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Regal West Corp. v. Nguyen

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

September 30, 2019

REGAL WEST CORPORATOIN, a Washington corporation, Plaintiff,
v.
MINH KHAI NGUYEN, an individual, Defendant.

          ORDER ON MOTION TO DISMISS DKT. # 31

          Ronald B. Leighton United States District Judge

         INTRODUCTION

         THIS MATTER is before the Court on Defendant Minh Khai Nguyen's Motion to Dismiss Plaintiff Regal West Corporation's First Amended Complaint (FAC). Dkt. # 31. Regal alleges claims related to Nguyen's misuse of Regal's secret information and intellectual property. Nguyen argues that the Court lacks personal jurisdiction because all of the alleged misuse occurred outside Washington. Nguyen also argues that Regal's Lanham Act claims, trade secrete misappropriation claims, and Computer Fraud and Abuse Act (CFAA) claim are implausible.

         In response, Regal contends that Nguyen waived several of his arguments by failing to raise them in his motion to dismiss the initial complaint, which was withdrawn. See Dkt. # 24.

         Alternatively, Regal contends that the Court does not lack personal jurisdiction and that its claims satisfy Rule 12(b)(6).

         For the following reasons, the Court GRANTS Nguyen's Motion to Dismiss with respect to Regal's false advertising and CFAA claims but otherwise DENIES Nguyen's Motion.

         BACKGROUND

         Regal provides its customers with “complete end-to-end logistics solutions, including cross-docking, transportation, and assembly and repackaging services.” Dkt. # 27 at 3. Regal alleges that it began developing software that would allow its customers to access real-time information about inventory and shipments decades ago. Around 1999, Regal contracted with a third-party company to continue developing this software, at which time Nguyen was a subcontractor or employee of this third party.

         Around 2000, Nguyen took the lead on Regal's software development project and visited Regal's place of business in Fife, Washington, to discuss the project. Nguyen continued to work for Regal for roughly 20 years in this capacity, during which time Nguyen allegedly “was given access to . . . Regal's customer database and customer-coding system, as well as pricing information, Regal's customer contracts, and Regal's accounting system.” Dkt. # 27 at 5. This was “solely for the purpose of developing and maintaining Regal's software and with the understanding that Nguyen would not disclose such confidential and proprietary information.” Id. Regal and Nguyen parted ways in February 2019 when Regal terminated its relationship with Nguyen's company, Softketeers, Inc.

         Regal alleges that Nguyen stole its proprietary information and trademarks while working for Regal to further Nguyen's new business venture, Retail Exchange Network, Inc. (RXN). According to Regal, RXN advertises itself as “an outgrowth of a warehouse management proprietary information technology systems [sic] that has been in place and developed over the last decade.” Dkt. # 27 at 6. Regal claims that this description refers to Regal's own custom software that Nguyen helped develop. Regal also alleges that RXN is using Regal's customer database and coding system, based partly on images that RXN uses in its online videos. One of those videos also includes background images of Regal's warehouse and a list of several Regal companies, such as Walmart and Amazon.com.

         In its initial complaint, Regal sued both Nguyen and one of Nyguyen's companies, Softketeers, Inc. Dkt. # 1. That complaint included contract- and fraud-based claims against both defendants. Nguyen moved to dismiss, stay, or transfer Regal's initial complaint but withdrew his motion after Regal amended its complaint. Dkt. # 30. Regal's FAC dropped Softketeers as a defendant and omitted the three contract-based claims against Nguyen and Softketeers. Nguyen then brought the current Motion challenging the FAC.

         DISCUSSION

         1. Waiver

         Because Nguyen already moved to dismiss Regal's initial complaint without contesting personal jurisdiction or Regal's trademark infringement and unfair competition claims, Regal contends that Nguyen cannot raise those arguments now. Nguyen responds that, because the initial Complaint contained contract claims against Nguyen and Softketeers that clearly supported personal jurisdiction, a 12(b)(2) defense was not available at that time. Regal replies that the defense was ...


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