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Open Text Corp. v. Grimes

United States District Court, D. Maryland

June 26, 2017

OPEN TEXT CORPORATION, Plaintiff,
v.
STEVEN GRIMES, et al., Defendants.

          MEMORANDUM OPINION

          Richard D. Bennett United States District Judge.

         Plaintiff Open Text Corporation brings this action against its former employee, defendant Steven Grimes, and Grimes' new employer, defendant Nuxeo Corporation, seeking injunctive and monetary relief based on defendants' alleged violations of the federal Defend Trade Secrets Act, 18 U.S.C. §§ 1836-39, et seq., the Maryland Uniform Trade Secrets Act, Md. Com. Law § 11-1201, et seq., and several common law causes of action. (ECF No. 1.) The gravamen of Open Text's Complaint is that Grimes wrongfully downloaded thousands of Open Text computer files containing the company's confidential and proprietary trade secrets; that Grimes transferred these files to his new employer, Nuxeo, a direct competitor of Open Text; that Nuxeo has used Open Text's proprietary data to solicit Open Text's clients; that Grimes and Nuxeo have improperly solicited Open Text employees to leave that company and begin working for Nuxeo; and that Open Text already has lost clients, business opportunities, and revenue as a result of these actions. (Id.) See also ECF Nos. 8, 10, 32.

         Now pending before this Court is defendants Steven Grimes and Nuxeo Corporation's Motion to Dismiss the Complaint or, in the Alternative, to Stay Any Claim Not Dismissed (“Defendants' Motion”). (ECF No. 31.) Defendants' Motion, framed under Rule 12(b)(6), is premised on their view that this Court is forum non coveniens based on a forum selection clause contained in Grimes' “Employee Confidentiality, Non-Solicitation, and Invention Assignment Agreement” with Open Text. (ECF No. 31-2.) This Court has already held Motions Hearings on May 11, 2017 and June 7, 2017, as more fully discussed, infra. This Court has reviewed the parties' submissions, and no additional hearing on the subject Motion to Dismiss is necessary. For the reasons stated below, Defendants' Motion (ECF No. 31) is DENIED.

         Plaintiff's pending Motion for Temporary Restraining Order or, in the Alternative, for Preliminary Injunction (“Motion for TRO/PI”) (ECF No. 8) will be addressed promptly, and a Scheduling Order will be issued in this case.[1]

         BACKGROUND

         I. Open Text's Complaint and Preliminary Motions

         On May 5, 2017, plaintiff Open Text Corporation filed a ten count Complaint against its former employee, Steven Grimes, and Grimes' new employer, Nuxeo Corporation, alleging, inter alia, violations of the federal Defend Trade Secrets Act (“DTSA”), 18 U.S.C. §§ 1836-39 et seq., violations of the Maryland Uniform Trade Secrets Act (“MUTSA”), Md. Com. Law § 11-1201, et seq., breach of contract, and breach of fiduciary duty. (ECF No. 1.)

         Plaintiff Open Text Corporation (“plaintiff” or “Open Text”) is a Canadian corporation with principal place of business in Waterloo, Ontario, Canada. (ECF No. 1 at ¶ 7.) Open Text is a software company specializing in enterprise information management (“EIM”), Digital Asset Management (“DAM”), and consulting services, and works with an array of businesses and organizations around the world. (Id.) Plaintiff employs over 3, 300 American workers and maintains over thirty offices in the United States, including one located in Gaithersburg, Maryland. (ECF No. 41 at 9, 29-30.)

         Defendant Nuxeo Corporation (“defendant” or “Nuxeo”) is a Delaware corporation with principal place of business in Brooklyn, New York. (ECF No. 1 at ¶ 9.) Nuxeo is a software company specializing in the provision of enterprise content management (“ECM”) platforms and solutions for organizations around the world. (Id. at ¶ 10.) Nuxeo is a direct competitor of Open Text. (Id.)

         Defendant Steven Grimes (“defendant” or “Grimes”) is a former employee of Open Text who resides in Clarksville, Maryland. (ECF No. 1 at ¶ 11.) Until March 31, 2017, Grimes worked for Open Text out of his home office and at the company's Gaithersburg, Maryland office. (Id. at ¶ 92; ECF No. 41 at 10.) Grimes' relationship with Open Text dates to 1999, when he was employed by corporations which Open Text subsequently acquired. (Id. at ¶¶ 66-67.) Shortly after Grimes began working for Open Text itself, on September 7, 2004, he executed an “Employee Confidentiality, Non-Solicitation and Invention Assignment Agreement - Development” (the “Grimes Agreement”) with Open Text. (Id. at ¶ 68.) A copy of the Agreement is attached to the Complaint. (ECF No. 1-2.) The Agreement provided, inter alia, that Grimes would “keep confidential and hold in secrecy” Open Text's confidential information for a period of three years following the end of his employment; that he would not publish or share any confidential information; and that he would not solicit or attempt to solicit other employees to leave Open Text for a period of six months following his termination. (ECF No. 1 at ¶ 69-71.) The Agreement also contains a forum selection clause (“FSC”) which provides that:

“This agreement and all the rights and obligations arising herefrom shall be interpreted and applied in accordance with the laws of the Province of Ontario and in the courts of the Province of Ontario there shall be exclusive jurisdiction to determine all disputes relating to this Agreement and all the rights and obligations created thereby. I hereby irrevocably attorn to the jurisdiction of the courts of the Province of Ontario.”

         (Grimes Agreement § V(D), ECF No. 1-2 at 4.)

         During the over twelve years that Grimes worked for Open Text, he was promoted, most recently, in September 2015, to the position of Vice President, Solutions Consulting, Americas. (ECF No. 1 at ¶ 73.) In this role, Grimes led Open Text's North America Solutions Consulting Presales Team and had access to Open Text's Confidential Information and Trade Secrets, as well as Open Text's Salesforce customer database. (Id. at ¶¶ 74-77.)

         As alleged in the Complaint, the actions giving rise to the instant case began on March 20, 2017, when Grimes sent an email announcing his resignation from Open Text, with his last date of work to be March 31, 2017.[2] (ECF No. 1 at ¶ 83.) Grimes sent his resignation letter at 4:22 p.m. on that day. (Id. at ¶ 85.) Earlier in the day, however, from 1:30 p.m. to 3:46 p.m., Grimes accessed hundreds of confidential and proprietary Open Text files. (Id. at ¶ 88.) Among the files which Grimes accessed were Open Text's “Process Play” and “Sales Play” files. (Id.) These files, Open Text alleges, contain its most closely-held consulting and sales proposals and are a core part of Open Text's sales and business strategy. (Id. at ¶¶ 37-46.) These proposals are developed through extensive labor on the part of Open Text personnel, taking four to fourteen months to complete before presentation to the prospective clients. (Id. at ¶ 46.) The sales and consulting packages sold by Open Text can generate tens of millions of dollars in revenue. (Id.)

         Having already accessed hundreds of sensitive and confidential files on March 20, Grimes against accessed hundreds more files, including nearly 200 unpublished Process Play files and 400 published Process Play files, on his last day of work, March 31, 2017. (ECF No. 1 at ¶¶ 92, 94.) This behavior was a significant deviation from his ordinary course of work at Open Text; during the five months prior to his resignation, Grimes “had accessed only 13 published Process Play files and only 3 unpublished Process Play files.” (Id. at ¶ 93.) Plaintiff alleges that Grimes had “no legitimate business reason” to access such a substantial number of files during the last eleven days of his employment with Open Text. (Id. at ¶ 95.)

         Open Text alleges that Grimes began working for a significant competitor, Nuxeo Corporation, almost immediately after his departure from Open Text. (ECF No. 1 at ¶¶ 103-114.) At the time of the Complaint, Grimes' LinkedIn profile stated that he is employed as Nuxeo's “Vice President, Global Sales Engineering.” (Id. at ¶ 103.) As early as April 10, 2017, plaintiff alleges, Grimes and Nuxeo contacted Brian Burke, a Principal Solutions Consultant at Open Text in order to entice Burke to leave Open Text for Nuxeo. (Id. at ¶ 106; ECF No. 9-3.) Grimes also participated in Nuxeo's efforts to recruit several other Open Text employees who subsequently joined Nuxeo: Matt Corodimas, Selim Hakimi, Jaspreet Lamba, and Neil Grant.[3] (ECF No. 1 at ¶ 116.) The Complaint alleges that Hakimi, like Grimes, had signed a confidentiality and non-solicitation agreement with Open Text in 2004. (Id. at ¶ 118.) Among the clients on whose portfolios Hakimi had worked at Open Text was the hotel company Marriott Corporation. (Id. at ¶ 130.)

         On April 20, 2017, Open Text sent letters to Grimes, Grant, Hakimi, Lamba, and Corodimas reminding them of their confidentiality and other post-employment obligations. (ECF No. 1 at ¶ 153; ECF No. 1-5.) That same day, plaintiff sent a letter to Nuxeo advising it of the post-employment obligations of the former Open Text employees. (Id. at ¶ 154.) Open Text sent follow-up letters to the former employees on April 27, 2017. (Id. at ¶ 155.)

         By letter dated May 5, 2017, counsel for Nuxeo responded to Open Text's inquiries. (ECF No. 9-5.) In this letter, counsel stated that:

“To the extent any files were downloaded, while [Grimes] was still working with OpenText, they were placed on his OpenText laptop, which he surrendered when he left and which OpenText has in its possession. He also copied them to a thumb drive, which he has destroyed.”

(Id. at 3.) Counsel for Nuxeo further advised Open Text that “[i]f you desire to communicate further on this matter, please contact me, not [Grant, Lamba, Corodimas, Grimes, and Hakimi] or Nuxeo.” (Id.)

         As noted, Open Text filed its Complaint in this Court on May 5, 2017. (ECF No. 1.) On May 8, Open Text filed a Motion for Temporary Restraining Order or, in the alternative, for Preliminary Injunction (“Motion for TRO/PI”) (ECF Nos. 8, 9) and a Motion for Leave to Conduct Limited Expedited Discovery (ECF No. 10).[4] Having reviewed the Complaint and plaintiff's Motions, this Court conducted a teleconference on May 10, 2017 with counsel for Open Text and for Nuxeo.[5] During the teleconference, this Court scheduled a hearing on plaintiff's Motion for TRO hearing for the following day, May 11, 2017.[6]

         II. The May 11, 2017 Motions Hearing

         On May 11, 2017, this Court conducted a hearing on plaintiff's Motions for TRO/PI (ECF No. 8) and for Leave to Conduct Limited Expedited Discovery (ECF No. 10). (ECF Nos. 19, 23.) During the initial hearing, this Court expressed serious concerns about the allegations of illegal copying of Open Text's trade secrets and encouraged the parties to reach an agreement to take measures to preserve the status quo in this case, including the sequestration of all Open Text materials in Grimes' and Nuxeo's possession.[7] In addition, counsel for Nuxeo and Grimes argued that this Court is forum non conveniens on account of the FSC in the Grimes Agreement with Open Text, and, thus, that this Court should dismiss this action. (ECF No. 31-2.)

         Over a several-hour recess, the parties conferred to draft an agreement to preserve the status quo with respect to the Open Text data downloaded by Grimes. This Court adopted that agreement, as set forth on the record and memorialized in this Court's Letter Order dated May 11, ...


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