Alifax Holding Spa v. Alcor Scientific Inc. et al
MEMORANDUM AND ORDER denying without prejudice 10 Defendants' Motion to Dismiss. So Ordered by Chief Judge William E. Smith on 9/28/2015. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
ALIFAX HOLDING SPA; and SIRE
ANALYTICAL SYSTEMS SRL,
C.A. No. 14-440 S
ALCOR SCIENTIFIC, INC.; and
FRANCESCO A. FRAPPA,
MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
Plaintiff Alifax Holding SpA (“Alifax”) brought this action
employee of Sire Analytical Systems Srl (“Sire”) (a subsidiary
of Alifax), and Alcor Scientific, Inc. (“Alcor”), Frappa’s new
misappropriation of trade secrets (Count Two), and breach of a
confidential relationship (Count Three).
ECF No. 1.)
(Compl. ¶¶ 3-4, 59-74,
Defendants moved, pursuant to Rule 12(b)(6) of the
Three; Defendants have also moved, pursuant to Rule 12(f) of the
Federal Rules of Civil Procedure, to strike the component of
constructive trust in one of Alcor’s patents.
(ECF No. 10.)
permitted Alifax to file an amended complaint to address a realparty-in-interest concern.
Alifax has since filed its amended
complaint, which adds Sire as a party plaintiff and asserts the
same three counts as Alifax’s original complaint. 1
Compl. ¶¶ 2, 54-75, ECF No. 20.)
also filed supplemental briefs.
Defendants and Plaintiffs have
(ECF Nos. 21-22.)
12(b)(6), the Court must view the complaint in the light most
allegations as true and affording Plaintiffs the benefit of all
reasonable inferences to be drawn from those allegations.
Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55-56
complaint must plead a plausible entitlement to relief; in other
words, “a plaintiff must plead[ ] factual content that allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.”
Alex & Ani, LLC v. Elite
Level Consult., LLC, 31 F. Supp. 3d 365, 370-71 (D.R.I. 2014)
With the addition of Sire, it is unnecessary to consider
the primary argument voiced in Defendants’ motion: that Alifax
was not the real party in interest to assert claims arising from
Frappa’s conduct, an argument Defendants characterized as one
implicating considerations of standing. (See Defs.’ Mot. 8, 1011, ECF No. 10-1.)
As Frappa’s former employer, Sire is the
real party in interest (and plainly has standing) to assert
claims relating to Frappa’s alleged malfeasance during (and in
the immediate aftermath of) his employment with Sire.
(quoting Sanchez v. Pereira-Castillo, 590 F.3d 31, 48 (1st Cir.
statements, do not suffice.”
Id. (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)).
Defendants first argue that the claim asserted in Count
Three – breach of a confidential relationship – is preempted by
the Rhode Island Uniform Trade Secrets Act (“RIUTSA”), see R.I.
Gen. Laws §§ 6-41-1 to 6-41-11, which forms the basis of the
claim asserted in Count Two (see Am. Compl. ¶¶ 60-69, ECF No.
(See Defs.’ Mot. 16-17, ECF No. 10-1; Defs.’ Supplemental
Mem. 2, ECF No. 21.)
Defendants also assert that Count Three
fails because it is premised on Frappa’s conduct that occurred
after he left Sire’s employ.
(See Defs.’ Mot. 15-16, ECF No.
Finally, Defendants argue that Plaintiffs have not pled
sufficient facts to establish that either Frappa or Alcor owed a
duty of confidentiality to Alifax.
(See id. at 17-19; Defs.’
Supplemental Mem. 2-3, ECF No. 21.)
meritorious, they cannot be accepted at this juncture.
rests on the premise that Rhode Island law applies to Count
assert that Italian law applies to Count Three and that, under
Italian law, the Amended Complaint states a cognizable claim for
breach of a confidential relationship.
14, ECF No. 15.)
(See Pls.’ Opp’n 9-10,
At the hearing, Defendants appeared to take
Count One, Rhode Island law applies to Count Two, and Italian
law applies to Count Three.
asserts a Rhode Island statutory claim, Rhode Island law must
overlooks “the principle of depecage.”
Putnam Res. v. Pateman,
958 F.2d 448, 464-65 (1st Cir. 1991).
As the First Circuit has
In legal parlance, depecage erects the framework under
which different issues in a single case, arising out
of a common nucleus of operative facts, may be decided
according to the substantive law of different states.
Although the Rhode Island Supreme Court has yet to
depecage, the court’s decisions make it clear that
Rhode Island, like most other jurisdictions, adheres
to the principle in the tort context.
Although the RIUTSA contains a preemption provision, it
displaces only “conflicting tort, restitutionary, and other law
of this state providing civil remedies for misappropriation of a
trade secret.” R.I. Gen. Laws § 6-41-7(a) (emphasis added).
Id. (citations omitted); see also La Plante v. Am. Honda Motor
Co., 27 F.3d 731, 741 (1st Cir. 1994); Oyola v. Burgos, 864 A.2d
Conflict of Laws § 145 cmt. d (1971) (“Each issue is to receive
differently under the local law rule of two or more of the
potentially interested states.”).
Therefore, the substantive law applicable to Count Three
applicable to Count Two; instead, to determine the law governing
Island’s choice-of-law framework.
respect to Count Three.
However, the parties have not
A brief examination of the governing
demonstrates that the requisite analysis cannot be conducted at
Defense, Inc. v. Harbour Grp. Ltd., 248 F. Supp. 2d 64, 69
particular . . . facts” to “determine therefrom the rights and
liabilities of the parties in accordance with the law of the
state that bears the most significant relationship to the events
Harodite Indus., Inc. v. Warren Elec. Corp., 24
A.3d 514, 534 (R.I. 2011) (quoting Cribb v. Augustyn, 696 A.2d
285, 288 (R.I. 1997)).
In order to identify the appropriate
considerations,” 3 as well as additional, tort-specific factors:
(1) the place where the injury occurred; (2) the place where the
(quoting Brown v. Church of Holy Name of Jesus, 252 A.2d 176,
179 (R.I. 1969)).
strongly towards either Rhode Island or Italian law.
On the one
hand, Plaintiffs are Italian companies, Frappa worked for Sire
in Italy, and he now works for Alcor in Italy.
¶¶ 1-3, ECF No. 20.)
(See Am. Compl.
A permissible inference to be drawn from
confidential information in Italy.
On the other hand, however,
The policy considerations are: (1) predictability of
results; (2) maintenance of interstate and international order;
(3) simplification of the judicial task; (4) advancement of the
forum’s governmental interests; and (5) application of the
better rule of law.
See Harodite Indus., Inc. v. Warren Elec.
Corp., 24 A.3d 514, 534 (R.I. 2011).
confidential information to Alcor.
Cf. Magnum Defense, 248 F.
Supp. 2d at 69 (“In a misappropriation of trade secrets case
such as the present one, the defendants’ wrongful conduct is
said to take place where the defendants misused the plaintiff’s
Signal Co. v. Joyal, 881 F. Supp. 727, 742 (D.R.I. 1995))).
adequate choice-of-law briefing from the parties, the Court is
unwilling to determine what law applies to Count Three.
Defendants’ arguments for dismissal of that count all rely on
the assumption that Rhode Island law governs, Defendants’ motion
is denied with respect to that count.
See In re Volkswagen &
Audi Warranty Extension Litig., 692 F.3d 4, 8 n.2 (1st Cir.
premature until some discovery occurred); Walker v. Unum Life
Rather, the issue of what law applies to Count Three
would be more suitably addressed at the summary judgment stage,
once the parties have had a full opportunity to develop the
With respect to Count Two, Defendants argue that Plaintiffs
sufficiently allege misappropriation.
(Defs.’ Mot. 12-15, ECF
Neither argument has merit.
Under the RIUTSA, a
“trade secret” is
information . . . that: (i) [d]erives independent
economic value, actual or potential, from not being
ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use;
and (ii) [i]s the subject of efforts that are
reasonable under the circumstances to maintain its
R.I. Gen. Laws § 6-41-1(4).
The Amended Complaint identifies
two groups of Plaintiffs’ trade secrets: information relating to
a project known as “Mecca”; and information relating to the use
of ultrasound waves to disrupt and redistribute red-blood cells.
(See Am. Compl. ¶¶ 25-31, ECF No. 20.)
Defendants point out
that the Mecca project was made public in Alifax’s patent filing
(Defs.’ Mot. 12, ECF No. 10-1), which Defendants have attached
as Exhibit C to their motion.
(ECF No. 10-4.)
patent filing is dated February 6, 2014.
(Id. at 2.)
Amended Complaint alleges that information relating to the Mecca
project remained confidential until that patent filing.
September 1, 2011.
(Id. at ¶ 8.)
Therefore, according to the
. . .
known to, and not . . . readily ascertainable by proper means
by, other persons.” 4
R.I. Gen. Laws § 6-41-1(4)(i).
Defendants also argue that Plaintiffs failed to allege that
the identified trade secrets were “the subject of efforts that
are reasonable under the circumstances to maintain its secrecy.”
R.I. Gen. Laws § 6-41-1(4)(ii).
(See Defs.’ Mot. 13, ECF No.
10-1; Defs.’ Reply 9-10, ECF No. 16; Defs.’ Supplemental Mem. 34, ECF No. 21.)
However, the Amended Complaint alleges that
“[c]ommunications, such as email messages and product drawings,
confidential company information.”
(Am. Compl. ¶ 38, ECF No.
With no citation to authority, Defendants contend that, as
a matter of law, marking communications as confidential cannot
alone constitute reasonable steps to maintain secrecy.
Mot. 13, ECF No. 10-1; Defs.’ Reply 9-10, ECF No. 16.)
Defendants wholly abdicated their responsibility to adequately
At oral argument, Defendants took a somewhat different
tack. Noting that the Complaint alleges that the Mecca project
was briefly suspended after Frappa left Sire’s employment and
then restarted and completed after he left, Defendants argue
that the CPS technology that resulted from the Mecca project did
not exist prior to Frappa’s departure from Sire. Although this
may be one plausible reading of the Complaint, it is not a
reading that the Court can accept at this juncture.
reasonable inference that can (and, at this stage, must) be
drawn from the allegations in the Amended Complaint is that
Frappa knew of the CPS technology of the Mecca project.
develop this argument, it is not worthy of consideration. 5
(“[I]ssues adverted to in a perfunctory manner, unaccompanied by
some effort at developed argumentation, are deemed waived.
is not enough merely to mention a possible argument in the most
skeletal way, leaving the court to do counsel’s work, create the
ossature for the argument, and put flesh on its bones . . . .
litigant has an obligation to spell out its arguments squarely
Defendants’ unsupported argument that, as a rule of law, marking
documents as confidential cannot qualify as reasonable efforts
to maintain secrecy appears inconsistent with the RIUTSA, which
“reasonable under the circumstances.”
1(4)(ii) (emphasis added).
R.I. Gen. Laws § 6-41-
In their supplemental memorandum,
Defendants argue that Sire waived its trade secret protection
with respect to the information by sharing it with Alifax, its
(See Defs.’ Supplemental Mem. 4, ECF No. 21.)
Curiously, Defendants chastise Plaintiffs in their Reply
for failing to cite “any case law where marking documents as
‘confidential’ was alone sufficient.” (Defs.’ Reply 10, ECF No.
Defendants have it backwards.
It is not Plaintiffs’
obligation (or the obligation of this Court, for that matter) to
unearth cases that contradict an argument for which no legal
authority has been cited in support.
However, this argument is unaccompanied by a single citation to
authority to support it, and, for this reason, the Court will
reasons, the Amended Complaint identifies trade secrets under
misappropriation of trade secrets (Defs.’ Mot. 13-15, ECF No.
10-1) fares no better.
Under the RIUTSA, “misappropriation”
(i) 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
(ii) Disclosure or use of a trade secret of another
without express or implied consent by a person who:
(A) Used improper means to acquire knowledge of the
trade secret; or
(B) At the time of disclosure or use, knew or had
reason to know, that his or her knowledge of the trade
(I) Derived from or through a person who had utilized
improper means to acquire it;
(II) Acquired under circumstances giving rise to a
duty to maintain its secrecy or limit its use; or
(III) Derived from or through a person who owed a duty
to the person seeking relief to maintain its secrecy
or limit its use; or
(C) Before a material change of his or her position,
knew or had reason to know, that it was a trade secret
and that knowledge of it had been acquired by accident
R.I. Gen. Laws § 6-41-1(2).
The RIUTSA defines “improper means”
espionage through electronic or other means.”
R.I. Gen. Laws
Before the Amended Complaint was filed, Defendants argued
that the Complaint does not identify the “improper means” used
by Defendants and, to the extent that the improper means are
premised on Frappa’s breach of a duty to Alifax to maintain the
secrecy of the trade secrets, see id. § 6-41-1(1), “it cannot
reasonably be inferred from the Complaint that Frappa owed any
contractual, statutory[,] or common law duty to Alifax” because
Frappa was employed by Sire and not Alifax.
14-15, ECF No. 10-1.)
(See Defs.’ Mot.
With the Amended Complaint’s addition of
Sire as a party plaintiff, this argument is no longer a ground
for dismissing Count Two, at least as to Sire.
¶ 33, ECF No. 20.)
(See Am. Compl.
Moreover, even if Defendants still assert
this argument with respect to Alifax (or Sire, for that matter),
Count Two should not be dismissed on this ground.
Under Rhode Island law, 6 “a fiduciary relationship arises
T.G. Plastics Trading Co. v. Toray Plastics (Am.),
Teixeira & Co. v. Teixeira, 699 A.2d 1383, 1387 (R.I. 1997)).
For present purposes, this Court assumes, without
deciding, that Rhode Island law applies to the issue of whether
Frappa owed a duty to Alifax for purposes of the RIUTSA claim
asserted in Count Two.
But cf. supra Part I (discussion of
intensive inquiry,” A. Teixeira, 699 A.2d at 1387, and “[t]here
relationship will be found,” Fleet Nat’l Bank v. Liuzzo, 766 F.
Supp. 61, 68 (D.R.I. 1991) (quoting Simpson v. Dailey, 496 A.2d
126, 129 (R.I. 1985)).
“The court may consider a variety of
factors, including the reliance of one party upon the other, the
relationship of the parties prior to the incidents complained
of, the relative business capacities or lack thereof between the
parties, and the readiness of one party to follow the other's
guidance in complicated transactions.”
Liuzzo, 766 F. Supp. at
68 (quoting Simpson, 496 A.2d at 129).
An employer can assert a
See Long v. Atlantic PBS, Inc., 681 A.2d 249,
252-53 (R.I. 1996); cf. Cahill v. Antonelli, 390 A.2d 936, 939
(R.I. 1978) (“The existence of an agency supports the finding
that a confidential relationship was established between brother
and sister, as an agent always stands in the position of a
fiduciary duty discloses confidential information of the person
to whom (or entity to which) the duty is owed, the duty may be
See Liuzzo, 766 F. Supp. at 68-69.
In this case, the Complaint alleges enough to establish, at
this stage, that Frappa acquired the confidential information
under circumstances giving rise to a duty to Sire and Alifax to
employment with Sire, he was “intimately involved” in the design
and development of Plaintiffs’ ESR analyzers and was provided
access to all of the Plaintiffs’ proprietary, confidential, and
including information relating to the Mecca project and the use
of ultrasound waves.
(Am. Compl. ¶¶ 24-25, 27-28, 31, ECF No.
persons or entities.
(See id. at ¶¶ 35, 38.)
Given the factallegations
because Plaintiffs “‘rightfully repose[d] trust and confidence’
in [Frappa],” T.G. Plastics, 958 F. Supp. at 327 (quoting A.
Teixeira, 699 A.2d at 1387), or because Frappa was Plaintiffs’
agent, see Cahill, 390 A.2d at 939.
Defendants next contend that the Amended Complaint “never
ties any particular trade secret to any use or disclosure by
Frappa or Alcor” and that “nowhere in the Complaint does Alifax
contend that either purported ‘trade secret’ was incorporated
into any product sold by Alcor.”
(Defs.’ Mot. 14, ECF No. 10-
But the RIUTSA does not require that the misappropriator
Rather, acquisition of a trade secret, with knowledge
that it was acquired by improper means, is sufficient.
required to do so, the Amended Complaint does allege that both
information was used in Alcor’s development of a competing ESR
analyzer, and the ultrasound information was used in Alcor’s
(Am. Compl. ¶¶ 45-47, ECF No. 20.)
Defendants also argue that, beyond a conclusory allegation
that Alcor knew or had reason to know that Frappa acquired the
information by improper means, there is no allegation in the
(Defs.’ Mot. 13-15, ECF No. 10-1.)
This argument is
owed Plaintiffs a duty to maintain secrecy; that Frappa joined
Alcor immediately after his resignation from Sire; and that,
within a year of Frappa’s departure, Alcor put out a competing
ESR analyzer and, shortly thereafter, filed an application for a
(See Am. Compl. ¶¶ 43-47, ECF No. 20.)
At this stage of this
including the short turn-around time of Alcor’s ESR analyzer and
the absence of competing ESR analyzers prior to Alcor’s, that
disclosing Plaintiffs’ trade secrets.
Cf. Astro-Med, Inc. v.
Nihon Kohden Am., Inc., 591 F.3d 1, 19 (1st Cir. 2009) (“Viewing
the evidence in the light most favorable to the verdict, it is a
logical inference that a competitor who hires away a rival’s
valued employee with access to inside information has done so in
order to use that inside information to compete with the rival,
and it is an equally logical inference that once Plant became a
Nihon Kohden employee, he sought to justify its hiring decision
For these reasons, Defendants’ motion to dismiss Count Two
for failure to state a claim is denied.
III. Constructive Trust
Plaintiffs’ request for a constructive trust in Alcor’s patent
because there is no authority for such a remedy.
19-21, ECF No. 10-1.)
Under Rhode Island law, “[t]he underlying
principle of a constructive trust is the equitable prevention of
unjust enrichment of one party at the expense of another in
2010) (quoting Dellagrotta v. Dellagrotta, 873 A.2d 101, 111
constructive trust is appropriate, ‘a plaintiff is required to
show by clear and convincing evidence (1) that a fiduciary duty
existed between the parties and (2) that either a breach of a
promise or an act involving fraud occurred as a result of that
Id. (quoting Manchester v. Pereira, 926 A.2d
1005, 1013 (R.I. 2007)).
(Defs.’ Mot. 20, ECF No. 10-1.)
However, in Bausch & Lomb, Inc.
v. Alcon Labs., Inc., 64 F. Supp. 2d 233, 245 (W.D.N.Y. 1999),
Alcon’s former employee was exposed to confidential information
during his employment with Alcon, left to take a position with
Bausch & Lomb, and disclosed this information to Bausch & Lomb.
Alcon alleged that Bausch & Lomb “made use of this information
in obtaining [a particular] patent.”
Alcon brought claims
for misappropriation of trade secrets and unfair competition,
and it sought a constructive trust in Bausch & Lomb’s patent.
Bausch & Lomb moved for summary judgment with respect to
Alcon’s constructive-trust claim.
The court denied the
motion, finding that Alcon had sufficient evidence to withstand
summary judgment for a constructive trust under New York law,
See id. at 251-54.
Although the facts of this case and Bausch & Lomb might not
cases that, if Alcon could withstand summary judgment in Bausch
& Lomb, Plaintiffs can withstand Defendants’ motion to strike at
the pleadings stage.
For these reasons, Defendants’ motion to dismiss Counts Two
constructive trust is DENIED WITHOUT PREJUDICE.
IT IS SO ORDERED.
William E. Smith
Date: September 28, 2015
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