Mujae Group, Inc. v. Spotify USA Inc. et al

Filing 53

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS MOTION TO DISMISS granting in part and denying in part 40 Motion to Dismiss. For the foregoing reasons, as well as the reasons stated on the record and incorporated herein, Defendants' m otion to dismiss is granted with respect to the Third, Fourth, and Fifth Counts of the Amended Complaint, and denied with respect to the First, Second, and Sixth Counts of the Amended Complaint. Plaintiff shall file a second amended complaint by J anuary 14, 2021, removing the dismissed causes of actions and allegations as to personal jurisdiction. Defendants shall file their answer by February 4, 2021. The parties shall appear for a status conference at 10:00 a.m., on February 26, 2021, to discuss a case management plan. The Clerk is directed to terminate the open motion (ECF No. 40). SO ORDERED. (Signed by Judge Alvin K. Hellerstein on 1/7/21) (yv)

Case 1:20-cv-06719-AKH Document 53 Filed 01/07/21 Page 1 of 3

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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MUJAE GROUP, INC.,
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Plaintiff,
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v.
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SPOTIFY USA INC., et al.,
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Defendants.
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ORDER GRANTING IN PART
AND DENYING IN PART
DEFENDANTS’ MOTION TO
DISMISS
20 Civ. 6719 (AKH)

ALVIN K. HELLERSTEIN, U.S.D.J.:
Plaintiff is an application developer, and Defendants are a popular audio
streaming service. On April 30, 2020, Plaintiff commenced this action against Defendants,
alleging, (i) violation of the Defend Trade Secrets Act, 18 U.S.C. § 1836, (ii) misappropriation of
trade secrets under New York law, (iii) misappropriation of ideas under New York law,
(iv) unfair competition under New York law, (v) misappropriation of skills and expenditures
under New York law, and (vi) unjust enrichment under New York law. See ECF No. 23
(“Amended Complaint”). Defendants now move to dismiss the action pursuant to Federal Rule
of Civil Procedure 12(b)(6). See ECF No. 40. The Court held a hearing on January 7, 2021, on
the instant motion to dismiss. For the reasons discussed below as well as stated on the record,
Defendants’ motion to dismiss is granted in part and denied in part.
Defendants argue, as a threshold matter, that Plaintiff’s claims for
misappropriation of trade secrets under federal and New York law should be dismissed as
time-barred. See ECF No. 41, at 6. Accepting “as true all of the factual allegations contained in
the [Amended Complaint],” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 572 (2007), drawing
“all inferences in the light most favorable to the non-moving party’s favor,” In re NYSE
Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007), and determining whether the Amended
Complaint “contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is
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plausible on its face,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation marks omitted), the
Court finds that the Amended Complaint plausibly pleads that Plaintiff had no reason to suspect
any misuse of its confidential information by Defendants prior to the release of Spotify Ad
Studio in September 2017, and misappropriation of Plaintiff’s trade secrets is, until this date, a
continuing tort. See Uni-Systems, LLC v. United States Tennis Ass’n, Inc., 350 F. Supp. 3d 143,
178 (E.D.N.Y. 2018); CSFB HOLT LLC v. Collins Stewart Ltd., No. 02 CIV. 3069(LBS), 2004
WL 1794499, at *8 (S.D.N.Y. Aug. 10, 2004). The federal and New York misappropriation of
trade secrets claims are, therefore, not time-barred.
With respect to the two misappropriation of trade secret claims, viewing the
Amended Complaint under the Twombly and Iqbal standards, the Court finds that the Amended
Complaint describes Plaintiff’s trade secrets with sufficient specificity “to inform [Defendants]
of what they are alleged to have misappropriated.” Medidata Sol., Inc. v. Veeva Sys. Inc., 2018
WL 6173349, at *3 (S.D.N.Y. Nov. 26, 2018). The Court further finds that Defendants’
assurance to keep any information shared by Plaintiff confidential constitutes “an agreement,
confidential relationship or duty” to maintain secrecy, Medtech Prods., Inc. v. Ranir, LLC, 596
F.Supp.2d 778, 803 (S.D.N.Y. 2008), and Plaintiff sufficiently protected the claimed trade
secrets with password and nondisclosure agreements. See ExpertConnect, LLC v. Fowler, 2019
WL 3004161, at *4 (S.D.N.Y. July 10, 2019) (holding that a trade secret plaintiff must allege
reasonable steps to protect its trade secrets, such as requiring employees to enter into NDAs and
protecting trade secrets through “password protected entry points”). Accordingly, Defendants’
motion to dismiss is denied with respect to the First, Second, and the attendant Sixth Counts of
the Amended Complaint. The remaining counts of the Amended Complaint, namely,
misappropriation of ideas under New York law, unfair competition under New York law, and
misappropriation of skills and expenditures under New York law, are duplicative of the
misappropriation of trade secret counts. See Town & Country Linen Corp. v. Ingenious Designs
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LLC, 436 F. Supp. 3d 653, 667 (S.D.N.Y. 2020); Carson Optical Inc. v. eBay Inc., 202 F. Supp.
3d 247, 267 (E.D.N.Y. 2016); see also Fed. R. Civ. P. 12(f). As such, Defendants’ motion to
dismiss is granted with respect to the Third, Fourth, and Fifth Counts of the Amended
Complaint.
For the foregoing reasons, as well as the reasons stated on the record and
incorporated herein, Defendants’ motion to dismiss is granted with respect to the Third, Fourth,
and Fifth Counts of the Amended Complaint, and denied with respect to the First, Second, and
Sixth Counts of the Amended Complaint. Plaintiff shall file a second amended complaint by
January 14, 2021, removing the dismissed causes of actions and allegations as to personal
jurisdiction. Defendants shall file their answer by February 4, 2021. The parties shall appear for
a status conference at 10:00 a.m., on February 26, 2021, to discuss a case management plan. The
Clerk is directed to terminate the open motion (ECF No. 40).

SO ORDERED.
Dated:

January 7, 2021
New York, New York

__/s/ Alvin K. Hellerstein______
ALVIN K. HELLERSTEIN
United States District Judge

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