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Bombardier Inc. v. Mitsubishi Aircraft Corp.

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

April 15, 2019

BOMBARDIER INC., Plaintiff,
v.
MITSUBISHI AIRCRAFT CORPORATION, et al., Defendants.

          ORDER ON MOTIONS TO DISMISS

          JAMES L. ROBART UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before the court are: (1) Defendant Mitsubishi Aircraft Corporation America, Inc.'s (“MITAC America”) motion to dismiss certain claims (MITACA MTD (Dkt. # 54)); and (2) Defendants Aerospace Testing Engineering & Certification, Inc. (“AeroTEC”), Michel Korwin-Szymanowski, Laurus Basson, and Cindy Dornéval's (collectively, “AeroTEC Defendants”) motion to dismiss certain claims (AeroTEC MTD (Dkt. # 56)). Plaintiff Bombardier Inc. (“Bombardier”) opposes both motions (Pl. MITACA Resp. (Dkt. # 91); Pl. AeroTEC Resp. (Dkt. # 92)), and MITAC America and AeroTEC Defendants filed replies (MITACA Reply (Dkt. # 96); AeroTEC Reply (Dkt. # 95)). The court has considered the motions, the parties' submissions concerning the motions, the relevant portions of the record, and the applicable law. Being fully advised, [1]the court GRANTS MITAC America's motion, GRANTS in part and DENIES in part AeroTEC Defendants' motion, and GRANTS Bombardier leave to file an amended complaint within 15 days of the date of this order.

         II. BACKGROUND

         This action concerns alleged trade secret misappropriation and related claims for breach of contract and tortious interference with business expectancies and/or contracts. (See generally Compl. (Dkt. # 1).)

         A. The Parties and Aircraft Certification

         Bombardier is a Canadian corporation and one of the world's leading plane manufacturers. (Id. ¶¶ 2, 21.) Bombardier employs more than 29, 000 people in its Aerospace division. (Id. ¶ 22.) As part of its operations, Bombardier developed the C-Series, which is a “clean-sheet” aircraft in a family of “medium-range jet airliners that marks a dramatic improvement over older competing aircrafts in terms of efficiency and dependability.” (Id. ¶ 23.) The C-Series can accommodate between 110 and 135 passengers over 3, 200 nautical miles and does so “at measurably lower operating costs than existing aircraft of that class.” (Id.)

         Bombardier began investigating the feasibility of the C-Series in 2004, with efforts picking up “in earnest” in January 2007. (Id. ¶¶ 24-25.) Bombardier then committed “full-scale resources to the C-Series program over the next six-and-a-half years, ” at which point it received government approval for the first C-Series aircraft test flight. (Id. ¶ 26.) After another three years and further government approvals, the first C-Series entered service. (Id.)

         A clean-sheet aircraft is difficult and costly to certify. (Id. ¶¶ 27-32.) Since 2000, only four companies worldwide have developed a commercial clean-sheet aircraft that meets the requirements of the Federal Aviation Administration (“FAA”) and the FAA's counterparts in Canada and Europe. (Id.) In addition to the many steps involved in certifying an aircraft, the certification processes have time limits. (Id. ¶ 30.) For example, one certification process-the “type certification”-must be completed within five years. (Id.) If an applicant fails to achieve certification within this time limit, it must certify the aircraft to updated FAA standards, “thereby incurring significant and redundant costs in the process.” (Id.) Bombardier has certified 10 clean-sheet design and derivative programs since 2006. (Id. ¶ 33.) According to Bombardier, “[t]his whole process-design, certification, production-is the heart of each company's competitive advantage, its own special secret sauce.” (Id. (quoting Denkenberger Decl. (Dkt. # 1-10) ¶ 15, Ex. 14 at 64[2]).)

         Around the same time that Bombardier began investigating the C-Series, “the Japanese government in conjunction with Mitsubishi Heavy Industries, Ltd. (‘MHI') initiated its own investigation into the feasibility of a similar aircraft project-the Mitsubishi Regional Jet (‘MRJ').” (Compl. ¶ 34.) MHI then established Defendant Mitsubishi Aircraft Corporation (“MITAC”), a Japanese corporation, to “conduct MRJ business.” (Id. ¶¶ 3, 35.) The MRJ program was officially launched in 2008, with a 2013 target date for the MRJ to enter service. (Id. ¶ 35.) The MRJ, however, experienced numerous delays. (Id. ¶¶ 36-43.) As a result, on June 4, 2014, MITAC formed MITAC America to help with the MRJ's design, development, and certification. (Id. ¶ 41.) MITAC America is a subsidiary of MITAC. (Id. ¶ 4.) Further, by July 14, 2014, MITAC enlisted AeroTEC, “a small engineering company that provides flight-testing and aircraft certification services, [to] provide technical support for MITAC's MRJ project.” (Id. (internal quotation marks omitted).) On August 3, 2015, MITAC, MITAC America, and AeroTEC created and jointly staffed the Seattle Engineering Center to manage the MRJ's flight testing, development, and certification in the United States. (Id. ¶ 42.)

         Despite these efforts, the MRJ incurred further delays. (Id. ¶¶ 43-48.) In January 2017, MITAC announced the fifth delay, changing the delivery date to sometime around 2020. (Id. ¶ 47.) In explaining this fifth delay, MITAC stated that it made design changes to the MRJ's avionics bay and electrical wire routing in December 2016, which required additional certification. (Id. ¶ 48.) MITAC further explained that, because of this delay, it “would be forced to return to the first stages of preliminary design review for the design change area.” (Id. ¶ 47 (internal quotations omitted).) In sum, MITAC claimed that the fifth delay was needed to mitigate the “risk of not meeting certification criteria, or having to make changes even further down the aircraft's development.” (Id. ¶ 48.)

         B. Bombardier Employee Recruitment

         Shortly before MITAC announced the MRJ's fourth delay in December 2015, MITAC, MITAC America, and AeroTEC began to recruit Bombardier personnel. (Id. ¶ 49.) As part of this effort, MITAC and MITAC America organized a job fair in Montréal, Canada for July 15-16, 2016, at a venue located less than one kilometer from Bombardier's principal place of business. (Id.) In promoting this job fair, MITAC and MITAC America advertised that they were “looking to hire over 200 Aircraft System Engineers who can work on Certification activities of MRJ aircraft.” (Id. (quoting Denkenberger Decl. ¶ 29, Ex. 28 at 135).)

         Bombardier claims that these recruitment efforts quickly paid off for MITAC and MITAC America. For example, on August 18, 2016, MITAC hired Keith Ayre to join the MRJ project. (Compl. ¶ 49.) Mr. Ayre had been a Design Approval Designee for Bombardier and “was critical to Bombardier's own certification efforts regarding the C-Series and Global 7000/8000 Aircraft.” (Id.) Bombardier asserts that, although Mr. Ayre did not terminate his Bombardier employment until August 26, 2016, “MITAC was actively soliciting, and Mr. Ayre was actively providing, MRJ certification guidance during Bombardier business hours.” (Id.)

         In addition to the Montréal job fair, AeroTEC organized a job fair for October 23-24, 2015, in Wichita, Kansas, which is the home of Bombardier's Flight Test Center in the United States. (Id. ¶ 50.) AeroTEC held this job fair “to interview candidates to work on MRJ flight testing in Seattle.” (Id.) AeroTEC arranged for billboards advertising the job fair to be displayed immediately outside Bombardier's Flight Test Center. (Id. (citing Denkenberger Decl. ¶ 30, Ex. 29 at 137-41).)

         MITAC, MITAC America, and AeroTEC also retained a recruiting service, contacted Bombardier personnel via email, and used successfully-recruited former Bombardier personnel to entice former colleagues to join MITAC, MITAC America, and AeroTEC. (Id. ¶ 51.) For example, Mr. Korwin-Szymanowski of AeroTEC-who had worked at Bombardier for approximately 15 years-sent an email on October 20, 2015, to 247 Bombardier email accounts stating that positions were open immediately to work on “the development and certification” of the MRJ. (Id. ¶¶ 6, 51.)

         Bombardier took numerous steps to stop AeroTEC's targeted recruitment of its employees, including: informing AeroTEC and Mr. Korwin-Szymanowski of the ongoing confidentiality duties Mr. Korwin-Szymanowski owed to Bombardier; explaining that the recruitment efforts were occurring at a critical time in Bombardier's development of the C-Series, as well as the Global 7000 and Global 8000 Aircraft, and therefore may harm Bombardier's affairs; and providing a copy of Bombardier's Code of Ethics that contained employees' confidentiality agreements. (Id. ¶¶ 52-53, Ex. D (“Code of Ethics”) at 17-18.) Bombardier also repeatedly reached out to MHI and MITAC to address similar concerns with recruiting, specifically expressing that Bombardier has “reasons to believe that the employees recruited by MHI will use intellectual property owned by Bombardier to assist MHI in developing the MRJ aircraft which will compete against Bombardier aircraft.” (Compl. ¶¶ 54-58, Ex. H at 2.) According to Bombardier, its attempts to stop the recruitment of its employees was unsuccessful: MITAC, MITAC America, and AeroTEC now employ “at least 92 former Bombardier personnel whose current job responsibilities relate directly to the development, certification, and/or commercialization of the MRJ.” (Compl. ¶ 59.)

         Bombardier further claims that many of the employees who left “absconded with highly sensitive Bombardier trade secret information.” (Id.) For example, on Mr. Basson's last day at Bombardier before joining AeroTEC to work on the MRJ, Mr. Basson sent two “proprietary PowerPoint slide decks” from his Bombardier email account to his personal email account. (Id. ¶ 60; see also id., Ex. J.) Bombardier claims that these slide decks “contain highly sensitive proprietary Bombardier trade secret information concerning Bombardier's Global 7000/8000 Skew Detection System and related confidential communications Bombardier made . . . for certification purposes.” (Compl. ¶ 60.) These slide decks also contain “particularized information concerning Bombardier's design, development, testing, and certification approach of the Global 7000/8000 Aircraft.” (Id.) Mr. Basson signed Bombardier's Code of Ethics, though it is unclear on what date. (See id., Ex. K (“Basson Code”) at 2 (“Dated: 4 MA”).)

         Ms. Dornéval is another former Bombardier employee who is currently working on the MRJ at AeroTEC. (Compl. ¶ 62.) According to Bombardier, “in the weeks, days, and even hours before her departure, [Ms. Dornéval] sent several documents containing highly sensitive Bombardier trade secret information to her personal email account.” (Id. ¶¶ 62-64; see Id. ¶ 62, Ex. O.) These documents “constitute Production Test Flight Profiles for Bombardier's CSeries [sic] Aircraft, ” which include “specific details concerning the flight test profiles developed throughout previous certification which Bombardier employed in gathering necessary data to obtain certificates of airworthiness for the C-Series aircraft prior to being able to commercially deliver them.” (Compl. ¶ 62.) Further, on her last day at Bombardier, Ms. Dornéval repeatedly tried to send additional Bombardier trade secrets to her personal email. (Id. ¶ 63, Ex. Q.) These files contained “standards and requirements regarding aircraft accident and incident investigations meeting regulatory certification requirements.” (Compl. ¶ 63 (internal quotations omitted).) However, the files Ms. Dornéval tried to send were too large, causing the emails to fail. (Id.) Bombardier claims that Ms. Dornéval did successfully transmit one of these documents over email. (Id.) In addition, Bombardier believes that Ms. Dornéval “absconded with this information in either hard copy form or through portable storage device means.” (Id.) Ms. Dornéval signed the Code of Ethics on July 3, 2007, around the time she was hired. (Id. ¶ 62, Ex. P (“Dornéval Code”) at 2-3.)

         Bombardier also claims that Defendants Keith Ayre and Marc-Antoine Delarche similarly took Bombardier trade secrets that relate to the C-Series' certification in the days and weeks before leaving Bombardier to work for MITAC and AeroTEC, respectively. (Compl. ¶¶ 61, 65-67.) Mr. Ayre and Mr. Delarche both signed the Code of Ethics. (See Id. ¶¶ 61, 65, Ex. N (“Delarche Code”), Ex. R (“Ayre Code”).) Bombardier also names Defendants John and/or Jane Does 1-88 on the belief that the other former Bombardier employees who joined MITAC, MITAC America, and AeroTEC seized Bombardier trade secrets. (Compl. ¶¶ 68-69.)

         C. Present Lawsuit

         Based on the foregoing facts, Bombardier brings suit against MITAC, MITAC America, AeroTEC, Mr. Korwin-Szymanowski, Mr. Basson, Mr. Delarche, Ms. Dornéval, Mr. Ayre, and John and/or Jane Does 1-88. (See generally id.) MITAC America and AeroTEC Defendants now move to dismiss the claims that pertain to them pursuant to Federal Rule of Civil Procedure 12(b)(6). (See generally MITACA MTD; AeroTEC MTD); Fed.R.Civ.P. 12(b)(6). Specifically, MITAC America moves to dismiss counts III and IV of the complaint, which allege federal and state law trade secret misappropriation; and count VIII, which alleges tortious interference with a contractual relationship and/or business expectancy. (See generally MITACA MTD; see also Compl. ¶¶ 92-114, 146-54.) AeroTEC Defendants move to dismiss counts V, VI, X, XI, XVI, XVII, XIX, and XX, which allege federal and state law trade secret misappropriation against all AeroTEC Defendants; counts XII and XVIII, which allege breach of contract against Ms. Dornéval and Mr. Basson; and counts IX and XXI, which allege tortious interference with a contractual relationship and/or business expectancy against AeroTEC and Mr. Korwin-Szymanowski. (See generally AeroTEC MTD; see also Compl. ¶¶ 115-36; 155-86; 210-59.) The court now addresses the motions.

         III. ANALYSIS

         A. Motion to Dismiss Standard

         Rule 12(b)(6) provides for dismissal for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When considering a motion to dismiss under Rule 12(b)(6), the court construes the complaint in the light most favorable to the nonmoving party. Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The court must accept all well-pleaded facts as true and draw all reasonable inferences in favor of the plaintiff. Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). The court, however, is not required “to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

         “To survive a motion to dismiss, 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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010). “A claim has facial plausibility 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 677-78. “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.'” Id. at 678 (quoting Twombly, 550 U.S. at 555, 557). Dismissal under Rule 12(b)(6) can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

         B. Trade Secret Misappropriation

         Bombardier alleges that MITAC America and AeroTEC Defendants misappropriated Bombardier's trade secrets in violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836 et seq., and the Washington Uniform Trade Secrets Act (“UTSA”), RCW 19.108.010 et seq. (See Compl. ¶¶ 92-136, 164-81, 210-27, 233-50.) The relevant portions of the DTSA and the UTSA are almost identical. Compare 18 U.S.C. § 1839(5), with RCW 19.108.010(2). A plaintiff asserting a DTSA or UTSA claim must establish that its trade secrets were misappropriated. See Inteum Co., LLC v. Nat'l Univ. of Singapore, No. C17-1252JCC, 2017 WL 6611961, at *4 (W.D. Wash. Dec. 27, 2017). The two laws define misappropriation, in relevant part, as follows:

(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(B) disclosure or use of a trade secret of another without express or implied consent by a person who--
(i) used improper means to acquire knowledge of the trade secret;
(ii) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was--
(I) derived from or through a person who had used improper means to acquire the trade secret;
(II) acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or
(III) derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret[.]

18 U.S.C. § 1839(5); RCW 19.108.010(2). Improper means includes “theft, bribery, misrepresentation, [or] breach or inducement of a breach of a duty to maintain secrecy.” 18 U.S.C. § 1839(6); RCW 19.108.010(1). Although the complaint need not “spell out the details of the trade secret, ” a plaintiff seeking relief for trade secret misappropriation must identify the trade secret “with sufficient particularity . . . to permit the defendant to ascertain at least the boundaries within which the secret lies.” SMS Signature Cars v. Connects Mktg. LLC, No. SACV 12-1300 JVS (ANx), 2012 WL 12893935, at *2 (C.D. Cal. Oct. 29, 2012) (internal quotations omitted); see also MAI Sys. Corp. v. Peak Comp., Inc., 991 F.2d 551, 522 (9th Cir. 1993).

         The parties do not dispute that the trade secrets at issue are the documents allegedly taken by Mr. Basson, Ms. Dornéval, Mr. Ayre, and Mr. Delarche.[3] (See generally MITACA MTD; Pl. MITACA Resp.; AeroTEC MTD; Pl. AeroTEC Resp.) Nor do the parties challenge that the documents are, in fact, trade secrets. (See generally id.) Rather, MITAC America and AeroTEC Defendants argue that Bombardier fails to allege sufficient facts that constitute misappropriation of those trade secrets. (See MITACA MTD at 16-22; AeroTEC MTD at 17-23.)

         1. MITAC America's Motion

         MITAC America argues that Bombardier fails to plausibly allege two elements of trade secret misappropriation: (1) that MITAC America acquired or used the trade secrets;[4] and (2) that MITAC America acquired or used the trade secrets with the requisite knowledge. The court addresses those arguments in turn.

         a. Acquisition or Use of ...


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