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Fidelitad, Inc. v. Insitu, Inc.

United States District Court, E.D. Washington

October 24, 2014

FIDELITAD, INC., Plaintiff,
v.
INSITU, INC., Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS COUNT V OF THE SECOND AMENDED COMPLAINT

THOMAS O. RICE, District Judge.

BEFORE THE COURT is Defendant's Motion to Dismiss Count V of Plaintiff's Second Amended Complaint (ECF No. 39). This matter was heard with oral argument on October 14, 2014. Mark G. Jackson and Kevin A. Rosenfield appeared on behalf of the Plaintiff. Eric B. Wolff appeared on behalf of Defendant. The Court has reviewed the briefing and the record and files herein, and is fully informed.

BACKGROUND[1]

Plaintiff was formed in early 2010 by Eric Edsall and Alejandro Pita. Prior to forming the company, Mr. Edsall and Mr. Pita were employed by Defendant as, respectively, the head of international business development and head of program management. In these roles, Mr. Edsall and Mr. Pita were responsible for driving sales of unmanned aerial systems ("UAS") manufactured by Defendant known as the ScanEagle.

In late 2009, while still employed by Defendant, Mr. Edsall and Mr. Pita traveled to Colombia to meet with representatives of the Columbian Air Force. While in the country, Mr. Edsall and Mr. Pita identified a number of new, nonmilitary applications for the ScanEagle. These applications included, among others, monitoring oil pipelines located in remote areas.

Upon returning to the United States, Mr. Edsall and Mr. Pita met with several of Defendant's executives to discuss the new opportunities they had identified in Colombia. Insitu was generally supportive, but was hesitant to divert resources away from its core military-focused applications. Thus, Mr. Edsall and Mr. Pita proposed to form a new business, at their own risk and expense, to act as a value-added reseller of Defendant's products in Colombia. Shortly thereafter, Defendant granted Plaintiff the exclusive right to sell Defendant's products in Colombia. The parties also entered into a written Mutual Proprietary Information Agreement specifying the purposes for which proprietary information exchanged between them could be used.

In the months that followed, Plaintiff developed several potential sales opportunities with customers in Columbia. Plaintiff kept Defendant apprised of its progress and gave several presentations outlining its business strategy. Eventually, Plaintiff closed several sales with customers in Colombia and placed orders for UAS products with Defendant.

Plaintiff alleges that Defendant then "intentionally and maliciously moved forward with a charade of legal review' and license requirements' to delay the shipment of products to Fidelitad." Pl.'s Compl., ECF No. 37 at ¶ 61. Specifically, Plaintiff contends that Defendant delayed processing of the sales under the guise of needing to perform a Risk/Benefit Analysis Memorandum and other legal compliance reviews. Pl.'s Compl., ECF No. 37 at ¶¶ 64-65, 72. Plaintiff further alleges that Defendant delayed shipping a ScanEagle and related equipment under the pretext of seeking clarification from the U.S. Department of State about the scope of an export license granted to Plaintiff. Pl.'s Compl., ECF No. 37 at ¶¶ 78-81. In Plaintiff's estimation, the purpose of these delay tactics was to create tension between Plaintiff and its Colombian customers, thereby paving the way for Defendant to sell its products to the customers directly.

Plaintiff alleges that Defendant's deliberate delay in processing its orders caused its customers to cancel their sales contracts. According to Plaintiff, this resulted in a loss of several million dollars in sales revenue. Fidelitad further alleges that Defendant has since completed several million dollars' worth of sales to the same Colombian customers whom Plaintiff had previously cultivated.

Plaintiff filed the instant lawsuit in Klickitat County Superior Court on October 16, 2013. Defendant removed the case to this Court on November 20, 2013, pursuant to 28 U.S.C. § 1442(a)(1), the so-called federal officer removal statute. ECF No. 37. Plaintiff thereafter filed a motion to remand, arguing that the requirements for federal officer removal have not been satisfied. ECF No. 6. That motion was denied. ECF No. 17.

Plaintiff's Second Amended Complaint asserts state law causes of action for (I) violation of the Washington Uniform Trade Secret Act (WUTSA), (II) breach of the Proprietary Information Agreement, (III) breach of the implied duty of good faith and fair dealing, (IV) unjust enrichment, and (V) tortious interference with business expectancy. ECF No. 37. Defendant now brings a motion to dismiss Plaintiff's claim for tortious interference arguing the claim is preempted by the WUTSA claim and also that it is fatally implausible. ECF No. 39-1.

LEGAL STANDARD

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). This standard "does not require detailed factual allegations, but it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In assessing whether Rule 8(a)(2) has been satisfied, a court must first identify the elements of the plaintiff's claim(s) and then determine whether those elements could be proven on the facts pled. The Court should generally draw all reasonable inferences in the plaintiff's favor, see Sheppard v. David Evans and Assocs., 694 F.3d 1045, 1051 (9th Cir. 2012), but it need not accept "naked assertions devoid of further factual enhancement." Iqbal, 556 U.S. at 678 (internal quotations and ...


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