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S-E-A, Ltd. v. Cornetto

United States District Court, D. Maryland

August 21, 2018

S-E-A, LTD. Plaintiff



         I. Background

         This case was filed on June 14, 2018, by S-E-A, Ltd. (“S-E-A”), against Anthony Cornetto, who was formerly employed by S-E-A. (Compl., ECF No. 1.) S-E-A immediately sought a temporary restraining order (“TRO”) against Cornetto, and that was granted. (ECF Nos. 2, 8.) An amended complaint was filed on June 19, 2018, to correct scrivener's errors. (ECF No. 14.)

         S-E-A alleged Cornetto had violated the federal Defend Trade Secrets Act, 18 U.S.C. § 1836, and further alleged he had breached his noncompetition and nonsolicitation agreements as well as his duty of confidentiality; the latter presented causes of action under state law. S-E-A presented a sufficiently compelling case for the state law claims that the Court entered the TRO. However, at that time, the Court was without benefit of adversarial argument from Cornetto. On July 9, 2018, Cornetto filed a motion to dismiss or, in the alternative, motion for summary judgment as to the federal count, Count II; as well, he sought dismissal of the supplemental claims if S-E-A did not prevail on the federal claim. (ECF No. 32.) Cornetto has sought dismissal under Federal Rule of Civil Procedure 12(b)(6) on the federal claim and dismissal of the state law claims under Rule 12(b)(1). After hearing argument from S-E-A on August 20, 2018, the Court will grant the motion.

         II. Standard for Dismissal under Rule 12(b)(1)

         The burden of proving subject-matter jurisdiction is on the plaintiff. A challenge to jurisdiction may be either facial, i.e., the complaint fails to allege facts upon which subject-matter jurisdiction can be based, or factual, i.e., jurisdictional allegations of the complaint are not true. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). See also Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (same); Richmond, Fredericksburg & Potomac Ry. Co., 945 F.2d 765, 768 (4th Cir. 1991) (same). In the case of a factual challenge, it is permissible for a district court to “consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg, 945 F.2d at 768 (citing Adams, 697 F.2d at 1219).

         III. Standard of Dismissal for Failure to State a Claim

         A complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists “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 678. An inference of a mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679. As the Twombly opinion stated, “Factual allegations must be enough to raise a right to relief above the speculative level.” 550 U.S. at 555. “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.' . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555, 557). Although when considering a motion to dismiss a court must accept as true all factual allegations in the complaint, this principle does not apply to legal conclusions couched as factual allegations. Twombly, 550 U.S. at 555.

         IV. Analysis

         The Defend Trade Secrets Act permits “[a]n owner of a trade secret that is misappropriated [to] bring a civil action . . . if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.”

         The term “trade secret” is defined in 18 U.S.C. § 1839(3) to mean the following:

all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if-
(A) the owner thereof has taken reasonable measures to keep such information secret; and
(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic ...

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