Virginia Lawyers Weekly VA Lawyers Weekly
Where two companies that provide geospatial information services allegedly hired the plaintiffs’ employees, induced them to disclose proprietary information in breach of their non-disclosure agreements and continue to disclose and use the plaintiffs’ trade secrets in their business operations despite a cease and desist notice, they were sued for misappropriation of trade secrets under both the Defend Trade Secrets Act, or DTSA, and the Virginia Uniform Trade Secrets Act, or VUTSA.
Background
Cadsys Technologies and Apex Advanced Technology LLC filed a six-count complaint against RMSI Private Limited, or RMSI India, and RMSI North America, or RMSI-NA. Plaintiffs allege that on March 15, 2016, Apex Advanced purchased assets from Apex CoVantage LLC, or Apex-C, which included rights to a non-disclosure and non-solicitation agreement, or NDA, between Apex-C and RMSI India.
In this suit, plaintiffs asserts claims for: (1) violations of the DTSA; (2) misappropriation of trade secrets in violation of the VUTSA; (3) statutory conspiracy in violation of Va. Code § 18.2-499; (4) common law conspiracy; (5) breach of contract and (6) injunctive relief. Defendants have filed a motion to dismiss.
Jurisdiction
The NDA provides that the “parties agree to submit to the jurisdiction of the state and federal courts located in the Commonwealth of Virginia with respect to any dispute arising from this Agreement.” Because RMSI-NA is a wholly owned subsidiary of RMSI, plaintiffs contend that RMSI-NA is included in the terms of, and bound by, the NDA.
The court does not find that the forum-selection clause is unreasonable. There is no suggestion that fraud or over-reach by any party prompted the clause’s creation. Neither is there any risk that defendants will be deprived of their day in court because of any inconvenience or unfairness of the forum.
Finally, the court does not find any fundamental unfairness in Virginia law that would deprive any party of a remedy or that enforcing the clause contravenes prevailing policy considerations. Accordingly, the court denies defendants’ motion to dismiss to the extent it is predicated on alleged lack of personal jurisdiction as to RMSI-NA.
Trade secrets claims
To plead a plausible claim of misappropriation of trade secrets under the DTSA and VUTSA, “(1) the information in question must constitute a trade secret, and (2) that trade secret must have been misappropriated.” Plaintiffs’ amended complaint identifies specific proprietary information. Furthermore, plaintiffs have plausibly pleaded that the proprietary information “(1) had economic value from not being generally known and readily ascertainable, and (2) that reasonable efforts were made to maintain its secrecy.”
Plaintiffs also allege that defendants hired Cadsys employees, induced them to disclose the proprietary information in breach of their non-disclosure agreements and continue to disclose and use plaintiffs’ trade secrets in their business operations despite plaintiffs’ cease and desist notice. Plaintiffs have thus plausibly alleged misappropriation of trade secrets under both the DTSA and the VUTSA.
Conspiracy claims
Defendants argue that because plaintiffs fail to state a valid misappropriation of trade secret claim, their conspiracy claims also fail because there is no predicate unlawful act. Second, defendants contend that the DTSA and VUTSA preempt any common law claim based on misappropriation of trade secrets. Third, defendants assert that the intra-corporate immunity doctrine bars plaintiffs’ conspiracy claims.
Because plaintiffs have plausibly pleaded claims under both the DTSA and the VUTSA, defendants’ first argument for dismissal fails. Second, the court has previously held that preemption arguments like the one defendants make should generally not bar claims at the motion-to-dismiss stage.
Third, the amended complaint suggests that a conspiracy exists between the two RMSI entities, which are managed by the same agent. Yet the intra-corporate immunity doctrine generally precludes such conspiracy claims, and plaintiffs’ opposition fails to explain why the doctrine should not bar the claims asserted here. As such, these claims are dismissed.
Contract claim
The court finds that the allegations are sufficient to infer, at the motion-to-dismiss stage, that all parties are bound by the NDA. To the extent defendants’ arguments regarding the applicability of the NDA to any party turns on other extrinsic evidence, a fully developed factual record either at the summary judgment stage or at trial will permit those theories to be tested.
Injunctive relief
An injunction is a form of remedy, not an independently cognizable cause of action. What is more, plaintiffs do not attempt to establish the necessary factors for overcoming the high bar of preliminary injunctive relief. The dismissal of this claim will be without prejudice to plaintiffs’ ability to later pursue any remedy authorized by law or equity.
Defendants’ motion to dismiss amended complaint granted in part, denied in part.
Apex Advanced Technology Inc. v. RMSI Private Limited, Case No. 1:21-cv-1400, Sept. 30, 2022. EDVA at Alexandria (Alston). VLW 022-3-456. 16 pp.
