AFS Logistics, LLC v. Cochran et al
MEMORANDUM OPINION: Based on the foregoing analysis, Defendants' motion to dismiss 29 is GRANTED IN PART and DENIED IN PART. As a result, Counts I, II, III, IV, VI, VII, and VIII will be DISMISSED WITH PREJUDICE. An appropriate order will enter. Signed by Magistrate Judge Barbara D. Holmes on 7/31/17. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(gb)
IN THE UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
AFS LOGISTICS, L.L.C.
CHRISTOPHER R. W. COCHRAN,
ALESSANDRO RUSTIONI, and
Presently pending is Defendants’ motion to dismiss Plaintiff’s first amended complaint
(Docket Entry No. (“DE”) 29), to which Plaintiff has filed a response. DE 32. Defendants have
also filed a subsequent reply to Plaintiff’s response. DE 51. This action is before the undersigned
for all further proceedings pursuant to the consent of the parties and referral of the District Judge
in accordance with 28 U.S.C. § 636(c). DE 37.
For the reasons set forth below, Defendants’ motion (DE 29) is GRANTED IN PART
and DENIED IN PART. 1
I. FACTUAL BACKGROUND
The first amended complaint contains the following allegations. Plaintiff AFS Logistics,
L.L.C. (“AFS” or “Plaintiff”) is a limited liability company, with its corporate headquarters
located in Shreveport, Louisiana, that handles transportation cost management and cargo
logistics. DE 27 at 1, ¶ 5. Defendant FreightWise, L.L.C. (“FreightWise”) is a Nevada limited
In light of this ruling, Plaintiff’s motion to ascertain the status of the Defendants’
motion to dismiss (DE 50) is rendered MOOT.
liability company formed by Defendants Christopher Cochran (“Cochran”) and Alessandro
Rustioni (“Rustioni”) (collectively referred to as “Defendants”) in September of 2014 whose
business also involves transportation cost management. Id. at 2, 4, ¶¶ 8, 21. 2 Cochran and
Rustioni are former AFS employees who started FreightWise while they were still employed by
AFS. Id. at 3-4, ¶¶ 13-14, 19-20. Both Cochran and Rustioni served in “sales leadership
positions” at AFS, which purportedly gave them access to Plaintiff’s “confidential and
proprietary information including sales methodology.” Id. at 3, ¶¶ 13-16. 3 Cochran and Rustioni
resigned from their positions at AFS in October of 2015 and January of 2016, respectively. Id. at
4, ¶¶ 25-26.
Plaintiff alleges that while employed by AFS, Defendants Cochran and Rustioni
conspired to utilize AFS’s “time and resources to secretly organize” FreightWise, a company that
competes directly with AFS. Id. at 3-4, ¶ 18. Plaintiff specifically alleges that Defendants
improperly solicited one of AFS’s major clients, identified as “Client X,” and ultimately
convinced this client to breach its contract with AFS “with the intent of initiating business” with
FreightWise. Id. at 5, ¶¶ 29-31. Plaintiff claims that because of their leadership positions at AFS,
Cochran and Rustioni were aware of the contracts that AFS had entered into “with a large
portion, if not all, of its clients,” and were thus able to “intentionally and maliciously interfere”
with all such contracts. Id. at 5, ¶ 33. Plaintiff does not identify any other examples of such
The headquarters of FreightWise are located in Davidson County, Nashville, Tennessee.
DE 27 at ¶ 8.
Defendant Cochran is subsequently described as a “Business Development Specialist”
and a “Regional Sales Executive,” while Defendant Rustioni is referred to as a “Director of
Business Development.” DE 27 at ¶¶ 30, 64, 65.
conduct, but alleges generally that Defendants “continue to have in their possession resources
and confidential and proprietary information” belonging to AFS and that Defendants continue to
use such resources and information “to unfairly compete with Plaintiff ... in furtherance of
Defendant FreightWise’s business objectives.” Id. at 4-5, ¶ 27.
Plaintiff asserts that Cochran and Rustioni began “acting ... for the benefit of Defendant
FreightWise” at least 10 months prior to their respective resignations from AFS. Id. at 6, ¶ 38.
AFS claims that it did not become aware of such action until September of 2016, nearly one year
after Defendant Cochran’s resignation. Id. at 6, ¶ 40.
Based on the foregoing allegations, Plaintiff filed an amended complaint that contained
eight counts: (I) breach of duty of loyalty; (II) conversion; (III) intentional interference with
business relations; (IV) tortious interference with contract; (V) violation of the Tennessee
Uniform Trade Secrets Act (“TUTSA”); (VI) conspiracy; (VII) a claim for injunctive relief; and
(VIII) a claim for punitive damages. Id. 6-14, ¶¶ 35-103. 4 Defendant argues that each of these
counts should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) due to Plaintiff’s failure to state
a claim on which relief can be granted, or, alternatively, based on the preemption provision of
the TUTSA, which is discussed in detail below.
A. Standard of Review
Review of a motion to dismiss for failure to state a claim upon which relief can be
granted under Fed. R. Civ. P. 12(b)(6) requires the court to “construe the complaint in the light
Plaintiff’s initial complaint included a claim for copyright infringement (DE 1 at 11-12,
¶¶ 78-86) that was subsequently dismissed voluntarily by Plaintiff. See DE 20.
most favorable to the plaintiff and accept all factual allegations as true.” Laborers’ Local 265
Pension Fund v. iShares Trust, 769 F.3d 399, 403 (6th Cir. 2014), cert. denied, 135 S. Ct. 1500,
191 L. Ed. 2d 452 (2015) (internal citation omitted). The court is not required, however, to
accept as true any proffered legal conclusions. Merritt v. Mountain Laurel Chalets, Inc., 96 F.
Supp. 3d 801, 811 (E.D. Tenn. 2015) (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct.
2932, 92 L. Ed. 2d 209 (1986)). In order to survive a motion to dismiss, the complaint in
question must provide the grounds for the entitlement to relief that is sought, which “requires
more than labels and conclusions, and a formulaic recitation of the elements of a cause of
action.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929
(2007) (abrogating Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)); see also
Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d. 868 (2009). The factual
allegations contained in the complaint must be enough to demonstrate a plausible right to relief.
Twombly, 550 U.S. at 555-61; Schneid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 43637 (6th Cir. 1988). Merely positing a theory of legal liability that is unsupported by specific
factual allegations does not state a claim for relief that survives a motion to dismiss. Iqbal, 556
U.S. at 678-79.
B. Case at Bar
For purposes of clarity, the Court will address each count alleged in the amended
complaint separately. The Court begins with Count V, alleged violation of TUTSA, in light of its
bearing on several of the remaining counts.
1. Violation of TUTSA (Count V).
Plaintiff alleges that Defendants violated the TUTSA by misappropriating information
from AFS’s confidential client database to “obtain an unfair advantage when soliciting
Plaintiff’s existing clients.” DE 27 at 10, ¶ 71. Plaintiff claims that Defendants further violated
the TUTSA by improperly accessing a confidential “formula” that Plaintiff uses to establish
benchmark market prices, calculate new prices, and establish “unique client pricing structures.”
Id. at 9-10, ¶ 66, 71. Plaintiff claims that both its database and formula represent trade secrets
under the TUTSA. Id. at 10, ¶ 70.
Defendants argue, however, that such information does not represent a trade secret
because Plaintiff has not alleged facts sufficient to identify the database and formula as trade
secrets. DE 30 at 17. Defendants maintain that Plaintiff has failed to allege how or when
Defendants improperly obtained information from the database and formula, and note that
Plaintiff has failed to reveal the actual identity of “Client X,” thus preventing Defendants from
knowing “what they allegedly misappropriated or why Plaintiff believes they did so.” Id.
Defendants argue that Plaintiff has thus failed to sufficiently state a claim under Rule 8(a) of the
Federal Rules of Civil Procedure.
The TUTSA defines a “trade secret” as follows:
[I]nformation, without regard to form, including, but not limited to, technical,
nontechnical or financial data, a formula, pattern, compilation, program, device,
method, technique, process, or plan that:
(A) 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; and
(B) Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
Tenn. Code Ann. § 47-25-1702(4). The Sixth Circuit has identified several factors to consider in
determining whether something constitutes a “trade secret” under this definition, including “the
extent of public knowledge; measures taken to guard its secrecy; the value of the information
both to the business and to its competitors; money that was spent to develop the information; and
the ease or difficulty with which it could be acquired by outsiders.” PartyLite Gifts, Inc. v. Swiss
Colony Occasions, 246 F. App’x 969, 973 (6th Cir. 2007) (citing Wright Med. Tech., Inc. v.
Grisoni, 135 S.W.3d 561, 589 (Tenn.Ct.App. 2001)). The Tennessee Court of Appeals has
further described a trade secret as “any secret formula, process, pattern, device or compilation of
information that is used in one’s business and which gives him an opportunity to obtain an
advantage over competitors who do not use it.” Vantage Tech., LLC v. Cross, 17 S.W.3d 637,
645 (Tenn. Ct. App. 1999) (internal citations and quotations omitted).
To establish a TUTSA violation, Plaintiff must also demonstrate that Defendants engaged
in misappropriation of the alleged trade secret. “Misappropriation is defined in relevant part as
either “acquisition ... by a person who knows or has reason to know that the trade secret was
acquired by improper means,” or disclosure without consent of a trade secret by a person who
knows or has reason to know that it was “[a]cquired under circumstances giving rise to a duty to
maintain its secrecy or limit its use.” Beijing Fito Med. Co., Ltd. v. Wright Med. Tech., Inc.,
No. 215-cv-02258-JPM-TMP, 2016 WL 502109, at *5 (W.D. Tenn. Feb. 8, 2016) (citing Tenn.
Code Ann. § 47-25-1702(2)). “Improper means” includes “theft, bribery, misrepresentation,
breach or inducement of a breach of a duty to maintain secrecy or limit use, or espionage through
electronic or other means ....” Id. (citing Tenn. Code Ann. § 47-25-1702(1)).
In the amended complaint, Plaintiff states that its database and formula are not generally
known by the public, are not readily ascertainable, and derive independent economic value due
to their inaccessibility to competitors who would benefit from their disclosure. DE 27 at 9-10,
¶¶ 66-69. Plaintiff also alleges that it has taken measures to guard the secrecy of its database and
formula, including a password-security system that required users to regularly change their
passwords. Id., ¶¶ 62, 69. Plaintiff’s efforts at establishing “trade secret” status are minimal and
far from compelling, especially in light of a previous holding from the Tennessee Court of
Appeals that items such as customer lists, credit information, pricing information, and profit and
loss statements do not constitute confidential information entitled to “trade secret” protection.
See Amarr Co. v. Depew, C/A No. 03A01–9511–CH–00412, 1996 WL 600330, *4-5
(Tenn.Ct.App. W.S., filed October 16, 1996). However, this district has determined that
requiring a plaintiff who alleges misappropriation of a trade secret to describe the specific
actions taken to maintain secrecy “would go far beyond the ‘short and plain statement’ required
by” Fed. R. Civ. P. 8(a). ProductiveMD, LLC v. 4UMD, LLC, 821 F. Supp. 2d 955, 962, n.3
(M.D. Tenn. 2011). The Court therefore finds that the amended complaint sufficiently identifies
the facets of the database and formula that make them trade secrets under Tenn. Code Ann.
Defendants’ additional argument that the TUTSA claim must be dismissed because
Plaintiff has failed to adequately describe the alleged misappropriation is unpersuasive. The
amended complaint asserts that Defendants misappropriated information from the database and
the formula so as to undermine Plaintiff when soliciting business from Plaintiff’s clients. DE 27
at 10, ¶¶ 71, 74. This represents a sufficient allegation of misappropriation of a trade secret via
improper means. See Jones v. United Propane Gas, Inc., No. E200900364COAR3CV, 2009 WL
5083476, at *15 (Tenn. Ct. App. Dec. 28, 2009) (“An employer has a legitimate business interest
in keeping its former employees from using the former employer’s trade or business secrets or
other confidential information in competition against the former employer.”) (citing Hasty v.
Rent-A-Driver, Inc., 671 S.W.2d 471, 473 (Tenn. 1984). The specificity that Defendants seek to
impose on Plaintiff at the pleading stage should instead be provided during the discovery
process. See Compuware Corp. v. Int’l Bus. Machines, 259 F. Supp. 2d 597, 605 (E.D. Mich.
2002) (holding that a plaintiff’s well-pled allegations of misappropriation of trade secrets
provided adequate notice of its cause of action to the defendant and that “[a]ny further specificity
desired by [the defendant] can be achieved through discovery”). Because the Court finds that
Plaintiff has sufficiently pled the existence of trade secrets that were allegedly misappropriated,
Count V of the amended complaint survives Defendants’ motion to dismiss.
The remainder of the Court’s analysis must then take into consideration the preemption
clause contained in the TUTSA, which states unequivocally that the statute “displaces conflicting
tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a
trade secret.” Tenn. Code Ann. § 47-25-1708(a). The TUTSA does not, however, preempt
“[o]ther civil remedies that are not based upon misappropriation of a trade secret.” Tenn. Code
Ann. § 47-25-1708(b)(2). Defendants contend that five counts contained in the amended
complaint are preempted by this provision of the TUTSA. DE 30 at 1.
The seminal reasons for determining whether a cause of action is preempted by Tenn.
Code Ann. § 47-25-1708 is found in Hauck Mfg. Co. v. Astec Indus., Inc., 375 F. Supp. 2d 649
(E.D. Tenn. 2004). The district court in that case provided a sound interpretation of the
preemption provision contained in the Uniform Trade Secrets Act (“UTSA”), which was
ultimately adopted by the state of Tennessee:
[A] better formulation of the UTSA preemption standard would be a “same proof”
standard under which a claim will be preempted when it necessarily rises or falls
based on whether the defendant is found to have “misappropriated” a “trade
secret” as those two terms are defined in the UTSA. Stated another way, if proof
of a non-UTSA claim would also simultaneously establish a claim for
misappropriation of trade secrets, it is preempted irrespective of whatever surplus
elements or proof were necessary to establish it. See Smithfield, 905 F.Supp. at
350 (“The question is ... whether failure of the misappropriation claim would
doom the remaining counts as well.”). The UTSA defines “misappropriation”
broadly enough to cover a wide range of conduct, including the sort of conduct
contemplated by the various claims which are often involved in preemption
disputes. If a proven claim, whether in whole or in part, constitutes
misappropriation of trade secret, it is that and that alone.
375 F. Supp. 2d at 658. Utilizing this reasoning, the Court applies the “same proof” standard to
determine whether, as alleged by Defendants, five of the remaining seven counts contained in the
amended complaint are preempted by Tenn. Code Ann. § 47-25-1708.
2. Breach of duty of loyalty (Count I).
Plaintiff asserts that Defendants breached their duty of loyalty to AFS by
misappropriating Plaintiff’s “time and resources.” DE 27 at 6, ¶ 39, 41. Defendant argues that
this claim is preempted by the TUTSA. DE 30 at 6. The Court agrees.
As stated by the district court in Hauck, a non-TUTSA claim is preempted if the claim
“necessarily rises or falls based on whether the defendant is found to have ‘misappropriated’ a
‘trade secret.’” 375 F. Supp. 2d at 658. Plaintiff refrains from explicitly claiming that Defendants
breached a duty of loyalty by misappropriating a trade secret, yet alleges that Defendants
“misappropriat[ed] Plaintiff’s time and resources in order to benefit and further the goals of their
competing business,” which allegedly included “interfering with Plaintiff’s business
relationships” and “diverting clients and prospective clients to their newly formed business
entity.” DE 27 at 6, ¶¶ 39, 41. Plaintiff provides no specificity as to how such actions were
executed, but states later in the amended complaint that its client database represents a “trade
secret” that Defendants misappropriated by “removing confidential and proprietary information
for the improper purpose of obtaining an unfair advantage when soliciting Plaintiff’s existing
clients.” Id. at 10, ¶¶ 70-71. As such, proof of the claim for breach of a duty of loyalty due to
solicitation of current and prospective clients “would also simultaneously establish a claim for
misappropriation of trade secrets.” Hauck, 375 F. Supp. 2d at 658. Plaintiff’s meticulous efforts
to avoid describing Defendants’ actions under Count I as misappropriation of a trade secret does
not save the count from preemption under Tenn. Code Ann. § 47-25-1708.
Alternatively, the Court agrees with Defendants’ contention that Count I must be
dismissed for failure to state a claim on which relief can be granted. The only part of Count I that
includes any level of specificity states that Defendants “convert[ed] Plaintiff’s time and tangible
property (e.g., office supplies, computers, printers, telephones, etc)[.]” DE 27 at 6, ¶ 41. Plaintiff
fails to provide any particulars as to how Defendants utilized these items to breach a duty of
loyalty, but instead states broadly that Defendants “act[ed] adversely against Plaintiff’s
interests[.]” Id. This is precisely the type of conclusory statement that is insufficient to survive a
Rule 12(b)(6) motion to dismiss. See Iqbal 556 U.S. at 678 (“Threadbare recitals of the elements
of a cause of action, supported by mere conclusory statements, do not suffice.”) (internal citation
omitted); see also Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 445 (6th Cir. 2012) (“To
survive a motion to dismiss ... allegations must be specific enough to establish the relevant ‘who,
what, where, when, how or why.’”) (quoting Total Benefits Planning Agency, Inc. v. Anthem
Blue Cross & Blue Shield, 552 F.3d 430, 437 (6th Cir. 2008)). Count I will be dismissed.
3. Conversion (Count II).
Plaintiff’s sole claim under Count II alleges that Defendants “wrongfully asserted
dominion over Plaintiff’s tangible property,” namely office supplies, “to benefit and further the
goals of Defendant FreightWise ... in a manner inconsistent with Plaintiff’s ownership rights[.]”
DE 27 at 7, ¶ 45. Defendants contend that this fails to present a cognizable claim and should thus
be dismissed pursuant to Rule 12(b)(6), and/or that this claim is preempted the TUTSA. DE 30 at
In Tennessee, conversion is an intentional tort and a party seeking to establish a prima
facie case of conversion must prove the following: (1) the appropriation of another’s property to
one’s own use and benefit, (2) by the intentional exercise of dominion over it, (3) in defiance of
the true owner’s rights. PNC Multifamily Capital Institutional Fund XXVI Ltd. P’ship v. Bluff
City Cmty. Dev. Corp., 387 S.W.3d 525, 553 (Tenn. Ct. App. 2012) (internal citations omitted).
Plaintiff’s claim of conversion does little more than track this language and insert a reference to
wrongful use of Plaintiff’s “phone(s), computer(s), paper, printer(s), printer ink, and various
other office supplies[.]” DE 27 at 7, ¶ 45.
The Court finds that Plaintiff’s claim for conversion is deficient. While Plaintiff
references several office supplies, there is no indication that Defendants’ use of such materials
was actually in defiance of the owner’s rights. Plaintiff instead states broadly that Defendants
utilized these office supplies to “further the goals of Defendant FreightWise,” but this is a wholly
conclusory allegation that lacks any specificity as to how Defendants accomplished such goals.
See Royal v. Select Portfolio Servicing, Inc., No. 11-2214-STA-DKV, 2012 WL 174950, at *6
(W.D. Tenn. Jan. 20, 2012) (although asserted that the defendant converted items “for its own
use,” plaintiff’s conversion claim failed because it failed to identify how Defendant allegedly
used or benefitted from such items); see also Greer v. Home Realty Co. of Memphis, Inc.,
No. 07-2639, 2010 WL 11493119, at *4 (W.D. Tenn. May 18, 2010) (dismissing complaint’s
conversion claim in part because “no factual content supports any allegation that [defendants]
possessed any of [plaintiff’s] property”). The amended complaint thus fails to sufficiently plead a
claim for conversion.
As discussed supra, the amended complaint includes other broad allegations of
conversion of property under Count I (breach of duty of loyalty), namely Plaintiff’s allegations
that Defendants “misappropriate[ed] Plaintiff’s time and resources” and “convert[ed] Plaintiff’s
time and tangible property (e.g. office supplies, computers, printers, telephones, etc.).” DE 27 at
6, ¶¶ 39, 41. However, the amended complaint includes no factual support for any such claims
other than its description of Defendants’ efforts to utilize the formula and database to improperly
solicit Plaintiff’s existing clients. Id. at 9, ¶¶ 62-75. Therefore, like the breach of duty of loyalty
claim, Plaintiff’s conversion claim appears to include general allegations so as to avoid
preemption under the TUTSA. By doing so, the amended complaint fails to provide any
specificity that would allow the conversion claim to survive dismissal under Rule 12(b)(6). See
Williams v. E. I. du Pont de Nemours & Co., No. 2:15-CV-02111-STA, 2015 WL 6458285, at *2
(W.D. Tenn. Oct. 26, 2015) (dismissing conversion claim that “lacks any factual support in the
allegations of the Complaint”).
4. Intentional interference with business relations (Count III).
Count III of the amended complaint contains the following three relevant assertions:
Plaintiff had a variety of contractual and prospective business relationships with
third parties under which it had legal rights.
Upon reasonable belief, Defendants, knowing of these relationships, intentionally
and unjustifiably interfered with them, causing certain third parties not to
Defendants acted through improper means and with improper motives causing
them to fail to adhere to their duties to preserve Plaintiff’s client relationships and
remain loyal to the company.
DE 27 at 7, ¶¶ 48-50. Defendants argue that such language represents little more than a “fishing
expedition” by Plaintiff that fails to state a claim on which relief can be based. DE 30 at 8. The
To establish liability for intentional interference with business relations in Tennessee, a
plaintiff must demonstrate five elements: (1) an existing business relationship with specific third
parties or a prospective relationship with an identifiable class of third persons; (2) the
defendant’s knowledge of that relationship and not a mere awareness of the plaintiff’s business
dealings with others in general; (3) the defendant’s intent to cause the breach or termination of
the business relationship; (4) the defendant’s improper motive or improper means; and
(5) damages resulting from the tortious interference. Trau-Med of Am., Inc. v. Allstate Ins. Co.,
71 S.W.3d 691, 701 (Tenn. 2002).
Count III of Plaintiff’s amended complaint simply recites these elements without any
level of specificity, which warrants dismissal under 12(b)(6). See Iqbal 556 U.S. at 678
(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.”) (internal citation omitted); Thompson v. Memphis Light, Gas &
Water, 416 S.W.3d 402, 408 (Tenn. Ct. App. 2011) (“[A] complaint must do more than simply
parrot the legal elements of the cause[s] of action.”) (internal citation and quotations omitted).
Plaintiff fails to identify any specific party or identifiable class of third persons that were subject
to Defendants’ alleged interference, which prevents Plaintiff from satisfying the first element of
the claim. Cf. Ellipsis, Inc. v. Colorworks, Inc., 329 F. Supp. 2d 962, 969 (W.D. Tenn. 2004)
(denying defendant’s motion to dismiss claim for intentional interference with business
relationship based on allegation in complaint that “adequately notifie[d] the defendant of the
relevant existing business relationship with which it claims [the defendant] interfered”);
Milacron LLC v. Advanced Fluids, Inc., No. 1:13-CV-364, 2013 WL 5722795, at *5 (S.D. Ohio
Oct. 21, 2013) (noting that plaintiff’s vague allegations that defendant “interfered with their
customers, representatives, and/or suppliers” failed to “raise [plaintiff’s] right to relief above a
speculative level, and thus they fail to sufficiently allege facts that satisfy the elements of a claim
for tortious interference”). Plaintiff instead provides conclusory allegations without any facts to
support such averments. See Papasan, 478 U.S. at 286 (“[W]e are not bound to accept as true a
legal conclusion couched as a factual allegation.”); see also Stinson v. Dalton, No. 08-2076,
2009 WL 10664880, at *3 (W.D. Tenn. Jan. 29, 2009) (granting motion to dismiss clam for
tortious interference with business relations in light of amended complaint’s failure to contain
any factual allegations regarding subject defendant’s “intent or motive or ... improper means that
[defendant] employed”). 5 Count III of the amended complaint will therefore be dismissed.
5. Tortious interference with contract (Count IV).
Count IV of the amended complaint alleges that Defendants tortiously interfered with a
contract with a specific client identified only as “Client X.” DE 27 at 8, ¶¶ 53-59. This count is
preempted by the TUTSA.
As noted above, if proof of a non-TUTSA claim “would also simultaneously establish a
claim for misappropriation of trade secrets, it is preempted irrespective of whatever surplus
elements or proof were necessary to establish it.” Hauck 375 F. Supp. 2d at 658. Two allegations
contained under Count IV demonstrate that proof of tortious interference with contract would
also involve evidence of misappropriation of a trade secret:
While employed for Plaintiff in their respective sales leadership positions,
Defendants Cochran and Rustioni became aware of Plaintiff’s contract with Client
Defendants’ actions in inducing Client X to breach their contract with Plaintiff by
offering a lower commission rate was the proximate cause of Client X’s breach.
DE 27 at 8, ¶¶ 54, 59. Elsewhere in the amended complaint, Plaintiff explicitly avers that it was
Defendants’ “specific knowledge of Plaintiff’s pricing structure with Client X [that] provided
Defendant FreightWise an unfair competitive advantage in that Defendant FreightWise knew
exactly how to structure their offer so as to induce Client X to breach their contract with
Plaintiff[.]” Id. at 6, ¶ 30. This ostensibly refers to the “formula” Plaintiff used to establish its
The Court finds particularly compelling the fact that Plaintiff had the opportunity in its
amended complaint to provide sufficiently detailed factual allegations, and failed to do so.
prices and its “unique client pricing structure,” which Plaintiff specifically identifies as a trade
secret in the amended complaint. Id. at 9-10, ¶¶ 66, 70. Plaintiff also later claims that Defendants
used the “confidential Formula” to “give Defendants an unfair competitive advantage in their
solicitation of Plaintiff’s clients in that they have knowledge of Plaintiff’s current pricing and
precisely how to undercut that pricing.” DE 27 at 10, ¶ 74. Proof of Defendants’ alleged
interference with any contract with Client X would therefore necessarily establish proof of
misappropriation of a trade secret. Accordingly, Count IV is thus preempted by the TUTSA.
6. Conspiracy (Count VI).
Plaintiff alleges that Defendants participated in a conspiracy to “misappropriate
Plaintiff’s clients, convert Plaintiff’s tangible property, interfere with Plaintiff’s business
relationships, and tortiously interfere with Plaintiff’s contracts.” Id. at 11, ¶ 78. The Court notes
that under Tennessee law, civil conspiracy “requires an underlying predicate tort allegedly
committed pursuant to the conspiracy.” ProductiveMD, 821 F. Supp. 2d at 967 (quoting
Watson’s Carpet and Floor Coverings, Inc. v. McCormick, 247 S.W.3d 169, 180 (Tenn.Ct.App.
2007)). Because Counts II (conversion) and III (intentional interference with business relations)
are subject to dismissal based on their failure to state a claim upon which relief may be granted,
there is no “underlying predicate tort” sufficiently pled in the amended complaint that would
support any claim for conspiracy to convert Plaintiff’s tangible property or interfere with
Plaintiff’s business relationships. Additionally, Count IV (tortious interference with contract) is
preempted because the allegations contained in that count necessarily involve proof of whether
Defendants misappropriated a trade secret. Any conspiracy claim related to tortious interference
with a contract is thus “specifically linked to the alleged theft of trade secrets” and must
therefore be dismissed. Id.
Similarly, Plaintiff’s claims regarding Defendants’ attempts to “misappropriate Plaintiff’s
clients” necessarily involve evidence of whether Defendants misappropriated the so-called
“formula” and “database,” both of which are alleged to represent trade secrets. DE 27 at ¶ 70.
Indeed, the amended complaint specifically alleges that Defendants “misappropriated Plaintiff’s
Formula and Database by removing confidential and proprietary information for the improper
purpose of obtaining an unfair advantage when soliciting Plaintiff’s existing clients.” Id. at 10,
¶ 71. Because there are no remaining underlying predicate torts, Count VI does not survive.
7. Injunctive relief (Count VII).
Defendants move to dismiss the amended complaint’s “claim” for injunctive relief for
failure to state a claim under Fed. R. Civ. P. 12(b)(6) based on Plaintiff’s failure to “produce any
affidavits or actual evidence supporting the ‘upon information and belief’ allegations” provided
under this count. DE 30 at 23. Defendants also argue that Count VII should be dismissed based
on the doctrine of collateral estoppel. Id. at 21-23.
It is unclear why Plaintiff has listed “Injunctive Relief” as a count in the amended
complaint, as injunctive relief is, as the term suggests, a remedy and not a cause of action.
Curiously, Plaintiff later includes the request for injunctive relief under the “Prayer for Relief”
section of the amended complaint. See DE 27 at 14, ¶ 5. Additionally, although the amended
complaint includes no claim for copyright infringement, Plaintiff additionally claims that
injunctive relief is necessary to “protect Plaintiff’s interests in its ... copyrighted database
compilations” and cites 17 U.S.C. § 502, which governs remedies for infringement of a
Regardless, Count VII must be dismissed because a form of relief cannot state a cause of
action upon which relief may be granted. See Cronin v. Bank of Am., No. 12-13249, 2013 WL
2626739, at *6 (E.D. Mich. June 11, 2013) (“In Count III, [plaintiff] requests injunctive relief.
This claim must be dismissed because injunctive relief is a remedy, not a cause of action.”);
Tann v. Chase Home Fin., L.L.C., Case No. 10-14696, 2011 WL 3799841, *10 (E.D. Mich.
Aug. 26, 2011) (“[P]laintiff cannot seek an injunction as a stand-alone cause of action; it is only
available as an equitable remedy.”). Plaintiff may however seek injunctive relief, in accordance
with applicable rules and procedures, if able to establish that Defendants misappropriated a trade
secret. See J.T. Shannon Lumber Co. v. Barrett, No. 2:07-CV-2847-JPM-CGC, 2010 WL
3069818, at *4 (W.D. Tenn. Aug. 4, 2010) (“Under TUTSA, a plaintiff who successfully
establishes that a defendant misappropriated a trade secret is entitled to injunctive relief and/or
an award of damages.”) (citing Tenn. Code Ann. §§ 47-25-1703, 1704); Meadow v. Nibco, Inc.,
No. 3-15-1124, 2016 WL 2986350, at *8 (M.D. Tenn. May 24, 2016) (“Nothing about this ruling
[granting motion to dismiss a cause of action for injunctive relief] precludes Plaintiffs from
seeking declaratory or injunctive relief as a remedy, should there be liability, in this action.”). 6
The Court notes that Defendants also raised a collateral estoppel argument based on the
determination of the Davidson County Chancery Court in denying a temporary injunction that
Plaintiff failed to demonstrate a likelihood of success on the merits. It is unnecessary for the
Court to determine whether the Chancery Court’s ruling can be considered for Rule 12(b)(6)
purposes because the Court is not persuaded by Defendants’ arguments regarding the scope of
collateral estoppel in this context.
8. Punitive damages (Count VIII).
Defendants finally contend that Plaintiff’s request for punitive damages should be
dismissed because it fails to plead sufficient facts to demonstrate that Defendants have acted
intentionally, fraudulently, maliciously, or recklessly, as required under Tennessee law. See
Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 901 (Tenn. 1992).
As with the count for injunctive relief, Count VIII, labeled “Punitive Damages,” does not
present a cause of action, but instead a prayer for relief. See Apex Energy Sols. of Cincinnati LLC
v. Apex Energy Sols. of Indiana, LLC, No. 1:10-CV-106, 2010 WL 4642902, at *8 (S.D. Ohio
Nov. 9, 2010) (“This ‘cause of action’ is not a claim for relief but a request for punitive
damages.”). Plaintiff may however pursue punitive damages if it successfully establishes that
Defendants’ alleged violation of the TUTSA was intentional, fraudulent, malicious, or reckless.
To the extent that Defendants request dismissal or denial of the prayer for punitive damages
under Fed. R. Civ. P. 12(b)(6), such request must be denied as the amended complaint contains
allegations that are sufficient to state a claim of at least intentional conduct on the part of
Based on the foregoing analysis, Defendants’ motion to dismiss is GRANTED IN PART
and DENIED IN PART. As a result, Counts I, II, III, IV, VI, VII, and VIII will be DISMISSED
WITH PREJUDICE. An appropriate order will enter.
BARBARA D. HOLMES
United States Magistrate Judge
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