omitted). This presumption of truth, however, does not extend to legal conclusions. See
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). Although a court's review of a
motion to dismiss is generally limited to the facts presented in the pleading, the court may
consider documents that are "integral" to that pleading, even if they are neither physically
attached to, nor incorporated by reference into, the pleading. See Mangiafico v. Blumenthal, 471
F.3d 391, 398 (2d Cir. 2006) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d
To survive a motion to dismiss, a party need only plead "a short and plain statement of the
claim," see Fed. R. Civ. P. 8(a)(2), with sufficient factual "heft to 'sho[w] that the pleader is
entitled to relief.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (quotation omitted).
Under this standard, the pleading's "[f]actual allegations must be enough to raise a right of relief
above the speculative level," see id. at 555 (citation omitted), and present claims that are
"plausible on [their] face," id. at 570. "The plausibility standard is not akin to a 'probability
requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully."
Iqbal, 556 U.S. at 678 (citation omitted). "Where a complaint pleads facts that are 'merely
consistent with' a defendant's liability, it 'stops short of the line between possibility and
plausibility of 'entitlement to relief.''" Id. (quoting Twombly, 550 U.S. at 557). Ultimately, "when
the allegations in a complaint, however true, could not raise a claim of entitlement to relief,"
Twombly, 550 U.S. at 558, or where a plaintiff has "not nudged [its] claims across the line from
conceivable to plausible, the complaint must be dismissed[,]" id. at 570.
Choice of Law
In its motion to dismiss, Defendant contends that New York law should apply to Plaintiff's
claims, while Plaintiff argues that California law applies. Under New York's conflict-of-law
analysis, courts in contract cases employ the "center of gravity" approach, which includes
consideration of the place of the transaction, the location of the subject matter at issue, the place
of the defendant's performance or failure to perform, and the domicile or place of business of the
contracting parties. See Matter of Allstate Ins. Co. (Stolarz), 81 N.Y.2d 219, 226 (1993). For tort
cases, New York courts typically apply "interest analysis," where the policies underlying the
competing laws are considered in determining which states' laws are to be applied. See id.
Considering the fact intensive nature of this inquiry, courts have regularly held that a
detailed choice-of-law determination would be premature on a motion to dismiss. See Speedmark
Transp., Inc. v. Mui, 778 F. Supp. 2d 439, 444 (S.D.N.Y. 2011) (citing cases). Moreover, as
discussed below, Plaintiff's breach of contract claim survives under both New York and
California law. As such, because Plaintiff's remaining claims closely track the breach of contract
claims and are not likely to significantly expand discovery, the Court declines to engage in a
choice of law analysis at this time. See id. (citations omitted).
Breach of Contract
Under New York law, to state a claim for breach of contract, a plaintiff must allege the
following elements: (i) the existence of a contract; (ii) adequate performance of the contract by
the plaintiff; (iii) breach by the other party; and (iv) damages suffered as a result of the breach.
See Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996) (citation omitted); see also Wolff v.
Rare Medium, Inc., 171 F. Supp. 2d 354, 357-58 (S.D.N.Y. 2001) (citation omitted). "In pleading
these elements, a plaintiff must identify what provisions of the contract were breached as a result
of the acts at issue." Wolff, 171 F. Supp. 2d at 358 (citation omitted).
Defendant argues that the pleadings fail to state sufficient facts necessary to establish an
enforceable contract because they fail to allege that (1) the business plan was adequate
consideration, and (2) Plaintiff and Defendant mutually assented to material terms.
1. Adequacy of the Consideration
Defendant argues that the business plan did not constitute adequate consideration because
it was not "novel" and thus had no value. Defendant argues lack of novelty is fatal to any cause
of action arising out of the idea's unlawful use. See Dkt. No. 17-1 at 18 (citing Paul v. Haley, 183
A.D.2d 44, 52 (2d Dep't 1992)). With regards to contracts, Defendant adds that an idea which is
general knowledge is incapable of being adequate consideration. See id. Defendant points to the
similarities between Plaintiff's business plans and the plans in Plaintiff's 2008 patents as evidence
that his idea lacked novelty. See id. at 21. Further, Defendant states that Plaintiff's operation of
auctionPal disclosed the business operation. Id. Finally, Defendant argues that Plaintiff's initial
email transmission amounted to Plaintiff "blurting out" his idea, thereby nullifying the novelty
before an agreement could be reached. Id. at 22-23. Defendant briefly raises similar arguments
for why the consideration is invalid under California law. See id. at 28-29. In response, Plaintiff
argues that there is adequate consideration because under New York law, the only novelty
required is subjective novelty for the buyer. See Dkt. No. 18 at 15.
Under New York law, "[c]onsideration is found where there is either a benefit to the
[buyer] or a detriment to the [seller]." Matter of Ball (SFX Broadcasting Inc.), 236 A.D.2d 158,
161 (3d Dep't 1996) (citing Weiner v. McGraw-Hill, 57 N.Y.2d 458, 464 (1982)). Absent fraud
or unconscionability, the existence of consideration is demonstrative of adequate consideration.
In re 37-02 Plaza LLC, 387 B.R. 413, 418 (Bankr. E.D.N.Y. 2008) (citation omitted). "The fact
that the seller may not have had a property right in what they sold does not, by itself, render the
contract void for lack of consideration." Apfel v. Prudential-Bache Securities, Inc., 81 N.Y.2d
470, 476 (1993) (citations omitted). Disclosing an idea can be sufficient consideration. See id. at
478. The disclosure can be consideration even when the idea is not absolutely novel or is in the
public domain so long as the idea is novel to the party receiving the disclosure. See Nadel v.
Play-by-Play Toys & Novelties, Inc., 208 F.3d 368, 376 (2d Cir. 2000) (citing Apfel, 81 N.Y.2d at
476-77). Thus absolute novelty is not required in contract-based actions centered on an improper
use of an idea. Id. at 378 (distinguishing contract-based claims from misappropriation-based
claims by noting that "the law of property does not protect against the misappropriation or theft of
that which is free and available to all").
"Novelty is determined through a fact-specific inquiry as to whether the idea is novel to
the recipient of that idea." Sokol Holdings, Inc. v. BMB Munai, Inc., 726 F. Supp. 2d 291, 300
(S.D.N.Y. 2010) (citing Nadel, 208 F.3d at 380). A court can grant a motion to dismiss on the
issue of novelty if the idea is facially not novel. See Sharp v. Patterson, No. 03 Civ. 8772, 2004
WL 2480426, *9 (S.D.N.Y. Nov. 3, 2004) (holding that an "idea to write a novel revolving
around a series of love letters is neither novel nor original").1
California law applies the same rule for novelty. Under California law, even a widely
known idea will be protected so long as the disclosure substantially benefits the person to whom
it is disclosed. See Desny v. Wilder, 46 Cal.2d 715, 733 (1956); see also Benay v. Warner Bros.
Entm't, Inc., 607 F.3d 620, 629 (9th Cir. 2010) (holding that "novelty is not required for an
implied-in-fact contract claim arising out of unauthorized use [of an idea]").
Here, the complaint plausibly alleges that the ideas in the business plan were novel to
Defendant. First, the complaint states that at the time of the disclosure, Defendant's auction site
did not provide an auction valet service. Second, the email exchange between Plaintiff and
Dalton suggests that the idea was, at the very least, new to Dalton. Defendant's claim that
Plaintiff's business plan was already available to the public due to his operation of the business
also holds no water. This information was publicly available, but not necessarily generally
known. The fact that one of Defendant's managers, who was working on developing relationships
with sellers, found the plan compelling suggests that Defendant did not know of the idea prior to
Plaintiff disclosing it. Additionally, Plaintiff has alleged that the information provided to
Defendant was distinct and more advanced than any information that was publicly available.
Finally, Defendant's assertion that Plaintiff's email amounts to a "blurting out" of his idea
is simply not an accurate interpretation of the complaint. The complaint includes allegations that
Plaintiff and Defendant's agents had conversations making Defendant's use of the business plan
conditional on Plaintiff being compensated as a consultant prior to the email, which forecloses a
blurting-out defense at this stage of the proceeding.
2. Mutual Assent
Defendant also argues that because there was no agreement as to compensation after the
disclosure, there was no assent to consummate the bargain.
A contract may be express or implied. See 1 Samuel Williston & Richard A. Lord,
Williston on Contract, § 1:5 (4th ed. 2017). A contract implied in fact may result as an inference
from the facts and circumstances of the case, although not formally stated in words, and is derived
from the "presumed 'intention of the parties as indicated by their conduct.'" Leibowitz v. Cornell
University, 584 F.3d 487, 506-07 (2d Cir. 2009) (quoting Jemzura v. Jemzura, 36 N.Y.2d 496,
503-04 (1975)). An implied contract has the same binding authority as an express contract, so
long as the implied contract satisfies the required "'elements [of] consideration, mutual assent,
legal capacity and legal subject matter.'" Id. at 507 (quoting Maas v. Cornell Univ., 94 N.Y.2d
87, 94 (1999)); see also Brown v. St. Paul Travelers Co., Inc., 331 Fed. Appx. 68, 70 (2d Cir.
2009) (holding that an implied contract "'is just as binding as an express contract arising from
declared intention, since in the law there is no distinction between agreements made by words and
those made by conduct'") (quoting Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of
N.J., Inc., 448 F.3d 573, 582 (2d Cir. 2006)).
To form a contract, there must be an objective meeting of the minds and a manifestation of
mutual assent "'sufficiently definite to assure that the parties are truly in agreement with respect to
all material terms.'" Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89, 95 (2d
Cir. 2007) (quoting Express Indus. & Terminal Corp. v. N.Y. State Dep't of Transp., 93 N.Y.2d
584, 589 (1999)). "[A] mere agreement to agree, in which a material term is left for future
negotiations, is unenforceable." Tractebel Energy Mktg., 487 F.3d at 95 (citation omitted). Price
and compensation are examples of material terms that require definiteness. See Major League
Baseball Props., Inc. v. Opening Day Prods., Inc., 385 F. Supp. 2d 256, 271 (S.D.N.Y. 2005)
Mutual assent is satisfied for an implied-in-fact contract if the parties negotiate for the
conveyance of an idea and the idea is "thereafter taken and made valueless for its owner."
Robbins v. Frank Cooper Assoc., 14 N.Y.2d 913, 915 (1964) (citations omitted). Specific terms
may not be required to establish mutual assent where the parties engage in predisclosure
negotiations. See Forest Park Pictures v. Universal TV Network, Inc., 683 F.3d 424, 433-34 (2d
Cir. 2012); see also Lapine v. Seinfeld, 918 N.Y.S.2d 313, 319 (N.Y. Sup. Ct. 2011) (noting "that
where the defendant took the plaintiff's property under circumstances in which the parties
negotiated for the conveyance of the property and intended payment for its use, but did not reach
agreement upon the terms, the defendant was obligated to pay plaintiff its reasonable value").2
Here, the complaint alleges that, prior to disclosure, Plaintiff and Dalton negotiated that
Defendant would not use the West Plan without giving Plaintiff a financial benefit through
employment or compensation. Because there is no requirement that the parties agree to specific
terms after the disclosure to satisfy mutual assent in this situation, the complaint includes
sufficient specific factual allegations to plausibly allege that the parties mutually assented to the
Based on the foregoing, the Court finds that Plaintiff has plausibly alleged a claim of
breach of contract and Defendant's motion to dismiss as to this claim is denied.
Unfair Competition: Misappropriation of Idea
Plaintiff voluntarily withdraws this claim. See Dkt. No. 18 at 9 n.1.
Unfair Competition: Misappropriation of Labor, Skill & Expenditure
"To properly assert this claim, which is a subset of New York's unfair competition law, a
plaintiff must allege that a defendant misappropriated plaintiff's labor, skills, expenditures or
There is no conflict between California and New York law for this claim. The Second
Circuit acknowledged in Forest Park that, in the absence of any predisclosure negotiations, the
New York standard for determining whether mutual assent is satisfied without specific terms is
unclear. See Forest Park Pictures, 683 F.3d at 433–34 (comparing Nadel, 208 F.3d at 376 n.5
(noting that implied assent can be inferred without price) with Lapine, 31 Misc. 3d at 318 (noting
"price is an essential element of a contract")). In these situations a conflicts analysis is required
as New York law is unsettled. Id. However, Lapine explicitly notes that specific terms are not
essential when the parties engaged in predisclosure negotiations. Lapine, 918 N.Y.S.2d at 319.
Thus, where the parties engage in a predisclosure negotiation, New York and California have
identical standards for breach of contract arising from the disclosure of an idea. See Forest Park,
683 F.3d at 433-34; supra note 1.
good will, and displayed some element of bad faith in doing so." Schroeder, 133 A.D.3d at 30
Defendant argues that the misappropriation of labor, skill, and expenditure claim fails
because the idea was not novel. Further, because it was in the public domain, the taking of it
could not constitute bad faith. See Dkt. No. 17-1 at 25-26. Both of these arguments can be
addressed together as they both depend upon novelty.
Under New York law, "the tort of unfair competition is a 'broad and flexible doctrine' that
has been described as 'encompassing any form of commercial immorality, or simply as
endeavoring to reap where one has not sown; it is taking the skill, expenditures and labors of a
competitor, and misappropriating for the commercial advantage of one person a benefit or
property right belonging to another.'" Big Vision Private Ltd. v. E.I. du Pont de Nemours & Co.,
610 Fed. Appx. 69, 70 (2d Cir. 2015) (quoting Roy Export Co. Establishment of Vaduz,
Liechtenstein v. Columbia Broad. Sys., Inc., 672 F.2d 1095, 1105 (2d Cir. 1982)); see also
Saratoga Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980); ESPN, Inc. v.
Quiksilver, Inc., 586 F. Supp. 2d 219, 230 (S.D.N.Y. 2008). Such a claim requires a showing of
bad faith. See Big Vision, 610 Fed. Appx. at 70.
"A claim of unfair competition does not necessarily require a showing of misappropriation
of a trade secret or commercially novel idea that is produced by one party." Sokol Holdings, Inc.
v. BMB Munai, Inc., 726 F. Supp. 2d 291, 302 (S.D.N.Y. 2010) (citing Telecom Int'l Am., Ltd. v.
AT & T Corp., 280 F.3d 175, 197-98 (2d Cir. 2001)). "The doctrine of unfair competition may
apply in cases involving the misappropriation of a party's business-related labors and
expenditures themselves — that is, the misappropriation of a party's work product." Id. (citations
omitted); see also Milton Abeles, Inc. v. Farmers Pride, Inc., 603 F. Supp. 2d 500, 503 (E.D.N.Y.
2009) (noting that misappropriation of information that is the product of "significant labor, skill,
and money ... may give rise to a claim of unfair competition"); Berman v. Sugo LLC, 580 F. Supp.
2d 191, 209 (S.D.N.Y. 2008) (explaining that a claim of unfair competition may be based on the
misappropriation of business strategies, internal company documents, and client lists); Sit-Up Ltd.
v. IAC/InterActiveCorp., No. 05 Civ. 9292, 2008 WL 463884, *19-21 (S.D.N.Y. Feb. 20, 2008)
(dismissing misappropriation of idea claim on the ground that the idea was not novel but denying
motion to dismiss claim for misappropriation of labors and expenditures with respect to
defendants' alleged misuse of business materials generated by the plaintiffs); Robotic Vision
Systems, Inc. v. General Scanning. Inc., No. 96–CV–3884, 1997 WL 1068696, *5 (E.D.N.Y.
Sept. 8, 1997) (denying the defendant's motion for summary judgment where the plaintiff
technology company alleged that it invested labor, skill and money in researching and developing
a bid strategy for merging with a target company; a competing technology company
misappropriated that information by fraudulently inducing the CEO of the plaintiff company to
divulge its plan for the merger and that the defendant company then put the fruits of plaintiff's
efforts to use for its own benefit).
In the present matter, contrary to Defendant's assertions, the Court finds that Plaintiff has
alleged a plausible claim of unfair competition as it relates to the misappropriation of labor, skills,
and expenditures of another. The complaint alleges that Defendant misappropriated Plaintiff's
work product. Specifically, the complaint alleges that Plaintiff expended approximately thirteen
years and was involved with the deployment of approximately $3,000,000.00 in investment
capital to develop the unique, internal processes in the West Plan. See Dkt. No. 2 at ¶ 83.
Plaintiff claims that the internal processes were unique and novel, "as there were no other entities
(including Defendant) utilizing the Mobile Device Process or the Spoke and Hub Model in the
virtual market place." Id. at ¶ 85. Further, Plaintiff disclosed the West Plan and variations
thereof to Defendant in confidence, and only after being assured that it would be kept confidential
absent Plaintiff's involvement and financial compensation in any project using the disclosed
information. See id. at ¶ 86. Finally, the complaint alleges the bad-faith misappropriation of
Plaintiff's labor, skill and expenditures. See id. at ¶ 88.
In seeking the dismissal of this claim, Defendant relies solely on the argument that lack of
novelty is fatal to this claim. See Dkt. No. 17-1 at 25. Although Defendant is correct that lack of
novelty is fatal to a claim of idea misappropriation, as discussed above, novelty is not required to
establish a claim of unfair competition based on the misappropriation of labor, skill and
expenditures. See Sokol Holdings, Inc., 726 F. Supp. 2d at 302; Milton Abeles, Inc., 603 F. Supp.
2d at 503; Berman, 580 F. Supp. 2d at 209; Sit-Up Ltd., 2008 WL 463884, *19-21. This holding
is consistent with the fact that "New York courts have noted the 'incalculable variety' of illegal
practices falling within the unfair competition rubric . . . calling it a 'broad and flexible doctrine."
Roy Export Co., 672 F.2d at 1105.
Based on the foregoing, the Court finds that Plaintiff has plausibly alleged a claim of
misappropriation of skill, labor, and expenditure and Defendant's motion to dismiss as to this
claim is denied.
"A cause of action for promissory estoppel under New York law requires the plaintiff to
prove three elements: 1) a clear and unambiguous promise; 2) reasonable and foreseeable reliance
on that promise; and 3) injury to the relying party as a result of the reliance." Kaye v. Grossman,
202 F.3d 611, 615 (2d Cir. 2000) (citation omitted). "However, a detailed showing of the
elements of promissory estoppel need not be shown to survive a pre-answer motion to dismiss."
Mendez v. Bank of Am. Home Loans Servicing, LP, 840 F. Supp. 2d 639, 654 (E.D.N.Y. 2012)
Defendant's first argument is that there was no reliance because Defendant did not make a
promise prior to the disclosure so Plaintiff was not induced into disclosing the business plan. See
Dkt. No. 17-1 at 26. However, the complaint explicitly states that "Dalton promised to keep any
disclosed business plan in confidence and that it would not be acted upon without [Plaintiff's]
financial involvement or approval. In reliance on Dalton's express promise, [Plaintiff] provided
the West Valet Plan to Dalton." Dkt. No. 2 at ¶¶ 29-31. Thus, Defendant's first argument is
Defendant then argues that any promise made was not sufficiently clear and unambiguous
to support a promissory estoppel claim. Dkt. No. 17-1 at 26. Defendant argues that under James
v. W.N.Y. Computing Sys., Inc., 273 A.D.2d 853, 855 (4th Dep't 2000), overruled on other
grounds by Am. Tower Asset Sub, LLC v. Buffalo-Lake Erie Wireless Sys. Co., LLC, 104 A.D.3d
1212 (4th Dep't 2013), when an "agreement is unclear concerning the duration of [the] plaintiff's
employment, the specific of the plan in which the plaintiff is to participate, what plaintiff's
'opportunity' entails, or the amount of money [the] plaintiff would receive[,]" it cannot support a
claim arising from promissory estoppel. The Court disagrees.
The promissory estoppel claim in James arose out of an employment compensation
dispute where the employer substantially reduced the plaintiff's commission. See id. at 854. The
employer told James that his future profits from the already existing company stock option plan
would more than offset the reduction in his commission. See id. Two years later, the employer
ended the stock option plan before James had a chance to fully invest. See id. James claimed
that, under promissory estoppel, he was entitled to relief because the options program had induced
him to stay at his job. See id. The court held that the oral statements implying James would
receive more compensation under the options program were not clear and unambiguous and
dismissed the claim. See id. at 855. The court noted that the oral agreement was "unclear
concerning the duration of [James's] employment, the specifics of the plan in which [James was]
to participate, what [James's] 'opportunity' entail[ed], or the amount of money [James] would
receive from the stock." Id. These details were needed because of countervailing evidence within
the complaint that weighed against the existence of a promise. Specifically, the stock option plan
included language that it would "not be deemed to constitute a contract . . . or . . . inducement to .
. . the employment of any person." Id. at 854. This statement that the option plan was not a
promise ran counter to James's assertions. See id. at 855. Thus, the broad statements of the
alleged promise could not be unambiguous when viewed in conjunction with the contrary
language in the options plan. See id. Here, unlike James, there is nothing in the complaint to
imply a mixed message. Thus, there is no need for additional specifics, as there is no ambiguity
Instead, this case is more akin to Clifford R. Gray, Inc. v. LeChase Constr. Servs., LLC, 31
A.D.3d 983 (3d Dep't 2006). In Clifford, the "defendants promised to give [the] plaintiff [a]
project subcontract" on the condition that the "plaintiff refrained from working with other general
contractors who were seeking the project." Id. at 987. After the plaintiff relied on that promise,
the defendant refused to perform. See id. The court allowed the plaintiff to proceed with a
promissory estoppel claim even though "the parties never fully agreed on the details of [the]
subcontract and agreed only that the outstanding details of the subcontract would be discussed if
[the] defendants were ultimately awarded the . . . contract." Id. at 984. These ambiguities were
immaterial because the promise of future employment in consideration for his forbearance was
the promise that the plaintiff reasonably relied on. See id. at 987.
Similarly, the complaint here alleges that Defendant promised to compensate Plaintiff if
Defendant implemented the West Plan. Like the plaintiff in Clifford, Plaintiff alleges that he
relied on Defendant's promise, even though the parties did not establish the terms of the future
contract. As in Clifford, this promise was sufficiently specific to reasonably induce Plaintiff's
reliance. Thus, the facts put forward in the complaint plausibly allege a clear and unambiguous
Finally, Defendant argues that, because of Plaintiff's previous operation of auctionPAL
and the "blurting" out his business plan via email, the plan was free for all to use so Defendant's
use of his plan caused him no injury.
First, the Court notes again that Plaintiff's complaint includes allegations of an agreement
prior to his disclosure, thereby refuting the "blurting" argument. Second, even assuming that any
disclosure in Plaintiff's previous patent applications or website operation were sufficient to
destroy the value in the information disclosed, the complaint alleges that the West Plan included a
proprietary, custom question database and market research on the best starting price and optimal
time for listing an item on an online marketplace.
Based on the foregoing, the Court finds that Plaintiff has plausibly alleged a claim of
promissory estoppel and Defendant's motion to dismiss as to this claim is denied.
"To prevail on a claim for unjust enrichment, the moving party must show that the
defendant received money from or was otherwise enriched by the plaintiff to the defendant's
benefit and, pursuant to principles of equity and good conscience, the defendant should not retain
what plaintiff seeks to recover." Deutsche Asset Mgmt., Inc. v. Callaghan, No. 01 Civ. 4426,
2004 WL 758303, *11 (S.D.N.Y. Apr. 7, 2004) (citing, inter alia, Clark v. Daby, 300 A.D.2d 732
(3d Dep't 2002)). "[C]laims for unjust enrichment seek restitution and are based upon theories of
quasi-contract." Id. (citing Matter of Estate of Witbeck, 245 A.D.2d 848 (3d Dep't 1997)). "A
quasi-contract is one implied by law, where none in fact exists." Id. (citing James v. State, 90
A.D.2d 342 (4th Dep't 1982)). Thus, quasi-contract relief is only available in the absence of an
enforceable written contract which governs the same subject matter between the parties. See
Seiden Associates, Inc. v. ANC Holdings, 754 F. Supp. 37, 39 (S.D.N.Y. 1991).
Defendant argues that Plaintiff's claim of unjust enrichment fails because the business plan
was not novel. See Dkt. No. 17-1. Defendant cites to Sokol Holdings, which states that where
unjust enrichment is "premised on a plaintiff's submission of an idea to a defendant, the plaintiff
must demonstrate the novelty of the idea in order to recover." Sokol Holdings, 726 F. Supp. 2d at
The Second Circuit is clear that unjust enrichment applies a contracts based analysis of
novelty. See Khreativity Unlimited, Inc. v. Mattel, Inc., 242 F.3d 366 (2d Cir. 2000) (holding that
an "idea must be novel to its recipient for the recipient to be unjustly enriched thereby"). Further,
in the Sokol Holdings case cited by Defendant, the court did not conduct a separate novelty
analysis for unjust enrichment. See Sokol Holdings, 726 F. Supp. 2d at 304. Instead, the court
referenced its novelty analysis for a breach of contract claim where it noted that the standard is
not absolute novelty, but "whether the idea is novel to the recipient of that idea." Id. at 300, 304;
see also Khreativity Unlimited v. Mattel, Inc., 101 F. Supp. 2d 177, 184-85 (S.D.N.Y. 2000)
(analyzing a stand alone unjust enrichment claim using the novelty to the buyer standard from
Based on the foregoing, the Court finds that Plaintiff has plausibly alleged a claim of
unjust enrichment and Defendant's motion to dismiss as to this claim is denied.
After carefully reviewing the complaint in this matter, the parties' submissions and the
applicable law, and for the above-stated reasons, the Court hereby
ORDERS that Defendant's motion to dismiss is DENIED; and the Court further
ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision
and Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.
Dated: December 1, 2017
Albany, New York
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?