Rail Scale, Inc. v. Balanced Railscale Certification, LLC et al

Filing 64

MEMORANDUM ORDER. Signed by Magistrate Judge Roy S. Payne on 9/4/2016. (ch, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
RAIL SCALE, INC.
Plaintiff,
v.
BALANCED RAILSCALE
CERTIFICATION, LLC, ET AL.,

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Case No. 2:15-cv-2117-RSP

Defendants.
MEMORANDUM ORDER
Before the Court are Defendants’ Motions to Dismiss for Lack of Subject Matter
Jurisdiction and Failure to State a Claim (Dkt. Nos. 14 and 16). The motions contend that (1)
there is no diversity jurisdiction due to the Florida domicile of one of the Defendants and the
Plaintiff, (2) the Court lacks supplemental jurisdiction under 28 U.S.C. § 1367 over Plaintiff’s
state law claims, (3) the claims involving trade secrets and breach of fiduciary duty fail to state a
claim because they lack specificity, and (4) the civil theft and unfair competition claims are
preempted by the Texas Uniform Trade Secret Act (TUTSA).
The Plaintiff alleges that Defendants are two former employees of Plaintiff (having left
Plaintiff’s employ four years ago and one year ago, respectively), and a company the two
formed together one year ago. Defendants are alleged to be infringing Plaintiff’s trademarks
and trade name, and to have misappropriated trade secrets and confidential documents,
breached their fiduciary duties, and committed acts of unfair competition. Defendants concede
that the Court has jurisdiction over the federal question claims that Plaintiff has alleged under
the Lanham Act, but contend that the various state law claims do not arise out of a common

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nucleus of operative fact with the Lanham Act claims. The Court is satisfied that the claims are
sufficiently connected and that the exercise of supplemental jurisdiction is appropriate.
With respect to the sufficiency of the allegations regarding trade secrets and fiduciary
duty, the Court agrees with Defendants that specificity is required, but the discovery process is
the manner in which that should be obtained. The allegations are clearly sufficient to put the
Defendants on notice as to the nature of the claims. Finally, the Court does not find sufficient
legal authority to conclude that TUTSA preempts Plaintiff’s civil theft and unfair competition
claims. Accordingly, the motions (Dkt. Nos. 14 and 16) are DENIED.

SIGNED this 3rd day of January, 2012.

SIGNED this 4th day of September, 2016.

____________________________________
ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE

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