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Telogis, Inc. v. Insight Mobile Data, Inc.

United States District Court, D. Maryland, Southern Division

December 19, 2014

TELOGIS, INC., Plaintiff,
v.
INSIGHT MOBILE DATA, INC., d/b/a STREETEAGLE, et al., Defendants.

MEMORANDUM OPINION AND ORDER

PAUL W. GRIMM, District Judge.

Plaintiff Telogis, Inc. and Defendant InSight Mobile Data, Inc. d/b/a StreetEagle ("InSight") are competing companies that provide "location-based management solutions for mobile fleets and integrated resources."[1] Compl. ¶ 2, ECF No. 1. InSight "knowingly targeted and hired certain individuals who, by virtue of their positions at Telogic and/or Navtrak (acquired by Telogis in 2012), had access to sensitive, confidential, and proprietary information, " id. ¶ 3, and those individuals, encouraged by Defendant, solicited Plaintiff's customers, in violation of the agreements they entered into with Telogis and Navtrak, id. ¶¶ 4, 11, 29. Plaintiff filed suit against Defendant and unnamed individuals, claiming misappropriation of trade secrets, tortious interference with contractual relations, and unfair competition, and seeking injunctive relief. Id. ¶¶ 32, 42-45, 47-49, 51. At this juncture, I must determine whether to grant the Motion to Dismiss that Defendant filed.[2] Because Plaintiff has stated plausible claims for misappropriation, tortious interference with contractual relations, and unfair competition, Defendant's Motion IS DENIED.

I. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) provides for "the dismissal of a complaint if it fails to state a claim upon which relief can be granted." Velencia v. Drezhlo, No. RDB-12-237, 2012 WL 6562764, at *4 (D. Md. Dec. 13, 2012). This rule's purpose "is to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.'" Id. (quoting Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006)). To that end, the Court bears in mind the requirements of Fed.R.Civ.P. 8, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), when considering a motion to dismiss pursuant to Rule 12(b)(6). Specifically, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief, " Fed.R.Civ.P. 8(a)(2), and must state "a plausible claim for relief, " as "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice, " Iqbal, 556 U.S. at 678-79. See Velencia, 2012 WL 6562764, at *4 (discussing standard from Iqbal and Twombly ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 663.

II. DISCUSSION

A. Modifications to Non-Competition Clauses of Agreements

In Defendant's view, "[t]he heart of the complaint turns on alleged breaches of restrictive covenants by four former Telogis employees." Def.'s Mem. 11. Plaintiff's Complaint describes three account executives and a sales manager for Navtrak (the "Employees") who went on to work for InSight. They all had signed executive employment agreements ("Agreements") upon beginning their employment with Navtrak. Compl. ¶¶ 12-13, 16-17, 20-21, 24-25. Three of the Agreements provided that the Employees would maintain the confidentiality of the Company's Proprietary Information, and all of them provided that, for periods ranging from one to two years, the Employees would "not... solicit any customers of the Company with whom [they] had contact or whose identity [they] learned as a result of [their] employment with the Company." Id. ¶¶ 3, 13, 17, 21, 25; see Anderson Agr. ¶ 7 & Ex. G ¶¶ 1 & 5, Sullivan Agr. ¶ 7 & Ex. G ¶¶ 1 & 5, Healy Agr. ¶¶ 7.1 & 8.1(b), Def.'s Mem. Ex. 1-3, ECF Nos. 19-3-19-5. At least two of the Agreements included non-competition clauses, Compl. ¶ 3, which provided that "for the period of two (2) years after... the date my employment ends for any reason..., I will not provide services, similar to those I provided to the Company, to any person or entity in competition with the Company within the United States of America, " Anderson Agr. ¶ 7 & Ex. G ¶ 6; Sullivan Agr. ¶ 7 & Ex. G ¶ 6. Upon ending their employment, three of the Employees signed releases, which provided that the Employees would not "criticize, denigrate, or otherwise disparage [Plaintiff] or any of [its] products, processes, experiments, policies, practices, standards of business conduct, or areas of techniques of research." Compl. ¶¶ 14, 18, 22.

The Employees began working for InSight "[i]mmediately after [their] employment with Navtrak ended, " in positions in which they were "directly engaged in competitive efforts against Plaintiff, " and their work covered the "same geographic region." Compl. ¶¶ 15, 19, 23, 27, 33. Insight knew that some of the Agreements included non-competition and non-solicitation clauses, and was "aware that each of these former employees was contractually obligated to keep confidential and not misuse for their own or anyone else's benefit any of Plaintiff's confidential or proprietary business information, specifically including customer and pricing information." Id. ¶ 3. Nonetheless, "[w]hile employed by Defendant InSight, and within one year of the last day of employment with either Navtrak or Telogis, " these Employees, "encouraged" by Insight, each "personally solicited, or assisted in the solicitation of, Plaintiff's customers whom they serviced while working for Telogis and/or Navtrak." Id. ¶¶ 4, 11, 29.

Defendant argues that Telogis cannot enforce the non-competition clauses in three of the Employees' Agreements because the Agreements "were modified when they were laid off[] to provide that... [i]f Telogis did not offer [the employee] employment [when it acquired Navtrak, ] then effective immediately prior to the Acquisition, [the employee's] obligations under the restrictive covenants relating to non-competition in the Employment Agreement [were] terminated.'" Def.'s Mem. 2 (quoting Modification of Severance Benefits under Employment Agreement ("Modifications"), Def.'s Mem. Exs. 6-8, ECF Nos. 19-8-19-10). Similarly, InSight contends that Telogis cannot enforce the non-competition clause in the fourth Employee's Agreement because "that agreement was terminated when Telogis acquired Navtrak" and the employee signed an "Employment Offer letter" that stated that he "agree[d] that contingent upon the acquisition of Navtrak by Telogis, [his] employment agreement [was] hereby cancelled...." Def.'s Mem. 6. Plaintiff counters that the Modifications were, in turn, qualified by the cover letter that accompanied them, Pl.'s Opp'n 3, which provided that the Modifications would release the Employees "from the 2-year covenant not to compete if [they were] in sales AND [they] were not offered a permanent job by Telogis, " id. Ex. 1, ECF No. 20-1.

When reviewing a motion to dismiss, "[t]he court may consider documents attached to the complaint, as well as documents attached to the motion to dismiss, if they are integral to the complaint and their authenticity is not disputed." Sposato v. First Mariner Bank, No. CCB-12-1569, 2013 WL 1308582, at *2 (D. Md. Mar. 28, 2013); see CACI Int'l v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150, 154 (4th Cir. 2009); see also Fed.R.Civ.P. 10(c) ("A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes."). Moreover, where the allegations in the complaint conflict with an attached written instrument, "the exhibit prevails." Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991); see Azimirad v. HSBC Mortg. Corp., No. DKC-10-2853, 2011 WL 1375970, at *2-3 (D. Md. Apr. 12, 2011). It is axiomatic that the documents comprising a contract are integral to a complaint concerning a breach of that contract. See Chesapeake Bay Found., Inc. v. Severstal Sparrows Point, LLC, 794 F.Supp.2d 602, 611 n.4 (D. Md. 2011).

I may consider the Agreements and Modifications in ruling on the Motion to Dismiss, given that they are integral to the complaint, see id., particularly since Plaintiff does not challenge their authenticity. See Sposato, 2013 WL 1308582, at *2. Plaintiff, does however, challenge the scope and effect of the Modifications on the Agreements. See Pl.'s Opp'n 3. I note that the Modifications terminated the Employees' "obligations under the restrictive covenants relating to non-competition in the Employment Agreement, " Modifications 1, and that "Exhibit G - Proprietary Information, Inventions, and Non-Competition" to the Agreements contained a "Non-Compete Provision, " as well as a separate clause proscribing "Solicitation of Employees, Consultants, Contractors or Customers, " e.g., Anderson Agr. Ex. G ¶¶ 5-6. It is unclear whether the Modifications terminated only the Non-Compete Provision or also the related provision about solicitation. Consequently, the Agreements and Modifications are "not so clear and unambiguous... that the Court can dismiss Plaintiff['s] claims as a matter of law at this early stage of litigation. Rather, the Court anticipates that discovery and the introduction of extrinsic evidence, " such as the cover letter, may clarify the import of the Modifications. See Key Tidewater Ventures LLC v. PNC Bank, N.A., No. JKB-14-2170, 2014 WL 5306716, at *4 (D. Md. Oct. 15, 2014). Thus, based on the information in the record, the Modifications have not been shown to prevent Plaintiff from stating a claim or to provide a basis for dismissal. See id.; Iqbal, 556 U.S. at 678-79; Fed.R.Civ.P. 12(b)(6).

B. Misappropriation (Count I)

Plaintiff claims that Defendants misappropriated its trade secrets in violation of the Maryland Uniform Trade Secrets Act ("MUTSA"), Md. Code Ann., Com. Law § 11-1201. Compl. ¶ 32.

MUTSA defines misappropriation of trade secrets as: "(1) 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 (2) Disclosure or use of a trade secret of another without express or implied consent...." Md. Code Ann., Comm. Law § 11-1201(c). Thus, a plaintiff can state a claim for misappropriation simply by demonstrating that the ...

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