E. FRANK HOPKINS SEAFOOD, CO., INC. v. OLIZI et al
MEMORANDUM. SIGNED BY HONORABLE J. CURTIS JOYNER ON 6/15/2017. 6/16/2017 ENTERED AND COPIES E-MAILED.(amas)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
E. FRANK HOPKINS
SEAFOOD, CO., INC.,
ELIO OLIZI ; CHERYL OLIZI; and
PURE FISH SEAFOOD, LLC,
: CIVIL ACTION
: NO. 2:17-CV-01558-JCJ
MEMORANDUM AND ORDER
June 15, 2017
Before the court are Defendants’ Motion to Dismiss (Doc. No.
6) and Plaintiff’s Response in Opposition thereto (Doc. No. 8).
For the reasons set forth in this Memorandum, the Motion is
denied in its entirety.
Plaintiff E. Frank Hopkins Seafood, Co., Inc. (“Hopkins”) is
a wholesale seafood distributor located in Philadelphia,
Pennsylvania. (Compl. ¶ 3). To facilitate its business, Hopkins
has developed and maintains lists of customers and suppliers,
order histories for these parties, and pricing strategies.
(Compl. ¶¶ 11-13). To protect this information, which is not
available to the public, Hopkins limits which employees may
access it. (Compl. ¶¶ 15-16). Hopkins’ employees are aware of the
information’s confidentiality. (Compl. ¶ 17).
Defendant Elio Olizi (“Mr. Olizi”), a resident of New
Jersey, was employed by Hopkins until he quit in September 2016.
(Compl. ¶¶ 4, 18). Because Mr. Olizi was responsible for
negotiating prices with customers, he had access to the aforesaid
non-public information and had contact with Hopkins’ suppliers
and customers, both current and prospective. (Compl. ¶¶ 22-23).
In August 2016, Mr. Olizi and his wife, Defendant Cheryl
Olizi (“Mrs. Olizi”), formed Defendant Pure Fish Seafood, LLC
(“Pure Fish”) under the laws of New Jersey. (Compl. ¶ 30).
Shortly thereafter, Mr. Olizi terminated his employment with
Hopkins without notice. (Compl. ¶ 24). He then worked for Samuels
and Son Seafood Co., Inc. (“Samuels”), a regional competitor of
Hopkins, for three months. (Compl. ¶¶ 25-26). Upon ceasing his
work there, Mr. Olizi sought to return to Hopkins but was denied.
(Compl. ¶¶ 27-29).
Hopkins alleges that Defendants used information that Mr.
Olizi obtained as an employee to entice existing and prospective
customers of Hopkins to instead contract with Pure Fish. (Compl.
¶¶ 32-38). The Complaint also asserts that several existing
customers actually terminated their contracts with Hopkins and
became customers of Pure Fish, and that several prospective
customers instead contracted with Pure Fish, all due to
Defendants’ use of Hopkins’ confidential information. (Compl. ¶
Counsel for Plaintiff corresponded with Mr. Olizi, demanding
he cease and desist the alleged unlawful use of Hopkins’
confidential information and return all such information to
Hopkins. (Compl. ¶¶ 43-44). Mr. Olizi replied through counsel,
denying possession of such information. (Compl. 45). In response
to the alleged continued possession and use of Hopkins’
information by Defendants, Hopkins sent two more letters
repeating its demands, which were met with no reply. (Compl. ¶¶
46-49). Hopkins filed a complaint on April 6, 2017, alleging
tortious interference with contractual relations, tortious
interference with prospective contractual and business
relationships, misappropriation of trade secrets, unfair
competition, conversion, civil conspiracy, and accounting.
Subsequently, Defendants filed a Motion to Dismiss under Federal
Rules of Civil Procedure 12(b)(3), 12(b)(6), and 12(b)(7), and
Plaintiff filed a Response in Opposition thereto.
A pleading is “a short and plain statement of the claim
showing that the pleader is entitled to relief.” FED . R. CIV. PRO .
8(a)(2). This is “in order to ‘give the defendant fair notice of
what the . . . claim is and the grounds upon which it rests.’”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Palakovic v.
Wetzel, 854 F.3d 209, 219 (3d Cir. 2017). Furthermore, in
considering dismissal under Rule 12(b)(6), we “accept all factual
allegations as true, construe the complaint in the light most
favorable to the plaintiff, and determine whether, under any
reasonable reading of the complaint, the plaintiff may be
entitled to relief.” Phillips v. County of Allegheny, 515 F.3d
224, 233 (3d Cir. 2008) (citations omitted).
The complaint “does not need detailed factual allegations,”
but it does need “more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will
not do.” Twombly, 550 U.S. at 555. While “[f]actual allegations
must be enough to raise a right to relief above the speculative
level,” all that is required is “a reasonable expectation that
discovery will reveal evidence of [the alleged unlawful
activity].” Id. at 555-56. In other words, the claim must be
“plausible on its face,” not merely conceivable. Id. at 570.
In Ashcroft v. Iqbal, the Supreme Court clarified that “[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.” 556
U.S. 662, 678 (2009); accord Palakovic, 854 F.3d at 219. After
Twombly and Iqbal, the Third Circuit formulated a three-step
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
Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011)
(quoting Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir.
Plaintiff’s Complaint alleges seven counts arising from
Defendants’ alleged taking, retention, and use of Plaintiff’s
confidential information. Broadly, Defendants argue that
Plaintiff failed to sufficiently plead facts in support of
essential elements of its claims; that several of Plaintiff’s
tort claims are preempted by state statute, the elements of which
are also not sufficiently pleaded; that Plaintiff failed to join
an indispensable party under Federal Rule of Civil Procedure 19,
as required by Rule 12(b)(7); and that Plaintiff failed to
establish proper venue under 28 U.S.C. § 1391, as required by
Rule 12(b)(3). We first address the 12(b)(6) motion with respect
to each claim, then we address the 12(b)(7) and 12(b)(3) motions.
MOTION TO DISMISS FOR FAILURE
OF CIVIL PROCEDURE 12(B )(6)
Tortious Interference with Contractual Relations
The Pennsylvania Supreme Court expressly adopted the
following standard for tortious interference with contractual
One who intentionally and improperly interferes with the
performance of a contract (except a contract to marry)
between another and a third person by inducing or otherwise
causing the third person not to perform the contract, is
subject to liability to the other for the pecuniary loss
resulting to the other from the third person's failure to
perform the contract.
Adler, Barish, Daniels, Levin and Creskoff v. Epstein, 393 A.2d
1175, 1183 (Pa. 1978) (quoting RESTATEMENT (SECOND )
TORTS § 766
(AM. LAW. INST., Tentative Draft No. 23, 1977)). In their
interpretation of this section, Pennsylvania courts have
delineated four elements necessary to state such a claim:
the existence of a contractual, or prospective
contractual relation between the complainant and a
purposeful action on the part of the defendant,
specifically intended to harm the existing relation, or
to prevent a prospective relation from occurring;
the absence of privilege or justification on the part
of the defendant; and
the occasioning of actual legal damage as a result of
the defendant's conduct.
Ira G. Steffy & Son, Inc. v. Citizens Bank of Pa., 7 A.3d 278,
288-89 (Pa. Super. 2010) (footnote omitted) (quoting Strickland
v. Univ. of Scranton, 700 A.2d 979, 985 (Pa. Super. 1997)). In
their motion, Defendants do not contest element (2); however,
they do contend that Plaintiff’s Complaint does not demonstrate
the existence of a contractual relation, address the lack of
privilege or justification on the part of the Defendants, or
identify any consequent damage. (Motion to Dismiss, Doc. No. 6,
p. 3).1 The sufficiency of the pleading of those three elements
is considered seriatim.
Existence of Contractual Relations
Where a case is not even in the discovery phase, requiring a
plaintiff to list the specific contracts which it alleges have
been harmed would be an extreme and unnecessary burden. Aetna,
Inc. v. Health Diagnostic Lab. Inc., No. 15-1868, 2015 WL
9460072, at *6 (E.D. Pa. Dec. 28, 2015). Here, Defendants argue
that Plaintiff “fails to identify a single existing contractual
relationship.” (Motion to Dismiss, Doc. No. 6, p. 3). To the
contrary, Plaintiff’s Complaint alleges that: Plaintiff maintains
a list of current and prospective customers, (Compl. ¶¶ 11-12,
34); a number of Plaintiff’s customers have terminated their
contracts with Plaintiff in order to contract with Defendants
instead, (Compl. ¶ 39); and Defendants solicited Plaintiff’s two
largest customers, (Compl. ¶ 54). These allegations are more than
mere legal conclusions and establish a reasonable expectation
that discovery will reveal evidence of this element of the claim.
Absence of Privilege of Justification
Under Pennsylvania law, a plaintiff must make a prima facie
showing that the defendant’s interference was unjustified (i.e.,
Defendants’ brief lacks page numbers. For clarity, we consider page 1 to be
the page following the Table of Authorities and beginning with “FACTS.”
improper). Ira G. Steffy & Son, Inc., 7 A.3d at 288 n.13 (citing
Triffin v. Janssen, 626 A.2d 571, 574 n.3 (Pa. Super. 1993)).
Broadly, “[t]he general issue is ‘whether, upon a consideration
of the relative significance of the factors involved, the conduct
should be permitted without liability, despite its effect of harm
to another.’” Crivelli v. General Motors Corp., 215 F.3d 386, 395
(3d Cir. 2000) (quoting Adler, 393 A.2d at 1184 n.17). To
determine impropriety, a defendant’s conduct should be assessed
with regard to the “‘rules of the game’ which society has
adopted.” Adler, 393 A.2d at 1184 (quoting Glenn v. Point Park
Coll., 272 A.2d 895, 899 (Pa. 1971)). More specifically, courts
the nature of the actor's conduct,
the actor's motive,
the interests of the other with which the actor's
the interests sought to be advanced by the actor,
the social interests in protecting the freedom of
action of the actor and the contractual interests of
the proximity or remoteness of the actor's conduct to
the interference, and
the relations between the parties.
Id. (quoting RESTATEMENT (SECOND )
TORTS § 767 (AM . LAW INST . 1979)).
Due to the fact-intensive nature of weighing these factors,
doing so before discovery is generally inappropriate. See Odyssey
Waste Servs., LLC v. BFI Waste Sys. of N. Am., Inc., No. Civ.A.
05-CV-1929, 2005 WL 3110826, at *7 (E.D. Pa. Nov. 18, 2005)
(denying a motion to dismiss in part because the fact-intensive
inquiry “will require at least some discovery to resolve”); Breon
v. Waypoint Ins. Grp., Inc., No. 1:06-CV-2204, 2007 WL 1575225,
at *3 (M.D. Pa. May 31, 2007) (denying a motion to dismiss in
part because weighing the Restatement factors “is more
appropriately reserved for summary judgment”). But see Hosp.
Assocs. of Lancaster v. Lancaster Land Dev., L.P., No. 07-cv03955, 2008 WL 4444249, at *9-*12 (E.D. Pa. Sept. 30, 2008)
(performing the seven-part analysis but finding that the facts
pleaded were sufficient to deny a motion to dismiss). Instead, as
Plaintiff argues, courts have held that alleging Defendants’
knowing and purposeful intent to interfere with a contract is
sufficient to satisfy the impropriety inquiry for the purposes of
a motion to dismiss. Odyssey Waste, 2005 WL 3110826, at *7
(citing Total Care Sys., Inc. v. Coons, 860 F. Supp. 236, 242
(E.D. Pa. 1994)); accord Breon, 2007 WL 1575225, at *3.
In Total Care, it was sufficient that the plaintiff alleged
the nature of the defendant’s interfering conduct and that the
defendant had a knowing and purposeful intent to interfere. 860
F. Supp. at 242. Similarly, it was sufficient that the plaintiff
in Breon alleged that a defendant intended to induce a third
party to terminate the plaintiff’s employment contract, and that
this defendant did not have any privilege or justification for
doing so. 2007 WL 1575225, at *4. Here, Plaintiff alleges that:
Defendants intentionally interfered with existing contracts,
(Compl. ¶¶ 34, 67); Defendants took and used confidential
information in order to induce Plaintiff’s customers to break
their contracts with Plaintiff and contract with Defendants
instead, (Compl. ¶¶ 34-40); and Defendants’ actions were not
privileged or justified, (Compl. ¶¶ 35-36). Therefore, Plaintiff
has sufficiently pleaded this element of its claim.
Existence of Resultant Damages
For this element of tortious interference with contractual
relations, a plaintiff must demonstrate that actual damages
resulted from the defendant’s conduct, and those damages must
flow from the loss of the benefits of the contract or
consequential, emotional or reputational losses. Pawlowski v.
Smorto, 588 A.2d 36, 40 (Pa. Super. 1991). As with their prior
assertions, Defendants aver — without further citation or
argumentation — that Plaintiff failed to identify any damage
resulting from Defendants’ alleged conduct. To the contrary,
Plaintiff alleges that because of Defendants’ interference,
customers have ended ongoing contracts with Plaintiff in order to
become customers of Defendants, (Compl. ¶ 39), and that Plaintiff
has suffered losses in excess of $75,000 as a result, (Compl. ¶¶
Accepting all factual allegations as true and construing the
Complaint in the light most favorable to Plaintiff, Plaintiff has
pleaded sufficient facts to state a claim for tortious
interference with contractual relations that is not merely
conceivable, but rather plausible. We can reasonably infer that
Defendants are liable for the alleged offenses, and Defendants
have fair notice of the claim and the grounds on which it rests.
Tortious Interference with Prospective Contractual
and Business Relationships
The elements of a claim for tortious interference with
prospective contractual relations mirror the elements of its nonprospective counterpart. A plaintiff must demonstrate: “(1) a
prospective contractual relation; (2) the purpose or intent to
harm the plaintiff by preventing the relation from occurring; (3)
the absence of privilege or justification on the part of the
defendant; and (4) the occasioning of actual damage resulting
from the defendant's conduct.” Kachmar v. SunGard Data Sys.,
Inc., 109 F.3d 173, 184 (3d Cir. 1997); accord Glenn, 272 A.2d at
898. In their motion, Defendants contend only that Plaintiff
fails to plead the first element of its claim, a prospective
contractual relation, which is considered below.
Although difficult to define, a prospective contractual
relation “is something less than a contractual right, something
more than a mere hope.” Synthes (U.S.A.) v. Globus Med., Inc.,
No. Civ.A. 04-CV-1235, 2005 WL 2233441, at *7 (E.D. Pa. Sept. 14,
2005) (quoting Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466,
471 (Pa. 1979)). To survive a motion to dismiss, a plaintiff must
establish a reasonable probability that but for the defendant’s
interference, a contract would have materialized. Id. (citing
Santana Prods., Inc. v. Bobrick Washroom Equip., Inc., 401 F.3d
123, 140); accord Glenn, 272 A.2d at 898-99. The last pertinent
principle, for which the Synthes court provides ample support, is
[B]ecause such prospective relationships are “not
susceptible of a definite, exacting identification,” a
plaintiff is not required to identify a potential
contractual partner by name. Kelly-Springfield Tire Co. v.
D’Ambro, 408 Pa. Super. 301, 596 A.2d 867 (Pa. 1991)
(holding that plaintiff did not have to identify a specific
potential purchaser to withstand motion to dismiss under
state pleading standard); see also Dunlap v. Peco Energy,
1996 WL 617777 (E.D. Pa. Oct. 23, 1996) (finding that
plaintiff’s allegation that defendant had interfered with “a
business expectancy in contracts . . . to the energy
industry” sufficient for purposes of motion to dismiss);
Amer. Health, 1994 WL 314313, at *14 (noting that “although
. . . the amended complaint simply states that ‘Plaintiff
had and has prospects of contractual relations with home
care patients found in the relevant geographic market,’ I am
persuaded by all of the allegations in the complaint that
plaintiff has alleged more than a ‘mere hope’ of prospective
relations with home health care patients”).
2005 WL 2233441, at *7 (alterations in original).
In Synthes, the defendants filed counterclaims against the
plaintiff for tortiously interfering with the defendants’
prospective contractual relations by disparaging them in
conversations with anticipated customers; these claims survived a
motion to dismiss since it was not necessary to identify the
specific contracts at issue. Id. at *6-*7. Here, Plaintiff
pleaded the existence of confidential information regarding
prospective customers, (Compl. ¶¶ 23, 34-37), as well as the
existence of anticipated customers who were instead enticed to
contract with Defendants due to Defendants’ access to such
information, (Compl. ¶ 40). It is alleged that by use of
Plaintiff’s confidential information, Defendants succeeded in
inducing prospective customers of Plaintiff to instead contract
with Defendants. (Compl. ¶¶ 66-69). At this case’s nascent, prediscovery stage, and considering the pleading standards under
Rule 8(a), Plaintiff has sufficiently pleaded this element (and
thus, this claim). Defendants’ motion to dismiss this claim must
Misappropriation of Trade Secrets
Under Pennsylvania law, a claim for misappropriation of
trade secrets is governed by the Pennsylvania Uniform Trade
Secrets Act (“PUTSA”). 12 PA . CONS . STAT . § 5308 (2014). PUTSA
defines “misappropriation” as:
acquisition of a trade secret of another by a person
who knows or has reason to know that the trade secret
was acquired by improper means; or
disclosure or use of a trade secret of another without
express or implied consent by a person who:
(i) used improper means to acquire knowledge of the
(ii) at the time of disclosure or use, knew or had
reason to know that his knowledge of the trade
(A) derived from or through a person who had
utilized improper means to acquire it;
(B) acquired under circumstances giving rise to a
duty to maintain its secrecy or limit its
derived from or through a person who owed a
duty to the person seeking relief to maintain
its secrecy or limit its use; or
(iii)before a material change of his position, knew or
had reason to know that it was a trade secret and
that knowledge of it had been acquired by accident
Id. § 5302. Defendants’ motion argues that Plaintiff fails to
establish that “any of the alleged trade secrets were ever
acquired by or disclosed to any of the Defendants by improper
means or by accident or mistake.”2 (Doc. No. 6, p. 5). As
Plaintiff points out, even if Defendants’ contention were true,
Defendants ignore subsections 5302(2)(ii)(B)-(C). So as to not
deny this part of the motion outright, we will consider the
sufficiency of the pleadings with respect to those subsections.
A duty of secrecy may arise where a defendant is made aware
that certain information may not be disclosed to third parties,
and the information itself is of a confidential nature; this is
the case even absent a confidentiality agreement. EXL Labs., LLC
v. Egolf, No. 10–6282, 2011 WL 880453 at *6 (E.D. Pa. Mar. 11,
2011); see also Swift Bros. v. Swift & Sons, Inc., 921 F. Supp.
PUTSA defines “trade secret” as:
Information, including a formula, drawing, pattern, compilation
including a customer list, program, device, method, technique or process
Derives independent economic value, actual or potential,
from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use.
Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
12 PA. CONS. STAT. § 5302. “Improper means” is defined as including, but not
limited to, “theft, bribery, misrepresentation, breach or inducement of a
breach of a duty to maintain secrecy or espionage through electronic or other
267, 277 (E.D. Pa. 1995) (holding that confidentiality agreements
are not necessary for Pennsylvania law to protect trade secrets,
such as customer lists, “if the other precautions taken by the
plaintiff are sufficient”).
Although EXL Laboratories dealt with a manufacturerdistributor relationship, not an employer-employee one, the
court’s discussion of a duty of secrecy applies with equal force
here. In EXL Laboratories, one of the plaintiff’s executives
warned the board of a distributor that board members could not
divulge the plaintiff’s proprietary information to third parties.
2011 WL 880453, at *6. The court held that these circumstances,
combined with the confidential nature of the information itself,
satisfied subsection 5302(2)(ii)(B) and created a duty to
secrecy. Id. Here, Plaintiff pleaded that its customer lists, as
well as other information, are confidential, (Compl. ¶ 12), and
that employees are aware of this confidentiality, (Compl. ¶ 17).
Plaintiff further pleaded that Mr. Olizi was granted access to
this information in order to perform his duties, (Compl. ¶¶ 2223, 82), and that he was aware of the information’s confidential
nature, (Compl. ¶ 80). Lastly, it is alleged that Defendants used
this information without Plaintiff’s consent. (Compl. ¶ 35).
Because Plaintiff has sufficiently pleaded, and Defendants do not
contest, the existence and breach of a duty of secrecy, the
motion to dismiss this claim can be denied without needing to
address the sufficiency of the pleadings regarding “improper
Under Pennsylvania law, the tort of unfair competition is
defined as follows:
One who causes harm to the commercial relations of another
by engaging in a business or trade is not subject to
liability to the other for such harm unless . . . the harm
results from . . . acts or practices of the actor determined
to be actionable as an unfair method of competition, taking
into account the nature of the conduct and its likely effect
on both the person seeking relief and the public.
Bro-Tech Corp. v. Thermax, Inc., 651 F. Supp. 2d 378, 417-18
(E.D. Pa. 2009) (quoting RESTATEMENT (THIRD )
UNFAIR COMPETITION §
1(a) (AM. LAW INST. 1995)); accord Giordano v. Claudio, 714 F.
Supp. 2d 508, 521-22 (E.D. Pa. 2010); Bldg. Materials Corp. of
Am. v. Rotter, 535 F. Supp. 2d 518, 526 n.4 (E.D. Pa. 2008);
Synthes, 2007 WL 2043184, at *9; Air Prods. & Chem., Inc. v.
Inter-Chemical Ltd., No. Civ.A. 03–CV–6140, 2003 WL 22917491, at
*12 (E.D. Pa. Dec. 2, 2003). “Unfair competition” must not be
construed as a catch-all for any wrongful business conduct, or to
include all business torts. Giordano, 714 F. Supp. 2d at 522
(citing USX Corp. v. Adriatic Ins. Co., 99 F. Supp. 2d 593, 619
(W.D. Pa. 2000)). That said, the “improper use of another’s
confidential information may qualify as unfair competition ‘even
if the conduct is not specifically actionable under the rules
relating to . . . misappropriation of trade secrets.’” Bro-Tech,
651 F. Supp. 2d at 418 (quoting RESTATEMENT (THIRD )
COMPETITION § 1 cmt. g). Unfair competition thus encompasses
“misrepresentation, tortious interference with contract, improper
inducement of another's employees, and unlawful use of
confidential information.” Id. (quoting Synthes, 2007 WL 2043184,
at *9). As discussed, Plaintiff has sufficiently pleaded its
claim for tortious interference with existing and prospective
contracts, thus providing at least one basis for the unfair
competition claim to survive Defendants’ motion. See supra
For this count and others, Defendants also object that PUTSA
preempts the common law tort claims brought by Plaintiff. (Motion
to Dismiss, Doc. No. 6, p. 7-8) (citing 12 PA . CONS . STAT. §
5308). Indeed, Third Circuit courts have acknowledged PUTSA
preemption for common law tort claims such as unfair competition,
conversion, and civil conspiracy, among others.3 Advanced Fluid
Sys., Inc. v. Huber, 28 F. Supp. 3d 306, 324 (M.D. Pa. 2014)
(citing various examples of such preemption). Defendants’
argument ultimately fails, however, because “[w]hile this claim
would be preempted . . . to the extent the information at issue
is determined to be trade secret information, the claim may
otherwise rest on confidential information which does [not] [sic]
Thus, the preemption analysis that follows applies with equal weight to
those subsequent claims made by Plaintiff.
qualify for such status.”4 Bro-Tech, 651 F. Supp. 2d at 418
(emphasis added); accord Youtie v. Macy's Retail Holding, Inc.,
653 F. Supp. 2d 612, 620 (E.D. Pa. 2009) (“[P]reemption exists to
the extent that [claims] are based on the same conduct that is
said to constitute a misappropriation of trade secrets.”); see
also Triage Consulting Grp., Inc. v. Implementation Mgmt.
Assistance, Inc., No. 12–4266, 2013 WL 3283462, at *4 (E.D. Pa.
June 27, 2013) (holding that with respect to the plaintiff’s
claim for intentional interference with contractual relations,
PUTSA and tort claims were “properly pled in the alternative,
even though the tort claims may ultimately be preempted by a
factual finding that the information in question is, in fact, a
trade secret”); PNC Mortg. v. Superior Mortg. Corp., No. 09–5084,
2012 WL 628000, at *25 n.19 (E.D. Pa. Feb. 27, 2012) (noting that
insofar as the plaintiff’s conversion claim applies to
confidential information not rising to the level of trade
secrets, the claim is not preempted by PUTSA); Bro-Tech, 651 F.
Supp. 2d at 418 (holding that the plaintiff’s unfair competition
claim is not preempted by PUSTA since “[i]t may happen at trial
that some or all of this information is found not to be trade
secret information, but nonetheless confidential and proprietary
in nature”). Finally, and most fatally here, a court should not
determine whether the information at issue constitutes a trade
In the original text, the court omits “not”; it is clear from context,
however, that this was a mistake.
secret without a fully developed record. Advanced Fluid, 28 F.
Supp. 3d at 325 (citing Alpha Pro Tech, Inc. v. VWR Int’l LLC,
984 F. Supp. 2d 425, 447 (E.D. Pa. 2013)); see also N. Am.
Commc’ns, Inc. v. Sessa, No. 3:14–227, 2015 WL 5714514, at *9
(W.D. Pa. Sept. 29, 2015) (denying a motion to dismiss and
deferring the issue of whether information constitutes trade
secrets until later, since “the issue of preemption should be
addressed after discovery has been completed”); Kimberton
Healthcare Consulting, Inc. v. Primary PhysicianCare, Inc., No.
11–4568, 2011 WL 6046923, at *5 (E.D. Pa. Dec. 6, 2011) (citing
Hecht v. BabyAge.com, Inc., No. 3:10–CV–724, 2010 WL 3940882, at
*5 (M.D. Pa. Oct. 6, 2010)) (allowing common law tort claims for
misappropriation, unfair competition, and conversion to survive a
motion to dismiss since it was inappropriate to determine whether
the relevant information constituted a trade secret without
In Advanced Fluid, the plaintiff alleged not only
misappropriation of trade secrets, but also that the defendants
conspired to use a co-defendant as an operative within the
plaintiff-company. 28 F. Supp. 3d at 324. Here, in contrast,
Plaintiff arguably does not allege conduct other than that which
would form the basis for a misappropriation of trade secrets
claim; however, it remains unresolved whether the information
itself constitutes trade secrets, and thus Defendants’ motion is
denied in accordance with Advanced Fluid. Indeed, Plaintiff’s
Complaint anticipates such potential distinction, alleging that
Defendants engaged in unfair competition by misappropriating
confidential information as well as trade secrets. (Compl. ¶ 89).
As such, this claim will survive Defendants’ motion to dismiss.
As Plaintiff points out, Defendants argue only that the
conversion claim is preempted by PUTSA, not that Plaintiff failed
to state a claim under Pennsylvania law. (Motion to Dismiss, Doc.
No. 6, p. 8; Response in Opposition, Doc. No. 8, p. 33). For the
same reasons set forth in the Unfair Competition section of this
opinion, Plaintiff’s claim for conversion survives Defendants’
motion to dismiss. See supra Section III.A.4. While the claim
will be preempted insofar as it deals with converted trade
secrets, Plaintiff’s Complaint also alleges conversion of
confidential information. (Compl. ¶¶ 32, 98). Because it is
inappropriate for us to determine which (if any) of Plaintiff’s
information constitutes trade secrets at this pre-discovery
stage, Defendants’ motion to dismiss this claim is denied.5
Defendants’ reliance on Nova Design Techs., Ltd. v. Walters, 875 F. Supp. 2d
458, 472-73 (E.D. Pa. 2012) is misguided. In that case, the plaintiff alleged
the conversion of “its sandpaper trigger technology, specifically, the use of
aluminum oxide sandpaper in a heat pack.” Id. The plaintiff did not allege
conversion of any other information. Id. This was a detailed, solitary
allegation about which the court made its preemption determination in the
context of summary judgment. Id. This contrasts sharply with the instant prediscovery motion, as well as the multitudinous allegations that Defendants
converted confidential information such as “records, reports, customer lists,
customers’ purchasing history, the names, addresses, home phone numbers, cell
numbers and/or extension numbers of current and former customers, customer
Proving civil conspiracy under Pennsylvania law requires
showing: “(1) a combination of two or more persons acting with a
common purpose to do an unlawful act or to do a lawful act by
unlawful means or for an unlawful purpose; (2) an overt act done
in pursuance of the common purpose; and (3) actual legal damage.”
Smith v. Wagner, 588 A.2d 1308, 1311-12 (Pa. Super. 1991).
Pleading a claim of civil conspiracy also requires alleging a
separate underlying tort. Boyanowski v. Capital Area Intermediate
Unit, 215 F.3d 396, 405 (3d Cir. 2000) (citing Nix v. Temple
Univ., 596 A.2d 1132, 1137 (Pa. Super. 1991); Pelagatti v. Cohen,
536 A.2d 1337, 1342 (Pa. Super. 1987)). Here, Defendants argue
only that Plaintiff failed to satisfy this last requirement;
i.e., sufficiently pleading a separate underlying tort. (Motion
to Dismiss, Doc. No. 6, p. 9). Because we held above that
Plaintiff has sufficiently pleaded common law tort claims such as
tortious interference with existing and prospective contractual
relations, unfair competition, and conversion, Defendants’
argument fails, and their motion to dismiss this claim is denied.
See supra Sections III.A.1-2, 4-5.
requirements, customer pricing information, contracts, printouts, pricings,
pricing strategies, profit margins, confidential information received from
customers, suppliers[,] vendors, and other third parties, prospective customer
information and lists, Hopkins’ established know-how,” etc., any of which may
or may not be a trade secret. (Compl. ¶ 34). As supported by the predominant
approach of Pennsylvania courts, we simply do not have enough information at
this stage to warrant supplanting a later determination by a more informed
Pennsylvania law provides two methods for determining
damages from a misappropriation of trade secrets: “one, the
damages sustained by the victim (the traditional common law
remedy), and the other, the profits earned by the wrongdoer by
the use of the misappropriated material (an equitable remedy
which treats the wrongdoer as trustee ex maleficio for the victim
of the wrongdoer's gains from his wrongdoing).” Greenberg v.
Croydon Plastics Co., Inc., 378 F.Supp. 806, 816-17 (E.D. Pa.
1974). Indeed, PUTSA provides for this possibility:
Damages can include both the actual loss caused by
misappropriation and the unjust enrichment caused by
misappropriation that is not taken into account in computing
actual loss. In lieu of damages measured by any other
methods, the damages caused by misappropriation may be
measured by imposition of liability for a reasonable royalty
for a misappropriator's unauthorized disclosure or use of a
12 PA. CONS. STAT. § 5304; accord Advanced Research Sys., Inc. v.
ColdEdge Techs., Inc., No. 3253 EDA 2012, 2014 WL 10979726, at
*7-*8 (Pa. Super. Mar. 21, 2014).
Plaintiff’s Complaint requests, as a separate action, “an
accounting of all assets, income, revenues and other monies
received by Defendants as a result of the theft of Hopkins’
current and prospective customer contracts in order to determine
the monetary damages suffered by Hopkins that are due and owing
to Hopkins.” (Compl. ¶ 112). This nebulous “theft of . . .
contracts” presumably refers to the common law tort claims
alleged by Plaintiff as well as the claim of misappropriation of
trade secrets. As discussed, Greenberg, Advanced Research, and
PUTSA provide for the remedy of an accounting for the
misappropriation of trade secrets; thus, we must determine
separately whether Plaintiff has stated a separate action for an
accounting under Pennsylvania common law.
Accounting as a separate action exists in a bifurcated
manner. As Defendants point out, an accounting may be demanded in
an action in assumpsit as a remedy at law. Fudula v. Keystone
Wire & Iron Works, Inc., 424 A.2d 921, 923 (Pa. Super. 1981)
(citing PA. R. CIV. P. 1021). However, “[t]he mere fact that a
remedy at law exists is not sufficient to oust equitable
jurisdiction. The question is whether the remedy is adequate or
complete.” Williams v. Finlaw, Mueller & Co., 141 A. 47, 48 (Pa.
1928). Thus, an action for accounting may be brought in equity
“when the accounts are mutual or complicated or when discovery is
needed and is material to the relief.” Fudula, 424 A.2d at 923
(quoting Setlock v. Sutila, 282 A.2d 380, 381 (Pa. 1971)); see
also Holland v. Hallahan, 60 A. 735, 736 (Pa. 1905) (rejecting a
request for an accounting because determining damages “does not
involve the examination of intricate and complicated accounts,
and under our practice [the plaintiff] can obtain any information
necessary to enable him to prepare for trial and properly to
present [the plaintiff’s] case”); Gloninger v. Hazard, 42 Pa.
389, 401 (Pa. 1862) (rejecting equity jurisdiction given that the
accounts at issue were all on one side, not mutual). Lastly:
[W]here the matter to be determined involves the accounts of
different parties, to which debit and credit items attach
and are intermingled, it can generally be held that a jury
would not be qualified to state such an account. We might
even go farther and say that equity will entertain
jurisdiction where it is doubtful whether adequate relief
could be had at law.
Stuyvesant Ins. Co. v. Keystate Ins. Agency, Inc., 218 A.2d 294,
296 (Pa. 1966) (quoting Williams, 141 A. at 49); accord Fudula,
424 A.2d at 923.
Here, Plaintiff alleges an inability to fully determine
monetary damages resulting from Defendants’ alleged misconduct,
(Compl. ¶ 112);6 this evokes the Williams proposition that if a
remedy at law is inadequate, equitable jurisdiction may obtain,
141 A. at 48. Construing the complaint in the light most
favorable to Plaintiff, we can also reasonably infer that
Plaintiff’s account could be implicated in determining damages,
making this a “mutual” situation described by Stuyvesant. As
such, Defendants’ motion to dismiss Plaintiff’s claim for an
As this case proceeds into discovery, Plaintiff should not be content to
rely solely on the possibility of an accounting: “An accounting request is not
a substitute for plaintiffs' obligation to establish their damages through
discovery.” Centrix HR, LLC v. On-Site Staff Mgmt., Inc., No. 04-5660, 2008 WL
783558, at *17 (E.D. Pa. Mar. 25, 2008) (quoting Arrowroot Nat. Pharmacy v.
Standard Homeopathic Co., No. 96–3934, 1998 WL 57512, at *12 (E.D. Pa. Feb.
10, 1998)). “An accounting should not be used to aide [sic] a party who has
otherwise failed to satisfy his burden of proof on the damages issue.” Id.
(quoting Genica, Inc. v. Holophane Div. of Manville Corp., 652 F. Supp. 616,
619-20 (E.D. Pa. 1987)).
accounting is denied.7 In sum, all of Plaintiff’s claims (Counts
I-VII) survive Defendants’ motion to dismiss under Rule 12(b)(6).
MOTION TO DISMISS FOR FAILURE TO JOIN AN INDISPENSABLE PARTY UNDER
FEDERAL RULE OF CIVIL PROCEDURE 19, PURSUANT TO RULE 12(B )(7)
Because some of the alleged unlawful activity occurred
during Mr. Olizi’s three-month employment by Samuels, Defendants
argue that under PUTSA and through a theory of vicarious
liability, Samuels is an indispensable party under Rule 19.8 Our
analysis is twofold:
[W]e first must determine whether the absent insurers should
be joined as “necessary” parties under Rule 19(a). If they
should be joined, but their joinder is not feasible inasmuch
as it would defeat diversity of citizenship (as would be the
It should be noted that even absent Count VII, Plaintiff may have access to
an accounting as a remedy for each of its common law claims instead of as an
independent cause of action. Indeed, “[a]n accounting is an essentially
equitable remedy, the right to which arises generally from the defendant's
possession of money or property which, because of some particular relationship
between himself and the plaintiff, the defendant is obliged to surrender.” Am.
Air Filter Co., Inc. v. McNichol, 527 F.2d 1297, 1300 (3d Cir. 1975) (emphasis
added) (citing Holland, 60 A. at 736 (Pa. 1905); Shenango Furnace Co. v.
Fairfield Twp., 78 A. 937, 943 (Pa. 1911); Crennell v. Fulton, 88 A. 783, 785
(Pa. 1913)); see also Boyd & Mahoney v. Chevron U.S.A., 614 A.2d 1191, 1196-97
(Pa. Super. 1992) (“Case law in Pennsylvania has long recognized equitable
accounting as an appropriate remedy for wrongful possession of property.”). In
addition to the action for an accounting in Count VII, Plaintiff has requested
it as a remedy in each of Counts I-VI; and, even had Plaintiff not done so,
this court is bound to “grant the relief to which each party is entitled, even
if the party has not demanded that relief in its pleadings.” F ED . R. C IV . P.
As Plaintiff points out, Defendants in effect concede that Plaintiff has
stated a claim against Defendants: “The limited facts alleged by Hopkins in
its Complaint give rise to causes of action against Samuels under both the
theory of vicarious liability and under Pennsylvania statute.” (Motion to
Dismiss, Doc. No. 6, p. 13). If Plaintiff has stated a claim against Samuels
under a theory of vicarious liability, that necessarily entails that Plaintiff
has stated a claim against Samuels’ employee, Mr. Olizi (and through the
conspiracy claim, the other Defendants). And if Plaintiff has stated a PUTSA
claim against Samuels under 12 P A . C ONS . S TAT . § 5301(1), Defendants also
concede that Plaintiff has sufficiently pleaded that Mr. Olizi employed
“improper means” within the meaning of the statute. We must assume that
Defendants intended to state a contingency and argue in the alternative, not
contradict their 12(b)(6) motion.
case here), we next must determine whether the absent
parties are “indispensable” under Rule 19(b).
Gen. Refractories Co. v. First State Ins. Co., 500 F.3d 306, 312
(3d Cir. 2007). Defendants concede that joining Samuels would
defeat diversity and thus is not “feasible” under Rule 19(a).
(Motion to Dismiss, Doc. No. 6, p. 13). As such, the only issue
is whether Samuels is “indispensable” under Rule 19(b). To
determine this, we must consider:
the extent to which a judgment rendered in the
person's absence might prejudice that person or the
the extent to which any prejudice could be lessened or
protective provisions in the judgment;
shaping the relief; or
whether a judgment rendered in the person's absence
would be adequate; and
whether the plaintiff would have an adequate remedy if
the action were dismissed for nonjoinder.
FED. R. CIV. P. 19(b); General Refractories, 500 F.3d at 319.
Given their interconnectedness, the first two factors are
considered jointly, followed by the remaining two factors.
Prejudice to Samuels and the Existing Parties, and
the Possibility of Lessening It
Defendants argue that if Plaintiff’s claims against
Defendants are proved, then Samuels could also be implicated
under PUTSA and a theory of vicarious liability. Even if this
were true, vicarious liability has not been invoked in this case.
The rules of vicarious liability respond to a specific need
in the law of torts: how to fully compensate an injury
caused by the act of a single tortfeasor. Upon a showing of
agency, vicarious liability increases the likelihood that an
injury will be compensated, by providing two funds from
which a plaintiff may recover. . . . If the agent is
available or has means to pay, invocation of the doctrine is
unnecessary because the injured party has a fund from which
Mamalis v. Atlas Van Lines, Inc., 560 A.2d 1380, 1383 (Pa. 1989).
As Plaintiff concedes, it has not pleaded a cause of action
against Samuels, (Response in Opposition, Doc. No. 8, p. 10), and
all of Plaintiff’s requests for relief refer only to Defendants,
(e.g., Compl. ¶ 60).
Plaintiff preemptively argues that Defendants also have no
right to seek indemnification from Samuels. (Response in
Opposition, Doc. No. 8, p. 9). We would add that even if
Defendants had such a right, it would still not necessitate
dismissal under Rule 19:
“‘[A] defendant's right to contribution or indemnity from an
absent non-diverse party does not render that absentee
indispensable pursuant to Rule 19.’ Janney Montgomery Scott,
11 F.3d at 412 (quoting Bank of Am. Nat'l Trust & Sav.
Ass’n, 844 F.2d at 1054). Indeed, defendants are free to
pursue any claim for contribution or indemnification they
might have against the absent insurers in a separate
General Refractories, 500 F.3d at 320. As such, the nonjoinder of
Samuels incurs no prejudice whatsoever to Samuels or the existing
Adequacy of Judgment
The third factor “allows the court to consider whether the
relief it grants will prove an adequate remedy for the
plaintiff.” Id. at 320-21 (citing Provident Tradesmens Bank & Tr.
Co. v. Patterson, 390 U.S. 102, 112 (1968)). Because Plaintiff
has not stated any claims against Samuels or predicated on Mr.
Olizi’s short employment with Samuels, the nonjoinder of Samuels
will not impede our ability to render adequate judgment for
Plaintiff, should any if its claims be proved.
Adequacy of Remedy for Plaintiff in the Event of
The final factor “counsels that courts should consider
whether there is any assurance that the plaintiff, if dismissed,
could sue effectively in another forum where better joinder would
be possible . . . .”9 Id. at 321. Here, Plaintiff does not
contend that it could not sue just as effectively in state court;
however, this is not nearly enough to outweigh the prior factors,
which are overwhelmingly in favor of Plaintiff. As such,
Defendants’ motion is denied.
DISMISS FOR IMPROPER VENUE UNDER 28 U.S.C. § 1301,
FEDERAL RULE OF CIVIL PROCEDURE (12)(B )(3)
Plaintiff quotes General Refractories as saying that this factor “counsels
strongly against dismissal . . . ” (Response in Opposition, Doc. No. 8, p. 10)
(alteration in original) (quoting 500 F.3d at 321). Presenting this as a
generally applicable rule is misleading because the rest of the quoted phrase
is “in this case.” General Refractories, 500 F.3d at 321. And in that case,
the court found it was likely impossible for the plaintiff to be able to bring
its suit in state court given a controlling requirement imposed by the state
supreme court, id.; such is not the case here.
Unlike a proper basis for jurisdiction, which a plaintiff is
required to plead, improper venue is an affirmative defense;
therefore, “on a motion for dismissal for improper venue under
Rule 12 the movant has the burden of proving the affirmative
defense asserted by it.” Myers v. Am. Dental Ass’n, 695 F.2d 716,
724 (3d Cir. 1982). In their briefs, the parties focus their
arguments on the sufficiency of the pleadings with regard to
subsection (b)(2) of the general venue statute, which holds that
a civil case may be brought in “a judicial district in which a
substantial part of the events or omissions giving rise to the
claim occurred, or a substantial part of property that is the
subject of the action is situated . . . .” 28 U.S.C.
1391(b)(2) (2011). Defendants have not met this burden and this
motion must be denied.
Although Defendants may fairly judge paragraph 8 of
Plaintiff’s Complaint to be conclusory, they ignore the rest of
the Complaint. Plaintiff alleges that: Plaintiff is located in
Philadelphia, (Compl. ¶¶ 3, 9); most (if not all) of Plaintiff’s
customers are in the Philadelphia region, (Compl. ¶ 10);
Plaintiff maintains a customer list, as well as other information
about these customers, (Compl. ¶¶ 11-12); Defendant Mr. Olizi
worked for Plaintiff and had contact with such information and
customers, (Compl. ¶¶ 18, 20-23); and Defendants have solicited
and continue soliciting business from Plaintiff’s Philadelphia-
area customers, as facilitated by Defendants’ alleged use of
Plaintiff’s information, (Compl. ¶¶ 30, 32-40). With some
imagination, there could be a few narrow gaps here; for example,
the Complaint does not make it explicit that Mr. Olizi worked for
Plaintiff in Philadelphia instead of remotely from his New Jersey
home. That said, we reiterate that “the burden is upon the movant
. . . to show that venue is improper under any permissible theory
. . . .” Myers, 695 F.2d at 725-26. Given this standard and our
ability to draw reasonable inferences to the benefit of
Plaintiff, Defendants’ motion is denied.
For the foregoing reasons, the instant motion is denied in
toto. An order follows.
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