Dri-Eaz Products, Inc. v. Allen

Filing 59

ORDER granting pltf's 46 Motion to Amend ; granting 47 Motion to Amend and Join Addional Party by Judge Ricardo S Martinez.(RS)

1
2
3
4
5
6
7
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

8
9
10

DRI-EAZ PRODUCTS, Inc., a
Washington corporation

CASE NO. C12-1638-RSM

11

ORDER GRANTING LEAVE TO
AMEND AND JOIN PARTY

Plaintiff,
12
v.
13
KAMILLA D. ALLEN, an individual,
14
Defendant.
15
16
17
18

This matter comes before the Court upon Plaintiff’s Motion for Leave to Amend
Complaint (Dkt. # 46) and Motion for Leave to Amend and Join Additional Party (Dkt. # 47).
For the reasons that follow, the motions shall be GRANTED.

19

I. BACKGROUND
20
The facts of this case are familiar to the parties and the Court, and need not be repeated at
21
length. In sum, Dri-Eaz Products, Inc. (“Dri-Eaz”) is a Washington corporation that designs,
22
produces and distributes a wide range of restoration, remediation, dehumidifying, and
23
environmental control products. Defendant Kamilla Allen was an employee of Dri-Eaz, but now
24
ORDER GRANTING LEAVE TO AMEND AND JOIN PARTY - 1

1 works for Intertex Inc., a California company that does business as B-Air Blowers (B-Air”).
2 Allen and B-Air are plaintiffs in the consolidated declaratory judgment action that is currently
3 pending before this Court. Intertex, Inc. v. Dri-Eaz Products, Inc., C13-165-RSM. Both actions
4 concern the termination of Allens’ employment with Dri-Eaz and subsequent employment with
5 B-Air.
6

In the instant motions, Dri-Eaz requests leave to amend its Complaint to re-allege claims

7 previously dismissed by the Court without prejudice—claims for misappropriation of trade
8 secrets and tortious interference with contract or a business expectancy—as well as to join B-Air.
9 Allen opposes amendment on the basis of futility. She contends that Dri-Eaz’s proposed
10 amendments still fail to state a claim.
11
12

II. DISCUSSION
Federal Rule of Civil Procedure 8(a) requires a plaintiff to set forth in its complaint “a

13 short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ.
14 P. 8(a). While “the pleading standard Rule 8 announces does not require ‘detailed factual
15 allegations,’ [] it demands more than an unadorned, the-defendant-unlawfully-harmed-me
16 accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v.
17 Twombly, 550 U.S. 544, 555 (2007)). A claim is plausible if the plaintiff pleads factual content
18 that allows the court to draw the reasonable inference that the defendant is liable for the
19 misconduct alleged. Id. at 678.
20

Federal Rule of Civil Procedure 15(a)(2) directs a court to grant leave to amend if justice

21 so requires. “A district court should grant leave to amend…unless it determines that the pleading
22 could not possibly be cured by the allegation of other facts.” Lacey v. Maricopa, 693 F.3d 896,
23
24
ORDER GRANTING LEAVE TO AMEND AND JOIN PARTY - 2

1 926 (9th Cir. 2012). In other words, “requests for leave to amend should be granted with extreme
2 liberality….” Mirmehdi v. United States, 689 F.3d 975, 985 (9th Cir. 2012).
3

For a Rule 15(a) motion, the non-moving party bears the burden of persuading the court

4 that leave should not be granted. Breakdown Services, Ltd. v. Now Casting, Inc., 550 F. Supp. 2d
5 1123, 1132 (C.D. Cal 2007) (citing DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186-87 (9th
6 Cir. 1987). The court considers the following five factors in its analysis when leave to amend is
7 requested: (1) bad faith, (2) undue delay, (3) prejudice to opposing party, (4) futility of
8 amendment, and (5) whether the complaint was previously amended. United States v. Corinthian
9 Colleges, 665 F.3d 984, 995 (9th Cir. 2011). Ordinarily, there is a presumption that leave to
10 amend should be granted absent a strong showing of one of the five factors. Eminence Capitol,
11 LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
12

The Court finds the proposed allegations offered by Dri-Eaz sufficient to permit

13 amendment. Allen argues only that amendment is futile because Dr-Eaz fails to state a claim for
14 trade secret misappropriation and fails to state a claim for tortious interference. She does not
15 contend that leave to amend was sought to cause delay, that it was requested in bad faith, or that
16 she will suffer prejudice. Further, Dri-Eaz did not amend its original complaint and leave to
17 amend was requested only after the parties engaged in substantive discovery.
18 A. Trade Secret Misappropriation
19

Washington’s Uniform Trade Secrets Act (“UTSA”) defines a trade secret as follows:

20

“Trade Secret” means information, including . . . a compilation . . . that:

21

(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

22
23
24

ORDER GRANTING LEAVE TO AMEND AND JOIN PARTY - 3

1

(b)
Is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.

2
RCW 19.108.010(4).
3
Dri-Eaz now alleges, inter alia, that Allen misappropriated confidential customer
4
information, which it deems trade secrets, and that she used the secret information to target Dri5
Eaz’s customers on B-Air’s behalf. Dkt. # 46-1, ¶¶ 13-14. Dri-Eaz further alleges that it “derives
6
economic value from the information not being generally known to and not being readily
7
ascertainable by proper means by other persons who can obtain economic value from its use, and
8
because Dri-Eaz took reasonable efforts to maintain the information’s secrecy.” Id. at ¶ 13. Allen
9
challenges Dri-Eaz’s proposed amendments on the basis of futility, arguing that the customer
10
information was readily ascertainable and therefore does not qualify as a trade secret.
11
Allen’s futility argument, however, rests primarily on factual challenges to the proposed
12
amendments. Dri-Eaz offers embellished allegations concerning Allen’s knowledge of personal
13
contact information for Dri-Eaz’s customers, which Dri-Eaz alleges constitute trade secrets. Dri14
Eaz further asserts that Allen, by virtue of her sales position within Dri-Eaz, misappropriated this
15
information when she used it to solicit sales accounts for B-Air. Although Allen contends that
16
the customer information is readily available to the public and generally known in the industry,
17
these factual assertions are irrelevant. Dri-Eaz need not prove that its customer information
18
qualifies as a trade secret to warrant leave to amend under Rule 15(a). Because customer lists
19
and contact information are “the type[s] of information which can be a protected trade secret if
20
[they] meet[] the criteria of the Trade Secrets Act,” Ed Nowogorski Ins., Inc. v. Rucker, 971 P.2d
21
936, 943 (Wash. 1999), it is sufficient that Dri-Eaz identified information that may be cognizable
22
as a trade secret and stated the necessary elements of a UTSA claim.
23
24
ORDER GRANTING LEAVE TO AMEND AND JOIN PARTY - 4

1 B. Claim for Tortious Interference with Contracts and Actual and Prospective Business
Expectancies
2
Dri-Eaz asserts this claim against both Allen and B-Air, and requests leave to join B-Air.
3
Allen contends that Dri-Eaz fails to state a claim such that the Court should deny both leave to
4
amend and leave to join B-Air.
5
A tortious interference claim contains five elements. Newton Ins. Agency & Brokerage,
6
Inc. v. Caledonian Ins. Grp., Inc., 52 P.3d 30, 33 (Wash. Ct. App. 2002). A plaintiff must prove
7
“(1) the existence of a valid contractual relationship or business expectancy; (2) that the
8
defendant had knowledge of that expectancy; (3) an intentional interference inducing or causing
9
a breach or termination of the relationship or expectancy; (4) that the defendant interfered for an
10
improper purpose or used improper means; and (5) resulting damage.” Id.
11
Allen challenges this claim on the basis that Dri-Eaz failed to allege the third required
12
element: that the interference was intentional and caused a breach or termination of a business
13
expectancy. Dri-Eaz responds that it has satisfied the intentional interference element by alleging
14
that it has “valid contractual business expectancies with its current customer base and potential
15
customers” (Dkt. # 46-1, ¶ 18); that Allen and B-Air’s actions were “directed at inducing a
16
termination of Dri-Eaz’s contracts and expectancies with its customers and potential customers”
17
(id. at ¶ 21); and that they “in fact succeeded in interfering with Dri-Eaz’s relationships with
18
customers and potential customers” (id.). In Kieburtz & Associates, Inc. v. Rehn, the Washington
19
Court of Appeals held that summary judgment was improper where the plaintiff offered
20
information that could satisfy the intentional interference element by demonstrating that the
21
defendants appropriated business from plaintiff’s customer. 842 P.2d 985, 989 (Wash. Ct. App.
22
1992). Here, Dri-Eaz alleges that Allen and B-Air intentionally targeted Dri-Eaz’s customers,
23
which resulted in interfering with Dri-Eaz’s customer relationships. Taking the allegations in the
24
ORDER GRANTING LEAVE TO AMEND AND JOIN PARTY - 5

1 light most favorable to Dri-Eaz, the allegations are minimally sufficient to warrant leave to
2 amend this claim as well.1 Accordingly, the Court shall grant both the motion requesting leave to
3 amend and the motion to join B-Air.
4
5

III. CONCLUSION
The Court, having considered the motions, the response and the reply thereto, and the

6 remainder of the record, hereby finds and ORDERS:
7

(1)

8

Amend and Join Additional Party (Dkt. # 47) are GRANTED.

9

(2)

10

Plaintiff’s Motion for Leave to Amend (Dkt. # 46) and Motion for Leave to

The Clerk of the Court is directed to forward a copy of this Order to all counsel of

record.

11
12

DATED this 22nd day of July 2013.

13
14

A

15

RICARDO S. MARTINEZ
UNITED STATES DISTRICT JUDGE

16
17
18
19
20
21
22
23

1

Although the tortious interference claim may be preempted by the UTSA, the Court
24 does not address the issue now as it was not raised by the parties.
ORDER GRANTING LEAVE TO AMEND AND JOIN PARTY - 6