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Inteum Company, LLC v. National University of Singapore

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

May 22, 2018

INTEUM COMPANY, LLC, Plaintiff,
v.
NATIONAL UNIVERSITY OF SINGAPORE, Defendant.

          ORDER

          JOHN C. COUGHENOUR UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Plaintiff's motion to amend its First Amended Complaint (Dkt. No. 29). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS in part and DENIES in part the motion for the reasons explained herein.

         I. BACKGROUND

         Plaintiff Inteum Company, LLC licensed knowledge management software to Defendant National University of Singapore for many years, but lost its contract to competitor Wellspring in a 2016 bidding process. (Dkt. No. 29 at 2.) Plaintiff subsequently sued Defendant for breach of contract and misappropriation of trade secrets. (Dkt. No. 1-2.) The Court dismissed the initial complaint for failure to state a claim, but granted Plaintiff leave amend. (Dkt. No. 24.) Plaintiff filed an amended complaint, and the parties began conducting discovery. (Dkt. No. 25.) Based on documents obtained in discovery, Plaintiff now moves to amend its complaint to add a claim for civil conspiracy, as well as supporting factual allegations. (Dkt. No. 29 at 1.) Defendant opposes the addition of this cause of action as futile and asks the Court to strike certain factual allegations. (Dkt. No. 30 at 6.)

         II. DISCUSSION

         A. Legal Standard

         Federal Rule of Civil Procedure 15(a)(2) provides that “a party may amend its pleading only with the opposing party's written consent or the court's leave.” Courts should “freely” grant such leave “when justice so requires.” Id. However, a court may deny leave to amend based on futility of amendment. Johnson v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004). An amendment is futile if it attempts to add a claim that could not withstand a motion to dismiss. Jones v. Community Redevelopment Agency of Los Angeles, 733 F.2d 646, 650-51 (9th Cir. 1984).

         B. Analysis

         To establish a claim for civil conspiracy, a plaintiff must show “(1) two or more people combined to accomplish an unlawful purpose, or combined to accomplish a lawful purpose by unlawful means; and (2) . . . an agreement to accomplish the conspiracy.” Woody v. Stapp, 146 Wn.App. 16, 22 (Wash.Ct.App. 2008) (internal citation omitted). A claim for civil conspiracy must be predicated on “a cognizable and separate underlying claim.” Gossen v. JPMorgan Chase Bank, 819 F.Supp.2d 1162, 1171 (W.D. Wash. 2011).

         Plaintiff bases its proposed civil conspiracy claim on allegations of (1) misappropriation of its trade secrets, (2) interference with its prospective economic advantage, (3) breach of contract, and (4) bid-rigging in violation of the Singapore Government Procurement Act (“SGPA”). (Dkt. Nos. 29 at 1, 30 at 9.) The Court finds that none of these underlying allegations is legally sufficient to support a civil conspiracy claim. Therefore, the addition of Plaintiff's proposed civil conspiracy claim would be futile.

         1. Misappropriation of Trade Secrets

         Plaintiff alleges Defendant conspired with Wellspring to misappropriate its trade secrets. (Dkt. No. 29-1 at 19.) Defendant argues that this claim is preempted by Washington's Uniform Trade Secret Act (“USTA”). (Dkt. No. 30 at 13.) The UTSA “displaces conflicting tort, restitutionary, and other [Washington] law pertaining to civil liability for misappropriation of a trade secret.” Wash. Rev. Code 19.108.900(1). It does not preempt “contractual or other civil liability or relief that is not based on misappropriation of a trade secret.” Id. at 19.108.900(2)(a).

         The preemptive scope of the UTSA is an unsettled issue in Washington. See T-Mobile USA, Inc. v. Huawei Device USA, Inc., 115 F.Supp.3d 1184, 1197 (W.D. Wash. 2015). Other UTSA jurisdictions are split between a “weak” and a “strong” view of preemption. Id. at 1198- 99. Under the “strong” view, a plaintiff “may not rely on acts that constitute trade secret misappropriation to support [another cause] of action” even if it requires proof of additional elements. Id. at 1198; Thola v. Henschell, 164 P.3d 524, 530 (Wash.Ct.App. 2007). To avoid preemption, a claim must be “wholly independent” of facts used to prove trade secret misappropriation. T-Mobile USA, 115 F.Supp.3d at 1199. Alternatively, in jurisdictions adopting the “weak” view, a claim is not preempted if it includes additional elements that “require some allegation or factual showing beyond those required under the UTSA.” Thola, 164 P.3d at 530 n. 5.

         The Court determines that the strong form of preemption applies. Courts in this district have routinely predicted that the Washington Supreme Court would embrace this approach. T-Mobile USA, Inc., 115 F.Supp.3d at 1199 (collecting cases applying Washington law); International Paper Co. v. Stuit, No. C11-2139-JLR, slip op. at 8 (W.D. Wash. May 21, 2012) (“the weight of authority has tipped away from” the view that common law claims are not preempted if the claims require additional elements). This conclusion is informed by the Washington Court of Appeals' statement that a plaintiff “may not rely on acts that constitute trade secret misappropriation to ...


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