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MUFG Union Bank, N.A. v. Tyler

United States District Court, W.D. Washington, Seattle

May 2, 2018

MUFG UNION BANK, N.A., a national association, Plaintiff,
v.
AARON TYLER, an individual, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS

          RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This matter comes before the Court on Defendant U.S. Bank's Motion to Dismiss and the individual Defendants' joinder in that motion. Dkts. #62 and #63. Defendants argue that: 1) Plaintiff's claims for conversion, intentional interference with business relationships and breach of fiduciary duty of loyalty are all preempted by Washington's Uniform Trade Secret Act (“UTSA”); 2) Plaintiff fails to state a claim for relief for misappropriation of trade secrets under state and federal law; and 3) Plaintiff fails to state a claim for relief under the Computer Fraud and Abuse Act (“CFAA”) against the individual Defendants. Id. Plaintiff responds that it has adequately pled facts to support its claims separate and apart from those facts that support its statutory trade secrets claims, and that its remaining claims have been adequately pled under Federal Rule of Civil Procedure 8. Dkt. #64. For the reasons set forth below, the Court now GRANTS IN PART and DENIES IN PART Defendants' motions to dismiss.

         II. BACKGROUND

         The instant matter was filed in this Court on November 22, 2017. Dkt. #1. Plaintiff MUFG Union Bank, N.A. (“Union Bank”) alleges that a group of its former employees resigned en masse after planning for several months to take trade secrets, documents and confidential information that they are now utilizing to take business from it and unfairly compete with it. Dkt. #1 at ¶ ¶ 8-22. Plaintiff further alleges that Defendant U.S. Bank knew of the individuals' actions and encouraged them. Id. at ¶ ¶ 19-22. Based on these allegations, Union Bank asserts six claims for relief against the Defendants: 1) breach of fiduciary duty of loyalty (against all Defendants); 2) intentional interference with business relationships (against all Defendants); 3) misappropriation of trade secrets under Washington's UTSA, RCW 19.108.010, et seq. (against all Defendants); 4) conversion (against all Defendants); 5) misappropriation of trade secrets under the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1831, et seq. (against all Defendants); and 6) violations of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030, et seq. (against the individual Defendants). Id. at ¶ ¶ 23-56.[1] Defendants have now moved to dismiss all claims.

         III. DISCUSSION

         A. Legal Standard

         In deciding a 12(b)(6) motion, this Court is limited to the allegations on the face of the Complaint (including documents attached thereto), matters which are properly judicially noticeable and other extrinsic documents when “the plaintiff's claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint.” Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). The Court must construe the complaint in the light most favorable to the Plaintiff and must accept all factual allegations as true. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The Court must also accept as true all reasonable inferences to be drawn from the material allegations in the Complaint. See Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1247-48 (9th Cir. 2013); Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th Cir. 1998). However, the Court is not required to accept as true a “legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         B. Claims at Issue

         Defendants move for the dismissal of all causes of action in this matter. The Court addresses each of those claims, in turn, below.

         1. Plaintiff's Claims for Breach of Fiduciary Loyalty, Intentional Interference with Business Relationships and Conversion

         Defendants first move to dismiss Plaintiff's First, Second and Fourth Claims for Relief alleged against all Defendants, on the basis that Washington's trade secret laws displace those theories of liability. Dkts. #62 at 4-8 and #63 at 3-5. Plaintiff opposes the motion, arguing that the facts supporting the claims for breach of fiduciary duty of loyalty, intentional interference with business relationships, and conversion are different that those facts it relies on in support of its claim for misappropriation of trade secrets. Dkt. #64 at 5-9.

         Washington's UTSA prohibits misappropriation of trade secrets. RCW 19.108, et seq.; Thola v. Henschell, 140 Wn.App. 70, 76, 164 P.3d 524, 528 (2007). Before the legislature enacted the UTSA, the common law prohibited similar acts. See, e.g., J.L. Cooper & Co. v. Anchor Secs. Co., 9 Wn.2d 45, 64, 113 P.2d 845 (1941) (allowing equitable action against a former employee who used a confidential customer list in his new business venture). But the UTSA is not a catch-all for industrial torts. Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 897 (Minn. 1983). The UTSA “displaces conflicting tort, restitutionary, and other law of this state pertaining to civil liability for misappropriation of a trade secret.” RCW 19.108.900(1). However, it does not affect “[c]ontractual or other civil liability or relief that is not based upon misappropriation of a trade secret.” RCW 19.108.900(2)(a).

         When examining whether a civil claim is preempted by the UTSA, courts often utilize a three-step analytical framework as a “helpful guide, ” beginning with the premise that a plaintiff “may not rely on acts that constitute trade secret misappropriation to support other causes of action.” Thola, 140 Wn.App. at 82 (citing to Mortgage Specialists, Inc. v. Davey, 153 N.H. 764, 778-79, 904 A.2d 652 (2006) and Ed Nowogroski Ins., Inc. v. Rucker, 88 Wn.App. 350, 358, 944 P.2d 1093 (1997), aff'd, 137 Wn.2d 427 (1999) (Rucker I)). Using this framework, the Court: (1) assesses the facts that support the plaintiff's civil claim, (2) asks whether those facts are the same as those that support the plaintiff's UTSA claim, and (3) will conclude that the UTSA preempts liability on the civil claim unless the common law claim is factually independent from the UTSA claim. See Mortgage Specialists, Inc. v. Davey, 153 N.H. 764, 778-79, 904 A.2d 652 (2006). This three-step analysis is meant to preclude duplicate recovery for a single wrong. Accordingly, the Court now turns to each of Plaintiff's claims.

         In Claim One, Plaintiff asserts a breach of the fiduciary duty of loyalty. Dkt. #1 ¶ ¶ 23-29. Plaintiff alleges that the individual Defendants owed Union Bank an undivided duty of loyalty which prohibited them from soliciting customers for their own benefit and/or for rival businesses and from acting in direct competition with Union Banks' business interests, and that they breach that duty by soliciting Amazon.com business on behalf of themselves and U.S. Bank while still employed by Union Bank, soliciting individuals who had received pre-approval from Union Bank to move their business to U.S. Bank, and stealing Union Bank's confidential and trade secret business and customer information in order to unfairly compete against Union Bank. Dkt. #1 at ¶ ¶ 24-25. Plaintiff further alleges that individual Defendants Tyler and Fogliani, who worked in managerial positions, breached the duty by soliciting other employees to leave and work for their competitor, and by disclosing Plaintiff's confidential financial compensation information to Defendant U.S. Bank. Id. at ¶ 26. Finally, Plaintiff alleges that Defendant U.S. Bank conspired and agreed with the individual Defendants to misappropriate Plaintiff's trade secrets and confidential information, and aided, abetted, and assisted the individual Defendants in breaching the duty owed to Plaintiff. Id. at ¶ ¶ 27-28.

         The Court agrees with Defendants that those facts focus on the alleged misappropriation of confidential and proprietary information, and that Plaintiff's UTSA claim relies on the same facts. Id. at ¶ ¶ 35-39. Indeed, in its Third Claim for Relief, Plaintiff alleges that prior to leaving employment, the individual Defendants misappropriated customer lists, pricing information, customer contact information, customer financial data, social security numbers, and forms 1003 Uniform Residential Loan Applications, that U.S. Bank aided, abetted and facilitated those actions, and that Defendants used the information for their own benefit. Id.

         Plaintiff attempts to salvage Claim One by noting it alleged specifically that the individual Defendants solicited Amazon.com in support of its breach of duty claim but not in support of its trade misappropriate claim, and therefore the claims do not rest on the same facts. Dkt. #64 at 6-7. The Court is not persuaded. When comparing the two claims, the essence of both is that the Defendants allegedly used misappropriated information to make such solicitations, inter alia, for their own benefit. Thus, the Court ...


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