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Fyfe Co., LLC v. Structural Group, LLC

United States District Court, D. Maryland

August 11, 2014

FYFE CO., LLC, et al.
v.
STRUCTURAL GROUP, LLC, et al.

MEMORANDUM

CATHERINE C. BLAKE, District Judge.

Plaintiffs Fyfe Co., LLC, Fibrwrap Construction Services, Inc., and Fibrwrap Construction Services USA, Inc. brought this action against defendant Structural Group, LLC and individual defendants Jason Alexander, Mark Geraghty, Shaun Loeding, and Anna Pridmore. The plaintiffs assert various breach of contract and tort claims against Structural and the individual defendants relating to their resignation from Fyfe and related companies to begin working for Structural. On May 30, 2013, this court granted the individual defendants' motion to dismiss the amended complaint for lack of personal jurisdiction and for failure to state a claim as to the civil conspiracy count. ( See Memorandum Opinion Granting Motion to Dismiss (May 30, 2013), ECF No. 57.) The court granted the plaintiffs leave to amend their complaint, and the plaintiffs subsequently filed a second amended complaint.

Now pending are the individual defendants' second motion to dismiss (ECF No. 71), in which Structural joins as to the motion to dismiss the civil conspiracy count (ECF No. 73), and Structural and the individual defendants' joint motion to dismiss (ECF No. 116) several additional counts. The parties have fully briefed the issues, and no oral argument is necessary. See Local R. 105.6. For the following reasons, the motions to dismiss will be denied.

BACKGROUND

Fyfe manufactures construction strengthening system products, including Fiber Reinforced Polymer ("FRP") systems, used for strengthening, repair, and restoration of masonry, concrete, steel, and wooden structures. Fibrwrap Construction Services and Fibrwrap Construction Services USA specialize in concrete repairs as well as installation and construction of FRP composite materials. All three companies are organized under Delaware law and headquartered in Missouri. Structural is a Maryland corporation engaged in specialty construction, repair, and maintenance services. In November 2011, Fyfe and Structural entered into a private label agreement ("PLA"). Pursuant to the PLA, Structural agreed to exclusively purchase Fyfe's products, Fyfe granted Structural a license to market Fyfe's products under Structural's name, and Structural agreed not to compete against Fyfe.

Alexander, Geraghty, and Pridmore are all California residents, and Loeding is a New York resident. The individual defendants worked for Fyfe or its parent companies until December 2012 when they resigned to accept new positions at Structural. As part of their employment agreements, each of the individual defendants agreed not to use Fyfe or its parent companies' confidential information and trade secrets for his or her own personal benefit or that of a third party. In addition, Alexander signed an Executive Employment Agreement ("EEA"), which, among other things, prohibited him for a period of two years from engaging in business that competed against Fyfe and from soliciting Fyfe's employees to leave their employment. Neither the old positions with Fyfe and its parent companies nor the new positions with Structural were based in Maryland.

On January 16, 2013, the plaintiffs filed the first complaint in this case. After the complaint was amended, the individual defendants moved to dismiss the complaint for lack of personal jurisdiction. On April 30, 2013, this court granted the individual defendants' motion to dismiss for two primary reasons. First, the plaintiffs did not show that the individual defendants purposefully availed themselves of the privilege of conducting activities in Maryland. The amended complaint was bereft of allegations that the individual defendants initiated the business relationship with Structural or that the individual defendants were engaged in long-term business activities in Maryland. And although the plaintiffs alleged the individual defendants traveled to Maryland in January 2013, the court concluded this single in-person visit was not a sufficient basis for asserting jurisdiction over them. Second, the plaintiffs could not invoke the conspiracy theory of jurisdiction because their allegations did not show a meeting of the minds among the defendants to misappropriate confidential information in order to compete against Fyfe.

On July 16, 2013, the court granted the plaintiffs leave to amend the complaint, and the plaintiffs filed a second amended complaint on August 5, 2013. The second amended complaint offers a more complete picture of the series of events giving rise to the plaintiffs' claims. First, it alleges that Alexander approached Jay Thomas, a Structural executive, in August 2012 on a fishing trip, and there he raised the prospect of Alexander, Geraghty, and Pridmore leaving Fyfe to join Structural. (Second Am. Compl. ¶ 48, ECF No. 67.) Following this conversation, Alexander traveled to Maryland in September 2012 to meet with Structural's management, including CEO Peter Emmons, to discuss further the possibility of the individual defendants joining Structural. ( Id. ¶ 49.) Although Alexander claims he was invited by Structural to Maryland, Emmons maintains that Alexander proposed the Maryland meeting. According to Emmons, Alexander told Thomas that he would be in the Maryland area and wanted to meet with Structural representatives while he was there. (Emmons Dep. 42:13-17, ECF No. 75-2.) At this meeting, Alexander identified Loeding as another individual who was interested in leaving Fyfe for a position at Structural. (Alexander Dep. 114:25-115:25, ECF No. 75-1.)[1] Then in October 2012, all the individual defendants traveled to Maryland for employment discussions with Structural. (Second Am. Compl. ¶ 51.) By this point, Structural was aware of Alexander's EEA, including its non-compete and non-solicitation provisions, as well as the confidentiality agreements binding the other individual defendants. ( Id. )

The second amended complaint also restates the allegations of a conspiracy among the individual defendants and Structural to steal Fyfe's confidential and trade secret information and compete against Fyfe. ( Id. ¶ 52.) After the October 2012 Maryland meeting, the individual defendants allegedly acted in furtherance of the conspiracy when they copied numerous files to portable storage devices and concealed their actions by deleting files and running file cleaning software. ( Id. ¶¶ 54-68.) Structural also allegedly acted in furtherance of the conspiracy when it purchased $2.1 million of Fyfe product, a sum which exceeded its total purchases for 2012 to that point and varied from its standard ordering practice. ( Id. ¶ 53.)

After resigning their positions with Fyfe, the individual defendants traveled to Maryland for two weeks of training with Structural in January 2013. According to the second amended complaint, during this trip, the individual defendants accessed Fyfe's confidential and trade secret information and transferred this information to their Structural computers. ( Id. ¶ 69.) In some instances, the storage devices were shared-one individual defendant used the storage device to copy Fyfe's files before the individual defendants resigned, and another individual defendant used the device to upload the files to his or her Structural computer. ( Id. )

On August 28, 2013, the individual defendants filed a motion to dismiss the second amended complaint for lack of personal jurisdiction and the civil conspiracy count for failure to state a claim. And on May 16, 2013, the defendants filed an additional motion to dismiss the unfair business practices count, the aiding and abetting count, the civil conspiracy count, and the injunctive relief count.

I. PERSONAL JURISDICTION OVER INDIVIDUAL DEFENDANTS

A. Standard of Review

Under Rule 12(b)(2), the plaintiff bears the burden of proving the existence of personal jurisdiction by a preponderance of the evidence. Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993). If a court chooses to decide the issue of personal jurisdiction before trial-as the court will do again in this case-it may either hold a separate evidentiary hearing, or it may decide the issue on the basis of allegations in the complaint, affidavits, and other discovery materials. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). If the court chooses not to hold a hearing, the party asserting personal jurisdiction "need prove only a prima facie case of personal jurisdiction." Mylan, 2 F.3d at 60. Additionally, "the court must construe all relevant pleading ...


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